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Vietnam fulfils rice export target for 2007
26 | 07 | 2007
At the end of 2006, the Government ordered companies to stop signing new contracts on exporting rice in order to ensure food security. The scenario has repeated itself again this year, but a little sooner.
Vinafood: no more exports

By the end of last week, Vietnamese enterprises had signed contracts to export 4.5mil tonnes of rice for 2007, the ceiling export level set by the Government. Nguyen Thi Nguyet, Secretary General of the Vietnam Food Association (Vinafood), said on July 16 that the association had stopped confirming rice export contracts. This means that enterprises have to stop signing export contracts (under current regulations, enterprises can export rice only after Vinafood confirms the contracts to verify that the export deals are straight and the export prices are suitable).

The Government has not ordered us to stop exporting rice, but we have to halt confirming export contracts, as exports have reached 4.5mil tonnes, to wait for further instructions from the Government and the Ministry of Trade,” Mrs Nguyet said.

She also said that in September, the Government would give the final answer on whether it would allow companies to continue signing export contracts after the Ministry of Agriculture and Rural Development submits its report on crops and production.

In Mekong River Delta provinces, rice prices keep rising though farmers are harvesting the summer-autumn crop, now selling at VND2,950/kg, as exporters are trying to collect rice to make deliveries to partners. Vietnam-sourced 5% broken rice is now being offered at $305-307/tonne FOB HCM City port, while 25% broken rice at $290/tonne, an increase of $30-40/tonne on average over that of two months ago.

Late last week, in Ha Long city in Vietnam, five countries that control 45% of rice exports in the world, Vietnam, Thailand, Laos, Cambodia and Myanmar, had a conference to discuss issues relating to food security, including cooperation between Thailand and Vietnam in exporting rice. Vietnam exported 4.75mil tonnes of rice last year, reaping $1.3bil, down by 10% in quantity and turnover compared to 2005 due to the insects.

Higher export prices, but exporters not happy

The continued price increases have given rice exporters a great deal of anxiety. Right at the beginning of the year, when farmers harvested the winter-spring crop, exporters faced big difficulties in chartering ships for carrying exports. Meanwhile, the transportation fee has increased since May 2007. For example, the transport fee for shipments to Asian countries has risen to $26-30/tonne from $18-19/tonne, while the fee to Africa has risen to $120-130/tonne from $80-90/tonne.

Nguyen Trung Kien, Director of Gentraco, a big rice exporter in the Mekong River Delta, said that on average, the transport fee had increased by $20-30/tonne over last year’s level.

“Though the transport fee has increased, it is still difficult to charter ships, especially ships to carry exports to ASEAN countries, while the ASEAN market consumes 50% of Vietnam’s rice exports,” said Mr Kien. Meanwhile, explaining the increased transport fee, Vinafood said that it was because of higher fuel prices, and because ships going to ASEAN countries did not carry goods on return.

Meanwhile, according to exporters, the transport fee accounts for 30-35% of the export FOB price.The difficulties in chartering ships have kept the stocks high. By June 30, 2007, the rice volume in stocks, which should have been delivered to clients before, had reached 750,000 tonnes.

Recently, after the Government of Indonesia agreed to buy more rice from Vietnam, Vinafood asked the Government to allow the Southern Food Corporation to directly contact Bulog, the state agency in charge of importing rice into Indonesia. The Vietnamese side has set a condition which has never been set before: the buyer has to arrange half of the ships needed to carry rice.

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