Rice prices increase in the local market  after the Government's decision to buy and stockpile 1 million tonnes of rice. — Photo Cafef.vn

HA NOI (Biz Hub) — Rice prices in the domestic market have increased after the Government's last week decision to buy and stockpile 1 million tonnes of rice.

Paddy prices rose by VND400 to 500 per kilo to VND4,200 to 4,300, while rice prices are currently pegged at VND6,300 to 6,400 per kilo, up VND200 to 300.

Local grain prices have also been seen a fillip following the news that the Viet Nam Southern Food Corporation (Vinafood 2) has just won a contract for supplying 300,000 tonnes of 15 to 25 per cent broken rice to the Philippines.

Vinafood 2 beat strong rivals from Thailand to win the contract. The corporation had last year also won a bid to export 500,000 tonnes of rice to the country and has sought to further broaden its market to the United States, Europe and other regional countries this year for realising a year-on-year export growth of up to 12 per cent.

Under the Government's decision, the grain purchase and stockpile will be carried out from March 1 to April 15 for the winter-spring paddy crop for February and March, in the country's rice granary of the Cuu Long (Mekong) Delta region.

According to the Agriculture and Rural Development Ministry, the yield for the winter-spring paddy crop in the Cuu Long (Mekong) Delta region is roughly 8 to 9 million tonnes.

Viet Nam is expected to export 1.4 million tonnes of the grain during the first four months of this year, with the figure for the whole year expected to be 7 to 7.5 million tonnes.

Rice is mainly exported to China and Southeast Asian countries.

Vinafood 2 anticipates that local rice exporters might face many more difficulties this year. Rice demand in the Philippines, Indonesia and Malaysia is forecast to escalate, but Viet Nam will have to compete with Thailand, which also wants to reduce its considerable rice stockpiles.

As the same time Vinafood 2 has also asked the government to extend loans to rice traders at preferential interest rates, citing that many traders are facing a shortage of capital.

About 80 per cent of the total 144 rice traders currently have a restricted financial status, Vinafood 2 said.

In order to boost rice shipments this year, the industry and trade ministry has suggested that rice exporters should diversify their markets and try to make full use of the opportunities stemming from bilateral and multilateral trade agreements, and follow them with updates for their export markets. — VNS