Accelerating Negotiations for Expansion of Rice Export Categories to EU

At present, Vietnamese aromatic rice varieties, ST24 and ST25, are being promoted in Belgium and the European Union (EU). Nevertheless, these varieties have not yet been granted preferential status under the Vietnam-EU Free Trade Agreement (EVFTA), thus they are subject to competition for common tariff quotas alongside other countries.

The outlook for rice exports in 2024 exhibits many positive indicators

According to EVFTA commitments, the EU gives Vietnam a quota of 80,000 tons of rice each year, including: 30,000 tons of regular milled white rice, 20,000 tons of unmilled rice and 30,000 tons of fragrant rice. (nine varieties: Jasmine 85, ST 5, ST 20, Nang Hoa 9, VD 20, RVT, OM 4900, OM 5451 and Tai Nguyen Cho Dao). In addition, the EU fully liberalizes broken rice.

Exports to the EU are mainly high-value rice

These commitments help Vietnam export an estimated 100,000 tons to the EU annually. For rice products, the EU will bring the tariff to 0% after 3-5 years.

At present, Vietnamese rice and rice products basically enjoy zero tax for the given quota. This has opened up opportunities for Vietnamese rice to compete with other countries when exported to the EU.

According to analytical data from the Ministry of Industry and Trade, in 2022, the EU imported 96,700 tons of rice from Vietnam, an increase of over 65% compared to 2021, for EUR79.5 million. The EU allocated all rice quotas in 2022 and Vietnam used 74,772 tons of rice in the given quota of 80,000 tons.

In particular, Vietnam ran out of rice quota for 30,000 tons of milled rice and 30,000 tons of fragrant rice. However, Vietnamese businesses did not used up all the milled whole rice exported to the EU.

In 2023, the EU allocated 73,345 tons because EU importers did not register all the amount of milled whole rice at the deadline for registering for rice quotas.

Regarding the Belgian market, due to the small market size, Vietnamese rice exporters lack interest in exporting rice to this market. Businesses and distribution systems in Belgium mainly import Vietnamese rice from major import hubs in France and the Netherlands.

According to Eurostat data, in 2023, Vietnam exported rice to Belgium for EUR56,300. This value was insignificant relative to the market import value of EUR500 million annually.

According to the Vietnam Trade Office in Belgium and the EU, the price of Vietnam's rice exported to Belgium and EU countries is higher than the average of other countries because rice varieties exported to this market are mainly valuable fragrant rice such as ST25 and ST24.

Some rice products like Vietnamese pho, vermicelli, rice paper and milled rice have successfully penetrated the EU's modern distribution systems in Germany, the Czech Republic, Belgium, the Netherlands, France and Northern Europe. Due to the increase in world rice prices following India's rice export ban, rice prices of all imported rice lines in Belgium have also looked up.

In Belgium, in the fragrant rice segment, Thai rice is the most expensive, as high as about EUR3 per kilogram and Vietnamese rice is the second most expensive at about US$2.5 per kilogram, followed by Italian rice (EUR2) and Cambodia (EUR1.4-1.5).

Vietnamese rice is mainly sold in Asian supermarkets because no distributors bring Vietnamese rice to supply chains in Belgium.

Attention to rice quality management

The demand for rice imports in this market is not large but this market is worth caring for exporters of high-value rice because the two sides have preferential tariffs on rice products when the EVFTA is in force.

On average, an EU consumer eats about 6 kg a year while the world average is 54 kg.

The EU does not use as much rice as in Asian countries. But, some Southern European countries such as Greece, Portugal, France, Romania, Bulgaria and Hungary also produce rice for the EU market.

The EU's rice production area is about 450,000 hectares. Every year, the EU produces 1.6-1.7 million tons of rice. The total rice market capacity in the EU is about 3.3 million tons a year, thus the domestic production meets 50-70% of the demand.

The EU can self-supply Japonica round-grain rice but it depends on imports for Indica long-grain rice, particularly specialties like Basmati and Jasmine from India, Pakistan and Thailand and milled rice lines for processing and restaurant from Cambodia, Myanmar and Vietnam.

The Ministry of Industry and Trade said that Vietnam and the EU are currently discussing a list of fragrant rice to be imported into the EU under the EVFTA Agreement with more preferential tariff rates. So, in addition to the EVFTA duties, Vietnamese rice will compete with other countries for common tariff quotas.

To export high-value rice to this market, according to the Vietnam Trade Office in Belgium and the EU, businesses need to pay attention to managing rice quality, especially pesticide residues.

"The threshold for pesticide residue in rice is below 0.01mg/kg and EU importers and regulators will regularly check food safety and quality. There is a big lesson for ST25 rice in 2021. A Belgian company had to recall it because pesticide residue was 0.017mg/kg," the Vietnam Trade Office in Belgium and the EU warned.

On the other hand, currently, Vietnamese fragrant rice, ST24 and ST25, is being advertised in Belgium and the EU. However, as these rice varieties have not been entitled to preferential treatment under the EVFTA framework, they must compete for common tariff quotas with other countries. Therefore, the Vietnam Trade Office in Belgium and the EU recommended that Vietnam soon accelerate renegotiation and expand the list of rice categories exported to the EU.

Source: Vietnam Business Forum