According to Vice Minister of Trade Phan The Rue, rice will be a “hot” item this year and demand will require 412 million tonnes while supply will be able to ensure approximately 406 million.

In 2006, the world’s major rice exporters remain Thailand, Vietnam, the US, India and Pakistan, and the rice export demands of countries in the Asia-Pacific region will also surge.

The Republic of Korea has lifted a ban on importing rice while Indonesia is likely to import rice again in the coming time after a period of banning rice imports.

Germany is also seen as a lucrative market for Vietnamese rice businesses.

Mr Rue said Vietnam fulfilled rice export targets in 2005 set by the Government as farmers’ rice volumes were well consumed at profitable prices. In addition, businesses benefited from exporting rice while ensuring national food security.

Chairman of the Vietnam Food Association Truong Thanh Phong said the successful rice exports last year resulted from reinforced trade promotion activities that helped to attract a large number of customers.

In previous years, a number of customers only bought rice at a maximum level of 100,000 tonnes but in 2005 there were 10 customers ordering between 100,000 to more than 300,000 tonnes.

Another reason was attributed to the successful building of a closed production process from material exploitation to export. In addition, the price of Vietnamese rice fell by US$4-5 per tonne against Thai rice.

However, to develop the agricultural sector sustainable in coming years, a number of issues have to be resolved. Rice export management is still weak. Rice export volumes have not been identified, causing difficulties for enterprises in negotiating and signing export contracts.

In the long-term, Vietnam will have to seek low-grade rice export markets and improve the quality of rice. Currently, some Asian and African countries are purchasing low-grade 25 percent broken rice. However, if the economies of these countries further improve, their increased use of 15 percent broken rice will put Vietnam in a passive position. Sixty percent of Vietnamese rice export is of low quality, therefore, the country should further introduce new rice varieties to achieve high-quality rice exports.

Although Vietnam is the world’s second largest rice exporter, its export value is placed third or fourth. Vietnam has to sell rice at a cheaper price due to a weak processing system and poor marketing. Moreover, despite that fact that Vietnamese farmers have achieved high productivity, yield and profits per hectare, most of them grow rice on small areas so they cannot escape poverty if they only cultivate rice.

In 2006, the sector will pay greater attention to improving the quality of export rice. The Government encourages the export of high quality rice to traditional markets such as Japan, the EU, Indonesia and the Philippines, as well as access to new markets, including Iraq, Iran, the Republic of Korea and some African countries.

Currently, rice ranks seventh among items of highest export value, after crude oil (US$7.8 billion), garments (US$4.8 billion), footwear (US$3 billion), seafood (US$2.6 billion), wooden products (US$US$1.5 billion) and electronics components (US$1.5 billion).