HANOI (Commodity Online) : World's second largest rice exporter Vietnam is facing one of the toughest periods in its farming history.

According to Mekong Delta Rice Research Institute, the country may lose one million tons of the grain this season as surpluses, the beginning of the wet season, and a shortage of places for drying wet rice are adding up to heavy potential losses.

The country hopes to sell about 6 million tonnes on the international market in 2010, a figure similar to last year's, but shipments fell in the first half.

Between January and June Vietnam exported more than 3 million tonnes, down 8.76% on the same period a year earlier, according to official statistics.

Over-production and lower exports have left rice farmers in the Delta, which for more than half of the country's production, holding on to their stocks in the face of lower prices.

Analysts said farmers may have over-produced this year on an expectation of earnings after state-owned VinaFood assured them the Philippines would buy in bulk.

But the Philippines had not yet confirmed all its purchases, while other buyers like those in Europe were betting on fresh falls in the price and delaying their orders.

Competition from other exporters including India and Pakistan leaves less room for Vietnamese grain abroad, while at home we have an abundance of rice so the prices are relatively low, analysts said.

Pakistan India