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Vietnam's rice aiming for sustainable exports PDF Print
Friday, 26 February 2016 11:39

VIETRADE - Rice is one of the key agricultural exports of Vietnam. However, rice exporting has been challenged by the declining export price at almost every market.


A drop in white rice export and a surge in aromatic rice export

According to Vietnam Food Association (VFA), in 2015, export of rice averagely reported to attained 6.568 million tons, equivalent to USD 2.68 billion FOB and more than USD 2.78 billion CIF, an increase of more than 200,000 tons, but a decrease of more than USD 100 million FOB against statistics in 2014. Average FOB price  in 2015 was barely more than USD 408 per ton, lowered than the average FOB price in 2014 of USD 439 per ton.


According to VFA, rice export performance in the early of 2015 was gloomy. Rice export in the first three quarters was modest due the lack of contracts passed from the end of 2014. There have been a few newly signed contracts caused by the decline in demand from Asian markets, the major consumer of Vietnam's rice. However, there was positive development of the market towards the end of the year, mainly due to the large number of export contracts signed  with the markets of focus (more than 1.45 million tons), enabling rice exporting in 2015 met the set objectives.


Exporting rice has changed significantly in terms of structure and varieties when assorted white rice experienced a slump, especially white and low-quality rice. In the mean time, aromatic and glutinous rice increased significantly. Aromatic rice impressively exceeded the 3.6% growth rate in 2010 to nearly 23% in 2015. Steamed glutinous rice and Japonica rice are among the favorites. These changes have brought about the breakthrough in Vietnam's structure and varieties in rice exporting.


Three major consumers of Vietnam's rice are Asia, Africa and America. Rice exporting  to Asia takes up nearly 75% of the share, followed by Africa. Rice exported to Africa is mainly aromatic which compensate for the declining export of white and low quality rice due to the fierce competition from India, Thailand. America ranks third with Cuba as the biggest and stable buyer. Rice export the US, Mexico and Haiti also witnessed notable increase out of the total share.


Rice exports flourish in the early 2016

Rice exporting in the early 2016 is promising with quite a few ongoing-signed contracts and early requests from major rice buyers.


According to Mr. Huynh The Nang, Chairman of VFA, there have been 500,000 tons of undelivered rice for contracts of focus and 200,000 tons for commercial contracts, signed during the first quarter of 2016.


Rice inventories in 2015, meanwhile, were not as high as the  previous years' levels since the rice export volume in 2015 has risen to 6.7 million tons, not to mention another several millions were exported to China through informal border trade.


Mr. Nang noted that the availability of contracts, and low inventories are the positive signals for Vietnam's rice exporting during 2016.


Especially, he has an optimistic forecast for the first half of 2016 when key importers such as the Philippines, China, Indonesia and Malaysia will soon sign the importing contracts to stabilize the food supplies in response to the drought caused by El Nino.


China remains key importer not only in 2016 but also in the years to come due to the high demand, convenience of transportation and loose requirements for quality.


Philippines' National Food Agency has disclosed their rice-importing plan from Vietnam and Thailand in ensuring their food supplies. Consequently, Philippines will import at least 50,000 tons of rice from Vietnam and Thailand to consolidate their rice reserve in response to natural disaster. Indonesia also planned to import 350,000 tons of rice in the first quarter of 2016 to increase rice reserve and control price hike.


The average price of rice in Indonesia domestic market has raised to USD 784 per ton while the desired price is USD 612 per ton. Even though Indonesia's domestic food production capacity is forecast to grow in 2016, the US Ministry of Agriculture still anticipates the country to import about 1.6 million tons of rice, compared to 1.5 million tons in 2015.


Similarly, Malaysia is also forecasted to raise their rice reserve due to negative impact of El Nino.


Brand identity for rice and sustainable development

Despite the promising outlook in the early of 2016, Vietnam rise exporting is yet considered sustainable. Therefore, the vision in 2016 is to maintain and strengthen the market segment of medium and low quality rice, including China and ASEAN countries, to take advantage of the competitiveness on production cost and low transportation expenses. And in the long run, develop markets for high quality rice in diversifying the demand. Especially, strictly comply with Prime Minister's decision in restructuring agriculture sector with focus on promoting the coordination and development of the rice value chain and ultimately reduce price, improve quality, meeting the demand of choosy markets. Establish a brand for Vietnamese rice in the international market towards export promotion and sustainable development in the future.


Regarding the brand identity establishment, a project on Vietnamese rice brand by 2020 with vision to 2030 was approved by the Prime Minister. The project seeks to improve the image recognition of Vietnamese rice, raise the awareness of producers, importers, distributors and consumers domestically and internationally of Vietnamese rice products, establishing a foundation to expand market share, and enhance added value and competitiveness in the world market.


The project sets goal that by 2020, the image of Vietnamese rice will be popularized in the domestic market and in at least 20 countries. The national rice brand will be certified and protected at home and in at least 50 other countries. By 2020, 20 per cent of the nation's rice is to be exported under Vietnamese brands.


Besides, for sustainable rice export, the industry should perform well in marketing, international export market expansion, which can be achieved by: improve the production quality, strictly follow technical procedures in breed selection, planting, crop caring, fertilization, irrigation...ensure food hygiene in rice production; ensure the quality of packaging; provide information for contact address and product specifications...right from the packaging stage; promote the marketing of Vietnamese rice to the world through different channels, under various forms. Particularly, organize and efficiently participate in various fairs of rice to popularize Vietnamese rice among both traditional and newly developed international markets. Enhance the network coordination between Vietnam's rice producers, processors and exporters and their international counterparts both at regional and the world level, especially Thailand to actively control the distribution of rice in terms of volume and price across regional and international markets.

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