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How many rice exporters should Vietnam have?
The Vietnam Food Association (VFA) has proposed the Ministry of Industry and Trade to stop licensing more rice exporters. However, experts believe that it will be unfair if the enterprises which can meet the requirements cannot join the market.
To date, 129 enterprises have been granted the licenses to export rice after they proved that they can meet the requirements stipulated in the government’s Decree 109 on rice trade management. Meanwhile, more and more enterprises have applied to join the market.
Expressing its worry about the increasingly high number of rice export companies, VFA has suggested that the licensing should be stopped, or the existence of too many exporters would force exporters to compete fiercely with each other, which may force them to reduce export prices and profit.
However, Trinh Van Tien, a rice expert from the Institute of Policy and Strategy for Agriculture and Rural Development IPSARD, it would be unfair if the management agency fixes the number of rice export enterprises in Vietnam.
The Government has released the decree No 109 with an aim to restructure rice export enterprises. The decree stipulates that only the enterprises which can meet the strict requirements set by the legal document will be able to export rice.
The new stricter requirements have been set in order to settle the current problems in the Vietnamese market. In the past, when no limitation was set, all enterprises could be able to join the market, including the ones which did not have production workshops, while they only collected and polished rice for export.
The existence of the enterprises on the market was believed to be the main reason behind the fierce competition which forced enterprises to offer surprisingly low prices to foreign importers, thus causing losses to Vietnamese farmers and enterprises.
Now the decree 109 has set higher requirements on rice exporters. Therefore, any enterprises which can meet the requirements must be licensed.
Tien said that all traders want to do business in a market with few rivals. However, the existence of many rice exporters would bring benefits to producers, because they have more opportunities to sell rice at better prices.
Pham Quang Dieu, a rice expert from Agromonitor, a farm produce market analysis firm, agreed that it is impossible to say how many enterprises Vietnam should have, though Vietnam exports 7 million tons of rice every year.
Therefore, Dieu believes that it is not necessary to think about the number of rice exporters on the market, but it is necessary to pay attention about the capability of the enterprises.
Dieu said that state management agencies need to check if the rice exporters can satisfy the requirements set up by the decree 109. Besides, he said, it is necessary to take periodic examinations to be sure that the enterprises really have capability, and they did not “borrow” workshops and material facilities to show to management agencies when seeking permission for exporting rice.
Dr Nguyen Van Nam, former Head of the Trade Research Institute, thinks that the decree 109 will surely lead to the sharp fall in the number of rice exporters (there were 262 in the past), because it imposes stricter requirements. However, Nam does not think that the number of rice exporters has much significance.
Nam said that VFA should improve its management work, so as to create a healthy business circle which acts for the national interests.
By early October, Vietnam had exported 5.9 million tons of rice, worth more than 2.8 billion dollars. VFA has predicted that Vietnam would export 7 million tons of rice this year, earning 3 billion dollars.
The current market conditions are believed to benefit Vietnam’s rice export. In the first nine months of the year, the average export price was 520 dollars per tone, an increase of 133 dollars per ton in comparison with the same period of the last year.
vietnamnet, TBKTVN
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