Vietnam rice exports soar to all time high

Vietnam’s rice exports of nearly 6 million tons in Jan-August was the highest ever, up 20% over the same period last year and equivalent to 89% of the year plan.

According to the General Department of Customs, rice export revenues of $3.2 billion during the period marked a year-on-year increase of more than 34%.

The Philippines, China, Indonesia and Ghana were among the largest importers of Vietnamese rice with an eight-month growth rate of up to 15 times year-on-year.

Rice exports are expected to continue growing in the remaining four months of this year, thanks to orders from many new markets.

However, exporters are concerned that supply might not be enough to meet demand that has suddenly skyrocketed in many countries around the world.

At a conference in the Mekong Delta city of Can Tho early last month, Nguyen Viet Anh, general director of Orient Rice Co., Ltd (Orico) cited data from the U.S. Department of Agriculture showing Vietnam's inventory-to-consumption ratio was 11%, while the safe level was 22%. After India's rice export ban, the figure has dropped to just 8.5%, Anh said.

Anh also cautioned about the possibility of an alarming situation when many farmers break their commitments to sell rice to businesses. The number of brokers was increasing rapidly and they were disturbing the market, making it almost impossible for businesses to purchase rice from previously affiliated farmers.

“When businesses do not have enough rice, the implementation of contracts will be affected. In this chain, farmers can benefit from increasing rice prices but businesses may suffer huge losses,” he said.

“This is a very serious problem, beyond the control of businesses,” he stressed, hoping that the authorities will take measures to stabilize the market.

In a recent report sent to the Prime Minister, the Vietnam Food Association (VFA) noted that the rapid rice price hike has led to disruptions in the supply chain from farmers to traders, processors and exporters. This has made it difficult for export businesses to collect rice to fulfil their signed contracts, the association said.

Meanwhile, export rice prices have decreased over the past few days, while domestic rates have kept rising. Currently, the average domestic rice prices are 5-7% higher than export prices, hitting $660-680 per ton for 5% broken rice.

According to experts and rice exporters, export prices of rice in Vietnam and the Asian region in general will continue to increase in the near future as supply tensions are yet to show signs of easing.

The Ministry of Agriculture and Rural Development has said that rice production will definitely reach the year’s target of 43 million tons. “Despite global rice shortages, domestic supply is guaranteed so that domestic prices do not skyrocket like the historic fever in 2008,” it said.