Updated: Aug 15
Rice, a staple food source and a strategic export commodity of Vietnam, has recently seen remarkable growth and achieved significant outcomes. Every year, Vietnamese rice export account for approximately 15% of the world's total rice exports. Vietnamese rice is now present in over 150 countries and territories.
With impressive results in rice export volume, the question arises: "What is the competitive capacity of Vietnam's rice export compared to leading rice-exporting nations?" "What are the competitive advantages of Vietnam's rice export?" "What challenges persist, causing Vietnam to face difficulties in the export process?" Explore these questions with Agroviet in the following article.
Current Status of Vietnamese Rice Export.
In recent years, the variety of rice exports from Vietnam has become increasingly diverse and abundant. The main exported rice varieties include fragrant rice, premium rice, glutinous rice, japonica rice, and more. Vietnamese businesses have placed a strong emphasis on enhancing the quality of rice, ensuring traceability of origin, and aiming to meet high standards in export markets. This is achieved through investments in developing source regions, producing according to safety standards, adopting standardized rice varieties, and improving milling and processing technologies. As a result, the quality of Vietnam's exported rice has been steadily improving.
The composition of Vietnam's rice export varieties is shifting towards increasing the proportion of high-value-added rice types and decreasing the proportion of low-grade rice. This shift in composition meets the demands of consumers in export markets, ultimately enhancing the value of exported rice.
According to statistics from the customs authority, in 2022, Vietnam's rice export volume reached 7.1 million tons, valued at $3.45 billion, marking a 13.8% increase in quantity and a 5.1% increase in value compared to the same period in 2021. The average export price reached $486 per ton. As of now, rice prices have experienced their highest increase in 12 years, with the cost of rice surging by tens of US dollars per day. By the end of July 2023, Vietnam had exported 4.83 million tons of rice (worth $2.58 billion), representing nearly a 19% increase in volume and a 29.6% increase in value compared to the same period in the previous year.
Vietnam's primary rice export market is Asia, with the Philippines being a particularly significant consumer. In January 2023, the Philippines accounted for 34.6% of Vietnam's rice exports. However, rice exports to this market during that month reached 129.3 thousand tons and $64.55 million, showing a decrease of 44.7% in volume and a 41.4% decrease in value compared to the same period in 2022.
Mr. Tran Duy Dong, the Director-General of the customs authority, noted that in the first quarter of 2023, the global economic situation continued to be complex, with increasing food reserve demands in many countries. Vietnam's rice export prices remained high, fluctuating around $450 per ton, and at times surpassing the prices of similar Thai rice types.
Moving into the second quarter, import demands for rice remained high in various markets, while the supply from major rice-exporting countries such as India and Pakistan continued to be limited. Additionally, the price of Thai rice increased due to a stronger Baht, and global rice prices continued their upward trend.
Minister of Industry and Trade, Mr. Nguyen Hong Dien assessed: "Following the record-breaking rice export volume of 7.1 million tons achieved in 2022, the rice export activities in the first half of 2023 in our country have continued to yield positive results both in terms of quantity and value (with an increase of 18.7% in volume and nearly 30% in value compared to the same period last year). Moreover, there has been a notably high growth rate in many markets, particularly in the segments of fragrant and high-quality rice, areas where we possess a competitive edge."
Opportunities and Challenges for Vietnamese Rice in the Current Context.
In recent days, rice prices have surged significantly, which is a promising sign. Alongside this, the fact that certain countries are imposing bans on rice exports presents both opportunities and challenges for Vietnamese rice.
Opportunities to Strengthen the Position of Rice Export Industry in Vietnam.
Global Food Security Concerns:
The recent measures taken by India, the world's largest rice exporter, to ban rice exports, along with Russia's reinforcement of this ban since 2022, and the involvement of the United Arab Emirates (UAE), have intensified global food security concerns. However, this situation presents a "golden" opportunity for Vietnamese rice. If effectively utilized, it can not only expand Vietnam's market share in traditional markets but also open doors to new markets, consequently driving growth in rice exports in the coming years.
This "golden" opportunity demands proactive efforts to swiftly secure a prominent position in the absence of other exporting nations. By reinforcing Vietnam's leadership in the rice sector and engaging in negotiations with new partners, the country can leverage this situation to its advantage. The focus should be on capitalizing on this unique opportunity, solidifying Vietnam's role as a leading rice exporter, and strategically maneuvering to extend the reach of Vietnamese rice to various global markets.
