Low-grade rice exports face a tough road ahead.
In the first six months of 2012, Vietnam shipped abroad an estimated 3.7 million tonnes of rice generating $1.7 billion in the export value, down 8.8 per cent in volume and 13.5 per cent in value on-year, according to a Ministry of Agriculture and Rural Development (MARD) report.
Similarly, rice export prices averaged $464 per tonne during January-May, falling 5.7 per cent on-year.
Head of MARD’s Cultivation Department Nguyen Tri Ngoc attributed sharp declines in rice exports in 2012’s first half to fierce competition from Myanmar, India and Pakistan, particularly in low-grade rice.
The world’s second largest rice producer India is controlling global low-grade rice market segment on the back of this country’s mounting inventory, pushing Vietnam out of its role in the African low-grade rice market.
Vietnam Food Association (VFA) chairman Truong Thanh Phong said there was no market for Vietnamese low-grade rice since this market fell into the hands of partners from India and Myanmar whereas the summer-autumn rice crop will harvest within July and August, producing more than one million tonnes of low-grade rice.
At this time, the price of low-grade rice paddy sinks below the production cost in many localities. That is because farmers prefer using low-grade rice varieties which promise high yields with shorter time for cultivation. The MARD vowed to come up with stronger measures in the next crop seasons compelling farmers to concentrate into longer-term quality rice varieties.
Not to mention low-grade rice, Vietnam has the ability to achieve its 2012 rice export target.
“Rice export volume based on signed contracts has mounted to around 4.5 million tonnes against set target of 6.5-7 million tonnes for 2012, so that full-year rice export target may be within reach,” said Ngoc.
VFA chairman Truong Thanh Phong believed Vietnam’s medium and high-grade rice and fragrant rice varieties still had big potential for export thanks to their competitive export price rates.
Besides, China’s demand for rice from Vietnam has spiked, making this country a leading export market for Vietnamese rice.
“Vietnamese rice is rooted in the global market, so it is also susceptible to world market movements. Our duty is to hike the competitive edge of Vietnamese goods as well as enhance their status in the global marketplace despite market woes,” said MARD Minister Cao Duc Phat.