Against the grain, Vietnam must shift to high quality rice exports

In the first eight months of this year, Vietnam exported 4.54 million tonnes of rice worth almost US$2 billion, up 0.3 percent in volume and down 14.9 percent in price compared to the same period last year, respectively, according to the Agro Processing and Market Development Authority under the Ministry of Agriculture and Rural Development. The rice industry needs to increase high quality rice exports to improve its export value.

Diversifying products helps businesses access more markets

Problems

The authority said exports to China do not appear set to expand in the coming months; in the Philippines, farmers are asking the government to facilitate rice sales to minimize damage caused by the opening of its doors to imports, precluding an increase in Vietnamese rice exports to that market.

These problems reflect the fact that Vietnam still relies on traditional markets, mainly selling conventional rice products and hasn’t focused on high quality rice development.

Do Ha Nam, Vice President of the Vietnam Food Association (VFA) said increasingly discerning markets including China has become the biggest difficulty for food exporters. Vietnam’s food exports to China have decreased from three million tonnes to an estimated 300,000 tonnes per year, Nam said.

Most rice businesses are small-sized. They still hesitate to sell products to far off markets, while importers do not trust small firms like themselves, Nam said. These companies therefore have to sell goods through transnational corporations, earning low profits that deprive them of the capital for re-investment in product quality improvement, he said.

Market diversification, quality improvement

Relevant ministries and sectors have recommended that rice businesses diversify their markets to minimize their dependence on the Philippines and China, including boosting exports to the EU to take advantage of the recently signed EU-Vietnam Free Trade Agreement (EVFTA).

Luong Hoang Thai, Director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade said that under the EVFTA, Vietnam can export up to 80,000 tonnes of husked, unhusked and fragrant rice per year to the EU benefiting from a zero (0) percent tax.

Pham Thai Binh, General Director of the Trung An High-tech Agriculture Joint Stock Company said Vietnamese rice exports to the EU currently bear a high duty of about EUR65-211 per tonne (almost 50 percent of their value), and the zero percent tax is expected to help Vietnam strongly increase rice exports to this market.

VFA Deputy Chairman Do Ha Nam said opportunities are there for Vietnamese businesses to export rice to other markets if they provide high quality, competitive and branded products and ensure that they are safe and yet delicious.