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Required modern trade methods make rice exporters hesitant to penetrate hard markets
Difficult-to-be-pleased markets such as South Korea, Japan and Hong Kong have been seeking to purchase Vietnam’s rice. However, in order to penetrate the markets, Vietnamese enterprises have to join electronic bids (e-bidding) and make transactions via trading floors.
According to the Vietnam Food Association (VFA), by May 4, 2011, Vietnamese enterprises had signed the contracts on exporting four million tons of rice with delivery time until the end of June 2011. The Philippines, Indonesia and Bangladesh are placing orders to purchase Vietnam’s rice. The high demand from the world market has led to the forecast that Vietnam would have export 6.5 million tons of rice in 2011, remaining the second biggest rice exporter in the world, just after Thailand.
However, the problem is that despite the big orders, enterprises do not make profits, because of the domestic price increases. Meanwhile, the rice price increase also does not make farmers happy: the rice price increases, but the profits do not increase accordingly, because the input material prices have increased by two folds in comparison with the same period of the last year.
Therefore, raising the export prices has become an urgent requirement which can help farmers and enterprises earn profits. Experts have pointed out that it is completely feasible for Vietnam to raise the export price, especially when difficult-to-be-pleased markets such as South Korea and Japan have sent words intimating that they want to import rice from Vietnam.
However, it is not easy for Vietnamese enterprises to penetrate the export markets.
According to Le An Hai, Vietnamese Trade Counsellor to South Korea, in 2011, South Korea plans to import 347,658 tons of rice, including unpolished rice, broken rice and white rice. However, in order to be named in rice tender offer list, Vietnamese enterprises have to have certain export experiences, have to join electronic bids and submit the bidding registration records to South Korean agencies.
As such, the minimum requirement that Vietnamese enterprises have to meet is having the skill to join e-bidding. However, e-bidding proves to be unfamiliar thing to Vietnamese enterprises.
Cao Thi Ngoc Hoa, Deputy General Director of the Southern Food Corporation admitted that to date, her cooperation has only been joining bids directly and it has never joined e-bids. “We still do not know anything about e-bidding,” Hoa said.
Similarly, Japan has recently revealed its intention to import 250,000 tons of rice from Vietnam. However, the Vietnam Food Association has admitted that it is difficult for Vietnamese enterprises to meet the demand. Deputy Minister of Agriculture and Rural Development, Ho Xuan Hung said, that one of the reasons behind this is that Vietnamese enterprises still do not have deep knowledge about Japanese market and the modern trade methods of the country.
Another barrier that has obstructed Vietnamese enterprises in penetrating hard markets is the uneven quality of rice products. Hoa said that her corporation once exported rice to South Korea, but it has stopped exporting to the market because the market has set up stricter requirements on imports.
Pham Van Bay, Deputy Chair of the Vietnam Food Association, said export rice to Japan must meet more than 500 quality norms. If the exports cannot meet the quality, exporters will have to pay fine, which is the main reason that has made Vietnamese enterprises hesitant to continue exporting to the market. A consignment of exports once imposed fines because the Japanese agencies found the higher-than-allowed antibiotic residues in the products.
Therefore, analysts say, though the Japanese market which always pays high prices for products, opens its doors widely to Vietnam’s rice, Vietnamese enterprises still do not dare to penetrate the market.
On the hesitancy of Vietnamese rice exporters, representative from Daewoo International, the biggest South Korean rice importer, has advised enterprises to improve the quality of exports. Pakistan once had the rice with the quality worse than Vietnam’s, but thanks to the great efforts and good cooperation, Pakistani enterprises have been successfully exporting rice to South Korea.
In fact, Vietnamese enterprises also have a success story in Hong Kong market. Previously, the high grade rice market of Hong Kong was dominated by Thai rice exporters. However, since 2010, Vietnam has become the leading rice exporter to the market, thanks to the higher quality and cheaper rice.
vietnamnet, DTCK
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