Diversifying rice export markets to reduce risks

Provinces in the Mekong Delta are entering the harvest season of the winter-spring rice crop, but the export of rice might be affected by the Chinese market due to outbreaks of an acute respiratory illness caused by the novel coronavirus (Covid-19). Amid such context, diversifying export market is considered as an urgent solution for the Vietnamese rice.

Farmers harvest early winter-spring rice in the Mekong Delta. (Photo: SGGP)

‘Hau Giang Province has around 1,000 hectares of winter-spring rice being affected by the saltwater intrusion but the loss is insignificant. Currently, farmers have already harvested hundreds of hectares of early winter-spring rice with fairly high productivity of above 7.7 tons per hectare. However, the price of paddy currently slightly drops compared to that at the beginning of the crop,’ said Mr. Tran Chi Hung, Director of the Department of Agriculture and Rural Development of Hau Giang Province.

Mr. Nguyen Van Ut, one of the farmers in Vi Thuy District of Hau Giang Province who had harvested winter-spring rice at the beginning of February this year, said that fresh paddy fetched VND5,500 per kilogram, bringing in a profit of nearly VND20 million per hectare. Now, the price of paddy is much lower.

‘Traders currently deposit to buy winter-spring rice of local farmers at VND4,700-VND4,800 per kilogram, down nearly VND200 per kilogram compared to last week. However, there are fewer traders making deposits than previous years,’ said Mr. Dien Van Banh, a farmer in Phung Hiep District in Hau Giang Province.

This is also the concern of other farmers in provinces in the Mekong Delta when they start to harvest the winter-spring rice crop. Meanwhile, saltwater intrusion and drought will continue to impact negatively on the area of the upcoming summer-autumn rice crop. Therefore, provinces need to encourage farmers to cultivate salt-tolerant rice varieties and apply advanced cultivation methods to save water during the dry season.

According to the Ministry of Industry and Trade, last year, Vietnam exported more than 2 million tons of rice to the Philippines. This year, this market is expected to buy the same or higher amount of rice. The African market will buy about 1 million tons of rice per year. Malaysia will import around 500,000 tons of rice per year. These are markets that Vietnamese enterprises have a higher competitive edge than Thailand’s in terms of price.

Mr. Pham Thai Binh, CEO of Trung An Company, said that at the beginning of this year, his company signed many export contracts to Malaysia, the Philippines, and Germany, with a total value of nearly US$50 million. At present, his company is buying rice from farmers to fulfill its contracts.

Last year, the Vietnamese rice industry made an impressive impression when exporting more than 6.3 million tons of rice, worth US$2.7 billion. The important highlight is that the ST25 rice was voted as the best rice in the world.

The fever of the world’s best rice ST25 has blown a wind of change to the domestic and foreign rice market. The developments of the Covid-19 will definitely affect exports of Vietnam but the impact will not be significant as rice export volume to China merely accounts for 400,000 tons, around 7 percent of total rice exports of Vietnam.

Noticeably, the proportion of fragrant, specialty and high-quality rice accounted for more than 80 percent of rice exports of Vietnam in recent years. Many research institutes, universities, and export enterprises have been focusing on researching and hybridizing high-quality rice varieties for the demand of the market.

According to Associate Professor – Ph.D. Duong Van Chin, Chairman of the Scientific Committee of Loc Troi Group, among the promising rice varieties presented by the Mekong Delta Rice Research Institute recently, OM8 and OM9 rice varieties received good reviews. These two rice varieties might be put together with Loc Troi 28 and ST24 rice varieties to form a group of Vietnamese specialty rice varieties whose export value is more than $1,000 per ton, instead of a few hundreds of US dollars per ton as currently.

This is an important foundation for Vietnamese enterprises to diversify segments for exporting fragrant, and high-quality rice to traditional, and choosy markets.