A hunger to drive global rice prices

Vietnamese rice exporters are eating up the competition

The United Nations’ Food and Agriculture Organization (FAO) last week said based on current estimates, much of the globe’s increased rice demand looked set to be met by larger shipments from Vietnam.

Global rice exports in 2010 were forecast to expand to 31 million tonnes, up 6 per cent, or 1.8 million tonnes, against 2009.

Vietnam, the world’s second largest rice supplier, was now anticipated to make a significant contribution to this expansion, FAO stressed in its rice market monitor report released last week.

The organisation has also upgraded its forecast of 2010 rice deliveries by Vietnam to a record of 6.9 million tonnes, up 16 per cent against 2009’s rice exports and 400,000 tonnes above the country’s official target for the year.

“Indeed, adequate supplies have sustained the country’s competitive edge. Vietnam’s exports of 6.8 million tonnes were already reported to have been secured by September this year, with the Philippines, Singapore and Cuba, standing as the country’s top markets,” the report said.

However, according to the Vietnam Food Association (VFA), Vietnam will be likely to export a maximum record of 7.2 million tonnes  of rice across 2010, up from 2009’s record of over six million tonnes, which was up 29.35 per cent against 2008.

In the year’s first 11 months, local exporters shipped 6.3 million tonnes of rice, with an export turnover of $2.95 billion, up 12.3 and 17.77 per cent in volume and turnover, respectively, against 2009’s corresponding period. The averaged export price touched $467 per tonne, up 4.59 per cent.

VFA chairman Truong Thanh Phong ascribed this year’s rice export windfalls to declined exports from big rice exporting nations like Thailand, India and Pakistan. Meanwhile, the world’s increasing demand for rice has coupled with rice and wheat crop failures in many countries due to bad weather.

Meanwhile, the Vietnamese government has approved a series of regulatory measures for the rice export market.

From January 1, 2011, rice traders will be required to hold legal certification, counting on storage capacity and facilities to process rice. Local exporters will be additionally obliged to store an amount equivalent of 10 per cent of their exports during the previous six months as stocks.

Although a nine-month grace period to adhere to these stipulations has been granted,  January 1, 2011 will see the implementation of these provisions with the opening of the Vietnam’s rice export sector to foreign businesses, as required under the country’s commitments to the World Trade Organization.