Vietnam struggles to retain position as leading rice exporter

According to the Vietnam Food Association (VFA), the country is struggling to retain its position as the leading rice exporter in the world since late September, however with rice exports ready to hit a record 7.7 million tons by the end of this year, Vietnam may hold onto it position this year.

A report by VFA said that in October firms exported 646,196 tons of rice at an average price of US$445.3 per ton, up $5.23 per ton compared to the previous month. Domestic rice price rose as firms had signed contracts to export 300,000 tons of rice to Indonesia last month. As a result, long-grain paddy climbed to VND6,185 per kilo while common paddy was bought at VND6,025 per kilo in provinces in the Mekong Delta.

In the first ten months of this year, the country exported 6.484 million tons of rice, bringing in $2.877 billion. According to the plan, Vietnam will export about 1.05 million tons of rice in the last two months of this year so rice exports will reach 7.5 million tons or even 7.7 million tons if there is a favorable market.

Besides, figures from the Department of Cultivation show that farmers have completed sowing of the autumn-winter crop on 730,000 hectares, up 130,000 hectares compared to the plan, of which 50 percent of the crop has been harvested by now, with production of 3.7 million tons of paddy, up 500,000 tons compared to forecasts. They have also sowed the next rice crop on 200,000 hectares with production likely to reach 860,000 tons, of which 100,000 tons will be ready to harvest next month.

Meanwhile, according to calculations by the Ministry of Agriculture and Rural Development, the amount of rice for export this year was 7.5-7.7 million tons and 8.6-8.8 million tons if including inventory rice of local firms since 2011. Thus, it is feasible to export 7.7 million tons of rice this year.

However, if Vietnam exports 7.7 million tons of rice, the domestic rice price will climb steeply, causing a set back for exports. Because global rice prices will not be able to catch up with domestic prices, especially when India and Myanmar sell rice at $30-$100 per ton respectively, lower than Vietnam. But if firms are cautious they will lose their chance to export rice at high prices, as they experienced last year.

Although, by volume, Thailand dropped to third rank; by value, it was still the leading rice exporter in the world as the quality of Thai rice is better. Currently, five-percent-broken rice from Thailand was bought at $570 per ton, whereas Vietnamese rice was bought at $490 and Indian rice at $460. Therefore, Thailand remained the leading rice exporter with $3.5 billion. Vietnam followed with $2.45 billion and India came next with $2.29 billion.

Officials from the Ministry of Commerce of Thailand and Thai exporters also said that Thailand will win back its leading spot by the end of this year.

Sometimes, the amount of rice exported to Cambodia through unofficial cross-border trade, which is then moved to Thailand, is huge. Tinh Bien Border Gate in An Giang alone sees up to 5,000 tons of rice passing through a day. However, since September, rice exports through unofficial cross-border trade to Cambodia dropped sharply as Thai traders no longer buy rice as much as before.

Meanwhile, rice exports to China in the past nine months touched 1.7 million tons, and upto 2 million tons if including unofficial cross-border trade.

According to experts, though it helped to lift up domestic rice price, an increase in rice exports to Cambodia and China will do more harm than good as it might cause a shortage of rice for firms to fulfill their export orders. In addition, Thai and Chinese traders will use Vietnamese rice against Vietnamese rice in the global market.

This is a great challenge for Vietnam’s rice export industry as up to now the country has not had any strategy for exporting and trading rice. The Ministry of Agriculture and Rural Development only has a strategy on food security, focusing on balancing production and consumption, but has not taken into consideration production for rice exports. If authorities are able to solve this shortcoming, the country’s rice exports will become more stable and bring in high value.

Source: Dau Tu Tai Chinh – Translated by Thuy Doan

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