Rice exports face tough time amid huge global supply, according to speakers said at a conference held in HCM City on June 24, 2019

With an abundant global supply and high inventory in major exporting countries, Viet Nam is expected to struggle to secure exports of rice in the second half of the year, speakers said at a conference held in HCM City on June 24, 2019.

Tran Quoc Khanh, deputy minister of Industry and Trade, said that Viet Nam’s rice exports in the first half of the year experienced great challenges due to a drop in demand from major importers.

Except for the Philippines, the country’s three major traditional rice importing countries such as China, Indonesia and Bangladesh all imported much less in the first half of the year.

The trend is expected to continue for the rest of the year because of the high inventory in China, an election year in Indonesia, and Bangladesh’s ongoing recovery from flooding, Khanh said.

The decline in imports from these markets has also affected two other leading rice exporters, India and Thailand.

In the first five months, Viet Nam exported a combined 239,000 tonnes of rice to China, Indonesia and Bangladesh, compared with 1.44 million tonnes over the same period last year, according to the Export and Import Department under the Ministry of Industry and Trade.

In recent years, many rice importing countries have imposed rice tariffs and allowed other rice suppliers to participate in the G2P (government-to-private) tenders in order to buy rice of higher quality at more competitive prices.

Meanwhile, countries such as Myanmar, Cambodia, and Pakistan are trying to increase their rice export output.

In addition, China is not only the largest rice importer, but also one of the world’s major rice exporters.

The Ministry of Industry and Trade is working with agencies such as Viet Nam Food Association and rice exporters to implement solutions, such as reviewing policies of foreign markets, according to Deputy Minister Khanh.

While negotiating bilateral and multilateral free trade agreements, the ministry has discussed with foreign partners about tax reductions and removal of trade and technical barriers for Vietnamese rice products.

The ministry has also updated information for local enterprises and associations about regulations on food hygiene and safety, quality control and traceability.

Many programmes on trade promotion and brand development have been luanched, including trade fairs in mainland China, the Philippines, Indonesia, Malaysia, Singapore and Hong Kong, as well as France, the Netherlands, Ghana, Ivory Coast and the US.

To assist businesses in studying customer demand and promoting exports, the ministry has worked with localities that produce high outputs of rice, such as An Giang, Long An, and Kien Giang provinces, Can Tho City, and HCM City.

Experts have recommended that Vietnamese exporters diversify export and import markets and avoid dependence on only certain markets.

Solutions sought to boost rice export amid market challenges

Vietnam needs to take new solutions and steps in rice production and export to ensure benefits of businesses and farmers given market-related difficulties forecast for the sector in the whole year, heard a seminar in Ho Chi Minh City on June 24.

According to Tran Quoc Khanh, Deputy Minister of Industry and Trade, the demand for rice of major markets like China, Indonesia and Bangladesh has dropped recently.

Meanwhile, the US Department of Agriculture forecast that the global rice supply will increase in the time ahead, drawing a gloomy picture of rice export of Vietnam and other countries.

By the end of May 5, 2019, Vietnam exported 2.76 million tonnes of rice valued at 1.18 billion USD, down 6.3 percent in volume and 20.4 percent in value against the same period last year.

Rice price stood at 427.5 USD per tonne, a decrease of 76.8 USD year-on-year, the Deputy Minister said.

Phan Van Chinh, Director of the Export-Import Department under the Ministry of Industry and Trade (MoIT), said in the first five months of 2019, China, Indonesia and Bangladesh imported only 239,000 tonnes of rice in total from Vietnam, as compared with over 1.44 million tonnes shipped to the three countries in the same period last year.

Bui Thi Thanh Tam, Vice President of the Vietnam Food Association, said the domestic rice sector is expected to face a range of challenges not only in 2019 but the years to come, firstly due to the increasing global rice volume which is forecast to exceed 499 million tonnes this year, up 4.2 million tonnes against the previous year.

Another reason is the large amount of rice stockpiles, she said, taking China as an example as the country’s rice stockpiles amount to about 116 million tonnes. China may replace the US to become a big rice exporter in the world. 

Le Minh Duc, Director of the Department of Industry and Trade of the Mekong Delta province of Long An, pointed out shortcomings in the implementation of solutions that were rolled out to help remove difficulties facing rice exports.

He suggested the Ministry of Agriculture and Rural Development clearly defines the land area for rice cultivation to ensure national food security and rice exports at the same time, while adjusting rice crops to maintain rice quality and quantity, and reduce production costs.

The MoIT should step up trade promotion activities and maintain revenues of rice export to China, he said, calling on associations to assist enterprises in building brand names for Vietnamese rice.

Other delegates at the event proposed connectivity models between businesses and farmers in rice production and consumption in order to meet market requirements.

Apart from issuing mechanisms in support of rice purchase to stock reserves, relevant ministries and agencies need to better the market information work to help businesses set forth their purchasing plans, Khanh said.

Taking effect in October last year, Decree 107/2018/ND-CP, which replaced an older decree, aims to remove legal barriers for rice businesses to expand to foreign markets.

According to the new decree, rice-exporting businesses will no longer be required to own rice storage or paddy milling and grinding facilities with processing capacities of 5,000 tonnes of rice and 10 tonnes of paddy per hour, respectively.

Instead, they now can rent such facilities from other agencies and organisations. The capacity volume requirements have also been removed.

Tran Van Cong, deputy director of the Ministry of Agriculture and Rural Development’s Agro Processing and Market Development Authority, said the new decree would help rice traders cut costs significantly.

Khanh said the decree was a breakthrough in institutional policy regarding rice export activities, removing difficulties for rice firms.

The decree also stipulates additional regulations on the responsibilities of ministries, sectors and localities in rice export management.

According to the General Department of Customs, Viet Nam’s rice exports reached 2.76 million tonnes in the first five months, down 6.3 per cent compared to the same period last year. The country earned US$1.18 billion worth of exports in the period, a decline of 20.4 per cent over the same period last year.

The country’s rice products are exported to 150 countries and territories, including the Philippines, Malaysia, Indonesia, mainland China, Cuba, Hong Kong, Singapore, Iraq, Ivory Coast, Ghana and Mozambique.