Rice market stagnates in first five months Vietnam’s rice shipments in the five months leading up to June dipped 10% in volume year-on-year to 2.1 million tonnes valued at US$870 million, according to the Vietnam Food Association (VFA). Meanwhile, Vietnam exporters have signed contracts to sell 3.2 million tonnes of rice so far this year a decline of 8% compared to last year’s comparable period, the VFA said. The VFA said the reasons for the drop included thin demand and exporters’ limited access to credit financing. The world rice market also presented a number of challenges due to low demand and high supply from Thailand, India, Pakistan and Myanmar. According to the VFA, rice exports will continue facing difficulties as African countries opt to purchase large quantities of rice being offloaded onto the market by Thailand. Meanwhile, Vietnam’s key markets such as China and Southeast Asia have lowered their demand. Vo Thanh Do, deputy head of the Agro-Forestry, Seafood Processing and Salt Industry Department under the Ministry of Agriculture and Rural Development said in the Mekong Delta, the price of rice stands at between VND4.150 and VND4.250 per kilo. To cope with the situation, the VFA has proposed purchasing rice in the summer-autumn crop to ensure profits for farmers. Compared to the average price of VND4.091 per kilo in May, farmers make a 30% profit, Do said. A number of leading market analysts have said Vietnamese rice growers having fallen into the ‘trap’ of over relying on producing lower quality rice varieties for sale in China. The trap essentially involves Chinese buyers who are willing to purchase lower quality rice from Vietnam in bulk when shipped informally across the border at prices far exceeding the market price. The trade off for the buyers is that they avoid having to pay US$70-80 per ton more in taxes and fees for higher quality rice varieties imported formally across the border. Hypothetically, if buyers pay growers an additional US$20-30 per ton, they still could save $40-50 per ton. On its face it appears to be a win-win scheme with growers selling their rice at a price in excess of the going market rate and the Chinese buyers purchasing it at a price far below the market rate. The ploy’s most serious ramification is that it lures growers into becoming lackadaisical and producing a low quality rice variety, which is not competitive on the global marketplace, thus increasing dependence on China. This practice leads a domestic market that is highly volatile and susceptible to the whims of Chinese traders that is fraught with various schemes to manipulate the market. Pham Quang Dieu, an expert of a market research firm AgroMonitor is one of those who have said Vietnam has been caught in China’s trap of selling poor quality rice. Dieu said to escape China’s trap, Vietnam should enhance the production of jasmine rice to improve competitive edge and export to other markets to avoid risks. The state should devise a proper strategy to export 2-3 million tonnes of jasmine rice to markets other than China. In the first five months of the year, China accounted for a 35% share of the export market. However, from the middle of last year until now, China has tightened the import of rice through border gates with Vietnam, leading to difficulties in rice exports. Nguyen Thi Bich Vuong, director of Hung Thinh Import-Export Co, Ltd said in the first three months of the year, her company exported several shipments of rice. However, since the beginning of April, the company has not shipped any rice to China. Meanwhile, Vietnamese rice is mainly exported to traditional markets such as the Philippines, Malaysia, Indonesia, and China. Nguyen Van Nam, a representative from the Ministry of Industry and Trade said to export rice at good prices, growers should improve the quality of rice, and grow high-yield rice while businesses should get rid of the lower quality varieties. Businesses should make market surveys and co-ordinate with farmers to increase the price, said Nam. According to the VFA, China is expected to import 4 million tonnes of rice this year. In addition, ASEAN nations also have demand for importing more than 4 million tonnes, which has opened up a bright spot on the horizon for rice exports. VOV