The price of export rice has increased gradually since the beginning of this year and currently remains high. As the winter-spring rice crop nears its end, the price of paddy rice has been rising and now stands at between 2,300-2,400 dong per kilo or 200 dong per kilogram higher than that in mid-March.
Despite the high prices of fertilisers and insecticides, local farmers in the Mekong River Delta are enjoying a bumper winter-spring crop.
According to the Vietnam Food Association, Vietnam is likely to export 3.8 million tonnes of rice in 2005. By mid-March of this year, export contracts for large volumes of rice signed by the association accounted for 44% of the total rice export volume of Vietnamese enterprises.
In January, domestic enterprises hesitated to export due to the limited volume of rice in storage. However, rice export volumes have increased gradually since February as many provinces began to harvest the winter-spring crop. In the Mekong Delta province of Can Tho alone, the rice export volume in the past three-months reached approximately 117,000 tonnes, earning nearly US$28.5 million. In the first quarter of this year, Vietnam exported 961,000 tonnes of rice with an average export price of US$242 per tonne, representing an increase of US$50 per tonne over the same period last year.
According to the Trade Research Institute under the Ministry of Trade, the export price of Vietnamese rice increased by 2-3% compared to early March on average, or US$20 higher than the beginning of last year. The price of 5% broken rice stood at between US$262-264 per tonne, while 25% broken rice was sold at US$252/tonne.
Many rice exporters, such as Thailand and Bangladesh, are suffering from drought. Therefore, it is estimated that global rice prices will remain as high as those in 2004, and Vietnamese rice has many competitive advantages.
The Vietnam Food Association said that Bangladesh will import between 100,000-650,000 tonnes of rice and the Philippines will increase its import volume from 0.5 to 1.3 million tonnes of rice.
Drought in many countries has made it possible for Vietnamese rice to gain the upper hand on the international market. However, the Mekong Delta region a granary of Vietnam may not escape this natural disaster.
According to the Agricultural Department under the Ministry of Agricultural and Rural Development, rice cultivation areas for the early summer-autumn crop in the Mekong Delta region decreases by approximately 130,000 hectares due to drought. Some agricultural experts said that the average productivity of the upcoming crop is estimated to fall by 70kg/hectare, therefore rice output for the summer-autumn crop will decrease by approximately 720,000 tonnes compared to last year’s figure.
In addition, some rice export enterprises in the Mekong Delta region said that they are worried about material shortages in the coming months. By early April, Vietnamese enterprises had signed contracts to export 2.9 million tonnes of rice, including 2.2 million tonnes to be shipped abroad in June. Currently, some northern and central provinces are suffering from severe impacts on export rice sources.
However, after balancing rice output and rice demand in the domestic market, president of the Vietnam Food Association Truong Thanh Phong affirmed that in 2005, Vietnam will export 3.8 million tonnes of rice, earning an export turnover of US$1 billion. Vietnamese enterprises need to strike a balance between rice purchasing and export business, thus avoiding the situation of repeated contracts and causing rice shortages at specific times, Phong said.