15:19 | 20/01/2014 Trade
(VEN) - Africa is considered as a promised land for Vietnamese rice. Increasing the export of high-quality rice to Africa will help Vietnam increase the value of rice exports to this market.
Rapid increases in export value
According to the Vietnam Food Association (VFA), in 2013, Vietnam exported about 6.6 million tonnes of rice, and Africa was the second largest importer of Vietnamese rice, behind China (exports to Africa accounted for nearly 30 percent of the total export value of Vietnamese rice in 2013). In September 2013, exports to Africa for the first time accounted for nearly 70 percent of the total export volume of Vietnamese rice, even higher than exports to China. Currently, Vietnam exports rice to 30 out of 55 African countries. Major African countries importing Vietnamese rice include Ivory Coast, Ghana, Senegal, Angola and Cameroon.
Thanks to competitive prices and good quality, Vietnamese rice has won the trust of a growing number of consumers from African countries. The price of Vietnamese fragrant rice exports to Africa just equals half of the price of Thai fragrant rice while they are equal in quality. However, Vietnamese businesses export rice to Africa mostly via intermediaries and this has pushed up prices, creating risks for domestic businesses.
These difficulties have been to some extent reduced through the signing of a number of memorandums of understanding (MOUs) between Vietnam and some foreign countries in the recent period. In late March 2013, Vietnam signed an MOU on trade in rice with Guinea, under which Vietnam would export 300,000 tonnes of rice annually in the period from April 1, 2013 to December 31, 2015. In early August 2013, Vietnam signed an MOU on trade in rice with Comoros, under which Vietnam would export 60,000 tonnes of rice to Comoros annually in the period from August 2013 to the end of December 2015. Besides, Vietnam has also signed an MOU on trade in rice with the Republic of Sierra Leone. These MOUs allow Vietnamese rice exporters to carry out transactions directly with importers, minimizing payments through intermediaries.
Africa currently is the world’s largest rice consumer with annual demand for over nine million tonnes, of which 6.4-6.5 million tonnes are imported. Vietnamese businesses can seek opportunities to boost rice exports to this potential market.
Increasing high-quality rice exports
Africa is a new emerging market that is full of potential. To penetrate this market, in the opinion of Hoang Duc Nhuan, Director of the Africa Division of the African, West and South Asian Markets Department under the Ministry of Industry and Trade, along with exporting medium-quality rice to Africa, domestic businesses should promote the export of higher quality rice such as fragrant and parboiled rice. In 2013, sometimes the export volume of some kinds of rice decreased while the export volume of fragrant rice to Africa considerably increased. In the first eight months of 2013, Vietnam exported to Africa 600,000 tonnes of fragrant rice, nearly half of the total volume of rice exports to this market. Vietnamese rice currently has to compete with low-priced rice from India and Thailand and in this context, promoting high-quality rice exports is considered as the key to building a firm position for Vietnamese rice in the African market.
Hoang Duc Nhuan added that Nigeria was the world’s largest rice importer with an annual demand for about two million tonnes, mostly parboiled rice. However, due to high production costs, the amount of rice Vietnam exports to Africa remains low. “Large, financially capable businesses should invest in technology to produce more rice of this kind for export to the Nigerian market,” he said.
To help businesses increase rice exports to Africa, in 2014, the Ministry of Industry and Trade will send trade promotion teams to Angola and Ivory Coast, which are large importers of Vietnamese rice, to seek possibilities for signing MOUs so that domestic businesses can export rice directly to these two markets. The ministry will also invite African businesses to come to Vietnam to seek rice export partners.
Through its departments and overseas Vietnamese trade offices, the Ministry of Industry and Trade will help domestic businesses verify information about African partners and provide them with consultancy so that they can avoid risks when exporting to Africa. The ministry will also create favorable conditions for domestic businesses to open representative offices and bonded warehouses in African countries so that they can export rice directly to Africa /. /
Industry and Trade Minister Vu Huy Hoang:
It took Vietnam much time and effort to sign an MOU on trade in rice with the Philippines with the export volume amounting to several hundred thousand tonnes while it was easier to sign similar MOUs with new and smaller markets such as Comoros. Therefore, small markets can’t be ignored. “Many a little makes a mickle” - many small markets will bring in effectiveness like a large market.
By Bao Ngoc