At a recent international rice conference held in Ho Chi Minh City, the three largest Vietnamese rice importers, namely Indonesia, the Philippines and Bangladesh, announced more rice imports from Vietnam. This seems to be a very convenient opportunity for Vietnam to become the largest rice exporter in the world. But, according to experts, in order to achieve this position, Vietnam must be more vigilant and thoughtful and more active to adopt timely and appropriate policies.
According to experts attending the international rice conference, Vietnam is seeing a great opportunity to play a larger role on international rice market after the Government of Thailand decided to purchase all the domestic rice and India faced certain obstacles relating to logistic systems in resuming rice export. In addition, Indonesia, the Philippines and Bangladesh - three traditional customers - have given the green light to new rice imports from Vietnam because they are suffering adverse weather impacts on crop production.
Mr Sutarto Alimuso, President of Perum Bulog, Indonesia, said imported rice volume is always large in Indonesia. In the coming time, this country will import a substantial volume of rice and Vietnam will be a top candidate. He said Indonesia will need to import about 1.5 million tonnes of rice to meet the demand through 2011. Meanwhile, Mr Ilahi Dad Khan, a representative of the Bangladeshi Government, said the Southern Asian nation will import about 450,000 tonnes of rice from Vietnam before the end of 2011. The Philippines plans to import about 150,000 tonnes of rice from Vietnam and China from now to the end of this year.
In spite of standing before the opportunity of becoming the world’s largest rice exporter, Vietnam is recommended to be more cautious because of the very volatile rice market where potential opportunities may be easily turned into threats and competitors can beat us at the very last moment.
Thailand remains a biggest competitor of Vietnam. Ms Korbsook Lansuri, former President of the Thai Rice Exporters Association, said although Thailand is being seriously affected by flooding when 1.5 million hectares of newly cultivated rice and 2 million tonnes of hulled rice were damaged, it does not face rice shortage thanks to 4 million tonnes being kept by its rice traders and 1 million tonnes in government stores, let alone the new crop to be harvested in the next two months. The Thai government is keeping its promise of buying all domestic rice at a high price. (Thai rice price averages US$500 a tonne, and US$650 for high quality rice. If this programme is applied, the market price will soar to US$700 - 800 a tonne). Thai rice is now the highest in the world. How will this high price affect the market? It remains uncertain whether the Government of Thailand will be successful with its bid on the entire purchase of 31 million tonnes of rice a year and how long this programme will last when the previous administration’s failure in subsidy policies for purchasing 9 million tonnes of rice is still vivid. In case the Thai Government purchases all rice from its farmers, what will it do with it? This remains unknown. For this reason, Vietnamese rice exporters must carefully consider.
Besides, Thailand has been the world’s largest rice exporter for years with 30 percent of global market share. Some traders in Thailand believe that Thailand can increase its rice selling price but still keep traditional customers - high-income earners who favour high-quality rice from Thailand. In this regard, no country has outstripped Thailand. Therefore, although Thai rice gains in prices, it is possibly not good news for other rice exporters because it is very difficult to bite into its well-established market segment.
India started resuming its rice export with 4.6 million tonnes this year. However, this is not an actual competitor for many exporters because this country is trading a small amount in relation to the said volume as its logistic systems fails to support trading in large quantity. India with rice to export and India with rice exported are very different, said Mr Jeremy Ziwinger, CEO of Rice Trader, one of world’s leading rice experts.
But experts also warned that India is probably a trap for other rice exporters, because its rice price is very competitive (its rice price is US$100 cheaper than one tonne of Thai rice). Hence, when it enters the market, it will become a big rival for other exporters. Many also suspected that infrastructure hindrance is a tip to wait for better prices.
According to experts, the market is forecast to be very difficult for rice exporters in 2012. A survey by The Rice Trader shows that the five largest rice exporters in the world saw relatively high growths in the past two quarters. Mr Jeremy Ziwinger said Vietnam broke its own rice export record to become a leading rice exporter in the world, but it well be very hard to keep the current position in 2012.
Ms Korbsook Lamsuri said Thai exporters are encountering numerous difficulties because of flooding and unclear new policies. Meanwhile, India has entered the low-end market and Thailand may lose some of its share in this segment. India is a dangerous opponent and it may oust Thailand from such markets as Iraq, Iran, Africa and Malaysia. “Rice is a special commodity, but it has not recently put on a right role of market-driving commodity without political influence. The new government has identified priorities to filling the rice and poverty gap. Hence, the role of traders will almost vanish and Thailand will lose its market shares,” said Korbsook Lamsuri.
With her multiple-year experience on rice export market, Ms Korbsook Lamsuri affirmed that the rice export market is very volatile and rice exporters must understand the market to be successful.
Ha Linh
Vietnamese
