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Vietnam rice exports could go against the grain
Rice exports will face a gamut of challenges not related to the weather this year, although disasters and diseases will retain their risk factor, experts and officials say.
They say the foremost challenge for the year will be the appearance of a new rival in the region, while unstable supply and demand in the world market will pose tricky situations for domestic producers and exporters.
“This year, our exports may face more difficulties due to the appearance of Myanmar who will directly compete with us in the low-level rice segment,” Deputy Minister of Industry and Trade Nguyen Thanh Bien told Thanh Nien Weekly.
Myanmar plans to raise its rice export to 1.5 million tons this year, from only 900,000 tons last year. And export prices of Myanmar rice at $320-330 per ton are 30-31.3 percent lower than that of Vietnam.
Pham Quang Dieu, Director of the Agricultural Development Information Center under the Ministry of Agriculture and Rural Development, said major competitors like India and Thailand could increase their shipments after curtailing them for some time.
Farm hands, wearing conical hats, rake rice grain at Co Do farm in Can Tho City in 2008
Thailand, the world’s biggest rice exporter, is expected to sell 3.8 million tons of rice that it has in stock, so it has storage space for rice bought from farmers in the latest harvest.
Meanwhile, global rice supply is forecast to rise as many countries facing food security threats have begun to deal with it themselves.
The Hanoi-based Institute of Policy and Strategy for Agriculture and Rural Development said the Philippines, for instance, had earmarked $1 billion for a program to boost rice production.
Malaysia has approved a 2.4 billion ringgit ($700 million) food security plan while China is offering various financial incentives to increase rice output.
Dieu warned that Vietnamese rice exports now rely heavily on some big markets such as Africa, Cuba, Iraq and Indonesia. “The market diversification is not big. Thus, we will be caught in a crunch situation if the big markets cut imports of our products.”
According to the Vietnam Food Association, Vietnam is facing the risk that its rice exports to Africa may decline this year, as importers are unable to sell their stock in the continent. In 2009, Africa was the biggest market for Vietnamese rice of low and medium quality, importing some 30 percent of the country’s total shipments.
Besides, many export contracts of hundreds of thousands of tons of rice to some markets have been cancelled since late last year. Deputy Minister Bien explained that some firms have faced problems in terms of goods delivery or getting payments.
Meanwhile, some firms said that the reason for cancelled contracts may be that foreign traders were not able to find customers to resell the rice after signing contracts with Vietnamese partners. In other cases, local firms have cancelled the deals because input prices have made the rice more expensive than signed contracts.
However, Bien said the volume under cancelled contracts was too small compared to the total of signed contracts for the year, and had not affected the country’s rice exports.
Vietnam has signed contracts to export 2.38 million tons of rice this year, of which around 1.47 million tons will be shipped in the first quarter.
In addition in the world market, rice production is facing difficulties caused by disease, drought and salinization in some coastal localities, according to the Ministry of Agriculture and Rural Development. Over 100,000 hectares of rice paddies have been hit by pests.
Vietnam aims to produce more than 23 million tons of rice this year, up by 45,000 tons over last year.
The brighter side
Despite all the challenges, Dieu said Vietnamese rice exports could do well because of higher demand than supply in the global market. According to the Vietnam Food Association, world demand for rice is estimated to rise by 6 percent, while trade in the grain is expected to increase by 4 percent.
“With the forecast increase in demand, the export prices may get higher,” he said. Under contracts this year, quotes for 25 percent broken, a lower-end variety, are quite high this year, ranging from $480 to $664.9 per ton, according to the Vietnam Food Association.
Nguyen Van Chau, Director of rice export firm Thuy Dat from Nam Dinh Province, said conditions were favorable for rice exporters, as opportunities were greater in the context of higher demand. Meanwhile, firms have also been more active in implementing contracts, not depending too much on the association, as before.
Vietnam is expected to ship 6.7 million tons of rice this year, up 6 percent over last year, according to the association.
To improve the quality of rice, the association plans to set up an investment fund with contributions from exporters. The fund will be used to help firms and farmers upgrading storage and processing facilities.
The association will also help over 13,000 rice growing communes buy computers so that farmers can connect to the Internet and access information about production, market prices, weather and so on.
Ngan Anh
thanhnien
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