The Agricultural Market and Institutional Research Center (hereafter AMI), Vietnam National University of Agriculture, proposes several solutions for mitigating the dramatic reduction of Vietnam’s rice export value in January 2019.
According to the report of the Agricultural Market and Institutional Research Center (AMI), the value of Vietnam’s rice exports in January 2019 reduced significantly in comparison with the same period of the prior years. Specifically, in January 2019, Vietnam exported 334 thousand tons of rice, equivalent to 142 million USD, much lower in comparison to 239 million USD in January 2018, and 195 million USD in January 2017. Notably, China, the largest rice exporting market of Vietnam, only imported a total value of 3.8 million USD of rice from Vietnam in January 2019, much lower than the figure of January 2018, about 57 million USD, and of January 2017, about 42 million USD. Some other markets also have the tendency to reduce rice imports from Vietnam, such as Indonesia which reduced its Vietnam’s rice import from 27 million USD in January 2018 to 659 thousand USD in January 2019.
Farmers harvesting rice on the field. Source: tuyengiao
The main reasons for the reduction in the value of rice exports are identified in the report as follows:
Firstly, in the global context, the demand for rice produced by Asian and African countries has been decreasing. Indian and Thai rice export prices have also reduced by 5%.
Secondly, due to China's imports restrictions, the country has introduced tougher conditions and it is expected to reduce rice imports from Vietnam from 1.5-2 million tons/year to 500,000-600,000 tons in 2019. From the last months of 2018, the rice market showed signs of slowing down, especially when China increased the import taxes on some rice types by 40% (including sticky rice imported from Vietnam). China advocated shifting to importing more rice from Thailand, Cambodia and Pakistan. Since 2017, China has controlled its rice importers more closely. There are now only 19 Vietnamese enterprises which still have the permit to export rice to China instead of the past figure of 150 enterprises.
Vietnamese rice is available in almost all nations and territories in the world, some of which require high-quality products. However, Vietnamese rice export traders have limited capacity in market access, market penetration, contract signing, and handling with international trade disputes, which means limited participation in global value chains. Hence, Vietnamese rice brands have not been widely known by customers in other countries.
As an agricultural country and the world's top 3 rice exporter, the reduction of export value significantly affects Vietnam. In order to tackle the situation, AMI’s report has also proposed some solutions as follows:
In the short term, it is needed to provide interest rate supporting to some exporting enterprises in advance so that they can buy rice from farmers and store rice in order to increase market demand temporarily, creating the demand for buying rice from farmers, helping to ease the pressure of reducing rice prices.
In the long term, it is of importance to develop a comprehensive market forecast and market analysis system to provide reliable information which allows timely warning before an imbalance of supply and demand occurs. Moreover, it is also necessary to change the proportion of rice varieties with the aim of enhancing rice quality, increase the percentages of fragrant rice and sticky one, and invest in large scale fields to avoid cross-pollination, the result of different rice in one field. In addition, there needs to be a plan for converting rice fields to other agricultural use to increase values and efficiency instead of total areas and yield.