Bright outlook for Vietnams 2020 rice exports

Vietnam’s 2020 rice exports face a promising outlook due to the positive impacts of new-generation free trade agreements (FTAs) the country has signed and changes in global supply and demand caused by the Covid-19 epidemic in China and other factors. 

Less dependence on China

According to Deputy Minister of Industry and Trade Tran Quoc Khanh, 2019 was a very difficult year for the rice industry, as supply and demand in the world market fluctuated sharply. Specifically, China had a surplus of rice, becoming a major rival of Vietnam in African markets, while global rice demand was decreasing, making the competition considerably tougher.

However, with the involvement of the Ministry of Industry and Trade and efforts by rice exporting enterprises, Vietnam exported 6.37 million tonnes of rice worth US$ 2.8 billion in 2019, up 4.2 percent in volume and 8.3 percent in value from 2018.

While Vietnam rice exports grew, its dependence on the Chinese market dropped and it accessed new markets in Africa, Thailand’s rice exports dropped 32 percent in volume compared to 2018.

Opportunities in Africa

Phan Van Chinh, Director of the Ministry of Industry and Trade’s Agency of Foreign Trade said that in January 2020, despite Tet (Lunar New Year Holiday), rice exports reached 410,855 tonnes worth US$196.46 million, down 4.6 percent in volume but up 2.2 percent in value compared to the same time in 2019.

Do Ha Nam, Vice Chairman of the Vietnam Food Association (VFA) said the outlook for rice exports in 2020 is bright, with growing sales in Africa and import demand from India and China stable.

In 2020, some FTAs are expected to help increase rice exports to related countries. The Republic of Korea (RoK), for example, has given Vietnam a quota to export 55,000 tonnes of rice, while Vietnam can export 40,000 tonnes of rice to the EU as soon as the EU-Vietnam Free Trade Agreement (EVFTA) takes effect. Some demand is also forecast to increase due to the effects of the grasshopper epidemic on rice crops in some countries.

However, rice exporters are also expected to face difficulties in 2020, with no major export contract reached and the unclear effects of the Covid-19 epidemic spread. It is important for them to build appropriate business orientations, expand new markets and maintain existing ones, such as the Philippines. Deputy Minister of Industry and Trade Tran Quoc Khanh noted that rice export contracts should have insurance clauses to avoid undue risks.

Deputy Minister of Industry and Trade Tran Quoc Khanh has instructed the Ministry of Industry and Trade’s departments and agencies to closely monitor the market, and provide recommendations and solutions to increase rice exports and reach rice export targets.