Within the beginning six months, the paddy and domestic price in Vietnam has been sharply increased only from late of April till the first week of July. The highest price of paddy recorded during the week from late of May to early week of June, and stands high till the first week of July 2008, about 6500 VND/kg.

It’s paradox that, since 1 July 2008, the time when Vietnam’s Government allow to recycle sign new rice export contract, the domestic paddy price was falling, which only less than 6000 VND/kg, and even decreased quickly and deeply from middle July till 15 August 2008.

In the fact that the domestic rice price down, on 21 July, Vietnam’s Government issued the decision to implement rice export tariff. At once side, at that time, rice supply was plentiful at harvested time, and farmers have no storage to stock. In another side, the enterprises pay many efforts to cut down the purchasing material rice to avoid loss because of the tax affected.  As the result, the farmers have no choice than sell paddy at low price. Since the late week of July, the domestic paddy price continue to fall lower, and until middle August, the paddy price in MRD equals only the paddy price level recorded in late February, early March, 2008, about 4400 VND/kg

In the context of down domestic prices, on 15 August, Vietnam’s Government Issue amendment of rice export tariff. According to that, the starting level of rice export rice has been raised to 800 USD/ton, in stead of the starting level of 600 USD/ton as previous regulation. Besides, the Government assigns the banks to give the rice enterprises the prioritized interest rate to encourage them to buy in all harvested summer-autumn paddy harvested. Despite of the new amendment of the rice export tariff, in the domestic market, the paddy prices not tend to increases, but don’t decrease further.

Ordinary paddy price in Can Tho province, Mekong River Delta, Vietnam (Jan-August/2008),VND/kg
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Vietnam’s rice export sector: What is the real gain or loss?

As usual, Vietnam’s Food Association has negotiated and signed rice export contract very early in the year. In Jan-March, Vietnam has signed contracts with total volume of 2.4 millions ton (more than 60% as export plan of the year 4-4.5 millions ton), with delivery time until June. The signed export total volume was equal compared to the same previous years. In the first two months of the year, the severe cools has damaged winter-spring seeding paddy in the Northern provinces.

Since 2 April, Vietnam’s Food Associations assigns the rice enterprises stop signing new rice export contracts. So from March to June, Vietnam’s enterprises only carry on delivery for the signed contracts.
Within March, April, Vietnam’s rice export prices were in lower compared to world rice export price about 30-40%. However, since May, Vietnam’s rice export prices recovered, equal 84% compared to world price, and absolutely grow in June. The statistic rice export of Vietnam’s General Statistic Bureau shows that in June, Vietnam export 210,000 tons rice, the export value reach 211.1 million USD, the average rice export prices reach 1,004 USD/ton. At this level, Vietnam’s rice export price even higher than world price recorded in June, but the export volume is small, due to the fact that most of signed contract have been fulfilled and delivered from Feb-April.
Since re-starting export since 1 July, Vietnam’s rice export price firmly stand at the price of about 971 USD/ton. However, in August, the Vietnam’s rice export prices down sharply, monthly average price are 564 USD/ton (5% broken), 523 USD/ton (25%)

Table 1: Vietnam’s rice export, quantity and value, monthly, 2008

Source: (1)-(2) Vietnam’s General Statistic, (3) = (2)/ (1), (4) IRRI, (5) = (3)/ (4)