Vietnam’s rice export sector is experiencing significant growth, with exports surging between January and July 2024. According to the Ministry of Agriculture and Rural Development, Vietnam shipped over 5.1 million tonnes of rice valued at $3.2 billion, marking respective increases of 25% and 5.8% compared to previous year figures.
The Vietnam Food Association has reported an average export price of Vietnamese rice reaching $636 per tonne, which is higher than major competitors like Thailand and India. Traditional markets, including the Philippines, Indonesia, and China, remain key buyers, but Vietnam is also making headway in new markets across the Middle East, Africa, South America, South Korea, and Japan.
A major factor contributing to this competitiveness is the exceptional quality of Vietnamese rice varieties. Notably, the ST25 variety has been awarded the title of "World's Best Rice” twice, enhancing its appeal on the global stage.
Despite this success, the global rice market faces challenges, including a projected shortfall of about 7 million tonnes this year. Several countries have imposed export restrictions or are building up their rice reserves, creating both opportunities and hurdles for Vietnamese exporters.
The Ministry of Industry and Trade is urging rice exporters to keep close tabs on market trends and exercise caution with pricing strategies. This is aimed at safeguarding Vietnam’s reputation as a premium rice supplier, amid fluctuated international demand.
To tackle the challenges confronting the rice sector, the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development have suggested setting up a national rice council. This council would focus on enhancing research, policymaking, and coordination across the industry—from production to export—aimed at bolstering the global brand of Vietnamese rice.
Meanwhile, China continues to be one of the largest export markets for Vietnam’s agricultural products, with agricultural exports to China amounting to $7.04 billion during the first half of 2024. Chinese consumption accounts for about 20.5% of Vietnam’s agricultural exports, showing the strong trade ties between the two nations.
Specifically for rice and pepper, exports to China have significantly declined this year. By the end of July, Vietnam’s rice exports to China had reached only $130.8 million, which represents an alarming fall of 68.4% compared to the same timeframe the previous year.
This decline is contrary to earlier predictions anticipating increased rice imports by China due to its dropping rice-growing areas and consecutive years of declining production. Adding to the woes, China's economic growth has been slower than expected, affecting its imports.
Chinese regulations also complicate the matter, as only 21 out of 200 Vietnamese rice businesses are authorized to export rice to China, creating limitations for Vietnamese exporters. Consequently, Vietnamese rice not only competes against local products but must also withstand competition from other exporting nations known for their quality.
Analysts predict these challenges may persist, particularly as demand from China remains uncertain. They point out the stringent requirements from Chinese importers for high quality and effective packaging, especially when compared to rivals like Thailand, who maintain high standards.
The situation has even led some Vietnamese exporters, like Trung An Hi-tech Agriculture JSC, to observe decreased orders from China, attributing this to shifting market demands. Pham Thai Binh, the chair of Trung An, emphasized the reliance on market needs to determine the level of exports.
Despite these hurdles, Vietnamese rice exporters have managed to secure fairly high prices for broken rice. Reports suggest the prices for Vietnam’s 5% and 25% broken rice are competitively positioned above those offered by both Thai and Pakistani rice, highlighting resilience amid challenges.
Turning to India, rice export rates are reportedly falling due to muted demand at international levels. Expectations of higher production alongside subdued buyers have caused Indian exporting prices to drop, particularly for non-basmati rice varieties.
India remains the second-largest rice producer worldwide, yet challenges such as fluctuated demand and high logistics costs have begun to take their toll. The Indian government has implemented temporary curbs on certain rice exports to stabilize domestic prices, thereby impacting the overall export dynamics.
The agricultural economy is deeply woven through India's GDP, with rice exports playing a notable role. The Basmati rice sector, for example, brings critical foreign currency, helping to mitigate fiscal deficits and contributing to global supply chains.
Despite growing production, the Basmati rice segment has also faced challenges, such as rising logistics costs and climate uncertainties impacting cultivation. Observers point to the need for comprehensive support from the government to navigate these hurdles effectively.
The Indian government has recently introduced initiatives aimed at bolstering agricultural exports, including financial packages to support farmers and exporters alike. These efforts are critical as India eyes enhanced engagement with global markets, primarily focusing on bolstered Basmati rice exports.
Overall, both Vietnam and India navigate turbulent waters within the global rice market. While each faces unique hurdles, the commitment to enhancing their respective rice export sectors remains steadfast, and the international demand for quality rice products provides them with significant opportunity.
The fluctuated dynamics of the global rice economy reveal both challenges and potential pathways forward for key exporting countries. The interplay between domestic needs and global markets continues to reshape strategies within the agricultural sector as nations work to secure their place on the world stage.