VietNamNet Bridge - Watchdog agencies are drafting a farm-produce export development strategy, planning to tighten control over cross-border rice exports to minimize risks for Vietnamese exporters.

The Chinese government has granted rice import quotas to businesses, portending an increase in exports to the market, especially exports across border gates. 

According to the Vietnam Food Association (VFA), Vietnam exported 6.3 million tons of rice in 2014 worth $3 billion. Of this amount, 30 percent was exported to China through official channels, while 2 tons of rice were exported to the market across border gates.

The director of an An Giang-based export company said he was negotiating with Chinese businesses on the consignments of rice to be exported in April.

He noted that Chinese prefer importing rice from Vietnam through unofficial channels - across the border line – to cut costs.

If they import rice through official channels, they would have to pay a quota fee of $80 per ton, VAT and import tax, which would cost them $160 per ton. 

As such, if they bought Vietnam’s 5 percent broken rice, which is sold at $460 per ton, they would have to pay $620 per ton.

The director said that the Chinese demand for cross-border rice has been increasing because of higher domestic demand and increasingly high prices in China.

Vietnamese businesses also like exporting rice to China because lower quality products are accepted there. 

However, Ho Cao Viet from the Southern Agriculture Science & Technique Institute, said it was risky to trade with the market.

In most cases, Chinese businesses pay only 20 percent of the consignments’ value in advance and make payments only after they receive goods. 

Viet said the risks faced by Vietnamese businessmen are high.

If the Chinese importers are smugglers, the risks would be even higher, because the consignments of goods would be seized by Chinese customs agencies and Vietnamese businessmen would not get paid for exports.

This is why Ministry of Industry and Trade (MOIT) has repeatedly called on Vietnamese businessmen to export products through official channels.

However, Professor Vo Tong Xuan, a leading Vietnamese rice expert, believes it is impossible to stop the cross-border import/export activities. 

Therefore, it would be better to tighten control over cross-border exports to minimize risks rather than request exporters to say ‘no’ to the cross-border trade.

“Vietnamese exporters must not negotiate with Chinese importers through intermediaries, but directly with importers,” he said. 

Xuan said that in case negotiations fail, Vietnamese businesses will need support from other Vietnamese businesses and the Vietnam Food Association which is responsible for protecting Vietnamese businesses.

DDDN