The second and third quarters of 2022 are forecast to be a “key” and “explosive” period for the acceleration of Vietnam’s rice export with the expectation of good prices. It is important for exporters to ensure the supply, overcome competitive pressures, effectively exploit the advantages of FTAs, and take full advantage of opportunities to enter deep into traditional and potential markets.
Recently, the Vietnam Food Association (VFA) quoted Reuters as saying that a trader in Ho Chi Minh City is hesitant to sign new export contracts because he wants to wait for higher rice prices.
Should we wait for higher prices?
Remarkably, there are forecasts that rice prices will increase in the coming weeks compared to the 5% broken rice price offered at 415 USD/tonne by the end of April 2022.
Besides, according to data from Ho Chi Minh City port, 300,990 tonnes of rice were exported in April 2022 and 40,000 tonnes of rice will be exported in the first week of May 2022, mainly to the Philippines, Africa, and Cuba.
Recently, there are some comments that the second and third quarters of 2022 will be a “key” and “explosive” period for the acceleration of Vietnam’s rice export turnover. Especially after this May will be the time when rice export becomes busier and rice prices will continue to go up as expected by Vietnamese traders.
Rice export is expected to make good use of the key period. (Photo: Internet)
Mr. Nguyen Chanh Trung, Deputy General Director of an enterprise having the link between rice production and consumption in An Giang province, said that usually, rice export will start looking better from the end of April until the third quarter. This is the time when traditional Vietnamese rice importers such as the Philippines or Africa rebalance their inventories and they will license private enterprises to import.
According to the rice exporting enterprises in the southern provinces, in the second quarter of 2022, the demand for Vietnamese rice on the international market will continue to increase to store domestic consumption. Especially in the context of the Russian-Ukrainian conflict, food supply was scarce, pushing global prices very high.
This is also an opportunity for Vietnamese rice to increase its market share and the value of export turnover in the coming months. Therefore, on May 5 in An Giang province, the Trade Promotion Department (Ministry of Industry and Trade) in cooperation with Vietnam Trade Office in ASEAN held a consultation session to export rice products to the ASEAN market.
On the ASEAN market, the most notable remains the Philippines. According to the Trade Promotion Department, in the first quarter of 2022, the Philippines continued to be the leader in Vietnamese rice consumption, accounting for 44.7% of the total volume and 42.6% of the country’s total rice export turnover. The figure reached 672,136 tonnes, equivalent to 311.08 million USD. The average price was 462.8 USD/tonne, a strong increase of 63.3% in volume, and 41.4% in turnover.
Experts commented that rice export of the Mekong Delta in particular and Vietnam in general to the Philippine market has many opportunities since this country adopted the policy of liberalizing the rice industry. Import taxes, instead of the quota removal policy, will increase rice imported to the Philippines.
Making good use of opportunities
To improve the efficiency of rice export to ASEAN in general, the rice sector needs to review the import demand of each market in the region, identify the markets that consume rice at cheap prices and high-grade rice, fragrant rice, etc. Moreover, it is important to focus on trade policies with countries in the region and make full use of the advantages of the Free Trade Agreements (FTAs) between ASEAN and its partners in the world.
Regarding the African market, many people are interested in the information in March this year when An Giang Import-Export Joint Stock Company (Angimex) signed a memorandum of a contract to export three million tonnes of rice to Sierra Leone in three years.
Angimex recently appointed a new Chairman of the Board of Directors shortly after Mr. Do Thanh Nhan, the former chairman, was arrested in April 2022 due to securities manipulation. By signing with Sierra Leone, this company wants to gradually expand the rice export market to countries in the West Africa region in the future after neighboring countries see the size and potential of the company.
Exports to the EU are also forecast to continue to increase sharply in the coming months based on the impact of the Vietnam-EU FTA (EVFTA). However, it should be seen that Vietnam’s rice market share in this large market is only 3.1% of the total volume of foreign rice imported into the EU.
Meanwhile, according to data from the European Statistical Office (Eurostat), the EU imports three to four million tonnes of rice per year. Therefore, Vietnam still has plenty of room to increase its exports to this market, especially in “key” periods such as the second and third quarters of 2022.
Vietnam still has plenty of room to increase its rice export to the EU. (Photo: Internet)
According to Mr. Tran Quoc Hung, an economic expert in the United States, first of all, Vietnamese enterprises need to use up the rice export quota of 80,000 tonnes/year with a tariff rate of 0% under EVFTA. In particular, they should promote high-grade, high-value fragrant rice that is favored by European consumers. In the context of the prolonged conflict between Russia and Ukraine, Vietnam has a good opportunity to boost rice export to the EU market.
In order for Vietnamese rice producers to make good use of the opportunities in the coming months, experts emphasized the importance of continuing to effectively exploit the advantages of FTAs.
Besides, rice exporters need to ensure the supply and note the information about containers, and sea freight to actively deliver and sign new contracts.
On the other hand, when the “key” period is opened, Vietnamese rice exporters need to overcome the challenges such as importers requiring high standards of quality. And especially exporters need to overcome the fierce competitive pressure from potential competitors in large markets.