Current situation of rice production and consumption in the market
Rice production activities
According to the latest figures from the Ministry of Agriculture and Rural Development, the Mekong Delta is still the largest “Rice Bowl” of Vietnam, nearly 4 million hectares by 2019. The Mekong Delta annually produces over 50% of total national rice production, contributing to ensure domestic food security as well as over 90% of export rice industry.
Source: VIRAC, USDA
The competitive advantage of rice production in Vietnam is rice varieties: jasmine rice, Bac Huong, Nang Xuan, Dien Bien, Tam thom… In addition, the quality of Vietnamese rice is on top of the world with the high nutrition in rice. It is estimated that in the 2019/20 crop, Vietnam’s milled rice output will increase by 2%, reaching over 28,000 thousand tons. The phenomenon is largely due to the increase in spring and autumn crop productivity.
Rice is the main food consumed in Vietnam. Vietnam ranked fifth in the top rice consuming countries in the world, behind only China, India, Indonesia and Bangladesh by the 2018/19 crop. The volume of Vietnamese rice consumption as well as other Asian countries remained stable.
Vietnam rice export
While many agricultural commodities dropped sharply in Q2/2020, the rice industry marked a significant development. Statistics from the Agency of Foreign Trade show that rice is the product with the highest growth value in agricultural products. While the total export value of the sector decreased compared to the same period in 2019, rice export reached US $ 1.6 billion, up 18.2%.
Particularly in June 2020, Vietnam’s rice export volume was estimated at more than 400,000 tons with a value of US $ 207 million. The total volume and export value of rice in the first 6 months of 2020 to nearly 3.5 million tons and 1.71. billion USD, up 4.4% in volume and up nearly 18% in value over the same period in 2019.
The Philippines is Vietnam’s largest rice import market with a volume of 1.3 million tons and nearly 600 million USD, up 23% in volume over the same period in 2019. In addition, exports rice also recorded a big growth in some markets such as: Senegal increased 18.3 times; Indonesia is 2.9 times higher. In terms of categories, white rice export value accounted for 38% of total turnover. The figure for sticky rice was 19.6% while Japonica rice and Japanese rice was 4.2%.
Difficulties in exporting Vietnamese rice to the international market
Depends heavily on the Chinese market
China is an import market with many geographical advantages. However, China is creating two huge barriers for Vietnamese rice products, which are import policies and technical factors. For technical factors, those are issues of the poor quality of Chinese products exported to Vietnam. However, Vietnamese goods sold to China always require very high quality.
Rice exported to China are mainly glutinous rice and vice versa, Vietnam’s glutinous rice production is more than 90% export to China. It is difficult to bring rice to China, the goods will be stagnant, which affects domestic enterprises.
Lack of medium quality rice production
While the major export contracts from early 2020 until now are of average level, exports are mainly to Asian and African countries. Therefore, some businesses are having difficulty in purchasing this type of rice to serve the signed export contracts.
Currently, Vietnam’s rice exporters have not yet linked and cooperated to increase competitiveness in the world market. The connection between enterprises is mainly in the authorized export or supply of rice for the performance of export contracts.
Prospects for developing Vietnam’s rice industry
The Ministry of Agriculture and Rural Development said that the rice industry aims to export 6.7 million tons in 2020, however, this figure could reach 8 million tons. With an average export price of $480/ton, Vietnam’s rice export turnover in 2020 could reach $3.9 billion.
With the commitment in EVFTA, the EU gives Vietnam 80,000 tons of rice per year (including 30,000 tons of milled rice, 30,000 tons of fragrant rice). In particular, the EU will completely liberalize broken rice (this commitment helps Vietnam export about 100,000 tons of rice). For rice products, the EU will bring the tax rate to 0% after 3-5 years.