Vietnamese rice continuously gets good news

Continuously winning bids for rice exports

Pham Thai Binh, General Director of Trung An hi-tech Farming Joint Stock Company (Trung An Company) said at the bid opening in the middle of May 2021, South Korea invited tenders to purchase three lots of rice with the total volume of 23,222 tons. Many export companies attended the tender.

As a result, South Korea announced that Trung An Company won the tender to export two lots of  total 22,222 tons of rice. The rest lot of 1,000 tons of white rice was sampled by the South Korean side.

Trung An Company won the deal for exporting long-grain brown rice of which one lot of 11,111 tons priced at US$572/ton and one lot of the same quantity but priced at US$ 578.5 /ton (Cost, Insurance and Freight). The two lots of rice will be shipped respectively in September and October 2021. “If excluding freight  costs and other charges for loading and unloading and clearance, Free on Board (FOB) price in Vietnam is around over US$500/ton”, said Binh.

Since the beginning of this year, this was the second time Trung An Company won the bidding to ship rice to South Korea. Previously, on April 19, the company signed an contract to export long-grain brown rice 3-4% with a volume of 11,236 tons to South Korea priced at US$ 584/ton. Time of shipment is the end of June 2021.

In 2021, South Korea set import quotas for Vietnamese rice at 50,000 tons. In the past two bids, Trung An Company won the bids with the total of more than 33,000 tons.

With the development of rice export market since the beginning of the year,  Vietnamese rice enterprises said long-grain white rice is sold well and priced at US$ 520-530 per ton on average. In the context of the Covid-19 pandemic, some of rice exporters have been affected. Meanwhile the demand for rice imports in many countries keep growing although transportation by sea still face challenges and freight costs are high.

Rice export volume in the first quarter of 2021 did not increase but the export value rose by 16-17% compared to the same period last year of which ST 24 rice exported to the EU had a high price at US$ 970-1,000 per ton.

IR50404 rice still has its own market and value

After signing the free trade agreements (FTA), Vietnamese rice export market share has been expanded. Many types and varieties of high-quality rice have been promoted to export to the EU, South Korea, Middle East and ASEAN countries such as Malaysia, etc.

Particularly in the EU, Pham Thai Binh, General Director of Trung An Company added Vietnamese rice is sold well in some countries and partners are working with the company to open a branch of Trung An Rice distributor in Germany.

Meanwhile rice export companies in Vietnam said that in recent years, Vietnamese rice industry caught up well with the trend of rice consumption in the importing markets thanks to rapid restructuring and transformation of rice varieties.

Currently, high-quality varieties of white rice and fragrant rice are consumed well while the medium-quality varieties see a decline in sale.  According the data over the past seven years from 2014 up to now, fragrant rice and glutinous rice have seen an increase in planting area, accounting for a large proportion while the area of medium-quality varieties tend to decrease.

However, recently some businesses said most of the rice varieties in the Mekong Delta are now sold at high prices. The lowest price of paddy rice is also above VND 6,000 per kilogram. Notably, even the price of IR50404 rice recently has skyrocketed and sometimes went up to VND 9,000 per kilogram and it is not easy to buy.

The reason is that the planting area of this variety decreased sharply. Meanwhile IR50404 rice still plays an important role in certain industries and the demand is still growing resulting in dwindling supply and higher price of IR50404 rice.

In addition, farmers in the Mekong Delta prefer IR50404 rice variety because it’s easy to cultivate, resilient to pest and disease and has high-yield. Moreover, the demand for the rice variety in processing, making powder, rice cake, noodle and rice material for export is growing increasingly even it is evaluated as the rice variety giving off hard cooked rice.

Hence, it can be said that even a rice variety of lower quality like IR50404 still have a role and added values in its own market. The problem is that it’s necessary to overcome the weakness of small-scale production of the variety.

The rice industry should continue to strengthen the role of cooperatives, linking all households into production groups and cooperatives together with enterprises to produce in the large-scale rice fields as a value chain.

In fact, over the past years, the model of large-scale rice fields in general was carried out by a small number of enterprises and cooperatives but it has not been spread and expanded.

To spread the model of large-scale fields it not only requires the participation of businesses but also depends on financial resources, improving competences for cooperatives and production groups as well as trade promotion and market expansion.