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Vietnam’s rice exports: Chances and Challenges

Vietnam’s rice exports: Chances and Challenges

Tuesday 28, 06 2022
The global food crisis is an opportunity for Vietnam to increase rice exports and play an important role in ensuring global food security.

Opportunities for rice exports

Data from the Food and Agriculture Organization of the United Nations (FAO) show that food prices have increased by 30% in the past year, as the COVID-19 pandemic and the conflict in Ukraine disrupted global supply chains.

Food and Agriculture Organization

More countries are choosing to cut exports and increase food and food hoarding to cope with the ongoing situation. That is considered to likely worsen the situation and cause prices to continue to escalate.

Since the Russia-Ukraine conflict broke out, about 30 countries have implemented measures to limit food exports. Many countries are expected to shoulder the task of supplying raw materials to the world, such as India, Brazil, Argentina, etc., have started limiting exports.

In the context that countries are looking for ways to stabilize food security, Vietnam's companies are making efforts to export to meet the increasing demands of customers worldwide.

Statistics show that rice exports in the first 5 months of the year reached about 2.8 million tons, bringing in a total export value of 1.3 billion USD, up 6.9% in volume.

Vietnam's rice price remains higher than that of several traditional rice exporting countries such as India, Pakistan, and Myanmar. The Philippines is still Vietnam's largest customer, with exports in the first 5 months of the year reaching nearly 1.3 million tons, an increase of more than 300,000 tons compared to the same period in 2021. Rice exports to Africa have increased by more than 76% compared to the same period in 2021. last year.

Vietnam's rice price

Exports to some other markets also increased sharply in the first 5 months, such as Ivory Coast up 37%, Malaysia up 19%, Mozambique up 47.1%, etc.

Besides maintaining orders to traditional markets, Vietnam's companies are also promoting exports to strict markets, such as the US or EU countries such as Italy, Germany, Sweden, Belgium, and Spain.

Mr. Nguyen Van Thanh - Director of Phuoc Thanh IV Production and Trading Co., Ltd, said that in the coming time, rice exports have many positive signals thanks to the demand for buying in markets remains at a high level. Especially the Philippines and China markets. The reason is because of the reduced production due to floods in China, while in the Philippines, rice stocks are at a low level.

Agricultural expert Nguyen Dang Nghia acknowledged that the opportunity to export rice is now very high. The pandemic and the recent conflict have greatly affected the world's food security. The global food crisis is an opportunity for Vietnam to increase rice exports and play an important role in ensuring global food security. So, this is an export opportunity for Vietnam to export.

In addition to the general demand for rice, some countries require high-quality rice. Vietnam's rice ST25 has been certified as the world's best rice, proving that rice products from Vietnam can meet the high demands, so this is an opportunity to boost exports.

Challenges remain

According to Mr. Phan Van Co - Marketing Director of Vrice. Co., Ltd, although the market has many positive signals and the rice export price is still high, Vietnam's rice exports in the coming time still face many difficulties. The African market has switched to buying Indian rice due to its good price and much cheaper shipping costs than Vietnam.

Vietnamese rice

Besides, production costs along with high freight rates make Vietnamese rice less competitive in the market. "Currently, freight rates to major ports in the EU are still at 9,000 - 10,000 USD for each 20-foot container. The shortage of empty containers remains. That makes corporate profits plummet,” said Mr. Phan Van Co.

Mr. Co state that stabilizing high-priced rice is a challenging problem now when the price of agricultural inputs is escalating day by day, making farmers more miserable when producing rice. Therefore, if rice exporters want to maintain their export performance, they must stabilize their output and reduce production costs to make a profit.

The big problem now is that Vietnamese rice has to face fierce competition from Thai rice in terms of price and quality.

Regarding the export price of rice in the coming time, Mr. Nguyen Van Thanh said that the liquidity will be low, and the price will be difficult to increase, despite the great demand. The reason is that some countries still have large inventories. In addition, there are countries lacking rice but reserve mainly for internal contract bidding, so it is difficult for commercial contracts to penetrate the market.



Compiled by VietnamCredit

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