A makeshift street shop on the border of Ho Chi Minh City’s districts 12 and Hoc Mon sells rice at low prices to low-income consumers.
Saturday, November 15, 2008Thanh Nien News (Hanoi)A fragrant error and some trader manipulation are costing Mekong Delta farmers dear.
It was easy to plant and had a high-yield, so expectations were high among farmers that the IR50404 variety of rice would fetch good deals with exporters.
The hopes have been dashed with exporters showing no interest in the variety, and what’s worse, domestic buyers aren’t keen to eat the rice as well.
Now, with huge stockpiles threatening to spoil by decay if they are not sold soon, low-income consumers in rural areas are being targeted in a big way, with farmers, dealers and traders scrambling to clear their stocks at much lower prices.
Many roadside stalls have emerged around Ho Chi Minh City’s outlying districts to sell husked rice to low-income consumers, at VND5,000-5,800 (US$0.29-0.34) a kilo, around VND3,000-7,000 ($0.18- 0.41) cheaper than the cheapest variety being sold in the city’s markets.
Five to seven trucks carry rice from the Mekong Delta every day to these temporary markets, according to the traders.
In District 8, street stalls are selling a 50 kg sack of husked rice at VND250,000-290,000 ($15-17). The sacks have no labels, and the grains are slim and milky, but traders assure buyers that the rice has not passed the expiry date.
On To Ky Street bordering districts 12 and Hoc Mon, around 15 trucks have parked on the roadside to sell rice, mostly from traders in Long An and Tien Giang provinces.
Nguyen Ngoc Nuong from Tien Giang Province says her family can sell around 10 tons a day while another trader says she can do five tons, adding that she can satisfy any order.
“I hire trucks to carry the rice from my hometown in Cai Be District every time the stalls get empty,” Nuong says. “We’re going to sell until there’s no buyer.”
Most of the rice being sold at these markets, open from 8 a.m. to 9 p.m., is of the IR50404 variety, according to Nuong and other traders.
Farmers from the country’s southern rice bowl have thousands of tons of IR50404 variety in stock from their fall-winter crop, harvested in late September.
The price for IR50404 has been cut recently to prevent it from rotting, say many rice traders in Tien Giang Province who have up to 100,000 tons of the rice in stock.
The variety produces rice of lower quality than fragrant rice, said farmer Nguyen Loi Duc from An Giang Province. “It’s used only by those in the rural regions, not those in the cities.”
Recent moves by Indonesia, Malaysia and the Philippines to develop their agriculture sectors for fear of a food crisis have contributed to the problem, according to agriculture professor Vo Tong Xuan, former rector of the An Giang University.
Duc says the unsold crop has added to more than 100 tons of the IR50404 variety left over from the summer-fall crop.
He had refused to sell the unhusked rice for VND4,800 ($0.28) a kilogram at harvest time. But the price didn’t increase for many months and Duc had to lower the price to VND4,500 ($0.27) for his 60 tons, the farmer recalls.
Now 40 tons remain but “all rice dealers have turned down my offer of VND3,000 (18 cents) a kilogram.”
The dealers, who buy unhusked rice from farmers and resell the husked rice to traders, have been turning to fragrant rice “to meet the demand of high-end customers,” says rice trader Tran Ngoc Trung of the Phuoc My Rice Company in Tien Giang Province.
Duc said he has been selling out his stock on credit to the poor locals to prepare for the winter-spring crop.
“Rice dealers are hunting for fragrant rice every day but I don’t have any,” he said.
The IR50404 husked rice is available in almost all stalls of Can Tho City’s markets at VND6,000 ($0.35) a kilogram or less while fragrant husked rice varieties in the same stall sell for at least VND12,000 ($0.71) a kilogram.
Around the Mekong Delta markets the IR50404 husked rice is even cheaper, at between VND4,000- 4,500 (24-27 cents) a kilogram.
The director of a HCMC-based rice exporter, who wishes to remain unnamed, says the market prices of husked rice have been set unreasonably by rice dealers and traders “beyond the market management’s control.”
He says dealers and traders have taken advantage of the rice export meltdown to “refuse to buy from farmers to press the prices further downward.
“Meanwhile they are pushing the prices of high quality rice up as they see the high domestic demand for the product,” says P., noting that the price of VND11,000 ($0.65) for a kilogram of fragrant husked rice already brings profit.
The change in demand has led to many Mekong Delta farmers considering turning all their fields over to fragrant rice for their winter-spring crop, planted in December and January, according to Ho Minh Khai, director of Co Do Agriculture Company, which owns thousands of hectares of rice field.
Khai says his company also planned to invest further in growing fragrant rice in a bid to attract more customers.
“If only farmers had planted more fragrant rice,” says Le Van Banh, director of Cuu Long (Mekong) Delta Rice Research Institute (CLRRI).
However, if all the farmers do it at the same time, it could be a disaster, Banh adds, noting that fragrant rice is low yielding, vulnerable and able to produce high quality rice only when grown in brackish water areas like Soc Trang Province.
