Last updated: Monday, April 22, 2019


Active and Flexible in Rice Export

Posted: Wednesday, October 24, 2018

New developments in the world rice market, such as rising price trend and changing tendering mechanism, require Vietnamese enterprises to be more and more active and flexible in accessing the market and moving towards trade liberalisation of this commodity.

Changing tendering mechanism
In recent years, some traditional rice importing markets of Vietnam have allowed private enterprises to tender rice import quotas in place of government agencies.

Typically, the Philippines – which can import up to 1.5 - 2 million tonnes of Vietnamese rice a year – mainly buys rice in the government to government (G2G) form. However, in the past two years, the Southeast Asian country has gradually allowed the private sector to import rice.

Specifically, the Philippines permitted the private firm AgriNurture Inc. to play a part in ensuring national food security. AgriNurture Inc and Southern Food Corporation (Vinafood 2) recently signed a memorandum of understanding (MOU) on import of 2 million tonnes of rice a year.

Other markets such as Iraq, Indonesia and Malaysia also allowed the private sector to import rice, to reduce monopolies of national food agencies.

The current rice trade liberalisation trend is an opportunity for enterprises to boost export. However, this also means that Vietnamese rice exporters must work more professionally to meet new standards.

In that context, Decree 107/2018/ND-CP on rice export business, which came into force from October 1, 2018, in place of the Decree 109, is considered a timely move to facilitate private rice business development.
Professor Vo Tong Xuan, Rector of Nam Can Tho University, said that rice trade is being liberalised and the introduction of Decree 107 makes businesses more active to meet market requirements rather than wait for allocation of contracts as before.

This trend engages many companies in rice export and helps farmers increase incomes, he said.

Rising price trend
The rice export price of Vietnam jumped to US$503.3 per tonne in the first nine months of 2018, an increase of nearly US$63 per tonne over the same period last year. This came from higher quality rice.

Mr Shawn Hackett, President of Hackett Financial Advisors Company, recently forecast that world rice will gain in price in 2019.

He noted that given that the US economy is facing some issues, using the US dollar in rice trading will make rice prices higher. On the other hand, weather changes will provide a great chance for rice prices to reach highs in 2010-2012 and in 2008.

According to experts, rice prices are currently low relative to production capacities with non-food commodity markets such as iron and steel.

Towards sustainable development
According to data from the Export and Import Bureau under the Ministry of Industry and Trade, Vietnam exported 4.73 million tonnes of rice worth US$2.38 billion in the year to September 15, up 9.3 per cent in volume and 24.8 per cent in value, respectively.

Premium jasmine white rice increased in the export structure. Low-quality white rice accounted for only 2.01 per cent of total rice exports in the first eight months of 2018. Meanwhile, high-quality and medium-class white rice accounted for 42.46 per cent and aromatic rice made up for 33.24 per cent.

Deputy Prime Minister Vuong Dinh Hue stressed that Vietnam is one of three largest rice exporters in the world with an average annual export volume of 5 - 6 million tonnes of rice. Vietnam's rice export market is about 43 - 44 million tonnes, of which the Mekong River Delta accounts for more than 50 per cent of output.

Vietnam's rice production and export have increased sharply in quality and added value, and facilitated safe production, high-tech application, and organic agricultural development.

High-quality white rice, aromatic rice and glutinous rice have the highest share. Vietnam's rice quality has met criteria to enter the most demanding markets in the world.

The Deputy Prime Minister said that, in addition to creating a favourable environment for rice production and trade, the Government set the growth target, required the strengthening of production chains with market value chains, ensured exported rice quality, deeply joined in global rice value and affirmed the prestige and brand of Vietnamese rice.

Huong Ly

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