Rice exporters face big hurdles

>> Vietnam exports over 4.5 mln tonnes of rice in seven months

>> Thai rice dealers warn against gov't price hike

In light of Decree 109/2010/ND-CP dated November 4, 2010 and effective from October 2011, to become eligible for rice export, businesses must have at least a specialised rice store with a minimal carrying capacity of 5,000 tonnes and a rice husking facility with capacity of at least 10 tonnes per hour positioned in the same location.

The  new Ministry of Agriculture and Rural Development (MARD) requirements are seen as a major hurdle for firms getting rice export certificates.

The Vietnam Food Association (VFA) said these requirements were unreasonable as businesses often located rice husking facilities at material growing areas, while the store system and rice polishers are usually placed in different areas.

The VFA asked the MARD to address the issue in mid-July 2011, but no feedback had been received, according Northern Food Corporation general director Tran Ba Hoan.

Earlier on June 3, the Ministry of Industry and Trade forwarded enterprises’ proposals to the MARD, but no effective solutions are in place.

Under VFA appraisals, only around 80 firms are eligible to gain the rice export certificates in light of Decree 109 and just seven firms actually obtained the certificates.

As a result, the jury is out on whether the registered exporters can serve the nation’s needs.

VFA chairman Truong Thanh Phong said: “Streamlining rice export is crucial as of the  200 firms joining rice exports so far the year, only 50 firms reported export volumes of at least 10,000 tonnes each per month and their export volume made up 92.7 per cent of total, meanwhile around 100 firms just exported several hundred tonnes per month and had no rice stores or husking facilities at all.”

In regard to how to avoid price-related risks, chief AgroMonitor economist Pham Quang Dieu was quoted as saying “Hoarding materials first before clinching export deals is a wise decision. Otherwise, businesses will incur heavy losses in the face of escalating material costs.”