The Vietnamese government has allowed rice exporters to stockpile a million tons of the grain to keep prices stable after shipments in the first two months fell 40 percent from the same period last year.
Under the scheme, which starts on March 15, the government will offer full interest subsidies for rice exporters for three months. They are required to pay at least VND5,000 per kilogram for unmilled rice so that farmers can have a minimum profit margin of 30 percent.
According to the Vietnam Food Association, prices of Vietnamese rice are under downward pressure because of increasing competition from India and Pakistan. Vietnam exported 627,182 tons of rice in the first two months, a 40-percent year-on-year fall.
Pham Van Bay, chairman of the association, said local exporters will have to try much harder to boost shipments in order to achieve the export target of 7 million tons this year.
He said market conditions could improve in the second quarter as the demand for rice from China, Indonesia, Malaysia and the Philippines is still high.
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