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Rice industry loses to world competitors
23 | 09 | 2007
Vietnam is the world’s second biggest rice exporter. Moreover, some officials from the Ministry of Agriculture recently forecast that if a target of intensive farming 1.3 hectares of high-quality rice is achieved, Vietnam will beat Thailand to the top spot in global rice production.
US Department of Agriculture statistics reveal that in 2001, 2004 and 2005 Vietnam was the world's second largest rice exporter. However, during 2002 and 2003 India outpaced Vietnam to hold this position. From 2001-2005, on the aver age, India held the second position with 4,136 million tonnes per year, with Vietnam third with 4,024 million tonnes.

However, despite Vietnam's dominance, the financial returns have been poor.

During the past five years, Vietnam exported 20.1 million tonnes of rice and earned US$4.4 billion. But, Vietnamese rice's export price was the lowest among the biggest global players, Thailand, India, the US and Pakistan. Specifically, at US$220.1 per tonne, Vietnamese average prices equalled just 79.65% of that in the world. While the average export price of the four remaining countries was 91.62% at the lowest and 119.26% at the highest.

Meanwhile, Vietnam exported 21.5% more rice than the US, but generated 11.13% less revenue.

When world rice prices fell in 2000, Vietnam cut its volume of rice exports, then in 2001 sold it at a cheap price of US$167.53 per tonne. It really was a bargain basement price.

Next, after 2001 which saw a decrease in rice production, 2002 saw Vietnam enjoy a bumper harvest of 2.34 million tonnes and prices recovered to US$223.86 per tonne. However, Vietnam once again suddenly cut the volume of its rice exports, which then fell to US$188.97 per tonne in 2003.

As a whole, compared to the average price of rice exports in the world, Vietnam suffered serious losses. Or, to be more accurate, if Vietnam had overcome grave weaknesses to raise rice prices, it might have been able to earn an additional US$226 million each year, and this figure over five years (2001-2005) could have been US$1.11 billion.

It is irrational to hold on to millions of tonnes of rice at a time when high prices rule the market, then sell when the bottom falls out of the market. It is an expensive lesson Vietnam must learn from. In this field, it is necessary to follow the example of Thailand. Due to accurate calculations, by retaining nearly three million tonnes of rice and then selling at a 10% higher price in 2004, Thailand set two records in one year. It exported more than 10.1 million tonnes of rice and earned US$2.7 billion.

Choosing the right time to export, enhancing the quality and improving the structure of rice strains to suit global consumers is paramount. If Vietnam adopts measures to overcome weaknesses in production and exports the industry will prosper.

Intellasia News Online
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