Vietnam’s rice cheap, but still selling slowly

VietNamNet Bridge – Vietnamese rice exporters had delivered 1.45 million tons out of the total 3.57 million tons of exports by the end of the first quarter of the year, according to the Vietnam Food Association (VFA). However, the average export price had reduced by $44.52 per ton over the same period of the last year.


Vietnam, rice export, VFA, policies, Thailand

Most of the rice exporters complained that it’s very difficult to obtain rice export contracts at this moment, which has forced them to bargain rice away. They said the demand for rice in the world has decreased, while the number of concentrated contracts only account for 10.55 percent of the total export volume.

Therefore, rice exporters now can only sell rice through commercial contracts and they have to sell cheaply to compete with other big exporters like India, Pakistan.

However, the explanation is unconvincing in the eyes of experts, who say they cannot understand why the rice remains unsalable though it has become very cheap already. In principle, people would still buy products in the context of the low demand, if the product prices become reasonable enough.

There are three possible reasons which can explain the current situation.

The first, which has been repeatedly cited by rice export companies, is that the quality of Vietnam’s rice is too low, which makes it unfavorable by the foreign importers. Therefore, the products remain unsalable despite the low prices.

However, no one believes this is the main problem. Vietnam’s rice quality has been upgraded significantly recently with the improved cultivation activities. Especially, experts affirmed that the technology gap in the countries’ cultivation has been narrowed recently.

The second, as explained by some experts, is that Vietnam still lacks the “soft power” in the world market. Vietnam has been well known as the biggest exporter in terms of quantity, while it is yet to become the habit of the consumers.

Vietnam’s rice, for the last many years, has been considered as inferior in quality to the Thai rice which has been popularized all over the world with noisy and effective communication campaigns.

This is because Vietnamese rice exporters have been only trying to export as much rice as possible, while they don’t care about advertising about Vietnam’s rice and “polishing” the rice in the international market.

The enterprises just aim to make profits in short term, while they don’t want to spend money and time on build the “soft power” for Vietnamese rice which would bring befits to them in long term.

Thirdly, experts believe that there exist the “groups of interests” which are powerful enough to impose news blackout on the rice prices and market supply and demand.

This means that rice export companies have colluded with each other to provide untrue information which has led to wrong investment decisions and wrong market information. The release of the untrue information aims to convey the message “rice is unsalable” to farmers.

With the limited capability of farmers to access information sources and control the market prices, farmers would have to lower the prices of the rice sold to merchants and export companies. As a result, export companies are the biggest beneficiaries in the “communication campaigns,” because they can buy rice cheaply from farmers and export more easily with more competitive prices.

SGTT

Vietnam, rice export, VFA, policies, Thailand
 
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