Rising costs, falling global prices worry rice exporters

Paddy now costs VND9,200 per kilogram at the farm gate, up 5.7% from July, according to the Vietnam Food Association. Farmers said declining output due to unfavorable weather has forced them to hike prices.

Huynh Thi Bich Huyen, CEO of rice exporter Ngoc Quang Phat, said her company now manages to buy only 1,000 tons a day, down 30% from the beginning of the year, due to the declining supply.

Meanwhile, her foreign buyers are bargaining hard to drive down prices, and her company has not signed any major export deals due to the risk of losses, she said.

Dinh Ngoc Tam, deputy CEO of another rice exporter, Co May, said companies like his are paying VND13,000 to buy a kilogram of rice while their foreign customers are only paying slightly more.

Rising transportation costs due to international conflicts and currency rate fluctuations have pushed up costs by 10-15% since the beginning of the year, he said.

Buyers have many sources for imports and so it is difficult to keep prices high, he added. The world’s largest rice exporter India is considering lifting its export ban on white rice and making changes to rice export taxes.

Analysts have said this might cool down rice prices in Asia after months of rising. But the Vietnam Food Association expects global demand to rise, and prices along with it.

Many countries have reported low rice inventories due to El Nino and other weather impacts and would soon buy more, it added.

The Ministry of Industry and Trade’s import-export department said businesses need to be ready to respond to fluctuations but avoid unfair practices such as price dumping to ensure the stability of the country’s rice exports.

The Ministry of Agriculture and Rural Development expects rice exports to fall by 9% this year to 7.4 million tons. So far the country has exported $3.27 billion worth of rice, up 5.8% year-on-year.