Loc Troi sets low prices to export to Indonesia, causing damage to the rice industry?

Loc Troi Group Joint Stock Company alone won 2 lots with a volume of 60,000 tons of rice. The winning price was USD 563 per ton, down to USD 16 compared to the initial offer price of USD 579 per ton.

The remaining unit, Thuan Minh Company, won the bid for 30,000 tons and was the unit with the lowest offering price among the bidding businesses, only USD 564.5 per ton. If you compare the winning price of rice with the domestic rice price announced by the Vietnam Food Association at USD 587 per ton, Loc Troi's winning price is USD 24 per ton lower, while Thuan Minh Company is USD 22.5 per ton.

If compared with the rice price announced by the Vietnam Food Association (VFA) of USD 587 per ton, the winning price of Loc Troi was USD 24 per ton lower, and Thuan Minh Company was USD 22.5 per ton lower.

Meanwhile, international businesses won the bid with the lowest price of USD 621.5 per ton - the initial offer price. The highest winning rice price was USD 629 per ton, only USD 4 per ton lower than the bid price. This winning price was USD 66 per ton, higher than the price of Loc Troi Company.

Mr. Nguyen Duy Thuan, general director of Loc Troi Group Joint Stock Company, admitted that this enterprise is under financial pressure because it has to advance capital to farmers from the beginning instead of letting farmers worry about input costs.

"We want the cost for farmers to be only 50% of the selling price. To reduce the chemicals for farmers, we must have costs and advance capital for them. Businesses guarantee this capital to help farmers. Because the bank Customers only trust businesses. Therefore, financial pressure is there," Mr. Thuan said.

However, according to Mr. Thuan, this enterprise has raw material areas and many rice mills throughout the Mekong Delta. Its ecosystem ranges from buying to producing rice, so it has a cost advantage. Therefore, Loc Troi sells rice at whatever price it does not affect farmers.

"We also buy rice from farmers at VND 100 - 200 per kg higher than the market price. In the last batch, the unit bought more than VND 3,000 billion of rice, but there was an incident, so it only lacked VND 500 billion. "The problem has now been resolved, helping farmers stabilize", Mr. Thuan added.

Dr. Vo Hung Dung, former director of the VCCI Mekong Delta branch, said that deciding on the bidding price is the right of the enterprise. If the winning bid price is too low but the domestic price is relatively high, the business will lose money and is the most worried business.

According to Mr. Dung, businesses bidding at low prices will not affect the Vietnamese rice industry unless the company holds a large market share to have an impact, but only in that season and that period.

However, Mr. Pham Thai Binh, Chairman of the Board of Directors of Trung An High-Tech Agriculture Joint Stock Company (Can Tho City), said Vietnamese rice exporters lowered prices, even at a loss, to win the bid. Rice exports are very negative internal competition.

According to Mr. Binh, regardless of the reason, even selling at a loss to get money to repay bank loans and pay farmers for rice, bidding at low prices also causes great damage to the rice industry and affects farmers' rights.

"This is a problem in the rice industry. This problem will only disappear when management agencies have solutions for businesses to access loans to build raw material areas and link with farmers to develop a sustainable rice industry like the 1 million hectares project the Prime Minister approved in November 2023," Mr. Binh said.

On May 22, the Indonesian National Logistics Agency (Bulog) announced the results of May's bid opening, showing that of the 150,000 tons of rice awarded, 90,000 tons came from Vietnamese enterprises. Among them, Loc Troi Company won the bid two lots with a volume of 60,000 tons, price of USD 563 per ton, the lowest among the winning bidders and down to USD 16 compared to the initial offer price of USD 579 per ton.

The remaining unit, Thuan Minh Company, won the bid for 30,000 tons and was the unit with the lowest offering price among the bidding businesses - only USD 564.5 per ton. If you compare the winning price of rice with the domestic rice price announced by VFA at USD 587 per ton, Loc Troi's winning price is USD 24 per ton lower, and Thuan Minh Company's is USD 22.5 per ton lower.

The remaining 60,000 tons belong to international enterprises using rice sources from Pakistan and Myanmar, with winning bid prices ranging from USD 621.5 - 629 per ton. The unit that reduced rice prices the most compared to the bid price was only USD 4 per ton. This bid also has 3 lots, each of which is 20,000 tons. Bulog is renegotiating the price with participating units from Vietnam, offering offers ranging from USD 579 to USD 582 per ton.