Rice exports set to simmer despite rising prices: industry CEO

By Trang Nguyen
Mon, June 19, 2023 | 9:26 am GMT+7

Vietnamese farmers and businesses are unlikely to reap the rewards of increasing export volumes and prices due to the adverse effects of climate change, which has resulted in saltwater intrusion and water shortages, said Pham Thai Binh, CEO of Trung An High-Tech Agriculture JSC.

Exports of agricultural products earned Vietnam more than $20 billion in the first five months of the year, of which rice accounted for over $2 billion. The rice industry is enjoying double benefits in both quantity and selling price. However, the El Nino phenomenon is affecting rice production in Vietnam. What do you think about the current supply of Vietnamese rice enterprises?

Currently, pandemics, political crises, and extreme weather patterns have taken away a lot of arable land, leading to severe food shortages in many countries. This is a good chance for Vietnam’s rice sector.

However, Vietnam is also adversely affected by climate change, saltwater intrusion, and water shortages for farming. In addition, increasing fuel and fertilizer costs and falling yields have resulted in rice price hikes. Therefore, although the volume or value of exported rice has increased, it is not certain that farmers and businesses are enjoying "double benefits", not to mention the limited supply of rice in the near future.

According to Vietnam's freshly approved rice export market development strategy to 2030, our country will reduce "quantity" and increase "quality". However, the reality shows that not many Vietnamese rice enterprises can supply high quality rice. In your opinion, what should businesses do to improve quality?

Reducing output and increasing quality are absolutely necessary for Vietnam's rice industry in the context of climate change rapidly spreading across all continents. In addition to quality improvement to increase the value of rice, reducing production means narrowing the rice cultivation area and of course reducing emissions from rice farming.

This is the world's common goal for green, safe and environmentally friendly agricultural development. Farmers, businesses and the whole rice industry in Vietnam are working together to achieve this goal. The demand for safe rice with green quality is a worldwide trend and businesses that do not follow it will definitely be eliminated.

Trung An High-Tech Agriculture JSC staff harvest rice in Kien Giang province, southern Vietnam. Photo courtesy of the company.

Trung An High-Tech Agriculture JSC staff harvest rice in Kien Giang province, southern Vietnam. Photo courtesy of the company.

Vietnam is still seeing rice export growth in traditional markets such as the Philippines, China, and the EU. Where do you see potential markets for Vietnamese rice in the coming time?

The Philippines and China are now two large importers of Vietnamese rice. In the short term, they will remain the main markets. However, in the long run, Europe, the U.S., South Korea, the Middle East, and Japan will be potential markets for Vietnamese rice.

Fastidious markets such as Europe, South Korea, Australia and some newly opened markets in the Middle East reportedly will continue to increase their imports of high quality rice from Vietnam because it is favored by local consumers. However, the big problems are technical barriers and food hygiene and safety. What measures should Vietnamese businesses take to conquer these markets?

Food hygiene and safety are paramount for consumers today. High-quality, safe rice is the demand we find in foreign markets, and in the future many countries will no longer be easy-going, so Vietnamese rice producers need to change their mindsets and show farmers how to cultivate rice to Good Agricultural Practice (GAP) standards to meet the needs of export markets.

India has lifted a 20% tax on exported white rice. Will this affect Vietnam's rice exports?

Countries around the world now have large demand for rice. In addition, the quality of rice in Vietnam and India is very different, so whether India imposes or removes tax on rice will not affect Vietnam's rice exports.

Most rice exporters reported a decline and even a loss in the first quarter due to high interest rates. What are your assessments of the business prospects for enterprises in 2023?

Rice production costs have increased, leading to higher prices. In fact, many rice exporters have suffered losses due to high purchasing prices and interest rates. The rice trade in 2023 depends a lot on lending interest rates. If banks reduce these rates to levels before August 2022 in line with direction from the Prime Minister and the State Bank of Vietnam, businesses will profit.

According to the Ministry of Agriculture and Rural Development, Vietnam exported 1 million tons of rice for $489 million in May, bringing the five-month figures to nearly 3.9 million tons and $2.02 billion, up 40.8% and 49% over the same period in 2022, respectively.

The average export price of rice in the first five months of 2023 was $517 per ton, up 5.8% year-on-year. In the first four months, the Philippines was Vietnam's largest rice importer, accounting for 42.4% of Vietnam’s total rice exports, with 1.29 million tons and $647.5 million, up 40.6% in volume and 53.4% in value year-on-year.

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