VietNamNet Bridge – No matter what way Vietnam follows to develop rice production and export, the way must ensure two things – the benefits for farmers and the stability of the rice trade.
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What will be the world market like in 2013?
The Vietnam Food Association (VFA) has warned about a difficult year for rice
export in 2013.
In fact, 2012 was also an unsatisfactory year for Vietnamese rice exporters.
Vietnam exported 7.72 million tons of rice, worth US$3.5 billion, representing
an increase of 8.2 percent in quantity, but a decrease of two percent in value.
Where do Vietnam’s rice products stand in the world market? According to the
Food and Agriculture Organization (FAO), Vietnam’s 5 percent broken rice was
traded at $412 per ton in December 2012. The price was higher than that of India
and Pakistan. However, Vietnam’s rice was cheaper than Thailand’s which was
traded at $583 per ton.
Especially, Indica rice from Hubei province in China was traded at 3,900 yuan in
September 2012, or $625 per ton.
Meanwhile, Vietnamese experts believe that there would be no big changes with
Vietnam’s farm produce in 2013, which means that the more rice Vietnam produces,
the biggest loss it will incur.
The three scenarios
In such circumstances, there are three choices for Vietnam.
First, Vietnam would follow the way being followed by India, which sells low
quality rice at low price and tries to sell as much rice as possible.
If it chooses that way, it is the farmers growing rice who would suffer. The
government has stated that it would apply necessary measures to ensure the 30
percent profit at minimum for rice farmers. However, farming still cannot
support their lives, even though the rice they put out has been exported in big
quantities, and at very low prices.
More importantly, experts said, with low quality and low price rice, Vietnam
would not be able to build up a strong brand for Vietnamese rice.
The second choice for Vietnam is to follow Thailand, which is selling high
quality rice at high price.
However, this would also be thorny path to follow, because Vietnam is not a
strong rice brand at all, while Vietnam still has to compete with cheap rice
from India and Pakistan.
Especially, in the current conditions, consumers tend to choose low cost
products to be full up, instead of high quality products. Thailand has lost Hong
Kong and Chinese markets to Vietnamese and Indian enterprises, which should be
seen a big lesson for Vietnam.
The third scenario will occur if Vietnam can conduct all the phases of the rice
production process, from production to export, in a harmonization. It would also
need to join forces in seeking partners and negotiating export contracts so as
to optimize their export profits.
Prof. Vo Tong Xuan, who is considered the leading rice expert in Vietnam, when
talking about the low-price Vietnam’s rice, emphasized that there is one
principle to follow: the export prices must bring benefits to the nation and to
farmers, who account for 70 percent of Vietnamese population.
In order to ensure benefits for farmers, Vietnam should strive to sell high
quality rice to make profit – like the purpose of Thailand. However, it needs to
follow a special way which allows implementing its strategy effectively.
Xuan believes that after Thailand announced the rice price increase of 50
percent, Vietnam should also increase its export prices.
SGTT