Profile change boosts rice export

The shift in rice export from low- to mid- and high-quality helped the rice export industry fare better in 2020. Yet much has to be done to maintain achievements.

When it comes to market, in addition to making full use of opportunities in existing export markets, especially in the context of the Covid-19 pandemic, the rice export sector should get the most out of new markets, including the United States, Europe and signatories in free trade agreements Vietnam has signed - PHOTO: LE HOANG VU

Reports by the Ministry of Agriculture and Rural Development show that by the end of 2020, Vietnam’s rice export had reached 6.15 million tons earning sales of over US$3 billion. Although the total export volume dropped 3.5% compared with 2019, its value rose 9.3% year-on-year. The encouraging results are ascribable to the change in low- to mid- and high-quality rice, which also renders Vietnamese rice more competitive than before against its rivals, which are top rice exporters—such as Thai, Indian and Pakistani rice.

The export rice profile in 2020 saw the following change. White rice shipments fell by 15% in volume while those of fragrant rice increased by 3.6%, glutinous rice mounted by 122.5%, brown rice and organic rice skyrocketed by 165.2%, according to statistics released by the General Department of Vietnam Customs.

Nguyen Trung Kien, vice president cum general secretary of the Vietnam Food Association (VFA), said beside the objective factor due to the increase in world market rice prices in the context of Covid-19, the change in rice strains which has improved rice quality in recent years has prompted buyers to accept Vietnamese rice at higher prices.

Even Vietnam’s 5% or 25% broken rice has sold at over US$500 per ton, US$100 higher than India’s 5% broken rice. According to Nguyen Van Thanh, director of Phuong Thanh IV Production - Trading Co., Vietnam’s 5% broken rice is from OM 5451 or OM 18 rice strains, which have higher quality than that of the IR 50404 strain, which was once popular in Vietnam. Meanwhile, Indian and Pakistani 5% broken rice is still from rice strains of lower quality. The OM rice strain that produce 5% broken rice in Vietnam has long, white and soft grains suiting the taste of the Chinese, Malaysian, Indonesian and even customers in the Middle East, said Mr. Thanh. On the other hand, Indian 5% broken rice grains are short, opaque and not soft (similar to Vietnam’s IR 50404 strain). Versus Thai rice, prices of Vietnamese rice are more competitive in the same segment, while its quality is quite comparable.

Obviously, the shift in rice export helped Vietnam notch up certain success in 2020. Of course, Covid-19 also caused import markets to increase rice stock and prices on the world market to rise.

The increase in production of high-quality white rice and fragrant rice and specialty rice (from the strains of OM 5451, OM 18, Dai Thom, glutinous and Japanese rice, to name but a few) has led to the short supply of low-quality IR 50404 rice used in making pastry and noodles, and prompted rice import from India. This situation uplifted trading activities as well as prices of the IR 50404 rice strain in Vietnam. Local farmers benefited from it, too.

To sustain the growth

The question to be answered is how Vietnam’s rice export sector can sustain the growth in 2021 in the context of the ongoing unpredictable Covid-19 ravaging the world.

According to Nguyen Trung Kien, VFA has set higher value for rice export for 2021. “To achieve that goal, in addition to promoting market development, it is necessary to focus on high quality products, the segment that has helped Vietnam’s rice industry to conquer the market in 2020,” he said.

Nguyen Quoc Toan, head of the Agroproduct Processing and Market Development Department under the Ministry of Agriculture and Rural Development, said when it comes to market, in addition to making full use of opportunities in existing export markets, especially in the context of the Covid-19 pandemic, the rice export sector should get the most out of new markets, including the United States, Europe and signatories in free trade agreements Vietnam has signed.

As regards rice production, the restructuring of the rice export profile should conform to the Prime Minister’s outline, which rules that production and processing entities must ensure food safety and hygiene; increase the value of high-quality products, such as organic rice; and standardize products to meet the world’s requirements and certifications, such as HACCP or Global GAP. “These are important certificates with which we can assert ourselves in the export market,” said Mr. Toan.

On the other hand, production cooperation among businesses and farmers need to be reviewed. A strong bond can create large production acreage, which offers quality and brings high value to export goods. “Finally, credit and financial institutions have to take part aggressively in agricultural enterprises,” he said.

Mr. Toan also noted another current problem related to logistics services—the need to quickly tackle the problem of shipping container shortage. “Mechanical engineering and manufacturing enterprises have to be involved to be able to provide enough containers so that Vietnam’s rice industry can become more competitive,” he said