New decree to help rice exporters

The decree, replacing Decree 109/2010/NĐ-CP on rice export and business, is expected to take effect from January 1, 2018, after which businesses will be able to engage in the free trade of rice without quantitative restrictions.

The decree also removes regulations of criteria for businesses to be eligible to export rice, as well as the floor prices set for rice shipments.

Pham Thai Binh, director-general of Trung An Co Ltd in the Mekong Delta city of Can Tho, said some articles in the old decree hindered the development of rice export firms.

For example, in early June 2017, the ministry signed a Memorandum of Understanding (MoU) on rice trading with Bangladesh, which is valid until 2022.

Under the MoU, Vietnam will export one million tonnes of rice to Bangladesh annually. This offers a huge opportunity for Vietnam to boost exports of this staple grain, build a rice brand and connect with farmers.

However, under the decree 109 which is still being enforced, the Vietnam Food Association authorised the Northern Food Corporation and the Southern Food Corporation to realise the MoU. Other companies have to seek trade deals with partners in other markets.

Binh said the involvement of the Government in seeking contracts was good for Vietnamese agriculture, but all businesses should be able to join this activity to promote trade in foreign markets.

Rice export businesses require a closely linked chain from farmers to exporters, thus when exporters face difficulties in seeking consumption markets, then farmers’ production will also be affected, Binh said.

Vo Minh Khai, director-general of Vien Phu Organic – Healthy Food Company from the southernmost province of Ca Mau, said that over the past years, rice enterprises that were small scale but produced high-quality rice had not been able to bring their products to the world market.

To export their rice, they had to depend on large companies as intermediaries. Therefore, revising the old decree would create a level-playing field for small rice export firms to proactively access the global market, Khai said.

The new document will also enable businesses to invest in producing high-quality products to compete with rivals from Thailand and Cambodia, he added.

Promoting high-quality brands

Vietnam has exported rice for nearly 30 years, with the first amount of 1.4 million tonnes in 1989 grossing US$310 million in turnover. In 2006, the country earned US$2.1 billion from selling 4.9 million tonnes of rice abroad.

Vietnamese rice has not created a strong brand in the world market.

So far, worldwide consumers mostly knew Vietnamese rice products as 5% broken rice or 25% broken rice, rather than by a specific name.

Bình said that under the situation, many types of Vietnamese high-quality rice were being sold under foreign names.

In fact, many types of high-quality Vietnamese rice such as ST, Jasmine, Hoa Sua and Loc Troi were being exported, but the export volumes had not met the demand of importers.

Le Thanh Tung, an official from the Ministry of Agriculture and Rural Development, said that the decree would create conditions for rice exporters, even small- and medium-sized one, to access directly with importers, help promote Vietnamese rice brands more easily and prevent trade fraudulence.

Vo Hung Dung, Director of the Can Tho-based branch of the Vietnam Chamber of Commerce and Industry, said that changes in the rice business policy would force enterprises to operate and develop under the market mechanism, and find ways to strengthen their reputation in the world market.

"Rice enterprises having strong reputation also means Vietnamese rice brands will be promoted," Dung added.