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Vietnam limits rice exporters to protect state contracts
The government will stop firms from exporting rice to certain destinations when such sales would be in competition with government contracts handled by the top two state-controlled exporters, an industry body has ruled.
From next Monday, exporters will not be allowed to sell rice to foreign companies that have signed government-backed deals, or to foreign traders who compete in the markets where Vietnam aims to sign such contracts, according to rules issued by the Vietnam Food Association.
The regulations were issued on July 30 and obtained by Reuters Thursday. Vinafood 2, the country's top rice exporter, started talks on selling up to 500,000 tons of rice to the Philippines in late July.
Rice is Vietnam's top cash earner among its agricultural exports. It is the world's second-largest rice exporter.
The government assigns Ho Chi Minh City-based Vinafood 2 to handle rice demand from the Philippines, Malaysia and Indonesia, while Vinafood 1, based in Hanoi, deals with Iraq and Cuba. Their contracts are government-to-government deals.
Other exporters compete for company-to-company contracts and can join government deals only by contributing their rice to shipments by Vinafood 1 or 2.
The food association has from time to time banned domestic firms from selling rice to foreign firms in markets where Vinafood 1 or 2 bids in major tenders, but it had not set any formal legal framework until July 30.
The association sets a price floor for the export of ordinary rice and grants loading permits after it has checked contracts to ensure proper pricing, destinations and payment terms.
Vietnam allows free export of glutinous and fragrant rice, which make up a tiny part of overall grain exports.
Under the new rules, serious violators could have their export license revoked by the Industry and Trade Ministry, the association said.
More than 160 rice exporters, all Vietnamese, shipped a combined 4.65 million tons of rice last year. Vinafood 1 and 2 accounted for the bulk of that.
Exports likely up 49 pct
Vietnam may boost shipments this year by as much as 49 percent to 7 million tons on an improved harvest, Do Huu Hao, deputy minister of industry and trade, said on Thursday.
“The government is aiming to boost rice exports this year to cover drops in prices,” Hao said by phone from Hanoi, citing higher output in southern Vietnam, which may produce up to 10 million tons of unmilled rice. “This good harvest will enable us to ship one to two million tons more of the grain,” he said.
Hao didn’t give specific figures for export price declines, or comparative production figures for southern Vietnam.
Vietnam is trying to increase agricultural earnings to narrow its trade deficit, which totaled US$3.4 billion in the January-to-July period.
The country has shipped about 5 million tons of the grain so far this year, according to Hao.
The government’s General Statistic Office said rice export reached nearly $2 billion in the first seven months.
Vietnam’s agriculture ministry has submitted a proposal to create government stockpiles of coffee and rice to protect farmers and exporters, Diep Kinh Tan, a deputy minister of agriculture, said in a phone interview on July 2.
The proposal is awaiting the approval of Prime Minister Nguyen Tan Dung.
Foreign players
In a separate development, the government has said that foreign-owned companies could be allowed to export rice from this year rather than 2011, the date set under Vietnam's World Trade Organization commitments.
A statement released by the Government Office said the government asked the Ministry of Industry and Trade to work out a “clear and transparent” framework and mechanism concerning foreign businesses’ trading of rice.
thanhnien, reuters (With additional reprting by Minh Quang)
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