Quality and stability key issues for Vietnam rice

From a net importer of food, Vietnam has become one of the world's largest exporters of rice, firmly establishing its position as a high quality and credible supplier of rice in the region and the world.

Dr Nguyen Sinh Cuc reviews the performance of Vietnam in rice production and export and outlines the path ahead in the following report.

Vietnam exported 1.42 million tonnes of rice in 1989 earning US $290 million and from the 1989-1999 period the country shipped as much as 22 million tonnes of rice to the world market and a total of 45 million tonnes in the course of the past 16 years.

Although the market was hit by a significant drop in world rice prices in the period 1999- 2002, increasing demand from the China market and worldwide meant that by the middle of 2003 there was a sudden change in the world market price due to the shortage of supplies, leading to a rise in price of rice on the international and regional markets.

The price rise meant that Vietnam sold more than 3.9 million tonnes of rice in 2004 to earn US $900 million - by far its most successful year to date.

The Ministry says that, thanks to an improvement in processing technologies, the quality of rice exported from Vietnam has improved making the commodity more competitive in the world market. This has also allowed the market for Vietnamese rice to expand to demanding regions in the world such as the EU, North America, Australia and Korea.

The Ministry also reports that many businesses were able to sign future contracts during 2003 and 2004, which enabled them to better prepare processing facilities and purchasing schedule.

However, despite all the progress made in recent years, the Ministry says that there are still many obstacles and challenges facing rice exporting activities in Vietnam.

One of the most significant obstacles is the fact that a low level of stability in farming, processing, storage and marketing of rice still exists in the sector.

Sixteen years since Vietnam entered the world rice market, there is still no master plan to develop specialised rice farming areas, despite some localities in the Red River delta and the Mekong River delta having plans for rice growing and processing.

The government drafted a plan for one million hectares of quality rice in the 2001-2004 period yet this plan remains more on paper than in the fields, due to reasons, including poor and incomplete planning with little or no reference to actual life.

There was also a lack of participation of State owned businesses in the work. Lack of processing facilities and uneven distribution of these facilities, mostly in major urban areas such as Ho Chi Minh City, Can Tho and My Tho where there is limited supply of rice hampered the effectiveness of these facilities.

The Ministry says that major rice growing has not been cultivated in leading areas such as An Giang, Dong Thap, Soc Trang and Long An province, which in turn makes processing more expensive due to additional cost of transportation.

AS well as a clear blue print, the management of rice exporting activities has also shown signs of shortcomings, the Ministry says. The plan for export is often set at the beginning of the year when there is no production figure to base it on and this plan keeps changing. The plan is often not in accordance with actual production but on unrealistic prediction, leading to low feasibility.

Although quality has vastly improved, it still remains an issue. The Vietnamese rice remained poorer compared to that of major international rivals in the world market and often below the increasingly high demands of the consumers in the world market.

From these shortcomings, the Ministry says that a series of measures are recommended to improve the competitiveness of Vietnamese rice in the world market, including an overall development plan for rice growing and processing in the whole country, better distribution of profits among farmers and businesses and expansion of market for Vietnamese rice in different types of markets.