Scramble on to get rid of rice at low prices [in Vietnam]

A makeshift street shop on the border of Ho Chi Minh City’s districts 12 and Hoc Mon sells rice at low prices to low-income consumers.

Saturday, November 15, 2008
Thanh Nien News (Hanoi)

A fragrant error and some trader manipulation are costing Mekong Delta farmers dear.

It was easy to plant and had a high-yield, so expectations were high among farmers that the IR50404 variety of rice would fetch good deals with exporters.

The hopes have been dashed with exporters showing no interest in the variety, and what’s worse, domestic buyers aren’t keen to eat the rice as well.

Now, with huge stockpiles threatening to spoil by decay if they are not sold soon, low-income consumers in rural areas are being targeted in a big way, with farmers, dealers and traders scrambling to clear their stocks at much lower prices.

Many roadside stalls have emerged around Ho Chi Minh City’s outlying districts to sell husked rice to low-income consumers, at VND5,000-5,800 (US$0.29-0.34) a kilo, around VND3,000-7,000 ($0.18- 0.41) cheaper than the cheapest variety being sold in the city’s markets.

Five to seven trucks carry rice from the Mekong Delta every day to these temporary markets, according to the traders.

In District 8, street stalls are selling a 50 kg sack of husked rice at VND250,000-290,000 ($15-17). The sacks have no labels, and the grains are slim and milky, but traders assure buyers that the rice has not passed the expiry date.

On To Ky Street bordering districts 12 and Hoc Mon, around 15 trucks have parked on the roadside to sell rice, mostly from traders in Long An and Tien Giang provinces.

Nguyen Ngoc Nuong from Tien Giang Province says her family can sell around 10 tons a day while another trader says she can do five tons, adding that she can satisfy any order.

“I hire trucks to carry the rice from my hometown in Cai Be District every time the stalls get empty,” Nuong says. “We’re going to sell until there’s no buyer.”

Most of the rice being sold at these markets, open from 8 a.m. to 9 p.m., is of the IR50404 variety, according to Nuong and other traders.

Farmers from the country’s southern rice bowl have thousands of tons of IR50404 variety in stock from their fall-winter crop, harvested in late September.

The price for IR50404 has been cut recently to prevent it from rotting, say many rice traders in Tien Giang Province who have up to 100,000 tons of the rice in stock.

The variety produces rice of lower quality than fragrant rice, said farmer Nguyen Loi Duc from An Giang Province. “It’s used only by those in the rural regions, not those in the cities.”

Recent moves by Indonesia, Malaysia and the Philippines to develop their agriculture sectors for fear of a food crisis have contributed to the problem, according to agriculture professor Vo Tong Xuan, former rector of the An Giang University.

Duc says the unsold crop has added to more than 100 tons of the IR50404 variety left over from the summer-fall crop.

He had refused to sell the unhusked rice for VND4,800 ($0.28) a kilogram at harvest time. But the price didn’t increase for many months and Duc had to lower the price to VND4,500 ($0.27) for his 60 tons, the farmer recalls.

Now 40 tons remain but “all rice dealers have turned down my offer of VND3,000 (18 cents) a kilogram.”

The dealers, who buy unhusked rice from farmers and resell the husked rice to traders, have been turning to fragrant rice “to meet the demand of high-end customers,” says rice trader Tran Ngoc Trung of the Phuoc My Rice Company in Tien Giang Province.

Duc said he has been selling out his stock on credit to the poor locals to prepare for the winter-spring crop.

“Rice dealers are hunting for fragrant rice every day but I don’t have any,” he said.

The IR50404 husked rice is available in almost all stalls of Can Tho City’s markets at VND6,000 ($0.35) a kilogram or less while fragrant husked rice varieties in the same stall sell for at least VND12,000 ($0.71) a kilogram.

Around the Mekong Delta markets the IR50404 husked rice is even cheaper, at between VND4,000- 4,500 (24-27 cents) a kilogram.

The director of a HCMC-based rice exporter, who wishes to remain unnamed, says the market prices of husked rice have been set unreasonably by rice dealers and traders “beyond the market management’s control.”

