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Rice export facing difficulties

Export market share reduced

The amount of rice produced in August, 2019 reached 590,000 tons (USD 265m), increasing the amount of rice exported in the first 8 months of 2019 to over 4.5m tons (USD 2bn). There is a concern that Vietnam’s rice export price is much lower than that from other countries. For example, Thailand’s rice of 5% broken rice price increase from USD395-405/ton to USD405-425/ton (FOB Bangkok); Vietnam’s rice of 5% broken rice price decreased from USD 340-350/ton to USD 335-345/ton (FOB Saigon Port). India’s rice of 5% broken rice price went down from USD 381-384/ton to USD 373-374/ton, however, it is higher than that of Vietnam’s.

In the first 8 months of the year, the Philippines has become Vietnam’s number one export market that accounts for 34.5% of the market shares. However, after changing from the quota system to the tariff system that will push up rice import activities, the Philippines’ rice in-stock is high. In the coming time, the amount of rice exported from Vietnam to the Philippines will not increase as predicted.

For the last decades, rice export has brought to Vietnam around USD 2-3bn annually, which put Vietnam in the world’s top 3 in rice export. However, from the beginning of the year, the sector has faced difficulties in a number of large markets.

In the first eight months of 2019, the amount of Vietnam’s rice exported to China experienced a decrease of 67% year-over-year in 2018. After a long import decrease from Vietnam, the need for rice from the China’s market has shown no sign of blooming back. Beside the rice in-stock, China has good harvest this year. According to businesspeople, the need for rice from China is rather high; however, it is difficult for China’s importers to buy rice from Vietnam due to new technological barriers that have been newly applied.

Meanwhile, after changing quota system to tariff system a half of year ago that pushed up rice import activities, the rice in-stock of the Philippines is relatively high. And the farmers asked the Government to assist rice consuming due to damage from increased import. Therefore, in the coming time, rice import activities from Vietnam to the Philippines will have more difficulties and will not increase as predicted.

There are many challenges

Thailand used to be the world largest rice exporter for over 3 decades; however, it is facing a doomy prospect when their export production drastically reduced. According to the Ministry of Trade, Thailand- the organization responsible for supervising rice production sector- Thailand’s rice export reduced from 11,6m tons in 2017 to 11m tons in 2018. And Thai rice exporters predicted it would reduce to 9m tons in 2019. The reasons are due to unstable political situation in the country and unexpected competitions from India, Vietnam and other countries.

The India’s Government announced to give allowance to rice of 5% broken rice, not for the popular basmati (a typical long-slender grained rice from India and Pakistan). The program is an attempt to expand rice export and reduce the amount of rice in-stock in order to make Indian rice price more competitive in the world’s markets.

Facing these challenges, finding an output for Vietnam’s rice is indeed an urgent work that needs a long-term strategy.

Previously, Vietnam exported only over 20,000 tons of rice pa to EU. After the EVFTA signed in June 2019, with the tariff of 0% applied to 80,000 tons of rice currently, Vietnam’s rice export will be growing in the future. EU is a ‘hard to please’ market. To make good use of the new chance. Vietnam’s rice exporters should improve their rice quality by improving their traceability, brand building...

According to the Ministry of Industry Trade, Vietnam’s rice production and export is changing to the direction of improving quality and value added, especially putting more emphasis on improving safe production and the use of hi-tech. However, relevant Ministries as the Ministry of Agriculture and Rural Development, the Ministry of Industry Trade, the Ministry of Planning-Investment, and the Ministry of Science- Technology have not had particular and reasonable plans to ensure the shifting to high-quality rice of the rice production sector’s.

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