VietNamNet Bridge - China, the biggest Vietnam rice importer since 2012, hsa unexpectedly reduced imports in the first months of the year, raising controversial predictions about the level of demand from the world’s most populous country.

 

With 95 million hectares, China’s food crop growing area accounts for only 13.1 percent of crop area worldwide, but with an output of 0.5 billion tons, China makes 20 percent of the total food produced in the world.

However, analysts said China faces three problems with its rice production.

First, though China has stopped the downward trend in the rice growing area and has maintained high productivity, food security has fallen sharply.

In 1970, rice accounted for 55.3 percent of the ‘food basket’ of the country (rice, wheat and maize). The proportion dropped dramatically to 29.8 percent in 2014. 

Counting only rice and wheat, the proportion dropped from 72.5 percent 53.5 percent.

Though Chinese favor rice, they now use more wheat, a factor that has influenced the sharp rise in Chinese rice imports in recent years.

Second, the measures taken to restore the rice growing area to ensure food security has turned China into a big rice importer as the world’s rice price falls.

According to the US Department of Agriculture, in 2005 China spent $2.559 billion to support domestic food production. 

Meanwhile, the figure soared to $30.21 billion in 2011 and $29.562 billion in 2014.

A report showed that Chinese direct support to its farmers has increased rapidly from $1.94 billion to $2.5 billion, which has contributed to the rise in rice prices.

The Chinese government has also supported Chinese farmers by raising the purchasing price of Japonica rice 2.56 times over an eight year period. As the domestic price is on the rise, Chinese are importing more rice from other countries.

Third, Chinese seem to favor less Chinese rice as imports are more competitively priced. 

Are there great opportunities for Vietnam rice?

It’s unclear if China will increase imports from Vietnam in the upcoming months. But according to FAO’s and USDA’s prediction, the answer would be ‘yes’ for two reasons. First, the rice sale prices are now at the deepest low. Second, El Nino is expected to be stronger in upcoming months.

However, a source said that the government of China may not act as people assume. Since it failed to auction its rice stock recently, it will force Chinese importers to commit to buy rice stocks in exchange for import quotas.

Dan Viet