Vietnam cuts rice floor price

Vietnam cut the minimum price at which it allows exporters to sell rice by nearly a quarter on Tuesday as the world's second-biggest supplier bows to the reality of a sharply falling global market. The move will add to pressure on Thailand, the world's top exporter, which is struggling to keep its market share as the government maintains its price support scheme for farmers.
On Tuesday the Vietnam Food Association said it had cut the floor for 5 percent broken rice by 23 percent to $500 a tonne and that on 25 percent broken rice by 30 percent to $410 a tonne, free on board. Industry and Trade Minister Vu Huy Hoang has proposed that the industry waive the floor price until the main crop harvest starts in February, and is pushing for more soft loans for exporters to buy paddy because of slow foreign demand, falling prices and rising stocks, a state-run newspaper reported.
Vietnam imposed an export price floor in June this year to prevent a retreat in global prices from hurting farmers who had rushed to grow more rice when prices were rising. It has gradually trimmed that floor from an initial $800 a tonne as Thai prices, a benchmark for the region, have fallen to $630 a tonne from peaks above $1,000 in May.
Thailand last week cut the price it will pay farmers under its support scheme by 15 percent to 12,000 baht a tonne, equivalent to around $630-$640 a tonne free on board. FURTHER STEPS POSSIBLE: The Liberation Saigon daily quoted Industry and Trade Ministry reports as showing Vietnam would ship 650,000 tonnes in the last two months of 2008 to fulfil its annual rice export target of 4.6 million tonnes.
It said the quality of the summer-autumn harvest, the second largest crop of the year, was bad, making it difficult to sell both at home and abroad. Vietnam's rice shipments between January and October dropped nearly 7 percent from the same period last year to 4.09 million tonnes, the government has said.
Banks should provide lower interest rates on loans to exporters to help them buy mounting stocks from farmers, the daily cited the minister's proposal to the government as saying. Exporters should also be allowed to ship their grain without having to register their contracts, it said.