Exporting to the Canadian market: Breakthrough opportunity

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Vietnamese rice has many opportunities to continue expanding into many large markets. Illustration photo: Internet

Many opportunities for rice products

Regarding the issue of exporting rice to the Canadian market, Ms. Tran Thu Quynh, Commercial Counselor, Vietnam Trade Office in Canada, said that Canada was a rice importer serving about 7 million people of Asian descent. Data from Statistics Canada showed that Canada's total of import rice reached a turnover of US$ 508 million from countries around the world in 2023, an increase of 2% compared to 2022. The value of import rice from Vietnam has increased steadily over the years since CPTPP (nearly tripling compared to 2018, US$ 5.8 million). Vietnam's rice export turnover to Canada reached US$ 14.7 million in 2023, an increase of 56.4% compared to 2022.

According to the Vietnam Trade Office in Canada, the Canadian market's demand for rice has increased steadily over the years, and will remain at a stable level of about US$ 500 million per year. Vietnam's rice products still have many opportunities to rapidly increase export to the market because up to now, Vietnam's market share is still very small, while Canadian import partners are starting to realize that the quality of Vietnamese rice is not inferior to Thai rice.

Ms. Tran Thu Quynh added that Vietnamese rice had recently been highly appreciated by importers for its quality, but some importers were not satisfied with the broken rice content (still about 5%) while other countries like Thailand had better milling quality, the broken rate was almost 0%. Besides long white grain rice jasmine), currently, Japonica rice grown in Vietnam was being imported quite strongly by Canada, which was one of the reasons driving the growth of rice turnover to the market in 2023. “However, like jasmine white rice, shushi round rice is packaged under the packaging and brands of foreign corporations”, the trade representative informed.

Assessing the market potential, Ms. Tran Thu Quynh said that Vietnamese rice still had a lot of room to enter the Canadian market because the market demand was very large, being one of the largest rice consuming markets in the world. (top 9 in 2022). According to the representative of the Trade Office, Vietnam's rice export figures to the Canadian market might be much lower than reality because currently Vietnamese rice was still exported to the United States, bagged there and then transshipped to Canada. However, rice export to the market had increased steadily over the years, showing that Canadian importers were starting to be interested in importing directly from Vietnam to replace, or reduce their dependence on the white rice markets of Thailand and the US.

The door opens to many markets

However, potential does not mean easy to conquer the market, because according to the representative of the Vietnam Trade Office in Canada, a significant difficulty for Vietnam's rice export is still the lack of a brand, so consumers do not recognize it to choose. “Vietnam's decision to buy rice is still mainly based on price factors, not brand loyalty. Besides, the issue of geographical distance causes Vietnam's rice export to have a big disadvantage in terms of transportation costs and delivery time compared to competitors. In the context that some countries still have forms of export subsidies, transportation subsidies or exchange rate supports, Vietnamese rice products still face many difficulties due to high domestic logistics costs and time, which affects quality”, Ms. Tran Thu Quynh analysed.

Also according to the Vietnam Trade Office in Canada, export to Canada in the coming time will face many difficulties such as” the tariff advantages that CPTPP brings to Vietnamese export will gradually disappear because Canada has promoting the signing of free trade agreements with a series of partners in South America and in the Indo-Pacific region (Malaysia, India, Indonesia, Canada-ASEAN...). These are all countries with product structures quite similar to Vietnam.

In addition, Canada also calls on enterprises to look towards the South American economic bloc and towards allied countries to build sustainable and reliable supply chains. This trend has a negative impact on the export of some products that Vietnam has strengths in, such as fruits, seafood, and textiles.

In addition to losing tariff advantages, high domestic logistics cost in Canada makes Vietnam's export prices less competitive compared to neighbouring South American countries. High transportation fuel prices, slow loading and unloading at Canadian ports due to lack of labour, and high logistics cost is also reason why Vietnamese goods are less competitive than South American exporters.

However, according to the representative of the Vietnam Trade Office in Canada, Vietnam is still Canada's largest trading partner in ASEAN and Canada's 7th largest import partner; Canada is Vietnam's second largest export partner in the Americas. In particular, Canada continues to position Vietnam as an important trading partner in its strategy of diversifying trade, diversifying supply sources and enhancing the sustainability of the supply chain. There is complementarity among the two countries, not competition in terms of goods. “Canada has strengths in high-tech machinery, energy technology, telecommunications technology, biomedicine and input products for Vietnam's industry such as minerals, plastics, wood, oil and gas, grains, Oilseeds, fertilizers... On the contrary, Vietnam can provide household products, leather, textiles, furniture... to the Canadian market thanks to the advantage of preferential tariffs in CPTPP", Ms. Tran Thu Quynh emphasize.

“In particular, in 2024, the Second Joint Committee on Economic Cooperation will meet in Vietnam, along with the largest Canadian business delegation will enter Vietnam, which may bring many new impulses for cooperation among the two countries, contributing to diversifying supply chains, promoting green transformation and creative connections among the two economies. Besides, with advantages in technology, finance, customer network and logistics in the Americas, Canada can be the door for Vietnamese enterprises to scale up and go global”, the Trade Office informed.