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Thailand's plan to sell stockpiled rice sparks concerns

May 13. 2016
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By Biz Hub
Asia News Network

HA NOI - Thailand's plan to accelerate sales of 11.4 million tonnes of rice in stockpiles within two months sparked concerns that it would hurt prices as well as Viet Nam's rice exports. However, some people were optimistic that the impact would not be
Thailand planned to sell the amount of rice in a government stockpile in May and June to generate US$2.8 billion, at an average price of US$245 per tonne, in what could be the biggest rice sale clearance ever of the world's second largest rice exporter after India.
According to Le Van Banh, director of the Department of Agro-Fisheries Processing and Salt Production, the biggest stockpiled rice sell-off from Thailand would certainly have an impact on the global rice market following the law on supply and demand, as well as on Viet Nam's rice market.
However, the impact on Viet Nam's rice exports would not be significant, at least in the short term, Banh said.
Banh also said that Thailand's plan to sell 11.4 million tonnes of rice within just two months was not feasible.
He said that Thailand exported on an average 400,000 tonnes to 500,000 tonnes of rice per month. "To sell 11.4 million tonnes in just two months sounds unrealistic," Banh said as quoted by vietnamplus.vn.
The Viet Nam Food Association said that the impact on rice exports would not be huge in the second and third quarters as most contracts had been signed in the last quarter of 2015, and there were estimated to be 1.4 million tonnes of rice remaining to be shipped abroad following existing signed contracts.
According to Banh, the stockpiled rice for this clearance would mainly be "sub-standard" quality that the government had purchased following the 2012-2013 rice mortgage programme and Thailand would target the not too demanding markets such as in Africa.
Since May 2014, Thailand has auctioned off 5.05 million tonnes of rice worth $1.5 billion. The Thai government had previously said it aimed to clear the stockpile by the end of 2017.
Meanwhile, major import markets of Vietnamese rice were China, the Philippines and Indonesia which had standards for rice quality and preferred newly-harvested Vietnamese rice, he said. "Rice exports from Viet Nam would not be significantly affected by Thailand's sell-off in the coming months," he said.
According to Ma Quang Trung, director of the plantation department under the Ministry of Agriculture and Rural Development, Viet Nam's rice exports in the first four months of this year reached 2.06 million tonnes, worth $916 million, rising by 11.8 per cent in volume and 13.8 per cent in value over the same period last year. Average rice export price was $438 per tonne, increasing by 0.32 per cent over the same period last year. China was the largest importer of Vietnamese rice, accounting for more than 30 per cent of the Viet Nam's total rice exports.
Last year, Viet Nam was the third largest rice exporter in the world with an export volume of 6.4 million tonnes.
Close watch
According to Banh, the Ministry of Agriculture and Rural Development has asked the Viet Nam Food Association, rice companies and farmers to closely track movements in the global rice market, especially from Thailand's clearance sale, for timely measures.
Nguyen Van Don, director of food trading company Viet Hung in southern Tien Giang Province, said the sale of Viet Nam's sub-standard rice would be affected the most by Thailand's move, as Thailand accelerated the stockpiled rice sale in the months coinciding with the rice harvest crop of Viet Nam
The Ministry of Industry and Trade said at the end of April, days after Thailand's announcement, that the global rice market was seeing unpredictable developments, which would influence Viet Nam's rice exports in 2016.
Besides export prices, which no longer was of Vietnamese rice competitiveness, quality and brand were also matter of concerns in exports.
The ministry said that it was important to hasten the restructuring of the agricultural sector and rice production towards building up a value chain, enhancing quality and developing a Vietnamese brand.
Quality would help Viet Nam to compete and maintain markets amid the flurry of low-priced rice, an expert said.
The industry and trade ministry also said that it would enhance trade promotion to take advantage of the new-generation free trade agreements to expand rice export markets.
In addition, the ministry proposed to Prime Minister Nguyen Xuan Phuc to provide preferential loans to rice traders for investments in warehouses and for buying rice from farmers in an effort to accelerate exports this year.
Building a national brand
Prime Minister Nguyen Xuan Phuc approved the agriculture ministry's proposal of a Vietnamese rice brand development and management master project from combining five separate projects.
These projects were previously raised in the Prime Minister Decision 706/QD-TTg about developing rice brand issued in May 2015.
The master project aimed to enhance the recognition of Vietnamese rice in the global market to boost competitiveness, improved rice added value and expand markets.
The project would focus on developing a national rice brand name, brands for major rice products of Cuu Long (Mekong) Delta, the country's biggest rice production area, rice brand protection, trade promotion and expanding exports.
Viet Nam aimed to become the world's leading rice brand by quality and food safety by 2030, under the approved project. – VNS

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