Vietnamese rice faces competition from India in Philippines

The Philippines is set to import a lot of rice from India at $100 cheaper per ton than Vietnamese rice as it diversifies its supply sources.

Farmers harvest rice in the Mekong Delta Province of Hau Giang. Photo by VnExpress/Nguyet Nhi.

A report by the Agricultural Products Processing and Development Department (Agrotrade) shows that in the first five months of this year, Vietnamese rice exports reached 2.7 million tons at $1.48 billion, down 11.3 percent in volume and 5 percent in value over the same period last year.

There’s no significant demand by foreign traders as they wait for the summer-autumn harvest season, the report said.

On the other hand, the price of Vietnamese rice is much higher than that of India and Thailand. A ton of Vietnamese rice is $20 higher than that of Thai rice and over $100 per ton over Indian rice.

On average, Vietnam's rice export price in the first four months of this year reached $543 per ton, up 15.4 percent year-on-year. The Philippines is Vietnam's largest rice consuming market, accounting for 35.6 percent, but export to this market decreased 20.7 percent in volume and 4.9 percent in value over the same period last year. Similarly, rice exports to Indonesia also decreased sharply by 71.1 percent year-on-year.

According to Agrotrade, market demand in the coming time will be high, but Vietnamese rice will face competition in the international market when the prices of Thai and Indian rice are more attractive to buyers.

Recently, the Philippines eliminated import duties for ASEAN, non-ASEAN and "Most Favored Nation" (MFN) nations with the goal of increasing imports of cheaper rice from India and Pakistan.

Specifically, the Philippines has lowered import duties for MFN on rice to a single rate of 35 percent. It had previously imposed a 40 percent in-quota tariff rate and 50 percent out-of-quota tariff rate.

On June 7, Philippines Finance Minister Carlos Dominguez announced that the country would seek more rice from countries outside Southeast Asia with the goal of diversifying supplies and keeping import prices at a reasonable price. Accordingly, India is a country with cheaper rice that can become a main supplier.

Vietnam has been the main rice supplier to the Philippines so far. In addition, the Philippines also buys rice from Thailand and India, apart from other countries outside Southeast Asia.

Vietnam is set to produce 43 million tons of paddy and export 6.5 million tons of rice this year, according to the Ministry of Agriculture and Rural Development.

The nation was the world’s second largest rice exporter last year at 6.25 million tons.