Sunday, 17 Dec 2017

Who influences the rice market?

Updated at Tuesday, 16 Dec 2014, 12:03
The Hanoitimes - VietNamNet introduces the third part of the roundtable discussion on “A quarter century of Vietnam’s rice exports”, with the participation of Prof. Dr. Vo Tong Xuan, Dr. Vu Trong Khai, and Mr. Nguyen Minh Nhi.

There is the fact that rice exporters and farmers are most afraid of an unexpected suspension of rice exports for "food security" reasons. In 2008 when the demand for rice in the world market was high and the rice price was rising to benefit farmers, there was suddenly a ban of rice export issued to ensure "food security". The rice prices in the domestic market increased by 2- 3 times. In HCM City, supermarkets only allowed each customer to buy 50kg at a time and they had to show their ID cards.

Reporter: Then officials sternly "learned from experience" from this case. But the question is whether the rice market has been swayed by an interest group for a long time?

Dr. Vu Trong Khai: At that time I strongly opposed the suspension of rice exports for two reasons. Firstly, the rice crop is only three months, so Vietnam only needed to keep a rice reserve for three months. The suspension caused heavy damages for farmers.

Thailand immediately took advantage of the situation to raise the rice price to a record of $1,200 per ton. Then, domestic prices were also pushed up by threefold. People queued in very long lines in front of rice stores and supermarkets to buy rice.

The unexpected suspension of rice exports has happened quite often in Vietnam. State-owned firms that hold a monopoly in rice export can do something to stop rice exports at harvest time in order to press the price. They did any trick from selling rice exporting quotas in the past to swaying the policies to seek profits for themselves.

Mr. Nguyen Minh Nhi: Those tricks are not strange to me. These firms are not good at competing in the world but good at infringing upon farmers to buy their rice at low prices.

Until now, the 25th year since Vietnam resumed exporting rice, private firms are still "crying" that they cannot compete equally with state-owned rice exporters, as advocated by the Party and the State’s policies.

Dr. Vu Trong Khai: Private companies have never been able to compete equally with State-owned firms in rice export. Initially, private firms were requested to have huge capital to be allowed to export rice. Other barriers have appeared since then to maintain monopoly for state-owned corporations.

There are rules "making it difficult" for private rice exporters such as they must have factories, warehouses and sources of supply. Meanwhile, state-owned corporations receive capital from the state budget to build factories and warehouses. Why can’t private firms hire warehouses or association with the firms that have warehouses? Such rigid regulations have prevented private companies from exporting rice. The monopoly is still very strong now.

Even state policies for the annual temporary storage of rice are also inflexible. In fact, the goal of the state is not achieved, and the farmers do not enjoy anything. State-owned corporations have never bought rice at harvest time. They only wait until prices fall to the bottom to buy.

rice export, vietnamese rice, rice farmers, mekong delta 


ReporterWe would like to ask Dr. Khai said about the concept of "food security". Based on world criteria, has Vietnam ensured food security yet?

Dr. Vu Trong Khai: According to the Food and Agriculture Organization (FAO), food security "exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life".  

Vietnam just balances on a national level by multiplying the per capita food output with the population to have the total demand. Even though Vietnam is a big rice exporting country, there are still hungry people who do not have money to buy rice in Vietnam. Therefore, Vietnam does not really have "food security".

There are many countries importing food but they always ensure food security as the UK and Malaysia. The people of England even have one of the highest standards of living in the world.

There are two issues here. The first is that food prices should be reasonable and the second is the income of the people must be enough to buy food every day. Vietnam fails to meet these two conditions.

Prof. Dr. Vo Tong Xuan: The term "food security" has been corrupted by interest groups.

For example, to ensure "food security," hundreds of million of US dollars were used to turn alum water into freshwater in Ca Mau peninsula but the results were very bad. The rice output did not increase while the aquatic resources were harmed.

I have repeatedly recommended that with the current great food output, we do not have to worry about loss of food security. Rice is harvested after only three months so let farmers and businesses export rice.

Prof. Dr. Vo Tong Xuan: Food security policy has been used in corrupt ways by some interest groups. The policy was used to prevent the initiatives of diversifying agricultural produce because the state did not invest in these crops. But if we keep growing rice and the rice output keeps rising, the rice prices will fall dramatically.

Reporter: This year the state allowed farmers to plant crops that yield higher profit than rice. However, farmers are confused because they do not know who will buy their products. What should we do?

Mr. Nguyen Minh Nhi: Vietnam’s "food security" is calculated the same way as GDP per capita. A wealthy family uses 1kg of rice per meal while a poor one eats 1kg of vegetable, not rice. But we combine the volume and divide in two to have each family with 1/2kg of rice and 1/2kg of vegetable and these figures look okay.

There is one factor that I find impossible to ignore - the Chinese market. We need to organize and map out a specific plan for this market to protect our farmers and businesses.

This is a huge market and if they want to buy a kind of agricultural product, they can push the prices up but if they stop purchasing, our farmers could only throw away their product. This way of business has placed our farmers in a passive status.

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