Vietnam Urges Rice Exporters to Buy, Ship Stockpiles

By Van Nguyen and Rattaphol Onsanit

Nov. 7 (Bloomberg) -- Vietnam, the world's second-biggest rice exporter, is calling on companies to buy up stockpiles from farmers for shipment overseas before the harvest this month, according to a statement on the government's Web site.

State-run Vietnam Southern Food Corp. and Vietnam Northern Food Corp. will have to buy 300,000 metric tons that meet export standards, said the statement, citing Deputy Prime Minister Hoang Trung Hai. The ministries of trade and foreign affairs together with the Vietnam Food Association will seek overseas customers.

The Southeast Asian nation is facing a rice glut after restricting exports earlier this year amid concerns there may be a shortage. Increased exports may further depress global rice prices, which have slumped about 40 percent in Chicago since reaching a record in April.

``Vietnam's rice production has been rising, and its government is encouraging traders to get this supply out,'' said Visut Tanprasatprinya, vice president of Bangkok-based Siam Rice Trading (Thailand) Ltd., which ships around 200,000 tons a year. ``That's why we see prices tanking.''

The price of Thailand's 100 percent grade B white rice, a benchmark for the commodity across Asia, was set at $595 a metric ton this week by the Thai Rice Exporters Association. That's the lowest price since March.

Higher rice shipments may help Vietnam to sustain economic growth after the government pared back targets for expansion this year because of surging inflation, a widening trade deficit and the global financial crisis.

Debt Payments

Deputy Prime Minister Hai asked Vietnam's commercial banks to extend companies' overdue debt payments and grant more loans at the ``lowest possible lending rate,'' allowing them to purchase more rice, said the statement, which was issued yesterday.

Exporters borrowed more than 18.8 trillion dong ($1.1 billion) in the first nine months to buy 3.2 million tons of rice, the central bank reported, according to the statement.

The total amount of rice available for export this year may be 5.3 millions tons, instead of an August projection of 4.6 million tons, the Lao Dong newspaper reported on Nov. 1., citing the Ministry of Agriculture and Rural Development. Between January and October, the country shipped about 4 million tons, the Vietnam Food Association reported on Nov. 3.

The country will focus next year on cultivating high-quality strains with total production forecast at about 38 million tons of unmilled rice, yesterday's statement said. The Mekong Delta may harvest 20.3 million tons, or 53 percent, it said.

To contact the reporters on this story: Van Nguyen in Ho Chi Minh City at vnguyen23@bloomberg.net; Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net