Good crops, high price; rice export has been accelerated

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Branding will help raise rice export prices to levels commensurate with the quality. Photo: N.H

Reduction, but not worrying

According to preliminary statistics of the General Department of Customs, rice exports in the first two months of 2021 were estimated at 608,768 tonnes, worth US$336 million, down 34% in volume and nearly 22% in value respectively. However, a positive signal is rice export prices recorded growth, averaging $551.7/ tonne, up 3.4% compared to December 2020 and up 15.4% compared to January / 2020.

Enterprises trading and exporting rice also acknowledged the decline in the results of rice export in the first twomonths of this year is not worrying. Nguyen Van Don, Director of Viet Hung Co., Ltd. said all importers have great demand, but since the end of last year, customers are stepping up to buy for long holiday reserves, so there was a slowdown at the beginning of the year. Meanwhile, in Vietnam, it has not yet reached the harvest point of the winter-spring crop, so the amount of rice bought by firmis not much. The high price of rice in the Mekong Delta is also a factor that makes purchasing companiesand foreign customers wait for the price to cool down.

Another reason affecting the decline of rice exports in the past twomonths mentioned by firmsis the rapid increase in sea freight rates due to a shortage of empty containers. Many importers have delayed the purchase with the expectation that international logistics activities will soon stabilise, helping the freight rate return to reasonable levels.

Many rice exporting enterprises have actively negotiated and promoted exports from the first days of the year. For example, Trung An High-tech Agriculture Joint Stock Company exported 1,600 tonnes of rice to Singapore and Malaysia. After that, Trung An also successfully negotiated a shipment of more than 2,000 tonnes to export to Germany, taking advantage of the preferential tax rates from the EVFTA Agreement. Viet Hung Co., Ltd. also exports rice batches to Hong Kong, the Philippines andCôte d'Ivoire.

Positive outlook

In 2020, many rice producers and exporters of Vietnam will benefit from the increase in export rice prices. Trung An Company recorded consolidated revenue up VND 2,714 billion, an increase of 48% compared to 2019. After deducting expenses, the after-tax profit earned was more than VND 88 billion, up 47%.Meanwhile, at LocTroi Group Joint Stock Company, although revenue fell, profit still increased, helping this enterprise's profit margin to increase sharply from 3.84% in 2019 to 4.77% in 2020. LocTroi revenue reached VND 7,709 billion, a decrease of nearly 12% compared to 2019. However, controllingexpenses helped the company earn VND 369 billion in net profit in 2020, an increase of 10% compared to 2019.

Trung An and Loc Troi are two enterprises that have exported rice to difficult markets thanks to methodical investment in cultivation to produce high quality rice products. In 2020, after the EVFTA tookeffect,these two enterprises exported rice to the EU at high prices and enjoyed a tax rate of 0% under this agreement. According to Huynh Van Than, Chairman of Loc Troi Board of Directors, EVFTA is the motivation for Vietnamese rice to penetrate into high quality markets and Loc Troi has prepared carefully for many years to take advantage of this leverage most effectively.

Currently, the winter-Spring rice crop is in the harvest period with the yield higher than the previous year, the rice selling price also increasedthanks to the high export price. In January 2021, Vietnam's rice export price averaged $551.7/ton, up 3.4% compared to December 2020 and up to 15.4% fromthe same period last year. Trung An's two export orders in early 2021 were also delivered at a very high level, of which 450 tonnes of Jasmine 85 rice exported to the Singapore market were priced at USD 680 / ton and 1,150 tonnes of fragrant Huong Lai rice were delivered to customers in the Singapore market. Malaysia is priced at$750 / tonne.

According to the Vietnam Food Association, the main export markets of Vietnam such as the Philippines, Southeast Asian countries, and African continue to sign contracts to buy rice from Vietnam. The Asian rice market is also active again asa series of potential customers such as China and Bangladesh have actively bought rice

Pham Thai Binh, General Director of Trung An Company, said that efforts to restructure the rice industry over the years have helped improve the quality of Vietnamese rice, helping to increase selling prices. Binh said that although it has increased significantly compared to the previous years, Vietnam's rice export price is still not equal to the same grade of rice fromother countries. To close this gap, firmsneed to focus on branding to raise the price of rice for export to a level corresponding withquality.

Besides EVFTA, other FTAs are also assessed to facilitate Vietnam's rice export, especially with high quality rice that brings great value. The Vietnam - UK Free Trade Agreement (UKVFTA), which tookeffect from the beginning of 2021, will help Vietnamese export rice to the UK to be reduced to 0% tax without limitation on quota. Similarly, the CPTPP also continues to help Vietnamese rice expand its market share in Australia and Singapore - two markets where tariffs and rice import quotas have been eliminated for Vietnamese rice.