Thailand's recent decision to unleash its huge rice inventory of about 17 million tons has negatively impacted many rice exporters, including those in Vietnam, according to the Vietnam Food Association (VFA).
Accordingly, the government of Thailand reduced the price of the 100B rice, which is equivalent to Vietnam's 5-percent-broken rice, from 430 U.S. dollars per ton to 380 dollars per ton.
As a result, prices of the Vietnamese paddy in the southern Mekong delta dropped, from 5 million VND (230 U.S. dollars) per ton on the average in late August to 4.5 million VND (210 U.S. dollars) per ton as of early September.
Currently, Vietnam is exporting 5-percent-broken rice to China for about 395 U.S. dollars per ton, and to African countries for 380-385 U.S. dollars per ton, slightly lower than early last month.
However, many foreign customers are trying to cut the prices of Vietnamese rice exports, paying only 370 U.S. dollars per ton (for container shipping) and 365 U.S. dollars per ton for FOB delivery, for the 5-percent-broken rice, which are lower than the flat price of 375 U.S. dollars per ton for the 25-percent-broken rice.
Insiders said Vietnamese rice exporters can not compete with their Thai rivals because of the difference in rice quality.
According to VFA, in the first eight months of this year, Vietnamese rice exporters had signed contracts for the export of over 7.2 million tons of rice. However, contracts worth 1.2 million tons were canceled, and only 4.7 million tons were shipped abroad during the period.
VFA predicted that about 1.84 million tons of rice would be exported in September, about 230,000 tons lower than scheduled, so the total rice exports in the 9-month period is estimated at 5.32 million tons.
To handle the declining prices, VFA proposed that the government extend its interest subsidy program by another one month lasting until mid-October to prevent domestic food companies from selling the grain when their loans fall due.
The association also asked for permission to buy another 300, 000 tons of rice for reserves from mid-September to mid-October, in addition to the previously-purchased 1 million tons.
The government should soon negotiate with Angola and Kenya on selling rice so that domestic exporters can begin procedures for shipments, suggested VFA.