Soon after Vietnam began harvesting the 2016-2017 winter-spring crop, the Thai government announced it planned to sell all its stockpiled rice – estimated at 8 million tons – in the first half of 2017.
According to Nguyen Van Don, director of the Tien Giang-based Viet Hung Company, on the first days of 2017, the sales were relatively satisfactory with many big contracts signed. However, in recent days no contracts have been signed.
Don attributed this to the increase in domestic and export prices compared with pre-Tet days. Meanwhile, the Thai government’s announcement has also affected demand.
Dang Thi Lien from Long An Food & Foodstuff Company said Vietnam’s 5% and 15% broken rice is being offered at prices higher by US$5-US$10 per ton than the same kind of Thailand.
In order to compete with the Thais, Vietnamese exporters have had to lower the selling prices. However, they would incur losses because the domestic price is on the rise.
This means that low prices won’t be the ‘weapon’ for Vietnam to compete with Thailand in the world market, especially in Africa and China, which favor low-cost products.
Huynh The Nang, chair of the Vietnam Food Association (VFA), commented that Vietnam has to cede its market share to Thailand in some markets which have demand for white rice because it cannot compete with Thailand in prices.
Vietnam, for example, can only try to increase the export of fragrant rice to Africa, while the white rice market segment has been dominated by Thai rice.
“The Thai decision to sell stockpiled rice will have adverse effects on Vietnam’s export,” Nang said, adding that the thevexport market would only recover once the rice is sold out.
In such conditions, VFA said it was going to propose to the government to kick off a plan on buying rice from farmers for stockpile. However, enterprises said it would be better to listen to the news before making a decision.
Vo Truong Giang from Angimex warned that the rice price won’t decrease considerably this year because of the forecasted low yield. In general, farmers can get 0.7-0.8 tons of paddy from every 1,000 square meters. However, the yield may be 30% lower this year.
With the low yield of the crop, he does not think the collection for storage needs to be done now.
In the context of slow sales, experts believe that Vietnam would rather gather strength to compete with rivals in the high-end market segment. China, the Republic of Korea, Singapore and the EU have high demand for high-end products.