Tien Giang, Vietnam - Looking out over the rice paddies from
the porch of her wooden house in the Mekong Delta, 56-year-old Huynh
Thi Be said she was lucky.
She sold her spring rice crop in June, as soon as she harvested
it. The two-ton crop brought her 5.1 million Vietnamese dong, or
somewhat over 300 dollars.
'There are people in this area who still haven't sold all their
rice,' Be said. 'They kept waiting for the price to rise, but instead
it went down.'
In a year when Vietnam's farmers expected to reap a bonanza from
skyrocketing world rice prices, they are instead suffering. The
reasons are complex, but the government, rice-exporting companies,
and farmers themselves have all played a role.
The problems began early in 2008, when rising food consumption in
increasingly wealthy countries like China led international agencies
to predict global shortages of rice. Vietnam, the world's number two
rice exporter, decreed a halt to new export contracts in March to
ensure its own food security.
That caused a scramble among rice-importing countries like the
Philippines to buy up available rice stocks, driving prices up 80 per
cent to 1,100 dollars a ton. Rumors of domestic shortages in Vietnam
led to panic buying at the end of April, with local prices leaping
100 to 200 per cent in a single weekend.
Meanwhile, Vietnam produced a bumper spring crop, and in May Prime
Minister Nguyen Tan Dung ordered food-exporting companies to resume
signing new contracts. International rice prices have since fallen to
about 600 dollars per ton, while Vietnamese farmers increased their
planting for the autumn crop to take advantage of expected high
prices.
But over the summer, many farmers found themselves unable to sell
their rice.
Farmers blamed rice distributors and exporters, who they said were
delaying purchases in order to force farmers to sell cheaply. Some
distributors blamed farmers, who they said were holding back in the
hope of higher prices later.
Others blamed Vietnam's broader economic troubles this summer:
inflation running at 27 per cent, driving up interest on the loans
distributors would normally take out to buy up the rice crop.
'With Vietnam's high rate of inflation, banks' interest rates are
at 20 per cent,' agricultural economist Tran Tien Khai of the
Fulbright Economic Training Program explained in early August. 'So
exporters will only buy rice if they have contracts and can export it
within one to two months.'
On August 7, in response to farmers' complaints, Prime Minister
Dung ordered the country's rice wholesalers to buy up the rest of the
crop and find customers to export it to, while ordering state-owned
banks to provide loans at favorable terms. Dung mandated that rice
distributors pay farmers enough to guarantee them profits of 40 per
cent.
Yet farmers say prices have fallen still further since the prime
minister's order. Huynh Thi Be sold her crop in June at 106,000
Vietnamese dong per 20 kilograms, about 6.40 dollars, but the price
today stands near 93,000 dong, or roughly 5.60 dollars.
'At these prices, I don't think I'll make any profit at all on the
autumn crop,' said Huynh.
'The government order is very vague, so it doesn't have any
effect,' said My Nhung, an independent mid-level rice merchant whose
warehouse lies a few kilometers from Huynh's farm. 'They don't set a
price, they just say 40-per-cent profit, but who decides what 40 per
cent is?'
Nhung's warehouse is one of half a dozen occupying a strip of land
between Route 1A and a canal leading to the Song Tien River. Trucks
back up against the front of her shop, while out back brightly
painted barges crowd towards her dock, unloading bag after bag of
rice.
Her warehouse is stacked to the roof with more than 100 tons of
rice. But the farmers she buys from are facing tight margins.
Huynh Huu Nguyen, one of the barge owners who sells to Nhung, said
the government's attempts to help farmers had only a brief effect,
raising rice prices a few hundred dong per kilo in mid-August.
'The price rose for only three or four days, and then it began to
fall again, probably because the supply exceeds the demand,' Nguyen
said.
Le Truong Son, director of Vinh Long Food, a large distributor in
a province neighbouring Tien Giang, said farmers were deliberately
withholding rice to take advantage of the government's order to
increase rice purchases.
'Many farmers slowed their rice sales after they found out about
the government's efforts to encourage rice-trading firms to buy more
rice,' Son said. 'The farmers want higher prices.'
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