He says dealers and traders have taken advantage of the rice export meltdown to “refuse to buy from farmers to press the prices further downward.

“Meanwhile they are pushing the prices of high quality rice up as they see the high domestic demand for the product,” says P., noting that the price of VND11,000 ($0.65) for a kilogram of fragrant husked rice already brings profit.

The change in demand has led to many Mekong Delta farmers considering turning all their fields over to fragrant rice for their winter-spring crop, planted in December and January, according to Ho Minh Khai, director of Co Do Agriculture Company, which owns thousands of hectares of rice field.

Khai says his company also planned to invest further in growing fragrant rice in a bid to attract more customers.

“If only farmers had planted more fragrant rice,” says Le Van Banh, director of Cuu Long (Mekong) Delta Rice Research Institute (CLRRI).

However, if all the farmers do it at the same time, it could be a disaster, Banh adds, noting that fragrant rice is low yielding, vulnerable and able to produce high quality rice only when grown in brackish water areas like Soc Trang Province.

Vietnamese rice farmers are hurt by cheap, high quality rice from Cambodia

Rice farmers need practical solutions

Saturday, November 15, 2008
Thanh Nien News (Hanoi)

Vietnamese rice farmers are being hurt again.

The news about how cheap, high quality rice from Cambodia is suddenly being transported through the border at An Giang Province at an alarming rate reaffirms that the country’s farmers are very vulnerable.

In the fierce competition against farmers in Thailand and other countries where farmers are supported by innovative farming technologies, it seems as if Vietnamese farmers are in this fight alone.

Farmers from Vietnam’s rice bowl are now stuck with thousands of tons of IR50404 variety rice harvested from their fall-winter crop.

They thought rice dealers would be interested and were not expecting them to buy fragrant rice like Jasmine or Khaodawkmali for only VND5,000- 5,300 (US$0.29-0.31) per kilogram.

Here’s part of the problem: Vietnamese prefer high-quality rice while its domestic farmers often grow the variety that simply doesn’t taste as good, such as the IR50404.

Domestic rice companies often import better quality rice and then resell it.

In Thailand, the price for its Thai White Rice Grade B dipped from $770 per ton in August to $720 in September and then to the current $580.

Then countries such as the Philippines, Indonesia, and Malaysia have refocused to increase production in a bid to meet domestic consumption and prevent future food shortages.

A dealer told The Bangkok Post that Thailand has had trouble selling rice in the Philippines since that country was already flooded with at least 600,000 tons of Vietnamese rice.

That’s why the Thai government had to announce at the end of September its plan to buy 8 million tons of unhusked rice at above market prices.

A kilogram of Khaodawkmali 105 unhusked rice is being sold at VND7,800; white rice at VND6,800 and Thai glutinous rice at VND5,830 per kilo.

Perhaps the amount that was transported to Vietnam is leftover from the unsold stockpiles in the Thai government’s buyout plan offered to its farmers.

There has been also criticism over Vietnamese farmers continuing to growing IR50404 rice which has a 15- 25 percent broken grain rate.

IR50404 is easier to grow and yields higher output, unlike the Jasmin 825 variety. So it’s understandable why Vietnamese farmers prefer IR50404.

We often saw officials suggesting that farmers not grow IR50404 but who can guarantee that the rice will sell faster if they choose to grow higher-quality varieties?

Farmers are left with no choice and must go with something stable.

For domestic food export companies: why not localize an area in which farmers can grow rice of preferable quality?

For the government: why not actively bring our rice to customers, no matter where they are located?

Thailand brings its unhusked rice to be processed in La Camarque in France. They are working on packaging and bringing their rice to Europe’s supermarkets.

We can do the same. Our companies in the seafood industry have been able to bring our products to Europe? Why are we not doing that with rice?

By Vo Tong Xuan

*Vo Tong Xuan is the former rector of An Giang University. He was recently awarded the Dioscoro L. Umali Achievement Award for Agricultural Development.

