Rice Export Faces Many Difficulties

As of the first week of the March 2014, Vietnam Ministry of Industry and Trade negotiated and signed big rice export agreements, accordingly 1 million tonnes to Indonesia and 1.5 million tonnes to the Philippines. Mr Vu Huy Hoang, Minister of Industry and Trade said: “the agreements will help Vietnam export at least 4 – 4.5 million tonnes of rice this year, excluding Cuba”.

 

The two largest rice export markets, India and Thailand, have inventories of about 50 million tonnes. Therefore, they are striving to offer a low price to reduce the inventories. Besides, Pakistan, Myanmar, Cambodia are also promoting rice export. All these factors force rice price to reduce aggressively.

 

According to the Vietnam Food Association (VFA), Vietnam has lost many contracts with traditional partners as Malaysia, the Philippines because Thailand offers a price of US$380, much lower than that of many other countries. Exporting rice to African markets also faces tough competition from India.

 

The Ministry of Industry and Trade also said that many solutions should be implemented, including purchasing rice for storage, rice export promoting, increasing subjects to export in concentrated contracts while controlling prices to prevent price dumping.

 

Mr Tran Thanh Hai, Deputy Director of the Import – Export Agency, Ministry of Industry and Trade shared that: The Ministry is focusing on completing the planning of rice exporters, gathering capital to promote rice trading; pushing up negotiating rice contracts with Indonesia, Philippines, etc.

 

The solution of purchase for storage that has been conducted for years will not be practical in export condition of 2014. According to the VFA, programme of rice purchasing for storage works only when rice inventories of exporting countries are not high. If Vietnam continues purchasing rice for storage, inventories will increase and involved enterprises will easily suffer bitter losses. Therefore, many enterprises do not afford to participate in the programme of purchasing rice for storage.

 

Standing before the difficulty, the Ministry of Industry and Trade proposes the Government elaborate mechanism to export rice to the Chinese market. The pilot option is to export rice through the border gate of Lao Cai province.

 

Mr Tran Thanh Hai shared that in 2013, China imported rice from Vietnam at the peak of 2.1 million tonnes, making up one third of the exporting rice volume. However, in January 2014, China imported only 65,000 tonnes out of Vietnam’s total export of 370,000 tonnes, which shows that it is not easy to export rice to China. Therefore, it is a positive point if China purchases Vietnamese rice for storage even through side-gates, it is also approved by the Ministry of Industry and Trade.

 

A representative of VFA said that China has enlarged rice import quota from Thailand with 1 million tonnes a year in 5 years’ term, therefore Vietnam will find it hard to compete with Thailand in this market.