Vietnamese rice faces disadvantages

At a recent conference in HCM City, experts expressed alarm at ominous statistics from the Vietnam Food Association (VFA). In the first eight months of 2013 Vietnam exported 4.67 million tonnes of rice, earning US$2 billion, representing a 10.9% fall in value and a 7.86% drop in volume compared to a year earlier.

VFA Vice President Pham Van Bay said domestic rice exporters are struggling to overcome excess supplies and global dwindling demand.

Thailand recently lowered rice prices in an attempt to clear its stocks, impacting the Asian rice market and posing a big challenge for Vietnamese exporters.

Vietnamese rice volume for export is forecast to fall in the coming years (Photo:vneconomy)

Bay said there will be a fierce competition among rice suppliers later this year after India decided to join the global rice market, and the Philippines and Indonesia – the two big importers – postponed transactions due to decreasing rice prices.

VFA forecast Vietnam’s 2013 rice export output will total 7.1–7.2 million tonnes— 500,000 tonnes less than in 2012. The sharpest fall is still to come as Asian abundance looks set to flood fourth quarter markets.

Deputy Minister of Trade and Industry Tran Tuan Anh believes inconsistent quality, insufficient branding, and volatile prices are all exacerbating the Vietnamese rice industry’s struggles.

In his opinion, many rice businesses lack the long-term export investment strategies required to expand their customer base and connect with processors.

Experts are also worried Vietnamese rice export volumes will decline from 2014 as farmers are encouraged to shift to other crops of higher economic value.

The Ministry of Agriculture and Rural Development (MARD) is planning to restructure rice cultivation in several provinces, increasing crop diversity and benefiting farmers.

MARD Cultivation Department Deputy Head Pham Dong Quang said corn will be a key rice alternative thanks to high market demand and productivity.

The plan is expected to be approved by the end of this year. A steep fall in Vietnamese rice exports will benefit India and Thailand—its two major trade rivals.

VFA has recommended the Ministry of Industry and Trade broaden government-level trade promotion to support the negotiation and signing of larger contracts.

It also urged the MARD to draft regulations governing rice stockpiling, thereby assisting farmers and stabilising market prices.

Deputy Minister Anh said the industry’s future rests on restructuring production, developing reputable brands, boosting trade promotion, and exploring emerging markets.

Other experts underlined the need to develop larger scale rice cultivation areas; strengthen links between farmers, scientists, authorities, and traders; and apply the advanced technologies capable of improving quality and efficiency.