Domestic rice exporters are likely to face a harsh competition in 2011 as Vietnam has fully opened its rice market to the global from the beginning of the year, in line with its commitments to the World Trade Organization (WTO).
“The competition will start very soon and Vietnam’s small rice firms can probably be bought up or become agents for international traders once they enter the market,” said Truong Thanh Phong, chairman of the Vietnam Food Association (VFA).
From 2011, foreign traders will be allowed to directly undertake rice trading in the country and export Vietnamese rice, and they will no longer need to enter into joint venture with local companies, he said.
A glaring weakness of Vietnamese firms is their small size and limited funds compared to their foreign counterparts, he added, warning that many Vietnamese exporters will be forced to turn into local suppliers for foreign partners.
“To improve their competitiveness, Vietnamese exporters need to be able to buy rice from farmers at reasonable prices.”
The chairman urged ministries, companies, and localities to cooperate to work out reasonable rice production costs, which could then be used to establish prices to be paid to farmers.
The Vietnamese Government has pledged for the first time to open its market since first export in 1987. The long period of protection has helped the state-owned VFA and its member corporations, Vinafood 1 and Vinafood 2, become the biggest rice exporters.
Although the opening up of the rice market will pose new challenges to exporters, 2011 is expected to be a good year for Vietnamese rice exports as global demand for rice would rise to 31 million tons this year from 29 million tons last year.
Vietnamese rice exporters achieved record numbers last year, shipping 6.8 million tons for $3.23 billion. (Labor)
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