Vietnam’s rice exporters are facing tough price competition in foreign markets this year due to large inventories and low demand.
Vietnamese rice exporters compelled to lower prices to boost sales
Truong Thanh Phong, Chairman of the Vietnam Food Association (VFA) said at a recent meeting in HCM City that, due to a lack of big contracts and the drop in rice prices on the world market, Vietnam’s rice export revenues fell sharply in the first quarter compared to the same period last year.
“The country’s rice export prices in January decreased by between USD20 and USD30 per tonne compared from last December. This is due to lower demand and price competition,” Phong said.
Export prices of 5% broken rice fell to to only USD395 per tonne, USD40-50 per tonne lower than prices fetched by rice produced in India and Pakistan, he noted.
According to him, Vietnam’s major rice export markets include China, Indonesia, the Philippines and African countries. China has been Vietnam’s biggest importer since 2012.
He however said that Chinese rice traders preferred buying Vietnamese products at low prices, forcing local traders to lower prices to boost sales. The same situation is recorded in African markets.
The VFA said that Vietnam currently has over two million tonnes of rice in stock, in addition to the winter-spring crop expected to produce 3.8 million tonnes more.
The agency warned that amid lower demand, local exporters should not be in too much of a hurry to sign new rice export contracts at lower prices, and instead maintain current deals and wait for demand to increase.
“Vietnamese rice exporters have been forced to choose between two options, either lowering prices or increasing their inventory," the VFA assessed.
Still, Huynh Minh Hue, the VFA’s General Secretary, said that the first priority should be to clear out inventories in order to ease the burden to farmers. In order to do so exporters would have to compete to get new contracts.
Adding to the problem, some Vietnamese companies have competed with each other, further lowering prices for Vietnamese rice.
