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Rice exports: Vietnam’s low-price advantage won’t help
Date: 30/03/2016

Despite difficulties, Vietnam’s rice exports have remained stable over the last few years thanks to low prices. However, this advantage may not help in the future as the world market has seen major changes.

www.goldenmark.org - Rice exports: Vietnam’s low-price advantage won’t help

According to VFA, Vietnam exported nearly 500,000 tons of rice in January 2016, an increase of 56 percent in quantity and 46 percent in value.

The increase was explained by higher demand from the Philippines and Indonesia which had a serious drought and needed to buy rice for stockpile.

However, big challenges were ahead. Rice production has suffered from saltwater intrusion in the Mekong River Delta, Vietnam’s largest rice granary.

In the world market, Vietnam has to compete fiercely with other rice exporters such as Thailand, India and Pakistan and emerging countries such as Cambodia and Myanmar.

Vietnam has strong advantages in high-quality long-grain white rice, which accounts for 27 percent of total exports, and fragrant rice, which accounts for 23 percent. In the market segments, Vietnamese exporters can export at stable prices, despite stiff competition.

As for the common white rice market segment, the low-price policy may not work well anymore, because many countries now tend to increase stockpiles, while the global output has increased.

Meanwhile, Vietnam’s rivals, including India and Pakistan, have advantages over Vietnam in terms of geographical positions.

According to Huynh Minh Hue, secretary general of the Vietnam Food Association (VFA), Asian countries consume 70 percent of Vietnam’s rice exports, while China alone buy 33 percent.

However, Vietnam has been mostly exporting rice to China through unofficial channels, across the border gates. The rice, displayed at most of the supermarkets in China, is not labeled as Vietnam’s rice.

“Chinese consume Vietnamese rice, but they don’t know the rice is from Vietnam,” Hue said.

Huynh The Nang, general director of Vinafood 2, also said it was difficult to cement their positions in the Chinese market.

“They (Chinese) mix Chinese and Vietnamese rice and then sell the mixture of rice in the market under Chinese brands,” Nang said.

Pham Hoang Lam, chair and CEO of Hung Lam JSC in HCM City, noted that African countries were good export markets for lower-priced Vietnamese rice.

However, Lam complained that it was risky to do business with partners from the market.

He once lost $800,000 in a deal with an African partner as he delivered goods but was not paid.

Source: VNN



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