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The price of rice reverses after the export suspension direction

The price of rice reverses after the export suspension direction

Friday 27, 03 2020
"Regarding the signed contracts whose goods have not been delivered yet, there has not been any sudden increase”

After several consecutive days of increasing price, the domestic rice market has noted a drop in the price of rice after the export suspension direction was declared by the Prime Minister on 25th March.

The rice price is dropping

On 26th March, Ngo Ngoc Yen, director of Yen Ngoc private enterprise, which is a rice supplier for export enterprises, confirmed that the domestic rice market had witnessed a price drop of 200 VND/kg after the rice exporting suspension direction had been issued.

Accordingly, Yen said at Ba Dac food wholesale market in Cai Be district of Tien Giang province, which is the biggest food wholesale market in the Mekong Delta, before the suspension direction, the price of OM 4900 finished rice was advertised at 12,000 – 12,500 VND/kg, but then it dropped to 11,800 – 12,300 VND/kg (depending on the quality); the price of Dai Thom 8 rice dropped from 11,200 – 11,500 VND/kg to 11,000 – 11,300 VND/kg.

The price of rice reverses after the export suspension direction

She said that the purchasing force of the market also dropped severely because of the rice export suspension. “Only those that have the needs still buy rice in small quantity, and the majority of enterprises have already stopped purchasing”, she said.

Chairman of the Board of Directors and General Director of Trung Thanh High-tech Agriculture Joint Stock Company Pham Van Quang confirmed that the rice price had dropped slightly by 100 VND/kg, which is insignificant.

“The rice market is still waiting for the future developments”, he said and stated that enterprises may not be too interested in trading at that moment.

The issues that stem from the situation

According to Quang, such a development of the market, based on a managing point of view, has reflected positive factors in the policies of the government in the context of the increasing price.

However, from the point of view of enterprises, managing policies should create a mechanism for them to “breath”.

“Enterprises have just recovered from 2018 and 2019 when the rice industry faced severe difficulties”, Quang explained and said that then should be the moment for enterprises to “breath” instead of being “suffocated”, resulting in more challenges.

Quang said the first death after the direction was issued was the fact that due to a lack of warning, enterprises did not react on time, resulting in the congestion of all the goods loaded onto the port.

“The announcement took effect at 12 AM on 24th March, but enterprises only received the official dispatches from customs on the morning of the same day.”

Enterprises must be warned beforehand to be able to actively lengthen the negotiation progress with customers, but in this case, they had no idea when the direction took effect. “African or Chinese partners may accept the "sudden event" reason, but that is not the case for European or Australian ones”, he said.

From information noted via communication channels, industry statistical reports, Quang said the amount of rice exported in the first 3 months of the year is only more than 1 million tons, which is not a big number, as, over the same period last year, that number reached 2 million tons.

"Regarding the signed contracts whose goods have not been delivered yet, there has not been any sudden increase”, he said and forecasted that the production of those contracts might not surpass 1 million tons, while the exported amount listed in the plan for 2020 is 7 million tons.

Based on his experience in rice trading and export, Quang deemed that to analyze statistically the number of contracts that enterprises have signed is not a difficult task for the authorities, proved by the fact that the Ministry of Industry and Trade has asked enterprises to send the statistics of all of their signed contracts with foreign partners in 3 working days.

Based on the number of contracts reported by the enterprise, if it is found that the export quantity is not so high that it is a risk, the Ministry of Industry and Trade should export and manage the "quota" according to the reported number of business contracts. At that time, the rice business also would not suffer damage.

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