Vietnam did very well in rice exports this year, but next year is going to be a tough one with unpredictable changes in the world market and stiff competition from cheap rice sources in India, Pakistan and Myanmar, the Vietnam Food Association (VFA) said.
|Workers at the Thanh Binh Agriculture Processing Centre load rice for export. — VNA/VNS Photo Dinh Hue|
Speaking at a meeting held in Tien Giang Province yesterday, VFA general secretary Huynh Minh Hue said local businesses exported more than 6.7 million tonnes of rice for a free-on-board (FOB) value of USD3.29 billion in the first 11 months of the year.
This represented a year-on-year increase of 7.59 percent in volume and 23.3 percent in value, he said.
The average FOB price in the period was USD488.6 per tonne, up USD62 over the last year.
However, Vietnam’s rice trade has been stagnant recently under the pressure of cheap rice sources from India and Pakistan, Hue said, noting that commercial rice export contracts reduced strongly last month, with only a few signed for fragrant and glutinous rice.
“World rice market is at a special stage and has four different price levels now,” Hue said.
Thailand is offering 5 percent broken rice at USD800 per tonne under the Government’s scheme to ensure higher minimum prices for farmers and USD600 per tonne for stockpiled rice.
Vietnam’s 5 percent broken rice is traded at USD550 per tonne while a tonne of 5 percent broken rice from India and Pakistan are priced at USD440-450.
Myanmar is also a competive rice source with its price even cheaper than that of India and Pakistan.
“Due to a big gap in prices among supply sources, many importing markets, especially in Africa, have shifted to rice from India and Pakistan, except for contracts that have strict quality requirements and quick delivery times,” he said.
Hue said the Thai Government will continue its scheme to buy rice from farmers at higher prices, but the move has not had the expected impact on world rice prices since Thai exporters have huge reserves and need to sell them.
Despite stable supply and competitive quality, Vietnam cannot compete with India and Pakistan in the export of low-grade rice since the latter offer very low prices.
However, regarding fragrant rice exports, Vietnam is expected to gradually take over this segment from its Thai rivals in certain markets thank to its competitive prices and good quality, said VFA chairman Truong Thanh Phong.
Le Truong Son, general director of Dong Thap Trading Corporation, said with huge losses caused by the historic flooding floods, Thailand would reduce its exports next year. Vietnam should tale steps to fill this gap, he said.
Meanwhile, China is emerging as a potential market for Vietnamese Jasmine rice, Phong said.
He said that VFA would organise trade promotion programmes in China and work with Chinese counterparts to set up a China-Vietnam Business Club to boost exports to the lucrative market.
The Philippines will also import rice next year, and one of the exporters may be Vietnam, Phong said, adding the VFA will keep a close watch on this development and pass on appropriate directions to its members.
Vietnamese enterprises had signed contracts to export 7.35 million tonnes of rice from the year to November-end, meaning another 617,000 tonnes had to be shipped in this month and earlier this year.
Phong said local traders have currently reserves of 1.14 million tonnes stored in warehouses plus output from the autumn-winter harvest, meaning that the stockpile for the first quarter of next year is expected to exceed one million tonnes, much higher than last year.
Le Minh Truong, director of the Can Tho-based Song Hau Food Co., said with the increase in supply from India, Pakistan and Myanmar at “attractive” prices, Vietnam will certainly be affected.
It is important that enterprises and farmers prepare for this situation psychologically as the current high prices are not likely to last, he said.
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