New decree weeds out small rice exporters

Of the 200 companies which have been exporting rice so far, only one has been granted the certificate on meeting all the requirements for exporting rice in accordance with the Decree 109.

The decree 109 will take effects on October 1, 2011, or just in four months. From that time, only the rice companies, which can meet the requirements stipulated in the decree 109, will be allowed to export rice.

To date, enterprises from all economic sectors have the right to export rice. This explains why many enterprises, whose business in no way relates to the rice production, also try to collect rice and export. Many of them even do not have depots, rice processing workshops.

Meanwhile, many foreign businessmen and domestic enterprises, which have favorable conditions and have high production capacity, cannot export rice.

Some sources say that the power of regulating rice exports is now in the hands of the Vietnam Food Association (VFA), which always gives “lucrative jobs” to its members, thus having caused the monopoly in rice export. This has been described as unhealthy competition which has been “distorting” the market.

The decree 109, with a lot of strict requirements for rice trade, is hopes to help make the rice export activities transparent and healthy, because it will eliminate incapable enterprises.

However, a new problem has arisen that to date, only one enterprise, Angimex, has been granted the certificate on meeting the requirements for exporting rice in accordance with the Decree 109, while the day when the new decree takes effect is nearing.

Meanwhile, other applications for certificates have been given back to enterprises because the enterprises still cannot present the certificates on having depots and husking factories as required.

Under the new decree, businessmen must have at least one specific warehouse with the capacity of 5000 tons of unhusked rice at minimum which can meet the standards stipulated by the Ministry of Agriculture and Rural Development, and one husking factory with the minimum capacity of 10 tons per hour, in order to be eligible for exporting rice.

The businessmen, who cannot meet the above said requirements, will only be able to supply rice, but not allowed to export rice.

According to VFA, of the current 200 rice export companies, 57 companies export more than 10,000 tons a year, accounting for 87 percent of the total rice exports. Meanwhile, the other 137 companies only export 13 percent of the total export volume. Forty export companies only export 200-300 tons of rice a year. Especially, a company has been found as exporting only one ton a year.

If referring to the regulations stipulated in the Decree 109, the small enterprises do not have capability for exporting rice.

In order to obtain the certificate on meeting the requirements for exporting rice, Angimex has to build 11 workshops recently and a specific warehouse system with the total capacity of 65,200 tons of rice which ensures the maximum preservation duration of one year. Also, the company also has 11 husking workshops with the capacity of 5-30 tons per hour.

Besides Angimex, some other enterprises also reportedly can meet the requirements and they are following necessary procedures to get the certificates. However, the number of the enterprises is less than 10.

Dr Le Van Banh, Head of the Mekong Delta Rice Institute, while applauding the decree, said that with no depots and material growing areas, enterprises would face disadvantages in negotiating with partners and they cannot fix the sale prices at the levels they want.

Nguyen Thanh Long, Managing Director of Gao Viet Company, complained that the decree 109 has caused big difficulties for small enterprises. The decree has set overly strict regulations which cannot be satisfied by small enterprises. In order to have the depots with the capacity of 5000 tons of rice, enterprises would have to spend 25-35 billion dong.

Tran Phuoc Thuan, Deputy Director of Can Tho Farm Produce Import-Export Company, agrees, saying that small enterprises have limited financial capability, while it is very difficult to access bank loans to make investment in depots and processing workshops. – Vnexpress

Tags: Vietnam rice, Vietnam rice exports, Vietnam rice exports 2011