Experts "diagnose" falling rice prices and export rice prices

Agricultural expert Hoang Trong Thuy had an interview with a reporter from the Industry and Trade Newspaper about this issue.

Sir, in the past week, the issue of raw rice prices in the Mekong Delta and Vietnam's export rice prices decreasing has "taken over" all social networking forums and newspapers. What is your opinion on this situation?

The fluctuations in domestic and export rice prices over the past week and up to today (February 26) are due to two reasons. First, it is due to market fluctuations.

Specifically, according to preliminary statistics from the General Department of Customs, in January 2023, our country exported 512,265 tons of rice and earned more than 362 million USD, up 4% in volume and 7% in turnover compared to the previous month. At the same time, it increased 42% in volume and 94% in value compared to the same period in 2023.

Experts "diagnose" falling rice prices and export rice prices

In terms of market, the Philippines remains the largest importer of Vietnamese rice with nearly 280,944 tons, equivalent to nearly 194.28 million USD, up 7.8% in volume and 8% in value compared to December 2023. The average price reached 691 USD/ton, up slightly by 0.3% compared to the previous month.

Notably, the position of the second largest importer has changed. While in 2022 and 2023, China and Indonesia respectively occupied this position, in the first month of 2024, France rose to the second position with a sudden increase in import output. Specifically, rice export output to France in January reached 17,919 tons, equivalent to 18.64 million USD, a sharp increase of 16,339% in volume and 18,356% in turnover compared to December 2023.

The average price reached 1,040.2 USD/ton, the highest among all Vietnam's export markets, while in January 2023, no rice was exported to this market.

With this fluctuation, businesses themselves have to wait and see what the rice import structure of the countries is like? Currently, almost all suppliers and demanders (including importers, exporters, purchasers, millers) have a wait-and-see mentality.

Second, in the Mekong Delta, drought-resistant rice varieties are only 2 weeks away from being harvested. However, non-drought-resistant rice varieties can still be harvested until the end of March 2024.

Winter-Spring rice always comes with good quality and large output. Enterprises themselves want to buy this rice to prepare for contracts signed at the beginning of the year. At the same time, it is possible to set a price range that is considered a "springboard" for export in the last 6 months of the year. Therefore, enterprises buy and sell rice moderately due to both the impact of market factors and to build a long-term foundation this year.

There is also an opinion that businesses are trying to squeeze farmers' prices because of the increased supply in the context of the Winter-Spring crop being harvested. I think this point of view is not really objective. Because if we put businesses in the role of the market impacts, plus the problem of increased transportation costs due to the Red Sea conflict, they will also be forced to calculate so as not to fall into a passive position.

For rice farmers, news of El Niño conditions in major rice-growing regions around the world has added to supply concerns, while the US Department of Agriculture (USDA) has lowered its forecast for global rice supplies for the 2023-2024 crop year by another 4.5 million tonnes from the previous level.

Specifically, global rice output in the 2023-2024 crop year will reach about 513.5 million tons (previously forecasted at 518 million tons). Meanwhile, total consumption is forecast to reach over 522 million tons. With the above supply and demand, the world is forecast to have a shortage of about 8.6 million tons of rice in 2024. The fact that supply is less than demand will create momentum for export rice prices to continue to stay high in 2024.

With the experience of 2023, it is better for them to keep the rice and hope to sell it at the right time. Therefore, farmers also wait with the mentality that if the domestic rice price and export rice price decrease, it will increase. Therefore, they keep the rice and do not sell it.

Third, rice importers know that Vietnam is entering the biggest rice harvest of the year, so they are not rushing to buy but waiting for a good price.

Farmers are waiting, export and import businesses are waiting. All of these waiting are to listen to the market about import and export. I think this waiting situation will last for a short time.

What is the solution to the current rice price problem to bring harmonious benefits to both export enterprises and rice farmers, sir?

The problem now is to harmonize interests. In this, the role of enterprises is extremely important. If they calculate profits for the enterprise but ensure national interests, then the bottleneck will be solved. But if enterprises keep calculating to make a lot of profits, but do not recognize that the person who produces the rice is the one who decides the entire business of the enterprise, it will be difficult to solve.

Agricultural expert Hoang Trong Thuy

However, it must also be recognized that, at present, only a few large rice exporting enterprises still have enough strength and capital to buy in. Therefore, to solve this bottleneck, it is necessary to promote credit lending to enterprises with export capacity and should not ask that enterprises must have contracts to get loans.

Create conditions for businesses to access loans with low interest rates so they can buy rice, so that businesses can be proactive in both export activities and relationships with farmers.

For farmers, the Winter-Spring crop is the crop with the largest yield, after which they will switch to growing rice in the Summer-Autumn crop. The Summer-Autumn crop usually has low rice yield, low quality and is quite unstable. Therefore, rice farmers must proactively provide input materials.

The price of rice has increased little while the price of input materials has increased a lot, leading to a situation where rice farmers themselves lack capital. Therefore, suppliers of input materials such as fertilizers, pesticides, seeds, etc., need to share with farmers in the form of delayed payments so that they can reproduce.

The simultaneous implementation of these key solutions will help rice prices escape the contraction. This will also help rice exports avoid a situation where when export rice prices rebound, it will lead to competition for buyers and sellers and return to the difficult period in early 2023.

It is important to eliminate the “waiting” point for both businesses and farmers. And to develop a sustainable rice market, as well as maintain the reputation of rice exports.

How do you predict rice prices will be in the coming time, sir?

Rice export prices have increased over the past 10 years, many people think that rice farmers have won big. However, this is not entirely true. In 2023, the total income of rice farmers is about 128 million VND/ha, while the investment cost has increased to about 70 million VND/ha, so the profit of farmers is only about 55 - 58 million VND/ha. Meanwhile, in 2012, the total income of rice farmers was about 108 million VND/ha, while the input cost was only 42 million VND/ha, so they made a profit of 66 million VND/ha. Obviously, in 2023, although the rice price is good, farmers' profits have decreased.

What about the outlook for rice export prices? Experts have also predicted that rice export prices will increase in 2024 due to tight supply due to India’s ongoing export restrictions. The impact of El Nino on major rice growing regions has added to supply concerns.

I also share this view. In the short term, I think that the export price of rice will increase slightly in the coming time. If this forecast is correct, the enterprises purchasing rice at this time will benefit.

Thank you!

Rice prices in the Mekong Delta region last week decreased quite sharply, even in some places, prices were adjusted many times a day. In particular, in An Giang , Can Tho, ... most types of rice last week had a sharp decrease in price from 1,500 - 2,400 VND/kg. Typically: Dai Thom 8 from 7,400 - 7,600 VND/kg, down 2,000 VND/kg; OM 18 also decreased by 1,800 VND/kg to 7,400 - 7,600 VND/kg; Nang Hoa 9 is priced from 7,000 - 7,200 VND/kg, down 2,200 - 2,400 VND/kg;... Compared to the Winter-Spring crop of 2022 - 2023, the price of rice is only 5,800 VND/kg, so farmers still have higher profits in this Winter-Spring crop.

Regarding exports, Vietnam's 5% broken rice was offered at $625-$630 per ton, down from $637-$640 per ton a week earlier.

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