Vietnam's summer-fall rice harvest is in full-swing but buyers are wary amid sagging foreign demand and a rising global supply.
Some rice firms are looking to markets abroad to nudge up Vietnam's export levels as a global surplus has flooded the global market.
Early this month, the Ministry of Agriculture and Rural Development announced that nearly half of the 1.7 million hectares of paddy rice in the southern region had been harvested. In the Mekong Delta, the nation's largest rice producer, buyers paid VND3,000 (US$0.2) per kilogram - 20 percent less than they paid during the previous harvest.
An official from the An Giang Province People's Committee said farmers often spend 20-30 percent more on their summer-fall crop than the winter-spring one.
Meanwhile, the rice is often plagued by pests and serious weather conditions, so its quality is often lower and thus, harder to sell.
If the paddy rice is purchased for VND4,000 per kilogram, farmers see no profit. If the price is lower, they face loss, he said.
Difficult to export
Stats show a glut in the market. According to the Food and Agriculture Organization (FAO) of the United Nations, India's rice output may rise by 13 percent this year. Some other big rice producers such as China, Indonesia and Bangladesh have also seen bumper harvests.
Le Van Hung, deputy director of the Department of Industry and Trade of Can Tho City said Vietnam will face difficulty peddling the rice overseas, as these rice-rich countries will reduce their importation of the grain.
This year's global rice output is estimated at 456 million tons; demand is set at 454 million. Meanwhile, the global rice stockpile is estimated at 123.5 million tons, according to UN stats.
Recently, Thailand has planned to sell off its rice stockpile before harvesting its November crop, exacerbating the global surplus and punishing prices. "If Thailand sells its rice inventory, the price of our rice will down," Hung said.
Vietnam had more than 1.8 million tons of rice in inventory by early June, according to the Vietnam Food Association (VFA). Following this month's harvest, the supply of the grain is expected to increase, creating more pressure on the price of the product.
The country wants to capitalize on Africa's high demand; however, many firms remain wary. "No firms want to export to the market, as its payment is very slow, sometimes over one year after the delivery of products," Hung said.
VFA said some firms are seeking ways to penetrate Brazil and South America. If they can do it, Vietnam's rice export may improve, said expert Trinh Van Tien from the Institute of Policy and Strategy for Agricultural and Rural Development (IPSARD).
"However, they are new markets, and firms aren't familiar with their consumers' tastes, thus it is difficult to forecast their potential success," Tien said. "If the world rice market continues to develop as now, Vietnam may reach its target rice export volume (of six million tons) this year, but export turnovers may be lower than 2009."
Vietnam shipped 3.5 million tons of rice abroad in the first six months of the year. The figure represents a 4.9 percent drop when compared with the same period last year, according to the General Statistics Office. Meanwhile, Vietnamese rice prices rose 0.4 percent in the world market.
Nguyen Van Phong, deputy chairman of the People's Committee of Tra Vinh Province, said the government should offer more capital support to firms so that they can purchase the product from farmers for stockpiling.