Dan Viet newspaper – After the europhia of overtaking Thailand in export output, the Vietnamese rice industry is facing a lot of difficulties when prices have fallen, with the market risked being reduced in 2013.
Only after a week of robust increase in price fueled by the fact that Vietnam signed a contract to export 300,000 tons of rice to Indonesia, domestic rice price began to go down. Currently, prices of raw rice in many provinces in the Mekong Delta have been substantially dropped, generally traded at VND 4,600/ kg for IR 50404 popular rice. Long grain rices have also started dropping below VND 5,000/kg.
Abundant supply, declining demand
According to businesses, the reason of price slump is due to stagnated export market. Mr Tran Thanh Van, Deputy Director of Gentraco joint stock Company said that the fourth quarter saw reduction in the export market with no new contracts, spring-winter crop was approaching the ripe harvest time, Cambodian rice at cheaper prices was also “flowing” into Vietnamese market. Low demand and high supply caused the prices to drop.
At the meeting on provisional rice storage held in Dong Thap, Mr Pham Van Bay, Deputy Chairman of the Vietnam Food Association (VFA), also warned that the Vietnamese rice exports in the last months of year, even to the first quarter in 2013 would be likely to reapeat the difficulties experiened in the first quarter in 2012, i.e. no market, prices dramatically dropped.
VFA’s representative further said that, according to overlapping contracts signed from the third quarter, fourth quarter in 2011 to the first quarter in 2012, the remaining export volume would be around 800,000 tons, however, in this year, rice exporters were almost unable to sign any new contracts for the first quarter next year. Domestic rice price therefore, must be reduced to compete with other cheap supply sources such as India, Pakistan, Myanmar … Prices are expected to keep going down until the upcoming spring-winter crop.
More severe competition
Meanwhile, according to the forecast of the Food and Agriculture Organization (FAO) in 2013, Thailand will regain the top rice exporter with output of about 8 million tons, up by 23% as compared to 6.5 million tons in this year. India is ranked second with 7.7 million tons, down by 14% as compared to 9 million tons in 2012. According to FAO, Vietnam”s rice export in 2013 will also increase by 1% to 7.6 million tons, claiming the third place.
Cultivation Department estimates that the national rice production plan in 2013 will reach the area of about 7,590ha, slightly down from 7,599ha in 2012.
In addition, the return of Egypt’s rice export in the coming time will also add to more severe competition between suppliers. Accordingly, Egypt is expected to export 700,000 tons in 2013, increased by 90% compared to 400,000 tons in this year.
For import, some traditional markets of Vietnam such as China, Africa, Middle East are expected to reduce rice import in the coming year. Accordingly, China”s import rice demand will be reduced by 11% compared to 2012, down to 2.3 million tons, Phlippines”s reduced by 11%, down to 800,000 tons as compoared with 900,000 tons in demand of this year. Iran, Nigeria … will aso reduce import by 5 – 7% compared to 2012.