Rice Price to Remain High in 2005

Rice Price to Remain High in 2005

In 2004 and early 2005, the world price of rice has remained at high levels. Although the rice output increased in 2004 especially in Asia, the world reserve dropped to 99 million tonnes by the year’s end. Many rice exporters faced drought and Vietnamese rice became more competitive.

Vietnam expects US$1 billion in rice export for 2005, against US$941 million last year. In 2004, Vietnam exported 4.2 million tonnes, the highest since 1999, surpassing the US (3 million tonnes) and India (2.8 million tonnes). In spite of an increase of 12 per cent since last October, the price of Vietnamese rice is still lower than the same kind of rice from Thailand by US$40-45.

According to some market analysts, the higher price of Vietnamese rice is caused by the world price hike. The rice output in 2004 was 35.7 million tonnes; 1.2 million tonnes more than 2003, with 27.6-28.1 million for domestic consumption, the export volume is 3.9-4 million tonnes. However, rapid export has increased the price at home. With a sharp increase of rice prices in China, Vietnamese rice exporters have expanded their purchase and cause a price hike in Vietnam. However, as the intervention of the government of Thailand increased the price of Thai rice, importers from the Philippines, Iraq and Africa again turned to Vietnam.

According to the American Department of Agriculture (USDA), the world rice output will increase 2.5 per cent in 2004-2005 crop (2.7 per cent in the last crop): 12 per cent in China and USA, 10 per cent in Japan while decreasing 2-8.2 per cent in India, Brazil and Bangladesh.

The world wholesales will be down to 25.1 million in 2005 (117,000 tonnes less than 2004). The export volume may be less as a result of the drought. Thailand is expected at 2-3 million tonnes.  China may not export rice in 2005. As the Indian government has ceased its subsidy for rice export due to sharp drop in the rice reserve, rice export can be reduced by 1.6 million tonnes.

The reserve by the end of the crop could be at 16.1 million tonnes, most of them are in China, Thailand and Vietnam. It would stabilise the world price for the 2004-2005 crop.

Rice production costs in 2005 will be around VND1,350-1,400 per kg in the Red River Delta and VND1,050-1,250 in the Mekong Delta. Therefore profit will be 60 and 95 per cent respectively.

• P.V