Rice remains one of Vietnam’s main exports amid the Covid-19 pandemic as local exporters continue to secure orders from demanding markets. Recent efforts to increase quality have brought about encouraging results for the sector.
In the first four months of 2021 Vietnam earned US$1.01 billion from rice exports
Multiple orders from main markets
Recently the Can Tho-based Trung An Rice Company won the bid to sell two lots of long-grain brown rice to the Republic of Korea (ROK). One lot has a volume of 11,111 tonnes at a price of US$572 per tonne and the other is 11,111 tonnes at US$578.5 per tonne.
If shipping, loading and customs clearance fees are excluded, the price is around US$500 per tonne, which is a relatively good price. One lot will be delivered to Incheon Port in September while the other to Ulsan Port in October.
It is the second time that Trung An has secured a rice order from the ROK, with the company having sold 33,458 tonnes to this market in total. The ROK is one of the markets for high-quality rice, therefore the consecutive orders to export rice to the country indicate the improved quality of Vietnamese rice.
In addition to the ROK, Vietnamese rice has also successfully conquered many other markets. According to the Ministry of Industry and Trade, Vietnam exported less rice in the early months of 2021 but brought in greater revenue thanks to price rises. Data from the first four months of the year showed that Vietnam shipped 1.89 million tonnes of rice worth US$1.01 billion, down 10.8% in volume but up 1.2% in value. The export prices during the period averaged at US$534 per tonne, up 13.4% from the same period of 2020.
In May the prices of Vietnamese rice continued to be relatively favourable compared to its competitors. Specifically, India’s rice prices declined for the seventh week in a row due to the increased supply following the government’s move to open reserves to help poor people overcome the difficulty of Covid-19. Accordingly, Indian 5% broken rice fell to US$370-374 per tonne in the final week of May, compared to US$371-376 in the previous week. Similarly Thai 5% broken rice dropped from US$475-485 per tonne to US$465-473 in the past week, the lowest level in more than 6 months. In the meantime, Vietnamese 5% broken rice remained at US$490-495 per tonne.
More support for exporters
Experts forecast that Vietnam’s rice export will see further improvements in the coming months thanks to more orders. Vietnamese exporters are seeking to secure orders from nearby markets such as China and the Philippines as these two countries are beginning a new round of rice purchases. Vietnamese exporters are also actively looking for opportunities from markets which have signed free trade agreements with Vietnam, such as the EU and the UK. Recently signed pacts such as the CPTPP, EVFTA and RCEP are helping to make Vietnamese rice more widely known, while the export markets are expanding to those consuming premium and specialty rice varieties.
But from another angle, the policies on rice export still need to see multiple changes so as to adapt to the new situation in which Vietnam has signed many free trade agreements. Specifically, new trade pacts offer benefits in terms of lower tariffs but also present challenges regarding pesticide residue requirements and the penetration of foreign rice into the domestic market.
In addition, local enterprises are being constrained by conditions on capital, rice growing areas and storage facilities so many are only engaged in trading, creating a purchasing and processing mechanism with too many intermediaries, resulting in lower profits for rice farmers. Therefore, it is necessary to promptly introduce appropriate changes in order to enhance the performance of exporters in a new situation.
In order to increase Vietnamese rice exports with more competitive prices, the Ministry of Industry and Trade is working with the Vietnam Food Association and relevant ministries and agencies to guide enterprises on how to maximise the opportunities brought about by free trade agreements. The ministry will also implement measures concerning policies and mechanisms, remove technical and trade barriers and revise regulations to support enterprises.
For their part, exporters are advised to be more proactive in enhancing their competitiveness with better quality and competitive prices as well as to build and protect their brands in order diversify markets towards sustainable export.
By the People Newspaper