A worker moves rice bags at a private agricultural processing company in Tuy Phuoc district, Binh Dinh province.(Photo: VNA) Hanoi (VNS/VNA) - A series of companies who rushed totrade rice a decade ago are now facing difficulties and in some cases, havegone bust.
Seafood processor Vinh Hoan Corporation late last month announced it woulddissolve its affiliate Vinh Hoan 2 Food Co Ltd.
Vinh Hoan 2, established in late 2011 by its parent company with the aim ofexpanding operations in the rice segment, handled the payments for debts of workerwages, taxes, social insurance, economic contracts, labour contracts and otherbenefits before its dissolution.
Vinh Long Food, set up by two giants Vinafood II and Nguyen Kim, were removedfrom the stock exchange in 2016 due to continuous losses.
Dong Thap Trading Corporation (FDG) also stopped its rice business, switchingto fertiliser trading. Many other names like Angimex and Loc Troi also haveexperienced a difficult period.
Between 2007 and 2011, world rice inventories fell sharply. The outbreak of afood crisis in 2008 contributed to support world rice prices, benefitingVietnamese rice exports.
After joining the World Trade Organisation in 2007, Vietnam opened the riceexport market, allowing foreign enterprises to directly participate equallywith Vietnamese companies.
As a result, rice prices soared from 270 USD per tonne in 2007 to 550 USD pertonne in 2011, even hitting the peak of 1,000 USD per tonne in 2008.
Grasping the opportunities, hundreds of companies rushed to register for ricetrading and rice export, including foreign enterprises.
The flow of foreign investment into the rice industry not only poured directlyinto rice trading enterprises but also via other investment channels such aslisted companies on the stock exchange.
Loc Troi Group Joint Stock Company (LTG), initially being an agrochemicaltrader, then started to build a rice milling plant in 2011.
An Giang Import-Export Company (AGM), Dong Thap Trading Corporation (FDG) orVinh Long Cereal and Food Corporation (VLF) attracted the attention of manyforeign investors. Notably, electronic and digital giant Nguyen Kim held stakesin most of these companies at that time.
Due to fierce competition, after the 2007-11 period, the rice market hitdifficult times, facing falling export prices and challenges in terms ofconsumption.
Businesses experienced continued losses, capital mobilisation were much slowlythan expected, negatively affecting operations.
In the 2012-13 period, increasing inventory together with high outstanding debtslashed profits.
Dong Thap Trading Corporation (FDG), reporting profit of tens of billions ofdong during 2007-11, suddenly suffered a loss of more than 37 billion VND in2012. The figure even rocketed to 130 billion VND in 2013.
By 2017, shareholders of the company agreed to restructure operations, whichboosted the fertiliser business activities and temporarily suspended riceproduction.
Vinh Long Food (VLF), backed by Nguyen Kim and Vinafood II, recording highprofit growth in 2008 but has suffered continuous losses since 2014.
As all banks stopped financing, Vinh Long mainly focused on recovering debts,selling inventory and assets. It dissolved a series of branches in 2015,selling representative offices in HCM City to HDBank for clearing debts andselling Domyfeed aquatic feed factories.
By the end of 2016, the accumulated loss climbed, the company had to declarebankruptcy. In the same year, VLF shares on HoSE were officially delisted.
Since 2011, An Giang Import-Export Company (AGM) also suffered a large decreasein annual profits.
Loc Troi Group Joint Stock Company (LTG) in 2018 had to change the structure ofits operation to suit the market, in which the food segment was reduced. Thecompany had to co-operate more with farmers on cultivation and tightencorporate governance.-VNS/VNA
Seafood processor Vinh Hoan Corporation late last month announced it woulddissolve its affiliate Vinh Hoan 2 Food Co Ltd.
Vinh Hoan 2, established in late 2011 by its parent company with the aim ofexpanding operations in the rice segment, handled the payments for debts of workerwages, taxes, social insurance, economic contracts, labour contracts and otherbenefits before its dissolution.
Vinh Long Food, set up by two giants Vinafood II and Nguyen Kim, were removedfrom the stock exchange in 2016 due to continuous losses.
Dong Thap Trading Corporation (FDG) also stopped its rice business, switchingto fertiliser trading. Many other names like Angimex and Loc Troi also haveexperienced a difficult period.
Between 2007 and 2011, world rice inventories fell sharply. The outbreak of afood crisis in 2008 contributed to support world rice prices, benefitingVietnamese rice exports.
After joining the World Trade Organisation in 2007, Vietnam opened the riceexport market, allowing foreign enterprises to directly participate equallywith Vietnamese companies.
As a result, rice prices soared from 270 USD per tonne in 2007 to 550 USD pertonne in 2011, even hitting the peak of 1,000 USD per tonne in 2008.
Grasping the opportunities, hundreds of companies rushed to register for ricetrading and rice export, including foreign enterprises.
The flow of foreign investment into the rice industry not only poured directlyinto rice trading enterprises but also via other investment channels such aslisted companies on the stock exchange.
Loc Troi Group Joint Stock Company (LTG), initially being an agrochemicaltrader, then started to build a rice milling plant in 2011.
An Giang Import-Export Company (AGM), Dong Thap Trading Corporation (FDG) orVinh Long Cereal and Food Corporation (VLF) attracted the attention of manyforeign investors. Notably, electronic and digital giant Nguyen Kim held stakesin most of these companies at that time.
Due to fierce competition, after the 2007-11 period, the rice market hitdifficult times, facing falling export prices and challenges in terms ofconsumption.
Businesses experienced continued losses, capital mobilisation were much slowlythan expected, negatively affecting operations.
In the 2012-13 period, increasing inventory together with high outstanding debtslashed profits.
Dong Thap Trading Corporation (FDG), reporting profit of tens of billions ofdong during 2007-11, suddenly suffered a loss of more than 37 billion VND in2012. The figure even rocketed to 130 billion VND in 2013.
By 2017, shareholders of the company agreed to restructure operations, whichboosted the fertiliser business activities and temporarily suspended riceproduction.
Vinh Long Food (VLF), backed by Nguyen Kim and Vinafood II, recording highprofit growth in 2008 but has suffered continuous losses since 2014.
As all banks stopped financing, Vinh Long mainly focused on recovering debts,selling inventory and assets. It dissolved a series of branches in 2015,selling representative offices in HCM City to HDBank for clearing debts andselling Domyfeed aquatic feed factories.
By the end of 2016, the accumulated loss climbed, the company had to declarebankruptcy. In the same year, VLF shares on HoSE were officially delisted.
Since 2011, An Giang Import-Export Company (AGM) also suffered a large decreasein annual profits.
Loc Troi Group Joint Stock Company (LTG) in 2018 had to change the structure ofits operation to suit the market, in which the food segment was reduced. Thecompany had to co-operate more with farmers on cultivation and tightencorporate governance.-VNS/VNA
VNA