Continuously Rising Prices:
The Mekong Delta region accounts for 90% of the country's rice exports. According to the Ministry of Industry and Trade, by the end of July 2023, Vietnam had exported 4.83 million tons of rice, valued at $2.58 billion, marking an 18.7% increase in volume and a 29.6% increase in value compared to the same period in 2022. The estimated average export price reached $534 per ton, reflecting a 9.2% increase from the same period in 2022.
Rice exports have continued to experience growth in traditional Asian markets, reaching nearly 3.3 million tons, accounting for 77.7% of the total export volume and showing a 35.8% increase compared to the same period in 2022. The prices of exported rice have seen substantial growth, with Vietnam's 5% broken rice price rising by $25 per ton since the imposition of export bans.
As of August 1st, 2023, the average price of Vietnam's 5% broken rice reached $590 per ton, marking the highest price in 11 years and representing an increase of approximately $80 compared to the previous month. Currently, rice export prices have surged by more than $600 per ton and show a continued upward trend. In the case of fragrant rice varieties, the average export price of Vietnamese Jasmine rice has been recorded at $690 per ton, reflecting an increase of around $80 from the previous month.
Rice Export Still Faces Numerous Difficulties and Challenges for Businesses and the Rice Industry.
Rice export still encounters several difficulties and chall enges for businesses and the rice industry. However, alongside favorable circumstances and achieved outcomes, Minister Nguyen Hong Dien straightforwardly acknowledges that our country's rice export activities in recent times still carry limitations and weaknesses that need to be overcome. Moreover, he predicts that we will have to confront various challenges and difficulties in the near future, particularly given the global food trade landscape, influenced by unfavorable factors.
Balancing Supply and Demand in Rice Export: In just over a month, rice prices have risen by over 2,000 VND/kg. By the beginning of August 2023, rice export prices have climbed to over $660 per ton. However, businesses are struggling to procure sufficient paddy to fulfill orders due to inadequate domestic rice supply. Despite the extensive export opportunities, businesses are cautious in entering new export contracts. Some previously signed contracts at higher prices have resulted in losses due to the continuous increase in domestic rice prices.
On August 6th, Prime Minister - Mr. Pham Minh Chinh issued Directive 24, focusing on ensuring robust national food security and promoting sustainable production and rice exports in the current phase. ributing to stabilizing domestic rice and ensuring national food security, Minister Nguyen Hong Dien recommends that units under the Ministry of Industry and Trade, as well as other relevant ministries, departments, localities, the Vietnam Food Association, and rice export traders focus on implementing key initiatives.
In this regard, in addition to intensifying rice exports to seize opportunities, ensuring food security for the nation in all situations remains paramount. It is crucial to continue establishing and strengthening effective collaboration mechanisms between producers, cultivating areas, and rice business and export enterprises. Additionally, fostering cooperation among traders to ensure a stable, quality supply and prevent competitive bidding, market disputes, and price pressures is of utmost importance.
Enhancing Rice Production and Sustainability.
On August 6th, Prime Minister Pham Minh Chinh issued Directive 24, focusing on ensuring robust national food security and promoting sustainable production and rice exports in the current phase.
The Prime Minister assigned the Minister of Agriculture and Rural Development to lead and coordinate efforts with relevant ministries, departments, and localities in planning and developing large-scale, high-quality commodity rice production areas. The aim is to secure dedicated rice cultivation land, closely monitor weather conditions, natural disasters, and disease outbreaks to make timely production adjustments, and ensure the production target of over 43 million tons of rice annually in the upcoming years.
Furthermore, the directive emphasizes the proper and efficient implementation of the "Sustainable Development of 1 Million Hectares of High-Quality Low-Emission Paddy Fields Linked with Green Growth in the Mekong Delta Region by 2030" project. This comprehensive initiative aims to foster sustainable growth through high-quality, low-emission rice cultivation across one million hectares in the Mekong Delta region.
With this directive, the Vietnamese government demonstrates its commitment to strengthening food security and fostering sustainable development in the rice industry, especially in the crucial Mekong Delta region.