Vietnam’s 2010 rice export overview

Vietnam’s rice export in 2010 reached 6.88 million tonnes for $3.23 billion, up 15.4 percent in volume and 21.2 percent in value against one year earlier, the Thoi Bao Kinh Te Sai Gon newspaper reported, citing primary statistics of Ministry of Agriculture and Rural Development.

Above satisfactory figures created an optimistic sentiment and made hidden challenges fade. Therefore, reviewing the market last year could help rice processors and exporters have preparations for coming time.

The rice market in 2010 closed with unpredictable movements. The price volatility seemed tougher than previous years. Many companies had to suffer big losses by the middle of 2010 as signing export contracts at low prices while they had to purchase rice from farmers at higher prices by the year end.

In the end of 2010, rice prices were in “risky range” as seen in the table of material rice and export prices. Domestic companies struggled to buy paddy at 4,000 dong/kilogram, material rice at 5,500 dong per kilogram in Dong Thap and 5,800 dong/kilogram in Tien Giang, but meanwhile, they only earned around $400 per tone from exporting 5 percent broken rice to other countries. Rice export plunged to the price bottom in August when Vietnamese enterprises en masse shipped 25 percent broken rice at low prices, some times at only $300 per tonne whereas paddy and material rice prices in Vietnam bounced back to approximately 6,000 dong and 6,700 dong per kilogram. Rice exporters fell in dilemma.

At that time, the market created both the biggest challenge as well as largest opportunity for exporters who have high storage volume to earn profits.

One of changes in rice trade policy in recent years was the government’s Decree No 109 that will be applied from 2011 and promoted effective in few years. But new regulations on rice trading such as warehouse, grinding capacity will set a wide-range selection among small and medium sized enterprises. The decree aims to make the paddy and rice markets healthy and boost exports more efficiently, but it will benefit big companies through reducing competitive pressure in exports.

2010 also saw the moves of Cambodia in preparing to export rice by itself. Cambodian government’s determination in enhancing investments in paddy, rice and negotiations with China, Philippines, Indonesia, and Bangladesh�will challenge Vietnam as a rival in medium-term. For this, the material rice supply to Vietnam will be narrowed.

Last year Vietnam Food Association applied the floor prices and it was hard for companies to predict “sensitive” times. Changes in the floor price policy pushed many firms to face difficulties.

Notably, Vinh Long Food Joint Stock Co was listed on the stock market, signaling a “underground” wave in rice trade in the future. The listing of rice companies will help them increase the capital raising capacity, business expansion and administration innovation, which will open and promote an internal competition.

Tags: Vietnam rice, Vietnam rice exports, Vietnam rice exports 2010