Market fluctuations in the rice market - insights from businesses

Vietnam Agriculture Newspaper recently conducted an interview with Mr. Nguyen Duy Thuan (pictured), General Director of Loc Troi Group (LTG) regarding the rice value chain and insights into rice market fluctuations.

With the aim of ensuring a raw material supply for export rice processing, especially when rice supply is limited in the Mekong Delta at the beginning of a new year, what preparations has Loc Troi Group made?

Loc Troi Group is deeply integrated with the rice value chain, with a diverse ecosystem including: Loc Troi Institute (LTI), Loc Troi Seed (LTS), Loc Troi Agricultural Supplies (LTV), Loc Troi Agricultural Services (LTF), and Loc Troi Agricultural Products (LTA).

Most notably, Loc Troi Agricultural Products (LTA) is currently the largest rice supplier in Vietnam, with 10 rice processing plants across the Mekong Delta region, capable of supplying over 2 million tons of rice per year and more than 1 million tons of by-products such as bran, husk, rice husk pellets, rice husk ash, etc., for both the domestic and international markets.

With the aim of ensuring a raw material supply for domestic consumption as well as export rice processing, LTG has implemented a production linkage program covering nearly 300,000 hectares of rice fields in the Mekong Delta region, with over 300,000 participating farmers. The majority of LTG's export orders are slated for delivery after the Lunar New Year. The delivery schedule is largely unaffected thanks to the early harvest of the winter-spring crop.

What is Loc Troi Group's plan for rice exports in 2024? Which segments and markets will it participate in? In addition to traditional markets, will the company extend its reach to new markets?

LTG aims to produce and trade two million tons of rice in 2024, which is equivalent to the annual supply capacity of 10 factories within the current Loc Troi agricultural ecosystem. LTG will export directly to markets worldwide, serving both export and domestic demand.

During the Annual Customer Day held in late 2023, LTG entered into agreements with long-term and trusted partners for export orders of various types of rice including long-grain white rice, fragrant rice, glutinous rice, sushi rice, raw rice, etc. These rice products have met the quality requirements for each market. These agreements span over 40 countries across Europe, America, Japan, China, the Philippines, and Africa.

In addition to Germany, France, and Austria, LTG will continue to negotiate and sign agreements to expand the "Vietnamese Rice" brand in the UK. We aim to bring Loc Troi's premium rice to Vietnamese expatriates and consumers worldwide, thereby contributing to enhancing the reputation of Vietnamese agricultural products.

During the 2023-2024 winter-spring and the 2024 summer-autumn crops, the Group collaborated and signed agreements with local governments in the Mekong Delta to establish rice material areas, key rice varieties, support for farmer organizations and cooperatives to develop rice material areas. What are your comments on this activity?

LTA has signed agreements to develop rice material areas covering over 300,000 hectares across multiple provinces in the Mekong Delta region, with a focus on An Giang, Kien Giang, Soc Trang, until 2030. Furthermore, LTA is actively participating in the Project: "Sustainable development of 1 million hectares of high-quality, low-emission and green rice production in the Mekong Delta until 2030." The project has been approved by the Vietnamese Government and is being implemented by the Ministry of Agriculture and Rural Development in the Mekong Delta region.

Farmers producing rice in association with LTA utilize rice varieties based on specific orders, including varieties with a high level of familiarity and productivity such as OM5451, OM18, Loc Troi 28, and Jasmine 85. Members of the Loc Troi agricultural ecosystem also actively support farmers by providing certified seeds, production processes, and the "T1H Solution Set", which includes crop protection products suitable for each variety and geographical area, as well as synchronized mechanization services such as plowing machines, seeding and pesticide spraying drones, harvesters, and hay balers.

Notably, a workforce of over 1,000 agricultural technicians known as "Ba Cung", who share living spaces, accompany farmers on their fields to provide timely guidance. Consequently, we aim to change the local farming practices, increase production efficiency, reduce labor, and protect workers' health as well as the environment.

Additionally, Loc Troi Group collaborated with the An Giang Farmers' Association to establish and coordinate activities for professional rice farmer associations in various districts and communes across the province. Namely, Loc Troi Group has organized training sessions, transfered scientific and technological advancements within the value chain, and supported farmers in terms of organizing production linkages and implementing efficient farming models.

Rice prices in the Mekong Delta are currently experiencing noticeable fluctuations as farmers enter the harvest season. What is your assessment of the domestic and global rice market in the near future?

The 2023-2024 winter-spring crop stands as the primary agricultural crop within the Mekong Delta, constituting the region's most substantial rice harvest of the year, which will be utilized primarily for export activities. Due to extensive harvesting activities, rice prices have decreased compared to that of the 2023 winter harvest. Foreign importers are actively pursuing negotiations aimed at securing lower prices, which is a response to the profit diminution caused by the price hikes in 2023.

Export rice prices will continue to fluctuate depending on India's relaxation of its export ban, and Indonesia's import demand to compensate for the previous unsuccessful crop caused by severe drought. On the other hand, the Philippines is actively seeking for low rice prices throughout March, April, and May 2024.