Farmers big losers if Vietnam stops rice exports: experts

By Thi Ha   March 27, 2020 | 11:35 pm PT
Farmers big losers if Vietnam stops rice exports: experts
A farmer harvests rice on a rice paddy field outside Hanoi. Photo by Reuters/Kham.
Stopping rice exports will see domestic prices plummet from oversupply, inflicting heavy losses on farmers, experts argue.

Nguyen Trung Kien, vice chairman of the Vietnam Food Association (VFA), said that most companies at a Thursday meeting with the Ministry of Industry and Trade reported having large rice inventories with themselves or with farmers.

Suspending rice exports will hurt both companies and farmers, they said.

The VFA therefore expressed hope that the government would soon resume exports, pledging that companies would strictly control export contracts towards ensuring domestic food security and creating favorable outputs for farmers.

Professor Vo Tong Xuan, principal of the Nam Can Tho University, agreed with the VFA argument. He said that following the General Department of Customs' announcement on rice export suspension, he and a number of experts looked again at Vietnam's rice output for the 2019-2020 winter-spring crop.

With the Mekong Delta currently having over 1.5 million hectares (3.7 million acres) of rice fields, the total output is estimated at 5.5 million tons. "The best solution currently is to reserve only 1.5 million tons of rice, and allow four million tons to be exported for farmers to reap more benefits," Xuan said.

Due to an increase in the number of orders from China, the Philippines, Indonesia and Malaysia, the price of rice procured from farmers is rising high, allowing farmers to earn higher profits with the current price of VND6 million ($258) per ton.

However, a rice export suspension would cause rice prices to plummet to about VND4 million ($172) per ton, causing farmers to suffer losses.

"Therefore, I hope the government would consider it carefully, resume exports timely, not let the need to rescue rice farmers happen and prevent a repeat of the 2008 rice crisis," Xuan said. "To ensure food security, the government should strictly control exports and impose heavy penalties on speculation cases."

He also argued that Vietnam's food production is going rather well as the rice varieties being grown in the Mekong Delta are short-term, some of which could be harvested after just 85 days. A reserve of 1.5 million tons of rice therefore would be enough to last until May or June, he said.

The Ministry of Industry and Trade said it would report the opinions of businesses and experts to the prime minister on Saturday.

A recent agriculture ministry report says Vietnam exported nearly 1.3 million tons of rice worth $602 million as of March 15, a 26.5 percent increase in volume and 34.6 percent rise in value year-on-year. Vietnam is forecast to export 6.5-6.7 million tons of rice this year.

Additionally, while the Mekong Delta has been suffering from salt intrusion in coastal areas, most farmers still had a good harvest in the recent winter-spring crop. This, combined with a decrease in global supply due to climate change, would cause rice prices to change in a way that benefits farmers, experts and industry insiders argued.

The General Department of Customs last Tuesday issued an urgent decision to suspend rice exports in an effort to ensure food security as the Covid-19 pandemic intensifies.

Immediately afterwards, the Ministry of Industry and Trade asked the government to allow resumption of rice exports, but a decision on this has not been taken.

Vietnam is the world's third largest rice exporter after India and Thailand. Last year, the country exported 6.37 million tons of rice worth $2.81 billion, with the top markets being the Philippines, Ivory Coast, Malaysia, and China.

go to top