Rice exporters worry as competition grows

Vietnam’s rice exports have dropped sharply in value after Thailand began dumping surplus grain on the market, China placed restrictions on imports, and India and Myanmar cut their prices.

Market share is being eroded due to cheaper rice from Thailand, which is running down its inventories, with Vietnam having lost 60 percent of its Africa market.

Vietnam has had to cut prices to USD375 and USD350 a tonne, depending on grade, but the Vietnam Food Association (VFA) is optimistic. Prices are now USD30 a tonne lower than Thailand, and Vietnam can regain market share in Africa.

VFA secretary Huynh Minh Hue said exports for early February stood at 270,000 tonnes of rice, down 35 percent for the same time last year, with first quarter exports expected to total 800,000 tonnes.

“This is quite a modest number,” Hue said. “Usually, we can export as much as 1.4m tonnes in the first quarter.”

Compounding the problem of falling prices is concern about a decline in orders from major customers in China.

In 2014, Vietnam exported 2.1m tonnes of rice to China, accounting for 30 percent of the country’s total rice exports. It sold a further 1.5m tonnes in unofficial border trade. But China is cracking down on this unofficial market , one trader saying the border has been closed to rice since July.

China has not yet set a rice import quota. The VFA anticipates China will import 4m tonnes this year, but has already signed a 2m tonne contract with Thailand, and Myanmar is expected to be a supplier.

“Aside from Thailand, the China market will be shared between Vietnam, Myanmar, Pakistan and Cambodia. We’ll lose huge market share there, so we need to increase exports to Africa,” Hue said.

The Centre for Agrarian System Research and Development said that stockpiling was not an option for Vietnam, as the government does not buy rice directly from farmers but through traders, who would have to lower their offer prices to cover additional costs.

(Dan tri)