Surging demand offers Vietnam rice exporters bright prospects

With many countries limiting food exports to guarantee domestic supply, rice is forecast to witness surging prices, offering Vietnam a competitive advantage as one of the world’s largest grain exporters.

Vu Thi Hue, head of Dai Duong Xanh Export-Import Co. Ltd's export-import division, said while lower wheat output and higher production costs have forced many countries to seek alternatives, rice is a suitable choice with good prices. "So a bright prospect could be seen for both export volume and prices in the time ahead."

In the first five months of 2022, nearly 2.77 million tons of milled rice worth over $1.35 billion were shipped abroad, up 6.6% in volume but down 4% in value year-on-year, according to Vietnam Customs.

The Philippines remained the biggest importer, accounting for about 46% and 43.6% of total export volume and value, followed by China with 14% and 15%, respectively.

Strong growth was also recorded in shipments to many markets like Africa (up over 76% from a year earlier), including Ivory Coast (37%) and Mozambique (47%).

Though Vietnam's export prices, an average $489 per ton, have fallen compared to 2021, they are still higher than those of other major exporters like India, Pakistan, and Myanmar.

Nguyen Van Thanh, director of Phuoc Thanh IV Production-Trading Co. Ltd, expressed his belief in a bright outlook for rice exports thanks to high demand in foreign markets, especially the Philippines, whose reserves are running low, and China, where production is decreasing due to floods.

Apart from traditional buyers, businesses are also stepping up shipments to demanding markets like the U.S. and EU countries like Germany, Sweden, Belgium, and Poland.

According to Vietnam’s Trade Office in Sweden, rice is the commodity posting the strongest growth in exports to Northern Europe. Since the EU-Vietnam Free Trade Agreement (EVFTA) took effect in August 2020, Sweden’s imports of Vietnamese grains have gone up considerably.

Dai Duong Xanh Export-Import Co. Ltd has become the firm with the biggest rice volume exported to the EU by utilising preferential treatment under the EVFTA.

Hue said since this deal came into force, great opportunities have opened up for rice exports to the EU, which currently has big demand for the grains from Vietnam. Many businesses are planning to ship thousands of tons of milled rice to the region this year instead of just several hundreds of tons like in the past.

If exporters manage to make use of preferential tariffs, they can earn 175 euro (about $200) per ton in profits, helping make up for soaring shipping costs and other expenses due to the Covid-19 pandemic, she said.

This is an opportunity for rice businesses in Vietnam to enter the EU market, Hue added.