[hepr-vn] Rice farmers fall deeper into debt

[Vern Weitzel]

http://vietnamnews.vnagency.com.vn/showarticle.php?num=04BUS010808

Rice farmers fall deeper into debt

(01-08-2008)


Farmers collect rice at Co Do Plantation in the southern City of Can Tho. 
Falling prices and large quantities of unsold rice pose challenges to farmers in 
the Mekong Delta who took out bank loans at high lending rates to invest in 
crops, fertilisers and pesticides on instalment. — VNA/VNS Photo Thanh Vu
HCM CITY — With rice prices falling, 8 million tonnes of the summer-autumn rice 
crop in the Cuu Long (Mekong) Delta have not been sold, leaving many farmers in 
financial difficulty.

Truong Thanh Phong, chairman of the Viet Nam Food Association (VFA), said that 
the price of rice on the international market fell to US$600-700 per tonne this 
month.

This compares with $1,100-1,200 per tonne in April and May.

In the domestic market, the price has also fallen. One kilo of rice now sells 
for VND4,200-4,300 compared to VND5,500-6,000 in April and May.

Because of higher prices on fertilisers, pesticides and fuel, farmers can only 
make a profit if rice sells for at least VND5,000 per kilo.

In the Cuu Long Delta provinces, the country’s rice basket, large piles of rice 
can be seen lining canals and streets waiting for buyers.

Loans taken out

Many farmers have taken out loans to invest in their crops and have bought 
fertilisers and pesticides on instalment at a high interest rate, Phong said.

Bui Thi Hanh, a farmer in Tien Giang Province, said that she had not been able 
to sell any of her rice and cannot pay her debts.

Le Van Tam, a farmer in Dong Thap Province, faces the same situation and has no 
money to buy school supplies for his children.

Although the Government has permitted rice exports, Phong said exporters were 
holding back purchases for two reasons: fears that the price could fall further 
and high interest rates on bank loans.

Le Viet Hai, director of Mekong Can Tho Company, said his company as well as 
other exporters would seek contracts to buy rice when the price on the global 
market goes up again.

Tax disincentive

Pham Van Bay, director of An Giang Agriculture Products and Food Import-Export 
Company, said the 10 per cent tax on rice exports had also discouraged rice 
exporters. According to Phong, VFA plans to hold a meeting to discuss measures 
on how to resuscitate the rice market. — VNS