Breaking down barriers to rice exports

09:08 | 06/12/2016 Trade

(VEN) - Many solutions have been brought out to overcome difficulties in rice exports.  

Difficulties

According to the Ministry of Agriculture and Rural Development, rice exports reached an estimated 396,000 tonnes for US$176 million in September and 3.76 million tonnes for US$1.69 billion in the first nine months of the year, a fall of 16.4 percent in volume and 12.5 percent in value compared to a year ago. Although Vietnam won bid to supply 150,000 tonnes of rice to the Philippines in late August, rice prices strongly declined by VND200-400 per kg.

China remained Vietnam’s biggest rice export market with 35.5 percent of market share, followed by Ghana and Indonesia with 11 percent and 9.4 percent. In particular, the Philippines, Malaysia, Singapore, Ivory Coast and China saw a strong decline in Vietnam’s rice imports.

The Vietnam Food Association explained that rice inventories of export businesses remained plentiful of around 1.3 million tonnes, including 1.1 million tonnes from commercial contracts that have not been delivered. Therefore, export businesses were not passionate in buying rice, leading to a fall in rice prices.

The Vietnamese rice sector has also faced fiercer competition due to the discharge of Thailand’s rice warehouses and plummeted rice imports of the Philippines and Malaysia.

The Vietnam Food Association adjusted this year’s rice export target to 5.65 million tonnes instead of 6.5 million tonnes. This was the first time Vietnam’s rice export target downed to below six million tonnes.

Overcoming difficulties

Rice exports have faced many difficulties as Indonesia has no intention of importing rice, while China has applied a strict monitoring program. Therefore, the Government Office communicated in writing the direction of the prime minister on strengthening rice procurement and consumption for farmers.

Due to difficulties in rice exports in the beginning months of the year, slow rice procurement and consumption and low prices, the prime minister assigned the Ministry of Agriculture and Rural Development to chair and coordinate with the Ministry of Industry and Trade, the Ministry of Finance, the State Bank of Vietnam and the Vietnam Food Association to review the situation of rice procurement and consumption and propose specific solutions to accelerate rice procurement for Mekong Delta provinces.

In addition to supports from the authorities, to maintain sustainable growth for rice exports, the restructuring of export markets to avoid the dependence is needed. In the long term, to compete with Thai and Indian rice, it requires the improvement of the value chain and rice quality.

The Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development determine to pay attention to rice consumption. These two ministries are making greater efforts to promote administrative procedure reforms in order to create favorable conditions for export businesses.

In particular, the Ministry of Agriculture and Rural Development approved the project on restructuring the Vietnamese rice sector by 2020, with a vision to 2030. With nearly VND7 trillion being spent in the next five years, the project mentions to the restructuring and transformation of state-owned enterprises into joint stock enterprises, with a focus on the Vietnam Southern Food Corporation (Vinafood 2) and the Vietnam Northern Food Corporation (Vinafood 1); encourage private companies to expand public-private partnership (PPP) investments in the Vietnamese rice sector, with a priority given to businesses having material areas and conducting scientific research and agriculture promotion activities.

To continue strengthening rice exports to China, the Vietnamese Ministry of Agriculture and Rural Development and the Chinese General Administration of Quality Supervision, Inspection and Quarantine signed a revised protocol on plant quarantine for Vietnam’s rice and rice bran exports to China.

Regarding export businesses, in addition to traditional markets, they are waiting for the Philippines. According to the Vietnam Food Association, the Philippines planned to import one million tonne of rice in three times. The first bidding was opened and Vietnam won bid to supply 150,000 tonnes of rice to the Philippines in late August.

Phuong Lan