[Vietnamese] Farmers caught out by sudden change in rice demand

Porters and rice dealers bring high-quality Cambodian fragrant rice through the border at An Giang Province.

November 14, 2008
Thanh Nien News (Hanoi)

Competition from cheap high-quality rice from Cambodia has left Mekong Delta farmers with mounting stockpiles of suddenly unpopular low-quality rice.

The farmers from Vietnam’s southern rice bowl have thousands of tons of IR50404 variety rice from their fall-winter crop, harvested in late September.

Farmers had been expecting rice traders to snap up the high-yielding low-quality IR50404 variety rice, which was grown in about 30 percent of the Mekong Delta’s cultivated land.

But rice traders are no longer interested in IR50404, preferring to buy high-quality rice to meet increased domestic demand for fragrant rice.

IR50404 has a 15-25 percent broken grain rate, the cheapest type of rice. High-quality rice only has a 5 percent broken grain rate.

Rice dealers, who used to buy unhusked rice from farmers and resell the husked rice to traders, are now preferring to buy fragrant rice such as Jasmine or Khawdakmali from Cambodia.

Cambodian farmers are selling Jasmine and Khawdakmali rice for VND5,000-VND5,300 (US$0.30-0.32) a kilogram. Cambodian farmers are keen to sell their harvest so they have money for an upcoming moon festival and rice dealers are eager to buy, as they are offered tax breaks on rice traded with Vietnam’s neighbors.

Vietnamese farmers, meanwhile, have only a small amount of Jasmine rice, which is being sold for VND6,900 ($0.40) a kilogram.

Domestic IR50404 is being offered by farmers for as little as VND2,500 ($0.15) a kilogram but “the dealers just show no interest,” said one farmer from Hau Giang Province.

Some dealers have even told farmers, “If you have IR50404, please don’t call. Thanks.”

Over the past 10 days there has been more than 1,000 tons of unhusked fragrant rice a day imported from Cambodia over the border at An Giang Province’s Tinh Bien District, according to a Vietnamese rice dealer.

Cambodian Kim Pou said his team of 50 porters and three other groups of porters had been busy lugging rice across the border in recent weeks.

The change in demand has led to many Mekong Delta farmers considering turning all their fields over to fragrant rice for their winter-spring crop, planted in December and January, according to Ho Minh Khai, director of Co Do Agriculture Company, which owns thousands of hectares of rice field.

In the past, the farmers had not planted high-quality rice varieties because they were considered difficult to grow. But their large stockpiles are making them rethink.

Khai said his company also planned to further invest in growing fragrant rice in a bid to attract more customers.

However, if all farmers do the same it could be a disaster, said Le Van Banh, director of Cuu Long (Mekong) Delta Rice Research Institute (CLRRI).

Banh said Vietnamese fragrant rice wouldn’t be able to compete with Thai fragrant rice in terms of quality and the domestic consumption of this type of rice remains low. “If every farmer grows fragrant rice, who will we sell it to?”

Up to 80 percent of Vietnam’s rice output is consumed by the domestic market, Agriculture and Rural Development Minister Cao Duc Phat told a National Assembly session on Tuesday.

Cambodia and Thailand are growing only one crop of high-quality low-yielding rice a year. However, Vietnam should not try to copy the rice growing methods of its neighbors because “we have a big population and not much farmland and so we have to rely on high-yielding varieties,” Nguoi Lao Dong newspaper quoted Nguyen Tri Ngoc, director of the ministry’s Cultivation Department, as saying.

The best way to maximize yields and profits would be to reserve parts of the region’s rice fields for high-quality rice, said Ngoc.

He said five years ago the ministry started a program to promote this method but farmers had not changed their crop growing habits as “no local officials told them to.”

In August Prime Minister Nguyen Tan Dung asked food companies and rice traders to buy rice from the Mekong Delta’s farmers for at least VND4,000 (25 cents) a kilogram.

Now that the farmers cannot sell their rice, even at VND2,500 (15 cents), the ministry can do nothing, Ngoc said. “The traders are not sharing the country’s difficulties,” he said.