Rice exports hit record high, but businesses need to be cautious

SGGPO 11/03/2023 10:51

According to estimates from the Ministry of Industry and Trade, in the first 10 months of 2023, Vietnam exported about 7.1 million tons of rice, worth nearly 4 billion USD, up 17% in volume and 35% in value over the same period in 2022. According to VFA, as of November 1, compared to the group of major rice exporting countries in the world, Vietnamese rice has the highest price.

On the morning of November 3, the Vietnam Food Association (VFA) and BizLIVE jointly organized the annual workshop “Solutions to improve the efficiency of Vietnam’s rice value chain”. The workshop provided an overview of the rice market and forecasts for 2024.

Conference scene

Attending the workshop were Mr. Nguyen Ngoc Nam - Chairman of the Vietnam Food Association (VFA); Mr. Nguyen Nhu Tiep - Director of the Department of Quality, Processing and Market Development of the Ministry of Agriculture and Rural Development and rice supply and export enterprises in the Mekong Delta.

At the workshop, delegates spent a lot of time discussing cost optimization, increasing profits in the rice value chain; accessing effective capital sources for the rice industry.

Các đại biểu tham quan gian hàng triển lãm thiết bị bay phục vụ trong sản xuất nông nghiệp

Delegates visit the exhibition booth of flying equipment serving agricultural production.

According to estimates by the Ministry of Industry and Trade, in the first 10 months of 2023, Vietnam exported about 7.1 million tons of rice, worth nearly 4 billion USD, up 17% in volume and 35% in value over the same period in 2022.

According to VFA, as of November 1, compared to the group of major rice exporting countries in the world, Vietnamese rice has the highest price. Specifically, Vietnam's 5% broken rice is priced at 653 USD/ton, Thailand's is priced at 560 USD/ton and Pakistan's is priced at 563 USD/ton. Vietnam's 25% broken rice is traded at 638 USD/ton, Thailand's is priced at 520 USD/ton and Pakistan's is priced at 488 USD/ton.

The high price of rice is often due to the impact of parties in the supply chain, leading to many difficulties in delivering goods for businesses, because export contracts have a delivery time of at least 1 to 3 months.

Nông dân ĐBSCL chuyển sang trồng nhiều giống lúa chất lượng cao, góp phần nâng cao giá trị gạo xuất khẩu

Farmers in the Mekong Delta have switched to growing many high-quality rice varieties, contributing to increasing the value of exported rice.

According to Mr. Do Ha Nam, Vice President of VFA, the sharp increase in Vietnamese rice prices has led to a number of cases where businesses have suffered heavy losses and have canceled contracts, especially for businesses with weak economic capacity. For large businesses that are almost finished delivering goods, in order to maintain their reputation with their partners, they are forced to buy at high prices to collect enough goods to fulfill the contract. This is the main reason for the high price of rice.

“The sharp increase in rice prices is also due to the influence of suppliers. Every time the price of rice increases a little, they contribute to pushing the price up further, and as a result, the price of Vietnamese rice is at a record high. It should be added that Vietnamese businesses are used to signing long-term contracts, so now most of them are concerned with buying rice to deliver to their partners,” added Mr. Do Ha Nam.

According to Mr. Do Ha Nam, the high price of Vietnamese rice is not necessarily an advantage - because when the price is high, customers will look for other markets with better prices and rice quality equivalent to Vietnamese rice, especially Thailand, leading to the risk of losing the fragrant rice market.

Dây chuyền sản xuất gạo xuất khẩu hiện đại của Công ty Trung An

Modern rice export production line of Trung An Company

Also at the workshop, experts and business representatives spent a lot of time discussing technology and capital solutions for the rice industry. According to technology experts, to keep the quality of rice grains fresh, delicious and without losing quality from harvest to consumers, there is no solution other than applying technology, because in reality, the factors that contribute to increasing the income of farmers and businesses in the rice chain do not have much "room".

According to rice experts, Vietnam's rice exports in 2023 are likely to reach 8 million tons. This is considered the highest record ever. In 2024, inventories will be very low, so businesses must be extremely careful or they will be very risky like this year: signing many contracts but not anticipating limited supply, then prices will rise and face difficulties. In order to do better export business in 2024, businesses must be extremely careful in deciding to sign long-term contracts, because of limited supply, combined with difficult credit capital.

Source