Vietnamese rice exporters optimistic for recovery

Vietnam exported nearly 1 million tons of rice worth US$465 million as of March 18 this year, a decrease of 25.98 percent in quantity, and 12.87 percent in value year on year. However, it was an improvement over last month. Domestic firms currently have contracts to export more than 2 million tons of rice this year. And according to the Vietnam Food Association (VFA), the market for Vietnamese rice has recently grown. For some time, Vietnamese rice exporters were unable to enter the Iraqi market. However, Vietnam Northern Food Corp. and Joint Venture Company for Rice Production, Processing and Export recently won a contract to supply 150,000 tons of rice to the country from the start of this year. It is expected that Iraq will continue to invite bids for exporting the grain. And while Indonesia has not officially declared a shortage of rice, its current stockpile is just around 1.3 million tons. Thus, the country will likely begin importing more rice in the near future. Markets in South America also look promising, as crops there have been damaged due to recent disasters. Crops in some provinces of neighboring China, meanwhile, have been badly affected by drought. Vietnamese firms have researched the situation and said there were signals of potential cross-border trade. The Philippines, Vietnam’s primary export market, is still in need of 800,000 tons of rice and will renew its contract in May. Of the total amount, 200,000 tons will be bought under commercial contract. Meanwhile, Thailand, the world’s largest rice exporter, has said it may release its stockpile, making auctions and negotiations more challenging for Vietnam. Thus, the VFA will have to work hard to protect its share of the export market. Africa remains a reliable market; however, importers and suppliers are waiting for rice prices to fall further as Vietnam has begun to harvest its winter-spring crop, of which production and quality are the highest of the year. Vietnam has retained its prices for over a month though, while Africa’s stockpile has started to drop, prompting importers to buy more. VFA members have also stockpiled 790,000 tons of rice, meeting 79 percent of the target. They said they would fulfill their goal this month. According to the VFA, they will continue to buy around 500,000 tons of rice. The stockpiles have helped to stabilize the price of paddy, which is currently around VND4,500 a kilo. VFA said firms must pay a rather high interest rate of 14-20 percent for loans to buy paddy and rice. Despite a Government directive to offer businesses special interest rates for loans to build warehouses, most firms haven’t received the financial assistance. VFA ordered firms to use their available capital or ask for loans at other banks instead of relying on the Bank for Investment and Development of Vietnam. However, to reduce the risk, VFA will ask for support from the Government to stockpile the next 500,000 tons of rice.