Vietnam will set a minimum price for companies buying rice from Mekong Delta farmers around 14 percent higher than current levels, as it aims to support prices that have fallen a fifth since their peak in early June.
A Finance Ministry official told a government meeting on Saturday the ministry would soon discuss with relevant authorities to set the floor at 5,000 dong (30.3 US cents) per kg, the Defence Ministry-run People's Army newspaper said. The floor price would raise the Delta's summer-autumn grain prices by 13.6 percent from 4,400 dong last week, halting a trend of falling values as exports have slowed while the summer-autumn crop harvest has peaked.
The Finance Ministry official did not say when the floor price for paddy purchase would be in place. Vietnam now keeps a floor price for rice exports at $600 a tonne for the 5-percent broken grain, free-on-board basis. Traders said farmers were likely to put a brake on paddy sales until the new floor price is approved.
"Now prices are low and farmers will stop selling to wait for the floor price to be in place," a rice trader in Ho Chi Minh City said." He said exporters will be happy not to buy now as they want to clear the stocks they already have. Last week the government raised Vietnam's rice export target this year by around 2 percent to 4.6 million tonnes.
The government also ordered the country's two largest rice exporters, Vinafood 1 and Vinafood 2, to buy up to 500,000 tonnes of rice this month from Mekong Delta farmers to prepare for export deals and boost domestic prices. The Delta, which grows three rice crops each year, would provide 4 million tonnes of commercial paddy, 3.5 million tonnes - 1.8 million tonnes of husked rice - of which would be for export.
The government restricted new contracts between March and June, which industry officials and rice exporters said caused exporters to have missed a global price hike with prices nearly trebling to around $1,200 a tonne due to tight supplies.
Comments
Comments are closed.