Rice stockpiling plan drives up prices

Rice prices in the Mekong Delta have bounced back two days after the government decided to stock up on an additional 500,000 tonnes of rice but insiders have projected it is hard to see a steep increase in the near future.

Since the government launched the rice purchase programme, the Mekong Delta has seen busier rice trading. Fresh low-grade paddy IR 5040 in An Giang Province stays at VND4,350-4,400 a kilo while dried rice reaches VND5,000-5,200, up VND100-150 from a week ago.

Similarly, the price in other provinces such as Dong Thap, Vinh Long and Tien Giang is up by VND50-100 to VND4,300-4,350 and VND5,000-5,100 for a kilo of fresh and dried grain respectively.

There has been a slight pick-up in rice prices since the government outlined a plan to stock up on an extra 500,000 tonnes of rice. The increase is also attributed to a recent surge in rice exports to Cambodia, said Pham Thai Binh, director of Can Tho-based Trung An Co.

However, rice prices remain low, so farmers cannot achieve a 30 percent profit as expected by the government.

Most industry experts said a remarkable increase in rice prices until the end of the third quarter is impossible as the export price has stayed low.

As of mid-June, the country contracted to export around 5.2 million tonnes of rice, according to the Vietnam Food Association. However, the export price was low, ranging from $380 to $420 a tonne for the contracts concluded in late April and early May.

The country offers overseas buyers $410-415 a tonne for 5 percent broken rice and $370-375 for the 25 percent type, FOB, which is lower than ask prices in India and Pakistan.

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Category: Business