Vietnamese rice faces barriers in biggest markets

Indonesian Minister for Economic Affairs Hatta Rajasa has requested the Ministries of Trade and Agriculture to take a probe against the illegal rice imports from Vietnam.

According to the Vietnam News Agency, the minister said there are some evidences about the importers’ license abuse.
The request has been made following the information that the illegal rice imports from Vietnam are being wholesaled in Cipinang or Baten province in eastern Jakarta on January 30, estimated at 16,900 tons.
The volume of rice was sold more cheaply than the domestic products. Sources said the rice has been imported to Indonesia with the legal license granted by the Indonesian Ministry of Trade.
Hatta Rajasa emphasized that the Indonesian government never allows individuals to import rice, and that it has authorized Bulog, an agency of the country, to import rice to stabilize the market prices. Therefore, it is highly possible that Vietnam’s rice has penetrated the Indonesian market through legal channels.
Prior to that, in October 2013, NFA, the Filipino food agency, warned that the contract on importing 120,000 tons of rice signed between the Filipino private import firms and the Southern Food Corporation (Vinafood 2) is invalid, and that the imports will be blocked by the country’s customs agencies.
According to NFA, under the country’s national quota program, Filipino businessmen can only buy rice from Thailand, India, China and Australia. The importers must obtain the special import licenses from NFA before they import rice from other countries.
Vietnam’s rice exports to the loyal markets of the Philippines, Indonesia and Malaysia have dropped dramatically recently, thus leading to the sharp fall of the total rice exports.
The rice exports to the Philippines dropped by 63 percent in the first nine months of 2013, while the exports to Malaysia dropped by 35 percent. Especially, Indonesia did not import rice from Vietnam.
In the context of the sharp falls in the exports to the loyal markets, the Vietnam’s rice production was “saved” by the strong rise in the exports to China. The export volume to the market in 2013 was four times higher than that in 2012, about 1.6 million tons.
China consumed 32 percent of Vietnam’s total rice exports, while African markets bought nearly 30 percent.
However, Vietnam has been warned against the reliance on China as the main export market. The unstable market would upset Vietnam’s rice export strategy one day if Vietnam does not follow a reasonable business development plan.
Nguyen Dinh Bich, a well-known rice expert, on his article on Thoi bao Kinh te Saigon--while noting that Vietnam had to lower the export prices sharply in 2013, which was a big bitterness, has warned that the same scenario may repeat in 2014.
The US Agriculture Department has predicted that the demand from the three Vietnamese loyal markets would soar in 2014 to 4 million tons, while the demand from eight Asian big rice importers would increase by 20.1 percent to 9.22 million tons. However, Bich commented that it would be not easy to boost exports to the markets.