Hunger to spike rice exports

Vietnam shipped 756,000 tonnes of rice abroad in the first two months of 2012, generating $437 million in the export value, down 26.6 per cent in volume and 16.1 per cent in value on-year, according to Ministry of Agriculture and Rural Development (MARD) statistics.

Indonesia remained Vietnam’s top rice consumer, however export volume to this market was just two-thirds of that one year ago.

Vietnam Food Association (VFA) general secretary Huynh Minh Hue attributed sagging rice export orders to global weakening market demand and fierce competition from rivals in India, Pakistan and Myanmar as these countries offer export prices much lower than those of Vietnam.

Food enterprises have yet to find out any viable way-outs except buying rice from farmers for temporary storage.

A MARD executive assumed demand would continue to eclipse supply in the long-term globally, but in the near term Vietnam’s rice export would face tough competition from weighty rivals.

In fact, apart from government-level contracts which were signed in late 2011 the number of commercial contracts with foreign partner remained few.

“If state firms just rely on government contracts, sooner or later private equity firms or foreign companies will take the upper hand on them,” said the MARD executive.

“Vietnam is now entirely open its rice market to foreign players. In the coming period, when private and foreign firms jump into the field state firms will see mounting difficulties,” said MARD deputy minister Diep Kinh Tan.

“Reliance on government-level contracts to some markets like Indonesia and the Philippines could present risks to state food companies since when rice import in these countries is assigned to private firms but is not handled by the government as currently local state firms will be put in disadvantages,” Tan added.

Hue assumed since scores of global trade multinationals have set footholds in Vietnam, food enterprises needed to leverage on government contracts to avoid sales at low prices.

A representative from Vietnam Pepper Association - the sector eyeing around 40 per cent jump in export earnings in the first two months - assumed continually sourcing fresh export markets would be the best cure in current context.

“Firms should not expect to ink deals right in first market survey rounds,” said the representative.