The rapid increase in export rice prices, along with adjustments in the consumption market in importing countries, has had a significant impact on the domestic supply and consumption of rice.
Rice export is currently facing great opportunities, but also many risks, especially for businesses without rice reserves.
FARMERS BENEFIT
According to information from the Vietnam Food Association, Vietnam's rice export prices are quite high, especially for 5% broken rice, which has reached 590 USD/ton.
This is also the highest rice export price since reaching a historic milestone in 2008. The recent increase in Vietnam's rice export price is partly due to India's ban on rice exports and some countries' temporary suspension of rice exports.
In addition to Vietnam, Thai rice also has high prices related to changes in the consumption market. In response to recent developments in the rice market, the Ministry of Industry and Trade recently held an important conference in Can Tho City to assess the situation and orientation for rice exports in the coming time.
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| Rice production line at Vinh Hien Company Limited. |
The high export price of rice has contributed to the increase in domestic raw material prices due to the current limited rice supply. Regarding this issue, Mr. Huynh Van Danh, Director of Vinh Hien Company Limited (Go Cong Tay District) said that rice prices have increased by about 30% compared to about 2 months ago.
Accordingly, the current price of Nang Hoa and Dai Thom 8 rice in the field in the Go Cong area fluctuates around 8,000 VND/kg, 5451 rice has also reached 7,800 VND/kg; and fragrant rice is sold for no less than 15,000 VND/kg. A few days ago, the rice market became more active, especially after the news of increased rice exports.
“However, the rice market has been relatively stable in recent days, because when the price was low, agents imported a lot of goods, but now the price of raw rice has increased, so we should reconsider. In Go Cong, there are still a few days left for the peak rice harvest, which will last about 20 days. It is forecasted that the price of rice will be difficult to increase further, but it is also difficult to lower the price because large purchasing units have set “standard” purchasing prices, and partly because the export price of rice has increased quite high. For example, the current export price of fragrant rice is 650 USD/ton, so the market price of rice will hardly be lower than 15,000 VND/kg,” said Mr. Huynh Van Danh.
According to data from the Ministry of Agriculture and Rural Development, in the first 6 months of 2023, the country's rice exports reached 4.27 million tons, worth about 2.3 billion USD, an increase in both volume and value over the same period. Currently, in Tien Giang, there are 7 enterprises licensed to export rice, but only 4 enterprises participate in exports, mainly 2 companies: Tien Giang Food Company and Viet Hung Company Limited; the remaining 2 enterprises were newly licensed at the end of 2022 and also participated in exports in 2023, namely Dac Thanh Food Company Limited and Dat Duc Thinh Trading and Service Company Limited. In terms of proportion, the province's rice export output accounts for an average of about 3% compared to the whole country. In the first 6 months of 2023, the province's rice export output reached 110,192 tons, worth approximately 65 million USD, an increase of more than 69% in volume and 2 times in value compared to the same period in 2022. Of which, exports to China accounted for more than 75% of the total turnover, followed by Africa accounting for more than 10%, Hong Kong 6.6%, Singapore 2.7%, Philippines 1.5%, Indonesia 0.5%... In addition, Tien Giang's exported rice is also present in demanding markets such as: Europe, Australia and some newly opened markets in countries in the Middle East. In fact, in recent years, people's awareness has gradually changed, shifting from purely agricultural production to agricultural economics , so the majority of people (accounting for nearly 90%) have boldly switched to growing high-quality rice and fragrant rice to serve export and meet the increasing demand of the domestic market. Rice prices on the world market are at a high level, Vietnamese rice brands are increasingly popular, global food supply is decreasing due to the Russia-Ukraine conflict, India has stopped exporting rice, countries are increasing national food reserves, so food demand is increasing... are good opportunities for Vietnamese rice. |
Of course, the recent increase in rice prices has contributed to increasing farmers' income. According to calculations, each hectare of rice can yield an average of 6 tons of rice, with the recent increase of approximately 1,000 VND/kg of rice, farmers can earn an additional 6 million VND/ha.
Looking at the overall picture, according to Nguyen Van Man, Director of the Department of Agriculture and Rural Development of Tien Giang province, since India banned rice exports, the selling price of rice to farmers has recently increased from 1,000 - 1,500 VND/kg, so farmers are very excited. "In the province, the total area planted is 117,665 hectares, 71,628 hectares have been harvested, currently there are 46,037 hectares of rice in the fields being harvested and preparing to be harvested, with an expected output of about 300,000 tons" - said Mr. Nguyen Van Man.
KEEP A CLEAR VIEW OF MARKET DEVELOPMENTS
From the perspective of the consumption market, especially with the recent news of boosting rice exports, Director of the Department of Industry and Trade of Tien Giang province Luu Van Phi said that rice exports of enterprises in Tien Giang province in the first 6 months of 2023 were quite favorable, especially since China reopened its rice import market.
This is a very positive signal for rice exporting enterprises in the country in general and Tien Giang in particular. One of the reasons is the decrease in global food supply due to the impact of the Russia-Ukraine conflict, while food production in some key countries in the Asian region has decreased due to the impact of the El Nino phenomenon.
In addition, China's reopening of its import market has contributed to boosting the demand for rice imports and increasing domestic rice prices in recent months. On the other hand, in recent years, thanks to the investment of the State, people and businesses in rice breeding, brand building, conversion to organic production models, strict implementation of green and clean production processes, especially the gradual change in farmers' production practices in reducing the amount of fertilizers and pesticides, contributing to reducing production costs... some Vietnamese rice brands have become increasingly popular in the world and have higher prices than Thai rice, typically: Jamine 85, Japonica, ST 25, sticky rice, Huong Lai fragrant rice...
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When discussing what export enterprises need to do to take advantage of rice export opportunities in the coming time, comrade Luu Van Phi said that, through discussions with enterprises, rice export is currently facing great opportunities, but also many risks, especially for enterprises that do not have raw material production areas and do not have rice reserves in warehouses for export because domestic rice prices can fluctuate according to world supply and demand.
“Therefore, to facilitate exports and take advantage of this opportunity, there are two factors that businesses must grasp: Be proactive in stable sources of input materials at reasonable prices, ensuring benefits when exporting (it is best to have rice in stock); when signing export contracts, pay attention to fluctuations in input material prices, avoiding risks when the contract is signed, domestic prices suddenly increase and there is no source of rice to deliver to foreign partners” - said comrade Luu Van Phi.
In the long term, to reduce risks in rice import and export activities, comrade Luu Van Phi also noted that it is necessary to form a chain of links from production to domestic consumption and export on the principle of mutual benefit. Recently, in the province's durian export, people and businesses have formed an open linkage method in the direction of fixing prices about 2 months before export with an increase or decrease of no more than 10% according to market prices.
In this way, the business has enough time to negotiate prices with foreign partners and if there is a fluctuation within the range of about 10%, the business can manage the risk. On the other hand, the issue of working capital to serve the purchase of goods in stock is extremely necessary for the business.
However, businesses are currently unable to access this source of capital due to the requirement of collateral. It is thought that rice exporting businesses need to closely monitor developments in the domestic and international food supply situation, and be quick and cautious when signing export contracts abroad.
MR. PHUONG
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