Vietnam leading the world in rice exports, what for?

Posted on August 10, 2012

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Vietnam now has the opportunity to become the biggest rice exporter in the world, since Thai rice has become less competitive in terms of prices. However, the No. 1 position does not bring benefits to rice growers.

The rice subsidization policy applied by the Thai government has pushed Thai rice prices up on the world market, thus making the products less competitive in comparison with Vietnamese rice.

By the end of July 2012, Thailand had exported 3.78 million tons of rice, a 50 percent decrease in comparison with the same period of the last year. With the Thai rice exports decline, Vietnam has every reason to become the biggest rice exporter in the world.

No. 1 position does not benefit Vietnamese farmers

Dr Le Van Banh, Head of the Mekong Delta Rice Research Institute, confirmed that Vietnam may surpass Thailand in rice exports in 2012. However, some other countries, including India, are competing fiercely with Vietnam. Therefore, even though Vietnam tops the list of the biggest rice exporters, the revenue and the profit would still be lower than the last year.

“Thailand ranks the second to Vietnam, but its farmers can get benefits from the subsidization policy. Meanwhile, Vietnam is the Number One, but farmers’ income remains low, because they can only sell products at low prices,” Banh said.

Analysts have also pointed out that what Vietnam should be interested is not the Number One or Number Two position among rice exporters, but is the benefit Vietnamese farmers and enterprises can receive.

Dr Nguyen Van Sanh, Head of the Mekong Delta Development Research Institute, said the biggest challenge for Vietnam now is there are too many rice exporters, but there are few exporters with strong capital capability, scale and business strategy.

Dr Vo Hung Dung, Director of the Can Tho Branch of the Vietnam Chamber of Commerce and Industry (VCCI) also said that Vietnam should not care much about its position in the list of rice exporters, while it should pay attention to the long term development strategy to ensure the long term benefits for farmers.

Dung said that the Number One position in rice exports does not always means the wealth and prosperity. Especially, this could be a trap of illusions and high risks.

Storing rice only benefits merchants

According to the Vietnam Food Association VFA, normal dried rice was traded at 5400 dong per kilo last week, while long grain rice at 5500 dong. The program on collecting 500,000 tons of rice from farmers for storage initiated by the government has been fulfilled in some Mekong Delta’s provinces.

However, the rice volume collected by VFA’s members is very low if compared with the rice output. A huge amount of rice still has been left unsold.

Nguyen Lien Khoa, Deputy Chair of the Hau Giang provincial authorities, said that the program on collecting rice from farmers does not help much because of some problems in the mechanism.

Khoa has called on the government to give support to enterprises, so that they can build more storehouses, thus allowing them to buy bigger volumes of rice for storage. This would not only help them collect rice at reasonable prices, but also help export rice for the best prices.

Deputy Minister of Agriculture and Rural Development Bui Ba Bong has also expressed his worry that farmers may not get benefit if only the rice storage program runs, because the rice collection is being undertaken by private merchants.

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