Since August 2022, the price of Vietnam’s 5% broken rice for export has surpassed those of Thailand and India, reaching the highest level globally.
The Ministry of Industry and Trade reports that Vietnam’s 5% broken rice export prices have remained the highest in the world since August 2022, surpassing Thailand by $15-27 and India by $40-50 per ton. Last year, rice exports reached 7.1 million tons, a record high in a decade. The upward trend in Vietnam’s rice export prices has persisted into early 2023, with an average of over $519 per ton. Consequently, export volume decreased by over 20% at the beginning of the year, but still increased by approximately 7% in terms of value.
According to the Vietnam Food Association (VFA), the current export price of Vietnam’s 5% broken rice is $463 per ton (FOB price), an increase of more than 16% compared to the same period in 2022. This price is on par with Thai rice and higher than that of India and Pakistan by $20-23 per ton.
In 2023, around 13.2 million tons of paddy, equivalent to 6.6 million tons of rice, are expected to be allocated for export. Although the first half of the year’s export plan is set at 4.12 million tons, only nearly 0.36 million tons were exported in January. This means that over 3.76 million tons must be consumed within the next five months.
The Ministry of Industry and Trade forecasts favorable rice exports this year, reaching around 6.5-7 million tons, due to the return of markets like Indonesia and Bangladesh. China’s reopening post-pandemic has increased import demand. Vietnam’s rice competitors, such as India, have imposed bans on broken rice exports and imposed a 20% tax on white rice, leading partners to seek more competitive markets, including Vietnam. White rice accounts for 45% of export composition, while the rest includes fragrant rice, sticky rice, organic rice, and fortified rice.
However, the Ministry of Industry and Trade acknowledges several challenges for rice exports this year. First, traders still face limitations in diversifying markets. The rice export market shows signs of instability, relying on traditional markets like China and the Philippines (which account for over 45% of Vietnam’s total rice exports). Vietnam’s rice exports also face competition from other low-cost sources such as India and Pakistan.
In addition, rising agricultural input costs have increased production costs, pushing up the procurement prices of paddy and commercial rice. This puts pressure on rice exporters, even though export offer prices have not increased significantly. Moreover, international shipping costs have decreased compared to 2021 but remain high, especially since the Russia-Ukraine conflict began.
To achieve export goals, the Ministry of Industry and Trade plans to discuss adding fragrant rice to the EU export list and diversifying and expanding markets through trade promotion channels. The Ministry also proposes that banks be more flexible, offering credit options instead of collateralizing assets for reputable rice exporters, enabling them to secure more capital for procuring and processing export rice during the main harvest season.
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