According to forecasts, 2024 will be another consecutive year of rice exports surpassing 8 million tons, bringing in around 5 billion USD for our country. Global rice supply has decreased, with countries like the Philippines, Indonesia, China, and several others increasing rice imports in 2024 to ensure food security, creating opportunities for Vietnamese rice. However, localities and businesses still express concerns about market information, how to closely monitor to seize the opportunity.
In the first 2 months of 2024, the whole country exported 1.02 million tons of rice, with a turnover of 708 million USD, up 49.8% compared to the same period last year. As for the export price of rice, if the average in 2023 reached 575 USD/ton, then in the first 2 months of 2024, it soared to 699 USD/ton...
Is it a great opportunity or a challenge for Vietnamese rice in foreign markets?
The end-of-season global inventory for the 2023-2024 crop is forecasted to be over 167 million tons, a decrease of 8.6 million tons compared to the previous crop year and the lowest inventory level in the last 6 years. India, the largest rice-exporting country, with over 20 million tons of rice per year, has implemented many export restrictions since the middle of last year.
Many countries have been redirecting their search for alternative rice supply sources, especially from the Southeast Asian region, creating opportunities for increased rice exports from Vietnam, as well as obtaining good export prices. In 2023, Vietnam's rice exports earned over 4 billion USD, and there are expectations for further increases this year.
The export price of rice is increasing, while the domestic price of rice is decreasing
In February 2024, the export price of Vietnam's 5% broken rice was $638 per ton, which was $10 higher than the same type of rice from Thailand and $19 higher than rice from Pakistan.
“ The export price of rice is likely to continue to rise in the near future as many countries are starting to increase their imports, while India still maintains restrictions on the export of certain key rice varieties, leading to a lack of signs of global supply increasing," according to the Vietnam Food Association
Preliminary estimates until the end of January 2024 show that Vietnamese rice has been exported to 27 markets, with a volume of over 512 thousand tons, valued at 362 million USD. This marks a 42.8% increase in volume and a 94.5% increase in value compared to the same period in 2022. Asian markets continue to be the largest export region in 2023, accounting for over 6 million tons, or 75% of the total export volume, followed by Africa with nearly 1.34 million tons, representing 16.5% of the total rice exports. While the European market region accounts for a small proportion of Vietnam's total export volume (about 1.6%), it still reached 132.6 thousand tons.
Vietnamese rice maintains its export position in the Philippines
In traditional markets, the Philippines remains the largest rice export market for Vietnam. In recent years, the Philippines has consistently been Vietnam's top rice consumption market, accounting for 38.5% of the total volume and 37.5% of the total rice export turnover of the country. In 2023 alone, Vietnam exported over 3.14 million tons of rice to the Philippines, equivalent to $1.75 billion, marking a 20.5% increase in value but a 2.46% decrease in volume compared to 2022.
At the Trade Promotion Conference with Vietnamese Trade Offices abroad in February 2024, Mr. Phung Van Thanh, Deputy Commercial Counselor of Vietnam in the Philippines, commented: "Being a major rice supplier, always maintaining the number one position in rice exports to the Philippine market, Vietnam has many advantages in this country." Many Vietnamese businesses have long standing relationships with rice importers in the Philippines, establishing credibility and trust in rice exports with partners based on stable supply, quality, and competitive prices.
Furthermore, Vietnam continues to uphold and ensure stable rice quality, constantly improving the quality of rice export products, thereby contributing to increasing the export turnover value of Vietnam's rice to the Philippines market. It is necessary to diversify rice export products, not only focusing on high-quality rice products to serve high-income consumers but also exploring the potential of medium-quality and lower-quality rice to serve a large number of people with medium and low incomes.
There are still many constraints existing in rice export activities
However, representatives from the Ministry of Industry and Trade also candidly acknowledge that alongside the achievements, rice export activities still face several constraints. Specifically, the import market remains undiversified, still heavily reliant on a few key traditional markets such as the Philippines, China, and Indonesia... Additionally, the commercial rice market situation evolves too rapidly, and policy actions from some rice-producing and exporting countries have had adverse effects on the global food supply chain, causing general market sentiment impacts. Besides, Vietnamese rice traders have not focused enough on developing regional raw material linkages or implementing solutions for source traceability, building data information systems to meet the requirements of import markets.
It is necessary to proactively devise rice production strategies and expand, explore niche markets
According to many forecasts, rice prices are expected to continue rising in 2024 due to tightened supply. The rice market is projected to remain tight in the early part of the year due to ongoing export restrictions by India. Meanwhile, demand is expected to increase during the Tet holiday. These factors will further drive rice prices higher.
The onset of El Nino and the potential impact of this weather phenomenon on major rice-growing regions have heightened concerns about supply. Farmers in the Mekong Delta region of Vietnam may begin harvesting the new crop this month, alleviating some concerns about supply. The winter-spring harvest season typically yields the largest crop nationwide.
Focus on building a brand for Vietnamese rice
The largest rice export market for Vietnam is ASEAN, accounting for up to 61% of the country's total rice exports. In January 2024, the Philippines continued to lead in Vietnamese rice consumption, accounting for 53.6% of the total volume and 39% of the total rice export turnover of the country.
According to Mr. Phung Van Thanh, Deputy Commercial Counselor of Vietnam in the Philippines, the Vietnamese rice brand has not yet been prominently featured by importers in this market compared to similar brands from Japan and Thailand. Therefore, the origin labels on the packaging are always smaller and require keen eyes to recognize. From this reality, Mr. Thanh recommends that besides boosting production volume and export turnover of rice, it is necessary to enhance the quality and reputation of enterprises, and both businesses and managers should focus on building the brand. Similarly, Mr. Pham The Cuong, Deputy Commercial Counselor of Vietnam in Indonesia, stated that the brand recognition of Vietnamese rice in the Indonesian market is also not very clear. Therefore, he suggests that Vietnamese rice export businesses should pay more attention to building a brand with a comprehensive promotion strategy for high-quality Vietnamese rice varieties. "Therefore, Vietnamese rice export businesses need to closely monitor market information, seize opportunities, and take advantage of exporting rice to the Indonesian market in the early months of the year," emphasized the Deputy Commercial Counselor in Indonesia.
Exploiting niche markets with high-quality and fragrant rice varieties
At the conference, Mr. Nguyen Ngoc Nam, Chairman of the Vietnam Food Association, stated that the national rice production in 2024 is expected to remain at the same level as 2023 (43.5 million tons) under favorable weather conditions. However, the volume of rice stocks carried over to 2024 has decreased significantly, so it is necessary to carefully balance rice production with domestic consumption demand.
Rice exports in 2024 are forecasted to remain vibrant as demand from major consumption markets in Southeast Asia such as Indonesia, the Philippines, Malaysia, China, and Africa increases due to concerns that the El Niño heatwave will persist until mid-2024.
Domestic prices are also forecasted to remain stable at a high level and maintain an upward trend. Therefore, the rice export plan for 2024 is around 6.5 million tons.
In 2024, the Vietnam Food Association will continue to strive to fulfill both tasks of ensuring domestic consumption demand, maintaining food security, and fulfilling international commitments.
Therefore, Mr. Nam suggested that the Ministry of Industry and Trade should consider negotiating and signing preferential trade agreements with some potential export markets; utilize the process of reviewing agreements that have been implemented to propose opening up more markets, increasing quotas for Vietnam.