Businesses denounce the culprits causing the drop in rice prices

Businesses and rice associations have complained about the congestion in the purchasing, circulation and transportation stages and denounced this as the main "culprits" causing the recent drop in rice prices.

Rice price drop, along with the development of Covid-19, made Mekong Delta farmers very anxious about the production plan of the autumn-winter crop. Photo: LHV.

Facing the recent drop in rice prices, on August 7th, the Ministry of Agriculture and Rural Development, the Ministry of Industry and Trade, the State Bank of Vietnam, the Vietnam Food Association and enterprises in the rice industry along with other key rice-production provinces in the Mekong Delta has held an online conference to determine the causes and solutions.

Stuck in all directions

From the reports of Mekong Delta provinces, over the past time, prices have decreased by about VND 700/kg for normal rice, VND 400-500/kg for high-quality rice and VND 200/kg for fragrant rice. However, in the previous week, rice prices in the Mekong Delta have slightly gone up.

According to Deputy Minister of Agriculture and Rural Development Tran Thanh Nam, through grasping the situation in localities, the decrease in rice prices over the past time is mainly because businesses and traders’ rice purchasing activities are facing difficulties and obstacles due to localities applying traffic control and transportation control in response to the Covid-19 epidemic.

The MARD as well as many businesses purchasing and exporting rice claimed that at the moment international customers still have high needs to import Vietnamese rice, but businesses cannot make the deliveries. The current price of rice and other agricultural products has dropped deeply, not because of supply and demand but because of serious disruptions in the supply chain.

“At present, farmers in Mekong Delta feel very confused about deciding whether to make production plans or not, or how they will produce in the 2021 autumn-winter crop, and soon, the 2021-2022 winter-spring crop. Meanwhile, the prices of many rice production inputs, especially fertilizers, have increased sharply, some of which have increased by 78% over the beginning of 2021. This is what farmers are extremely concerned about", said Deputy Minister of Agriculture and Rural Development Tran Thanh Nam.

According to Mr. Nam, another difficulty is that the number of workers at factories and rice processing enterprises is only 30-40%, making enterprises' implementation of "3 on-site" become very difficult…

The circulation phase must be urgently resolved

As stated by Mr. Tran Anh Thu, Vice Chairman of the People's Committee of Hau Giang province, at present, farmers harvesting rice still faces certain obstacles because they have to perform a quick test of Covid-19 when going to the field. Traders making purchases in provinces with Covid-19, when leaving those provinces, are required to perform isolation.

The Mekong Delta provinces have implemented social distancing, so provinces in the region need to agree on the method, which is, means of transport (boat, train, car ...) will have QR transportation codes attached to them, vehicle drivers, as well as those work on the vehicles with Covid-19 negative quick test results, need to be allowed for normal traffic. In order to avoid the situation when execution in each locality is different, some localities even suggested that vehicle owners, workers and traders, when going to buy rice in an epidemic area, must be isolated, which is very hard for them.

Also, there must be a removal mechanism so that ships can purchase and deliver rice to relieve the current congestion in consumption and transportation.

The purchase for national reserves is unnecessary

According to Mr. Do Ha Nam, Vice Chairman of the Vietnam Food Association, upon grasping information, farmers, especially in the An Giang area, shared that with the current price of rice, they will no longer grow the autumn-winter crop. Businesses are now very worried about being closed, as several localities in Mekong Delta also have many rice factories completely closed, so the situation is really intense.

In addition, due to congestion in circulation and transportation, large enterprises can only maintain about 50% of the normal goods export capacity. The main reason is still the lack of labor to maintain operations. Transport activities this month are extremely difficult. Goods cannot be loaded onto ships for export. Meanwhile, freight rates are very high, especially to the African market.

“…Currently, the biggest bottleneck is in circulation and the inability to export goods, leading to inventory, businesses can't buy more rice. Therefore, it is not necessary to temporarily make purchases for national reserves, just resolve the circulation stage to sell and export rice, and businesses will increase their own rice purchases again to push up the price of rice", Mr. Do Ha Nam expressed his opinion.

Sharing the same view, Mr. Pham Thai Binh, General Director of Trung An High-tech Agriculture JSC shared: “The purchase for national reserves is unnecessary, and it will also be very complicated, because the price of rice has already gone up when purchases are lying in wait. Therefore, in parallel with resolving the circulation stage, if necessary, banks should lend more capital to businesses so that they can buy rice for their own reserves, taking rice as collateral".

In regard to the matter surrounding loans, Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, affirmed that the capital of commercial banks is abundant. If rice enterprises have demand, the State Bank fully agrees and commits to guarantee loans for enterprises to purchase rice for temporary storage under the mechanism allowing rice as collateral.

It is not possible to leave everything to the agriculture sector

The rice economic space in the Mekong Delta is not only in each specific locality, but is related and linked in the whole region, especially with the traders' system, transporting from one province to another. Therefore, it is not possible to leave everything to the agriculture sector. This matter also involves the police, the traffic, the medical sectors…

Currently, traders and businesses purchasing rice already have to pay extra costs due to disease prevention and testing, therefore, resolving the matter to ensure trade for purchasing, transporting, consuming and exporting requires relevant ministries and localities to join hands.

Businesses need to promote the spirit of actively supporting rice purchases for farmers instead of waiting for the price of rice to drop further before buying. This is also the social responsibility of enterprises as well as the opportunity for them to build brand image.

(Minister of Agriculture and Rural Agriculture Le Minh Hoan)