VietNamNet Bridge - Vietnam’s rice exporters continue to rely on the Chinese market. Experts warn Vietnam may fall into the Chinese ‘low-quality rice’ trap.

Exports at standstill, rice prices fall

According to the Vietnam Food Association (VFA), Vietnam had exported 2.1 million tons of rice by the end of May, earning $870 million, a decrease of 10 percent in export volume and 13 percent price decrease in comparison with the same period in 2014.

To date, Vietnam has signed contracts on exporting 3.5 million tons of rice, or 8 percent lower than the same period of last year. 

Rice exporters complained that rice exports this year have been unsatisfactory. Thailand and India, the Vietnam’s biggest rivals, all have big inventories. Thailand is reported to have 15-16 million tons in stock, while India has 23 million tons.

VFA noted that Thailand tends to lower the selling price in an effort to clear the stocks. Meanwhile, India and Pakistan are competing fiercely in Africa and the Middle East.

As exports have been in a deadlock, the domestic price has been decreasing. 

According to Vo Thanh Do, a senior official of the Ministry of Agriculture and Rural Development, in the Mekong River Delta, fresh IR 50404 rice is traded at VND4,150-4,250 per kilo.

“Though Vietnam has won the bid to provide 150,000 tons of rice to the Philippines, the domestic price is still on the decrease,” Do said.

VFA has proposed to collect summer-spring rice for stockpile to help stabilize the domestic price and ensure reasonable profit for farmers.

“We will be keeping a close watch over the summer-spring rice harvesting, especially in July and August, the peak harvest season, and make a proposal about how much to collect,” Do said.

Vietnam urged to stop following ‘high yield, low price’ strategy

China remains Vietnam’s largest rice consumer, which bought 35 percent of the 2.1 million tons of rice Vietnam exported in the first five months of the year.

However, experts have warned against the heavy reliance on the Chinese market. China, despite high demand, has been tightening imports across the border gate since mid-2014, which has made it risky for Vietnamese enterprises to export rice to the market. 

A source said that even contracts on exporting rice through official channels were also canceled, stressing that it was very risky to do business with China.

Nguyen Thi Bich Vuong, director of Hung Thinh Trade and Import/Export Company in Lao Cai province, specializing in exporting rice across the border gates to China, said only several consignments of goods were exported in the first three months of the year. 

Meanwhile, no consignment has been exported since April when China began tightening control over imports.

Tien Phong