Hanoi, Oct 28 - Vietnam plans to ease rice export rules including waiving a floor price until early next year and to provide more soft loans for exporters to buy paddy to deal with slowing foreign demand, falling prices and mounting stocks.
Industry and Trade Minister Vu Huy Hoang has sought government approval to waive the floor until February 2009 when the country's largest crop harvest starts and exporters should be freely sell their grain, a state-run newspaper reported.
Vietnam, which vies with India as the world's second-biggest rice exporter, imposed an export price floor earlier this year in order to prevent a retreat in global prices from hurting farmers who rushed to expand crops this spring, but has gradually trimmed that floor as Thai prices nearly halve from their peaks.
Last week its floor for 5 percent broken rice was $650 a tonne, free-on-board basis, while traders and exporters said the grain could only be traded at a maximum $480 a tonne. Freely traded Thai rice fell to a seven-month low of $630 last week.
The Ho Chi Minh City People's Committee-run Liberation Saigon daily quoted Industry and Trade Ministry's reports as showing Vietnam would ship 650,000 tonnes in the last two months of 2008 to fulfil the annual rice export target of 4.6 million tonnes.
"Meanwhile the global markets in late 2008 and early 2009 continue to face pressure from excessive supply and the financial crisis widening, along with a sharp drop of agro-products, so export contract signing would be tough," the report said.
The newspaper said farmers have produced much of the 25 percent broken rice from their summer-autumn crop harvest, their second largest crop of the year, but quality was bad, making it difficult to sell at home and abroad.
Earlier this month the Industry and Trade Ministry had asked the Finance Ministry to waive the rice export tax as a measure to boost slowing exports.
Vietnam's rice shipment between January and October dropped nearly 7 percent from the same period last year to 4.09 million tonnes, the government has said.
Banks should provide lower interest rates on loans to exporters to help them buy all the mounting stocks from farmers, the daily cited Hoang's proposal to the government as saying.
They should also be allowed to ship their grain without having to register their contracts, it said.
So far exporters are required to submit their contracts to the Ho Chi Minh City-based Vietnam Food Association to secure clearance for loading. The association said it wants to check the export prices to ensure Vietnamese rice is sold at good prices.
Traders said the export floor price in place was not feasible because the association set it without considering actual supply and demand on the market.
Vietnam exported 4.5 million tonnes of rice last year and is forecas to ship 4.6 million tonnes this year.