Although domestic rice exporters faced difficulties in the first half of this year, there is hope that Vietnam will achieve its yearly target for 7 million tones if it can export to potential markets.
Vietnam has so far earned US$1.626 billion from exporting more than 3.4 million tonnes of rice, above the set target for six months, but still 500,000 tonnes less than the same period last year, according to the Vietnam Food Association (VFA).
Illustrative photo - Source: VOVNews
Businesses in Mekong Delta provinces are bustling about purchasing 500,000 tonnes of rice for temporary stockpiling in response to the national programme launched on July 10.
VFA Chairman Truong Thanh Phong cites some difficulties faced by domestic rice exporters as lower purchasing power and tougher competition from other major exporters in the world.
However, Phong argues, Vietnam could reach the yearly target by exporting high-quality rice. Over the past six months, China has imported large volumes of Vietnamese high-quality fragrant rice.
By mid-June, the number of export contracts for high quality rice had doubled from a year earlier.
VFA Vice Chairman Pham Van Bay says the export volume of average quality Vietnamese rice in the first half of 2012 dropped to 21 percent from 43 percent last year. Meanwhile, nearly three million tonnes (50 percent) of high-quality rice has been exported under the signed contracts, double last year’s figure.
In the face of fierce competition from India and Myanmar, the VFA has warned businesses to export only 20-25 percent of low-quality rice.
Vietnamese fragrant rice is much sought after in major markets with 350,000 tonnes shipped by mid-June. Yet the VFA says fragrant and high-quality rice account for only 5-7 percent of the two million tonnes of rice in stock.
For that reason, many rice exporters find it difficult to sign export contracts in advance as the supply of fragrant rice can not meet their growing demand.
The Asian, European and African markets that often import low-quality rice now want to buy high-quality fragrant rice. Vietnam’s fragrant rice is sold at US$560-600/tonne but its jasmine rice at US$620-630/ tonne while the price for Hom mali and KDM rice is up to US$800/tonne.
Most rice importers prefer Vietnam’s fragrant rice as it is US$50-100 per tonne cheaper than Thailand’s.
Maintaining key markets
Deputy Minister of Industry and Trade Nguyen Thanh Bien says while focusing on their key export markets such as Indonesia, the Philippines, Africa, and China, domestic rice exporters need to penetrate the Republic of Korea (RoK), Japan and other potential markets.
The RoK has recently signed a contract to buy 300,000 tonnes of rice from Vietnam while Japan is surveying the Vietnamese market to possibly import 600,000 tonnes of high-quality rice. Taiwan and Hong Kong are also keen to import large volumes of Vietnamese rice.
Vietnam has agreed to export 1.2 million tonnes of high-quality fragrant rice to China, which is still considered a major regional market. However, the VFA has warned domestic businesses to be careful about payment methods when dealing with their Chinese counterparts.
From now until the end of this year, Vietnam needs to go ahead with its exploitation of every potential market within reach, Bien says.
VFA Chairman Truong Thanh Phong emphasizes that Vietnam needs to develop exclusive rice growing areas to meet the demand for high-quality rice from potential markets such as the RoK and Japan./.