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December 22, 2007

VIETNAM/TRADE
Rice exports expected to reach 4.5mn tonnes in 2008

Rice exports of around 4.5 million tonnes at high prices are predicted for 2008, said Truong Thanh Phong, chairman of the Vietnam Food Association.

The association confirmed the price of export rice will continue to increase in 2008 after increasing by about US$41 per tonne this year. An analysis conducted by the association shows that in 2008 food supply on the international market will not meet demand. Many countries all over the world have a high demand for rice, so the association feels confident over securing high export prices.

The price of exported rice next year may stand at more than US$320 per tonne, said Phong. Experts said the most important factor in exporting rice next year was guidance in production. Along with ensuring the exports, experts said, enterprises must care about prices when buying rice from local farmers so that they will not affect the price on the domestic market.

However, despite the rosy outlook for exports, rising petrol prices will affect profits made from rice. High petrol prices will increase the price of fertiliser and other production cost.

The association says that therefore, the price of rice from farmers will be about VND3.6 million (US$225) per tonne.

The association based its price suggestion on experiences during 2007, when Vietnam exported 4.53 million tonnes of rice, earning an export turnover of US$1.4 billion. The turnover had increased by 15 per cent over 2006.

In 2007, rice exports did in fact meet many difficulties. One of them was reduced supply from farmers. Transport costs were another challenge. In 2007, transport costs increased by between 60-70 per cent.

"We must accept the high transport cost", Phong said. However, he added, of more concern was the result that enterprises could not hire transport to carry their rice as effectively as before, so exports were slowed down.

In 2007, the income of farmers increased because they sold rice at a price of around VND3.6 million per tonne, up VND800,000 compared with the predicted price set from the beginning of the year.

Courtesy VNA

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