VietNamNet Bridge – Experts have expressed doubts about Southern Food Corporation’s (Vinafood 2) plan to “restructure rice production and export”.

Vinafood 2, the major Vietnamese rice exporter, has announced it will “make a breakthrough” in rice exports by buying unhusked rice from farmers to process rice for export instead of buying rice for export, as it did in the past.

Huynh The Nang, general director of Vinafood 2, said this is a part of the corporation’s plan to develop its large-scale paddy field model, which would help it secure enough rice stocks for export. Meanwhile, this would allow farmers to sell rice at good prices.

It is expected that the large-scale fields would account for 20 percent of the rice growing area in the Mekong River Delta by 2020.

Vinafood 2 has completed working sessions with its subsidiaries and commercial banks on the cooperation in implementing the restricting process.

The rice exporter has signed cooperation contracts with four banks, namely MHB, LienViet Post Bank, VietBank and HD Bank, under which the banks would provide loans to rice merchants, cooperatives, rice suppliers and Vinafood 2’s subsidiaries.

Nguyen Van Nam, a renowned trade expert, noted that for many years, Vinafood 2 has been acting as the “rice exporters’ foreman”, not buying rice directly from farmers, but from merchants and via intermediaries.

Nam said he still could not imagine how Vinafood 2 can do this.

“Farmers sell fresh paddy right at the fields. If Vinafood 2 wants to buy paddy from farmers, it will have to develop a collection network nationwide,” he noted.

Commenting about Vinafood 2, the expert said this was the best choice for Vinafood 2 for now.

In the past, Vinafood 2 was the only authorized exporter. But things are different now: many other companies also have the right to export rice if they can satisfy the requirements set by the government.

“As Vinafood 2 is losing its monopoly, it will have to buy paddy from farmers to process finished rice products for export, or it will have nothing to do,” he said.

Analysts warned that it would be very costly and complicated for Vinafood 2 to reorganize its business chain, i.e., it would carry out all phases of the production, processing and export.

An analyst noted that it would be better for Vinafood 2 to sign rice-supply contracts with local enterprises. If so, it would be able to create a rice production and business chain which would allow it to save costs and work effectively.

Kim Chi