Creating favourable conditions for rice exports

Vietnam's rice exports see sharp declines in the first two months of 2017.

Vietnam earned US$248 million from exporting 799,000 tonnes of rice in the first two months of 2017, down 40.6% in value and 17.2% in volume compared to the same period last year, according to the Ministry of Agriculture and Rural Development.

These sharp declines are making it more difficult for the target of exporting over 5 million tonnes with a value of approximately US$2.3 billion in 2017 to be achieved, particularly as fluctuations in the export market are seriously affecting the domestic rice industry.

Regarding Thailand’s plan to sell all its rice reserves of about eight million tonnes this year, experts all stated that the move, if it comes true, will lead the rice export prices to continue falling sharply, thereby posing difficulties to the production and consumption of rice of the winter-spring crop, which is considered the major production crop of the year in Vietnam.

Only when Thailand’s rice inventories are definitely handled, can the rice export market probably recover, they noted.

In addition, the rice stockpiles in the world are now at a high level, while a number of traditional rice-importing countries have been effectively implementing the policy of food self-sufficiency, limiting and even ending rice imports. Notably, as competition is getting fiercer with the increasing number of commercial and technical barriers put up by importing nations, it is becoming increasingly difficult for Vietnamese rice to penetrate into markets with a demand for high quality.

Apart from objective reasons, subjective factors inside the country are also making 2017 a possibly tough year for Vietnam’s rice exports. According to businesses, all requirements, ranging from storage capacity, the capacity of milling facilities, venues for warehouses and mills and material zones, to new licenses and documents required for the registration of export contracts in the government’s Decree No. 109/2010/ND-CP on rice export business, are only formalistic and do not suit the current situation.

At a recent workshop on directions for amending /the decree, the Vietnam Institute for Economic and Policy Research (VEPR) stressed that the revision of Decree No. 109 must have the aim of creating the best possible conditions in which for enterprises to participate in rice exports and of reflecting the diversity of the market. In reality, a number of businesses have their own markets and products of high quality and value, but do not satisfy the requirements set out in the decree. Therefore, if “untied,” those enterprises will lose export opportunities and the rice industry will hardly move up in the value ladder.

In 2016, Vietnam’s rice exports only hit more than 4.8 million tonnes with an export value of nearly US$2.2 billion, down 25.8% in volume and 21.2% in value compared to 2015. Also last year, the Vietnam Food Association (VFA) had to lower the rice export target twice due to difficulties. Given the negative signals in the first two months of the year, it is necessary for stakeholders to promptly remove obstacles and make relevant policy adjustments aiming to empower businesses and lead rice export output and value to meet expectations.