Regulations should not create inertia for rice exports

Over the past few weeks, the international rice commodity market has undergone notable volatility.

Vietnam's 5-percent broken rice for export reached $622 per ton (on August 9), following the upward trajectory of the Thai counterpart, which attained $645 per ton.

The export price of Vietnamese rice has hit a 15-year high. In the domestic market, the cost of raw paddy has surged significantly. Despite the rice in the fields not being ready for harvest for over a month, traders have already made deposits to secure purchases. While farmers previously sold rice from the winter-spring crop for less than VND5,000 per kg, some are now depositing VND8,500 per kg. Moreover, locally-grown rice prices in domestic markets are steadily on the rise.

The surge in rice prices benefits rice growers and creates a market opportunity for rice exporters. However, the domestic market is witnessing concerning developments. Some enterprises must purchase rice at inflated rates to fulfill contracts previously made with foreign partners, leading to a situation of "buying high, selling low," resulting in financial losses.

Some localities are experiencing a significant accumulation of rice, leading to an imbalance between local supply and demand, resulting in unjustified increases in domestic rice prices. This scenario underscores the necessity to not only ensure steadfast national food security in all circumstances but also to bolster the sustainability of the rice supply chain.

Many businesses express concerns that the draft amendment to Decree No.107/2018/ND-CP on rice export business, prepared by the Ministry of Industry and Trade, contains provisions that have not fully met the requirements. The expenses, travel duration, and paperwork involved for rice exporters, primarily situated in the Mekong Delta region, continue to be notably elevated.

Following a five-year cycle, traders are mandated to apply for renewed certification through the same procedures as the initial application. The export authorization fee, varying from $1 to $5 per ton of rice, has the potential to lead to a situation known as "certification rental," creating inertia and making Vietnamese rice more expensive and challenging to export.

Hence, it is paramount to enhance the rice export management mechanism, aligning it with the rice export business conditions and the quality of paddy and commodity rice for export. Traders should collaborate closely with rice growers, engaging in activities spanning raw material cultivation, production, and rice consumption. This collaborative effort will foster a transparent, equitable, and supportive business environment that safeguards the rightful interests of rice farmers and upholds the esteemed reputation of Vietnamese rice commodities.

The situation of vying with others to buy "young rice" stems primarily from the fact that many rice exporters have failed to establish raw material growing zones, instead depending on traders and thereby missing out on potential market opportunities. Therefore, the regulation to reserve at least 5 percent of the total rice export volume in the previous six months has not been strictly enforced. Bidding progress to purchase rice for national reserve in the context of volatile prices was also affected. Thus, it is necessary to complete the linkage models, prioritizing the raw material growing area of 1 million hectares of rice in the Mekong Delta according to the planning.

Furthermore, there is a need to explore the implementation of a mechanism that can stabilize prices within the domestic rice market and offer assistance to economically disadvantaged consumers while fostering a conducive environment for rice producers and exporters. Market surveillance and price control authorities should strengthen their efforts in conducting thorough inspections and closely monitoring business activities related to exports and domestic consumption.

Vietnam has garnered insightful lessons from the fluctuations within the rice market during the years 2008, 2020, and 2022. To create the most efficient operational strategies for the present, a comprehensive analysis of the gains and losses observed in recent rice export endeavors is imperative.

In addition to addressing the immediate challenges, it is essential to concentrate on enhancing the quality of rice varieties and establishing long-term strategies for the rice industry, constructing robust technical and technological infrastructure, nurturing distinctive brands, expanding market presence, and forging a substantial and efficient connection among rice exporters, cooperatives, and farmers to guarantee product quality, traceability, and elevate the competitiveness of Vietnamese rice products.

Other news