Rice exporters to face stiff competition

With global demand for rice expected to rise, 2011 is likely to be a good year for Vietnamese rice exports although an opening up of the grain market in line with trade commitments will pose new challenges to exporters.

According to the Viet Nam Food Association, world rice demand will rise from 29 million tonnes last year to 31 million tonnes since many countries have announced plans to increase their imports.

Indonesia did not import rice in 2008 and 2009 but bought 1.5 million tonnes last year and plans to import a similar volume in 2011.

Bangladesh too seems set to increase imports. Viet Nam shipped 400,000 tonnes to the South Asian country last year and has signed deals to export 250,000 tonnes in just the first two months of this year.

Malaysia has also indicated plans to import 800,000 tonnes in all this year and the VFA hopes to sell half or more of this quantity.

Vietnamese rice exporters achieved record numbers last year, shipping 6.8 million tonnes of the grain for US$3.2 billion.

Significantly, during certain periods last year Vietnamese rice prices were equal to or even higher than that of comparable Thai grains.

Food Association chairman Truong Thanh Phong said the export successes of last year are positive factors that will encourage exports this year.

But he warned: “There will also be difficulties for rice exporters this year since Viet Nam has to open up its rice market to foreign traders under its World Trade Organisation commitments.”

It will allow foreign traders to directly undertake rice trading in the country and export Vietnamese rice, and they will no longer need to enter into joint venture with local companies, he said.

A glaring weakness of Vietnamese firms is their small size and limited funds compared to their foreign counterparts, he said.

It throws up the possibility that many Vietnamese exporters will be forced to turn into local suppliers for foreign partners, he said.

“To improve their competitiveness, Vietnamese exporters need to be able to but rice from farmers at reasonable prices.”

Ministries, companies, and localities should co-operate to work out reasonable rice production costs, which could then be used to establish prices to be paid to farmers.

Phong also made some forecasts about the domestic market this year – Viet Nam will be able to ensure food security and rice prices will be rather stable; paddy prices will not be less than VND5,000 per kilogramme. — VNS

Tags: Vietnam rice, Vietnam rice exports