The Ministry of Industry and Trade (MoIT) has proposed two groups of urgent solutions to remove difficulties for rice consumption, including urgent research and opening a "green channel" for water transport and facilitate accessing capital for rice purchase.

Illustration. Source: Internet

The risk of losing export markets

According to the Ministry of Agriculture and Rural Development, as of August 12, the summer-autumn rice crop in the Mekong Delta region has harvested 780,000 hectares with a yield of about 5.8 tonnes/ha and an output of about 4,524 million ton. Harvest is expected to come into season in August and finish around mid-September.

Directive 16 in 19 southern provinces/cities has led to congestion in the circulation of rice and goods from the field to the factory and from the factory to export ports.

The MoIT stated that there was a serious shortage of seasonal labour workers in the field, including people buying rice, harvesting rice and people carrying rice to boats. Rice-carrying boats cannot move from one area to another, especially between localities.

The summer-autumn crop is harvested at a time of heavy rain, so the rice must be dried by a drying device. However, the transportation of rice from fields to factories was interrupted, leading to a glut of untreated fresh rice, harming its quality. Traders lacked raw materials to process finished rice, affecting the progress of their signed export contracts.

The market has a serious shortage of truck/container drivers, boat/barge drivers transporting rice and goods from processing plants to ports. Labourers working at export ports have also been greatly reduced.

A representative of the MoIT said rice inventories at traders’ who are members of the Vietnam Food Association (VFA) were still high even though it was time to replenish inventory regularly. However, due to the disruption of goods circulation and distribution, inventories have not been released, capital flows have also been congested and traders have been unable to purchase rice.

Most traders are afraid of signing new contracts due to congestion in traffic and delivery at seaports and the difference between the asking price and the actual freight at delivery is too large, putting both traders and customers at great risk.

“If this situation continues, it will definitely affect the industry turnover and the risk of losing export markets, especially traditional markets like the Philippines, China, and Malaysia to other competitors in the region such as Thailand and India,” said the representative of the MoIT.

Two groups of urgent solutions

To ensure timely rice consumption for farmers, the MoIT reported to the Prime Minister for consideration and to assign relevant ministries, branches, and localities to implement several solutions.

The first group of urgent solutions is to urgently research and open a "green channel" for water transport.

The MoIT proposed the Prime Minister assign the Ministry of Transport to work with the Ministry of Health, relevant ministries, sectors and localities to build and report on the "green channel" for water transport, ensuring the requirements of Covid-19 pandemic prevention and control but relieving the current congestion.

The People's Committees of the Mekong Delta region must urgently direct all levels to facilitate traders operating in the field of paddy and rice in particular and traders in general to travel and purchase rice directly in the field; discuss and reach agreement with the Ministry of Health and the Ministry of Transport to apply options flexibly.

Option one is to accept quick tests at the hamlet/commune, register information, travel schedule with the State management agency in the hamlet/commune, and the same apply to workers loading/unloading rice on boats.

Priority should be given to the "green channel" (quick test at the quarantine checkpoint on the river) for vehicles transporting fresh rice from fields to the satellite drying plant system in the nearest area to ensure the quality of stored paddy.

Option two is if case traders agree to provide rapid test kits for the posts on the river, when their boat/barge moves through, staff on duty will do the quick test and stamp the passport for the vehicle to move on.

For this option, local leaders need to give flexible instructions, like to only require a certificate of negative for Covid-19 (PCR) when the vehicle leaves the wharf/shore (first point), and during the river travel, it can use the certificate of quick test at checkpoints to pass to the next checkpoint as well as to dock/shore (end point) of the route.

Send staff to join a quick training course at the nearest health agency to carry out working needs.

The second group of urgent solutions proposed by the MoIT is to facilitate accessing capital to purchase paddy and rice.

The State Bank of Vietnam considers and directs commercial banks to support interest rates for businesses; facilitate them to get mortgage loans with products they will purchase as recommended by the MoIT.

In the first seven months of 2021, rice exports reached 3.492 million tonnes, worth US$1.888 billion, the average price was $540.68/ton; down 12.69% in quantity, down 3.10% in value, and the average price increased by $53.5/ton over the same period in 2020. VFA expected that in 2021, Vietnam would export about 6.0 - 6.2 million tonnes of rice of all kinds, worth about $3.325 billion.