Vietnam to Remove Minimum Export Price for Rice.

Vietnam government is considering the removal of minimum export price (MEP) for rice allowing exporters, both state-owned and private, to set their own prices instead of sticking to the floor prices set by the Vietnam Food Association (VFA), according to local sources. Currently, the MEP for 5% broken rice stands at $410 per ton, MEP for 25% broken rice stands at $375 per ton, and that for 35% broken rice stands at $365 per ton.
 
The government has instructed the Ministry of Industry and Trade (MOIT) and the Ministry of Agriculture and Rural Development (MARD) to report over the possible impact on such a decision on Vietnam's rice exports as well as work on diversifying Vietnam's export markets and set reasonable export targets. Local sources say the government is considering this move to provide more flexibility in pricing to the exporters. Analysts say the move would end VFA monopoly in Vietnam’s rice export market.
 
The VFA told local reporters that such a move would increase competition among the rice exporting countries such as India, Thailand and Pakistan putting further downward pressure on rice export prices. It added that local private exporters would face difficulty in sustaining the competition.   
 
Internally, the VFA and the two state-owned export organizations VINAFOOD I and VINAFOOD II are being criticized for quoting too low bids in the Philippines tender, effectively positioning Vietnam rice as 'cheap' in the international market. Many exporters say foreign buyers are negotiating prices based on those quotes. Both farmers and local exporters are facing huge losses, they add.
 
Meanwhile, Vietnam's former Prime Minister, Nguyen Cong Tan, criticized the role of the Vietnam Food Association (VFA) in managing exports saying the VFA has too many rights in formulating export policies and is protective of the two state-owned export organizations, which are authorized to collect rice from local enterprises and export it. He noted that the VFA has not been concerned of private exporters and farmers.
 
Vietnam exported about 2 million tons rice during January 1 - May 22, 2014, down about 26% from about 2.8 million tons exported during the same period in 2013, according to data from VFA. Average rice export price so far in this year stands at about $436 per ton (FOB), down about 1% from about $439 per ton recorded during January - May, 2013.
 
In the beginning of this month, the VFA has lowered 2014 rice export target to 6.2 million tons from the earlier target of 6.5 - 7 million tons due to increased competition from Thailand and India. USDA estimates Vietnam to export 6.5 million tons rice in 2014, down about 3% from about 6.7 million exported in 2013. It estimates Vietnam's rice exports to again increase to 6.7 million tons in 2015.

Source : oryza.com