This is also an impressive achievement of the rice industry for many years, especially when throughout 2020, the agricultural sector was heavily damaged across both production and exports due to the impact of natural disasters and the COVID-19 pandemic.
“Rice – White gold”
The success of the rice industry last year has reminded everyone of the comparison “rice – white gold” after the phrase had been forgotten for a long time. It gives great pride that although fierce natural disasters such as hail, drought, saline intrusion and floods severely devastated agricultural production nationwide, rice production rose above all to achieve a comprehensive victory with a total output of 42.7 million tonnes, fully meeting the needs for domestic consumption, animal feed and export. In particular, rice export results are considered a miracle. In 2020, while the turnover of some key agricultural products plunged due to COVID-19, rice exports registered steady growth over the months. Notably, the highlight in rice exports was not the output but the selling price. Rice was the commodity with the biggest increase in export prices, up 13% year-on-year to an average of US$496 per tonne. In early December 2020, the price of Vietnam’s 5% broken white rice ranged from US$493 to US$497 per tonne, about US$20 per tonne higher than that of Thai rice and US$120 higher than that of Indian rice. These are considered the best prices in Vietnam's rice export history, which demonstrates that the quality of Vietnamese rice has improved significantly.
Rice export activities quickly have prospered right after the European Union-Vietnam Free Trade Agreement (EVFTA) officially came into force on August 1, 2020. Under the deal, the EU gives Vietnam a quota of 80,000 tonnes of rice per year with a 0% tax rate (20,000 tonnes of not-yet-de-husked rice, 30,000 tonnes of de-husked rice and 30,000 tonnes of fragrant rice). For products from rice, the EU will bring the tax rate to 0% after three to five years. Taking advantage of that, Vietnam began exporting the first batches of rice to the EU from September 2020 at increasing selling prices compared to previously. Specifically, the current export prices of ST20 rice and Jasmine rice to the EU market stand at over US$1,000 and US$600 per tonne, respectively, much higher than the pre-EVFTA prices of US$800 and US$520. With the EU market globally known for having the most stringent requirements on quality, these prices are considered a prideworthy achievement for Vietnamese rice.
Numerous opportunities for further growth
Commenting on the impressive development of rice exports in 2020, Deputy Minister of Agriculture and Rural Development Le Quoc Doanh said that in the process of agricultural restructuring, rice is one of the industries with successful restructuring. The proportion of quality rice varieties has climbed to 75-80% of rice production from only 35-40% five to six years ago, even 90% in many localities. This is one of the main factors to improve the rice quality and drive the export prices of Vietnamese rice to hike. In addition, the quota of 30,000 tonnes of fragrant rice granted by the EU to Vietnam has offered a great opportunity for Vietnam’s fragrant rice and specialty rice, to assert their quality and prestige in the world market. Currently, there are nine fragrant rice varieties enjoying tariff quotas to the EU, including Jasmine 85, ST5, ST20, Nang Hoa 9, VD20, RVT, OM 4900, OM 5451 and Tai Nguyen Cho Dao. These are also varieties of Vietnamese rice with huge potential for development. In the time ahead, if the stages regarding quality and food safety are well ensured, this quota will surely be raised by the EU side.
As forecast by the Vietnam Food Association (VFA), Vietnam’s rice exports in Q1 2021 continue to remain positive, as some major markets such as the Philippines and Africa continue to sign contracts to purchase Vietnamese rice. The Asian rice market has also started to heat up again when a series of potential customers have boosted the rice purchase, such as China and Bangladesh. In 2021, the EVFTA and some other FTAs to which Vietnam is a signatory will surely have clearer impacts on rice export activities. The signed Vietnam will have a more pronounced impact on rice exports. Inspired by some shipments in 2020, it is hoped that this year, the rice volume entitled to 0% preferential tax will penetrate more into the EU at higher prices. According to many agricultural experts, rice processing and exporting enterprises should also focus on exploiting and conquering the EU market, because in addition to taking advantage of tax incentives, rice products eligible for exports to the EU will obtain a warranty to be exported to any markets in the world.
Along with the achievements, Vietnam’s rice exports still have many opportunities for growth in both output and turnover. It’s important for the rice industry to maintain and promote its direction on the basis of paying greater attention to quality, food safety, traceability, and many factors related to sustainable development, thus meeting the increasing requirements of major markets.