Vietnamese rice grain struggling to find position in rice export
Vietnamese rice exporters have a great opportunity to dominate the market share in the Southeast Asian market in particular and the world in general. However, Vietnamese rice grain is still presently struggling to find its position in rice export.
Inside one of the country's biggest rice warehouses
Ms. Tran Le Dung, First Secretary in charge of the Vietnam Trade Office in Malaysia, said that soil in Malaysia is not suitable for rice cultivation; thus, the country's agriculture focuses on oil palm and rubber trees while its rice self-sufficiency can only meet about 60 percent of domestic demand.
Therefore, every year Malaysia has to import from 900,000 to 1 million tons of rice to meet domestic demand and its reserve.
The country often imports long white rice, which is very popularly grown in Vietnam. However, it is not easy for Vietnamese enterprises to export rice to this market.
The Malaysian government has assigned Padiberasnasional Berhad Group (Bernas Berhad) to be the exclusive importer of the long white rice to meet the domestic demand. Accordingly, Vietnamese export companies that want to export rice there must sign a contract with Bernas Berhad.
Currently, the Vietnam Southern Food Corporation is signing a contract to supply 700,000 tons of long white rice in 2022 to Berhad Group. However, Vietnam only supplies raw rice, the rice must be packaged into a product under the brand name Bernas Berhad for sale sold in the market.
Worse, the rate of rice imports from Vietnam to the Malaysian market is also decreasing sharply, from 44 percent of Malaysia's rice import turnover in 2019 to 41.2 percent in 2020 and 23.2 in 2021. By the end of the first quarter of 2022, the amount of rice exported from Vietnam to the Malaysian market has not been able to recover strongly.
Not only losing market share in the Malaysian market, but Vietnam's rice also sees export turnover decrease in many other markets in Southeast Asia such as Singapore, Laos, and Indonesia.
Explaining this problem, Mr. Nguyen Thanh Huy, in charge of the Vietnam Trade Office in Thailand, said that Vietnamese rice products are facing fierce competition from Thai and Indian rice because the governments of these two countries have more flexible support policies for rice exporters as well as farmers.
For example, in Thailand, the government applies a rice export tax exemption policy for companies selling rice to main markets such as Europe, the United States, or some traditional markets.
At the time of planting the main and secondary crops and harvesting rice, farmers will enjoy many flexible support policies corresponding to the actual market conditions at that time.
In addition, in addition to the annual support, the Thai Government has lately promoted research and development of new rice varieties to meet consumer tastes. That is why Thai rice has the same quality as Vietnamese rice but has a much lower price.
Agreeing with Mr. Huy’s opinion, Ms. Tran Le Dung emphasized that the current price of Vietnamese rice hardly competes with their Thai and Indian peers. Presently, many rice importers are increasingly looking for supplies from Thailand and India. Generally in Southeast Asia, Vietnam's rice export turnover is ranked third, but in terms of turnover, there is a big gap between Vietnam and the leading country - India.
In order to increase market share and improve the position of Vietnamese rice grains in the region, experts say that Vietnamese enterprises cherish their own products only to be able to penetrate deeply into the markets of other Southeast Asia countries, paving the way for the export penetration into neighboring markets.
To do so, Vietnamese enterprises need to carefully find out consumer tastes in rice of each country in addition to the reduction of production costs to improve price competitiveness. Especially, along with maintaining raw exports, enterprises must convert to refined exports and comprehensive change in packaging design combined with the development of their own brand.
Mr. Cao Xuan Thang, a representative of the Vietnam Trade Office in Singapore, said that Singapore is a difficult market, even the markets that are considered easy, in the near future will also tighten the regulations on food safety and hygiene for imported agricultural and aquatic products and processed foods.
Therefore, from now on, domestic enterprises need to have a quick transformation to catch up with the requirements of technical barriers in export markets. Present export standards for agricultural products mainly focus on requirements such as ISO 22000 achievement and HACCP.
In addition, different export markets have different standards; hence, enterprises need to comply with regulations on labels and goods information on product packaging. Last but not least, products must be licensed by the local authorities to meet import standards.
The trade counselors noted that Vietnamese businesses that export rice stably through Southeast Asian markets are favorable to expanding rice exports to Europe, the United States, China, and the Middle East, because the transportation system through these countries has been significantly improved and the cost is relatively low.
In the context of the global logistics chain being broken, logistics prices in Vietnam increased by 10-15 times from 2021 to the present, this is a valuable thing.
The Ministry of Industry and Trade and Vietnam's trade counselors in export markets are ready to make connections to support businesses to promote the export of goods in general and rice grain in particular.
According to Ms. Nguyen Thi Thu Thuy, Director of the Export Support Center under the Ministry of Industry and Trade, the problem is that businesses need to ship samples soon while simultaneously redefining the brand's position of ‘Vietnamese goods’ to penetrate into markets that Vietnam is aiming for.
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