New decree to disqualify many rice exporters next year

Under a decree drafted by the Ministry of Industry and Trade, local rice exporters will have to meet many requirements before being allowed to ship rice abroad.

For instance, they must have storage capabilities of at least 5,000 tons of rice and their rice milling plants must be able to process a minimum of 10 tons per hour. Exporters failing to make any shipments for 12 consecutive months will have their licenses revoked.

Pham Van Bay, director of An Giang Agriculture and Food Import Export Company, said the move was necessary to tighten control over rice trading in Vietnam.

The new regulations would help eliminate many exporters who just want to pocket quick cash, causing unfair competition by undercutting other exporters.

Nguyen Van Duong, director of the Department of Agriculture and Rural Development in Dong Thap Province, said he supports the regulations specifying the facilities that rice exporters must have.

Many companies didn’t have adequate facilities for rice trading but they still joined the business anyway, Duong said. “When prices drop, they would just quit and go against their promise to purchase rice from farmers.”

Exporters said they expect the new decree to improve the business environment by getting rid of disreputable businesses.

However, some said they are still doubtful about the decision-making role given to the Vietnam Food Association. The draft decree stipulates that exporters still have to register with the association for a permit to ship rice abroad.

The director of a company in the Mekong Delta’s Dong Thap Province said the role should be given to the Ministry of Industry and Trade as it is hard to ensure that the association will treat non-members and members alike.

Nguyen Van Khang, director of Tien Giang Province’s Department of Agriculture and Rural Development, said the national food association can be in charge of overseeing the registration of rice export contracts as long as there was a mechanism to monitor the association strictly.

The Vietnam Food Association has faced repeated criticism from provincial authorities and exporters for the way it has allocated shipment quotas to rice exporters in each locality. Many exporters said they have been allowed to export smaller volumes than their capacities while the country’s two largest food companies, Vinafood 1 and 2, were granted disproportionately bigger quotas.

Vietnam plans to remove its rice export quota system and make it more market-based, a local newspaper cited Bui Ba Bong, deputy minister of Agriculture and Rural Development, as saying in September.

This year’s national rice export target of 6 million tons, revised upwards because of a bumper harvest, has been achieved; and a target of 6.2 million tons has been set for next year.