Vietnamese rice exporters told to honour contracts

Vietnamese rice exporters told to honour contracts

As prices surge, minister says trying to renegotiate deals will hurt country's reputation

A farmer walks through a rice paddy in Hanoi. (Photo: AFP)
A farmer walks through a rice paddy in Hanoi. (Photo: AFP)

HANOI: Vietnam’s trade minister has called on the country’s rice exporters to honour their export contracts to maintain demand despite a recent surge in prices for the staple grain.

Prices of 5% Vietnamese broken rice rose to a 15-year high of $590 to $600 per tonne on Friday, up from a range of $550 to $575 a week ago, traders said, after India on July 20 ordered a halt to its largest export category to keep domestic prices in check.

Two trade sources said earlier this week that some rice exporters in Thailand and Vietnam were renegotiating prices on sales contracts for around half a million tonnes for August shipment as India’s ban tightens global supplies.

“We need to stick to the signed contracts to protect our reputation,” Trade Minister Nguyen Hong Dien said at a conference, according to the newspaper Tien Phong.

Dien called on exporters to focus on ensuring rice quality and avoiding an excess of exports to maintain sufficient domestic supplies and fully meet reserve requirements.

“It’s unacceptable for a rice exporting country to face tight supplies and high domestic prices,” he said.

Vietnam’s rice paddy output is expected to rise to 43 million tonnes this year from 42.7 million last year, the Department of Crop Production said on Tuesday.

Rice shipments from Vietnam, the world’s third-largest exporter after India and Thailand, are expected to reach 7.8 million tonnes this year, up from 7.1 million last year.

Exports in the first seven months of this year were estimated to have risen about 18.7% from a year earlier to 4.84 million tonnes, according to preliminary government data.

In a related development, rice price index of the UN Food and Agriculture Organization (FAO) rose 2.8% in July from a month earlier to a 12-year high as prices in key exporting countries jumped on strong demand and India’s move to curb exports.

The FAO said its All Rice Price Index, which tracks prices in key exporting countries, averaged 129.7 points in July against 126.2 for the previous month.

The July figure was almost 20% higher than the 108.4 points seen a year ago, and the highest since September 2011, it said.

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