The Prime Minister has approved the purchase of one million tons of winter-spring rice from February 20 to May 20, for temporary stockpiling in the Mekong Delta.
Furthermore, the Government will cover 100 percent of interest rate on loans for businesses to buy rice for a three-month term, from February 20 to May 20.
|Farmers work hard to harvest a good crop (Photo: SGGP)|
With this move, farmers in the Mekong Delta hope that rice prices will stop fluctuating or go up.
Before and after Tet, farmers in the Mekong Delta harvested an early spring crop and are preparing to harvest the summer-autumn crop in March, and also hoping to sell the huge amount of paddy already stored in their houses.
At the moment, traders are buying paddy at VND4,200-4,400 per kg depending on variety, but the number of traders buying are small.
Meanwhile, rice farmers are eager to sell paddy to cover expenses needed after Tet.
“I hope the price of rice will increase after the state buys rice for temporary storage,” said farmer Dien Van Banh from Phuong Binh Commune in Phung Hiep District of Hau Giang Province.
Mekong Delta provinces harvested 150,000ha of the spring crop, which accounts for about 10 percent of the rice area in the region.
Paddy output from this crop is expected to be about 10 million tons, of which 6-7 million tons will be sold out.
The Government will buy one million tons of rice for temporary storage, equivalent to two million tons of paddy, or about 30 percent of the total amount of paddy needed for sale in the region.
The Government has asked the Vietnam Food Association to instruct food enterprises to purchase rice at market price.
The Ministry of Finance and State Bank of Vietnam will provide capital for the purchase.
The Ministry of Agriculture and Rural Development will cooperate with Vietnam Food Association, the Ministry of Industry and Trade, and provincial and municipal People’s Committees in the Mekong Delta to develop mechanisms for inspection and management of the rice sale for temporary stockpiling.
The Ministry of Agriculture and Rural Development is planning to build a national rice reserve of 100,000 tons to stabilize distribution and meet demand when market price fluctuates, for which a plan will be submitted to the Government.
Additional efforts to stabilize the rice market include government approval of the Finance Ministry’s proposal to a plan on imposing absolute tax on rice and urea fertilizer exports from June 2008.
The Ministry of Industry and Trade said that rice prices are unlikely to fluctuate from now until the end of the year because Vietnamese farmers are expecting bumper crops this year.
However, distribution can cause a price rise, which necessitates an urgent adjustment of distribution activities, said the Ministry.
The recent shortage of rice shows that enterprises are focused mainly on exports; in addition, the current tax policies have failed to encourage enterprises to participate in the domestic market.
In the first five months of the year, the country exported more than 2.1 million tons of rice out of 2.4 million tons under signed contracts.