Vietnam finds it more difficult to sell rice

VietNamNet Bridge – Vietnam, which could easily obtain the contracts on exporting rice in large quantities two or three years ago, now has to struggle hard to scramble for the right to export every ton of rice.

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Vietnam has signed a contract on exporting 500,000 tons of rice to the Philippines, which goes for a “good price” as revealed by the Vietnam Food Association (VFA). Observers said it had to experience a stiff “battle of wits” with Thailand to obtain the contract.

The contract on exporting 500,000 tons of rice has been inked with the Filipino government, which needs to import rice to provide to the 4 million Filipino people in the areas seriously devastated by Haiyan typhoon in early November

According to VFA, Cambodia gave up the bidding right at the beginning because it could not meet the strict requirements set by the host country. Only Vietnamese and Thai businessmen stayed to attend the bids and scramble for the right to provide every batch of products of the package.

Thailand was a strong rival. The big rice exporter had the high inventory volume of tens of millions of tons and showed the strong determination to sell rice to the Philippines. It even cut down its five percent broken rice price to below Vietnam’s price level to compete with Vietnam.

Meanwhile, the only big advantage of Vietnam in the confrontation with Thailand was the experiences of the veteran rice supplier to the Philippines.

Vietnam only won the bid of providing 500,000 tons of rice to the country by “using its special method,” as revealed by some businesses.

Experts have noted that it is more and more difficult for Vietnam to export rice to the world in the context of the food oversupply.

It was so easy for Vietnam to win the bid to provide 0.5-1 million tons of rice to loyal markets such as the Philippines, Malaysia and Indonesia two or three years ago. Vietnamese businesses won all the bids they joined and provided rice at good prices. They could establish good relationships with the partners and followed their effective diplomatic ways.

However, things are getting quite different. Rice import countries nowadays tend not to buy rice under concentrated commercial contracts, but tend to assign private companies to come forward and import rice.

It is the big changes in the mechanism applied by the importers, plus the oversupply in the world market which has forced exporters to lower the prices to become more competitive, which have put Vietnamese businesses in big difficulties.

In the past, the concentrated contracts were obtained by Vinafood 1 and Vinafood 2, the two biggest rice corporations in the north and the south of Vietnam, and then outsourced to other businesses. Therefore, businesses still could “find jobs” even though they did not look for importers.

Nowadays, as the numbers of concentrated contracts are on the decrease, businesses have to look for export markets themselves, while they lack the capability for international trade negotiation.

As a result, a lot of Vietnamese businesses had to sell rice at low prices, which not only badly affected their profits, but also harmed the Vietnam’s rice production.

Vietnam’s rice in 2012 and 2013 sometimes dropped to the deepest low in the world market, which brought losses to farmers.

K. Chi

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