Thanks to the Vietnam-EU Free Trade Agreement, Vietnam’s rice export to the EU market had a breakthrough growth when it increased four times in both volume and value in the first two months of this year.
A breakthrough in rice export to the EU
After the EVFTA came into force, Vietnam’s rice export to the EU took an impressive turn.
In the first two months of this year, Vietnamese enterprises exported more than 15,500 tonnes of rice to the EU market, worth 11.7 million USD, up nearly four times in volume and 4.3 times in value compared to the same period in 2021.
Previously, Vietnam’s rice export to the EU market increased by 13.3% in volume and 34.2% in value in 2021, reaching 63,927 tonnes worth 44.6 million USD.
According to The Export-Import Department (Ministry of Industry and Trade), this result shows that enterprises have effectively taken advantage of the EVFTA to increase rice export value to the EU. Especially in the context of the complicated pandemic, the price of sea freight to the EU increased sharply and rice import to this market decreased in 2021.
Vietnam’s rice export to the EU in 2021 – 2022. (Photo: Hoang Hiep)
Notably, while the country’s average rice export price went down 12.1% in the first two months to 469 USD per tonne, Vietnam’s rice export price to the EU recorded an increase of 9% to 755 USD per tonne.
Vietnam’s rice prices to the EU market are higher than the national average because the main types of rice exported to this market are fragrant rice with high value.
The fragrant rice such as ST 24, ST 25, Jasmine, or KDM accounted for nearly half of Vietnam’s rice export to the EU in two months with more than 7,500 tonnes, an increase of 285.3% compared to the same period last year. Although the EU is not a region that consumes much rice, this market has a lot of potential for the high-value fragrant rice of Vietnam.
In the EU, Italy has unexpectedly become the leader of Vietnam’s rice import in the first two months of the year with 6,353 tonnes, up 26 times over the same period.
Besides, some other key export markets of Vietnam in the EU in the first two months of this year are Germany (2,362 tonnes), France (1,469 tonnes), and the Netherlands (1,439 tonnes).
Vietnam’s leading rice exporters to the EU in the first two months of this year are Blue Ocean Import-Export Company Limited (accounting for more than 20% of Vietnam’s total rice export turnover to the EU), Loc Troi Group Joint Stock Company (accounting for 15%), and Thinh Rice Trading and Service Joint Stock Company (accounting for 9.8%).
There are still many opportunities to export to the EU
According to the European Statistical Office (Eurostat), the EU imports about three or four million tonnes of rice per year. In 2021, the EU imported 3.6 million tonnes of rice; of which 1.6 million tonnes were internal transactions and two million tonnes were from outside the EU.
The leading supplies of rice to the EU are Pakistan (424,467 tonnes), Myanmar (360,891 tonnes), India (204,790 tonnes), and Thailand (189,431 tonnes). Vietnam comes 10th place in the race to export rice to the EU with 61,000 tonnes.
However, Vietnam’s rice export price to the EU increased markedly with an average of 796 USD/tonne, up 26% more than 629 USD/tonne in 2020. Thereby, it recorded the strongest price increase among the leading rice exporters to the EU.
Vietnam’s export price to the EU is quite competitive compared to other competitors such as Cambodia (851 USD/tonne), Thailand (975 USD/tonne), and India (889 USD/ton).
Since Vietnam’s rice market share in the EU is quite modest, accounting for only 3.1% of the total volume of outside-block rice imported into the EU, Vietnam has many opportunities to increase its exports to this market.
With competitive prices, improved rice quality, and the advantages of the EVFTA, Vietnam’s rice export to the EU is expected to continue to breakthrough in the near future.
There are still many opportunities to export to the EU. (Photo: vnbusiness)
A push from EVFTA
The Vietnam Food Association (VFA) commented that, in 2022, Vietnam’s rice export to the EU is expected to increase further. Especially, the quality of Vietnamese rice is improved, mainly fragrant rice, which is favored by European consumers.
Taking advantage of EVFTA to export fragrant rice with 0% tax is in the hands of enterprises with large raw material areas, cultivated under high standards such as Loc Troi, Tan Long, or Trung An.
According to the Export-Import Department, in the past years, one of the reasons that prevented the growth of Vietnam’s rice export to the EU market was the high tax rate by the EU on rice imported from Vietnam.
At the same time, Vietnam has not been allocated a tariff quota by the EU. So it is difficult to compete with rice of other countries such as Thailand, the United States, Australia, India, or Pakistan which are allocated a tariff quota, and countries such as Laos, Cambodia, and Myanmar which are duty-free and do not have a quota applied.
However, according to the commitment from the EVFTA, the EU gives Vietnam a quota of 80,000 tonnes of rice per year (including 30,000 tonnes of milled rice, 20,000 tonnes of unmilled rice, and 30,000 tonnes of fragrant rice).
In particular, the EU will fully liberalize broken rice (this commitment makes it possible for Vietnam to export an estimated 100,000 tonnes to the EU annually). For products from rice, the EU will bring the tax rate to 0% after 3-5 years. This has opened up opportunities for Vietnamese rice to compete with other countries when exporting to the EU.
With stable demand, especially at a high level for specialty rice from Asia, the EU will continue to be a potential rice export market for Vietnamese enterprises in the near future.
Despite this, the pandemic is still complicated in Europe, shipping tariffs remain high which can make it difficult to take advantage of the EVFTA to promote rice export to the EU market in 2022.