Photo credit: Thoi Bao Kinh Te Saigon Online
Vietnam may stockpile around 1 million tons of rice through the mid of April in an attempt to keep prices stable and secure profits for farmers.
Under a new proposal from the agriculture ministry, local rice companies will be allowed to take out loans at subsidized interest rates to buy rice from farmers in the Mekong Delta, the country’s biggest rice producer, news website Thoi Bao Kinh Te Saigon Online recently reported.
Purchases are expected to be made from March 1 to April 15.
Harvesting of the country's winter-spring crop has begun. Prices are likely to fall once the new supply hits the market.
A report released by the ministry showed that Vietnam's rice supply is likely to surpass demand soon, which will cause prices to fall remarkably.
The ministry was quoted as saying that the Mekong Delta’s output for February and March will total 3.65 million tons.
Exports, on the other hand, are not catching up. The amount contracted to ship so far has reduced tremendously compared to the same period last year.
The ministry also noted a downward trend in local rice prices, blaming it on the supply-demand imbalance.
For instance, between January 26 and February 11, prices of the popular IR50404 rice variety dropped from VND4,600 (US$0.21) per kilogram to VND4,250 in An Giang Province, a 7.6 percent decline.
Vo Thanh Do, a senior official from the ministry, said in the news report that Vietnamese farmers are still able to earn a 30 percent profit margin at the moment.
The Vietnam Food Association has said that with harsh competitions from other rice producers like Thailand and India, and with increasing supplies, Vietnam’s rice exports will be under huge pressure over the next months.