Lots of orders from the beginning of the year
At the beginning of 2022, Trung An Hi-tech Farming JSC based in Can Tho, announced the good news that it won the bid to export 15,000 tonnes of rice to the Republic of Korea(RoK), with the delivery time from March to June 2022.This is the third export contract to the RoK that Trung An has won.
Trung An General Director Pham Thai Binh said that the amount of rice was 100% broken rice (used as raw materials for beer production), with the winning bid price of 369 USD per tonne (FOB price), which was higher than the price offered by the Vietnam Food Association, at 338 USD per tonne.
The RoK has emerged as one of the potential markets for Vietnamese rice in recent years. In particular, the effectiveness of the free trade agreement between Vietnam and the RoK has opened up more opportunities for Vietnamese rice to penetrate this market.
According to the Ministry of Industry and Trade, the Korea Agro-Fisheries& Food Trade Corporation, has recently announced tariff quotas for rice imports in 2022. Accordingly, 55,112 tonnes of Vietnamese rice will enjoy a preferential tax rate of 5%, much lower than the tax rate applied to the volume of imported rice, outside the quota of 513%.
Along with Trung An, rice companies have continuously received good news from the beginning of 2022, as the market has recovered and the pandemic has been gradually controlled. Notably, the price of Vietnamese rice has continuously stood at a high level.
Preliminary statistics of the General Department of Customs, showed that rice exports reached over 505,000 tonnes in January, with a total value of over 246 million USD, up 45% in volume and nearly 30% in value, compared to the same period in 2021.
Rice exports rose in both quantity and value, as China has reopened the border gate. In addition, the import demands from traditional markets of Vietnam, such as the Philippines, Malaysia, the US, Africa, and the RoK, started to advance. Rice exports to Europe are also expected to surge sharply this year, thanks to the EU-Vietnam Free Trade Agreement (EVFTA). Under the EVFTA, the EU will grant Vietnam an export quota of 80,000 tonnes of rice per year and fully liberalise broken rice. Rice exports promise to have a year of growth in both quantity and quality, if Vietnamese enterprises seize this opportunity.
Many rice enterprises said that they are continuing to receive high-value orders, in large quantities from importers in the coming months. Pham Thai Binh was pleased to share that Trung An has continuously exported rice to partners, in the first two months of this year. From March onwards, in addition to the RoK market, Trung An will continue to implement a number of contracts to ship rice to other EU and Asian countries.
Enhancing the competitiveness of Vietnamese rice
However, like other industries, rice enterprises, especially small and medium enterprises, are facing increasing input costs, such as shipping charges, domestic transportation costs, price of fertilizers, pesticides, and others, pushing production costs up and corroding profits.
In addition, the sharp increase in petrol prices in the first two months of this year, is heavily affecting the export activities of enterprises, putting production costs up. The Vietnamese rice is also facing fierce competition, with similar products of many other countries.
Tan Long Group's Hanh Phuc Rice Factory promises to bring opportunities for high-quality rice exports.
To optimise costs and improve competitiveness for Vietnamese rice in the market, many large rice enterprises have invested in technology, to enhance product quality and the value of rice grain.
For example, Loc Troi Group Joint Stock Company has established two member companies and signed contracts with companies and agencies, to buy rice and finance the production of two million tonnes of rice, worth more than 12 trillion VND in 2022.
Huynh Van Thon, chairman of Loc Troi Group said that the order of two million tonnes of rice and the contract of 12 trillion VND, is a testament to the trust of domestic and international partners, in the large-scale production model of Loc Troi. This is also the foundation for the group to apply scientific production processes, reduce fertilizers, and manage water resources, thereby reducing costs, enhancing quality, and increasing profits for both farmers and businesses, Thon added.
Tan Long Group Joint Stock Company inaugurated Hanh Phuc Rice Factory in An Giang province, in January 2022. The factory has the largest scale in Asia, with an area of 161,000 m2 and a total capacity of processing 1,000 tonnes of finished rice per day. Fresh rice is dried and stored, while the aroma and flavour of rice varieties are kept, helping to improve quality and value of rice exports.
In early February, Tan Long continued to work with An Giang and Kien Giang provinces, to sign cooperation agreements on building a standardised rice material area and promote linkages in these two localities. This is a favourable opportunity for rice growers to have their output consumed, thanks to the mechanism that farmers cultivate, according to orders and market orientation from enterprises. The cooperation also helps farmers reduce the cost of input materials and promote the synchronous application of science and technology, to produce the best quality rice products, thanks to a modern post-harvest treatment system.
According to the Vietnam Food Association, Vietnam's rice exports in 2022, are estimated at 6 to 6.2 million tonnes, equivalent to 2020 and 2021. Although the export volume is not expected to create a breakthrough, the export value is increasing day by day, asserting the position of Vietnamese rice in the world market.
