Rice export prices are the lowest in the world, what is the solution for Vietnamese rice?

From its peak in mid-August 2023 at 700 USD/ton, Vietnam's rice export price has plummeted to its lowest level in the past 3 years.

Rice export price drops 43%

According to the Vietnam Food Association, the latest update on rice export prices shows that 5% broken rice on February 6 stood at 399 USD/ton, down 5 USD/ton compared to the previous day; 25% broken rice stood at 371 USD/ton, down 6 USD/ton compared to the previous day; 100% broken rice stood at 313 USD/ton, down 5 USD/ton compared to the previous day.

Enterprises purchasing rice from linked fields for export in An Giang. Photo: Cong Mao.

At current prices, Vietnam's rice exports are the lowest in the world. Specifically, Thailand's 5% broken rice is currently at 433 USD/ton (34 USD/ton higher than Vietnamese rice); 25% broken rice is at 411 USD/ton (40 USD/ton higher than Vietnamese rice) and 100% broken rice is at 377 USD/ton (64 USD/ton higher than Vietnamese rice).

As for Indian rice prices, 5% broken rice exports are also currently at $413/ton; 25% broken rice is at $394/ton. Pakistani 5% broken rice exports are at $404/ton; 25% broken rice is at $377/ton and 100% broken rice is at $340/ton.

Thus, from the peak in mid-August 2023 at 700 USD/ton, the highest since 2008 (within 15 years), Vietnam's rice export price has plummeted to the lowest level in the past 3 years. Compared to the current price on February 6 of 399 USD/ton, Vietnam's rice export price has decreased by 301 USD/ton, equivalent to a decrease of about 43%.

According to Mr. Phung Duc Tien - Deputy Minister of Agriculture and Rural Development, the main reason for this price decrease is that India has loosened its rice export restrictions after 2 years of temporary closure, increasing supply in the international market and creating competitive pressure on other exporting countries, including Vietnam.

In addition, demand from major import markets such as the Philippines and Indonesia is currently slowing down, as these countries have accumulated enough rice reserves for 2024 and are currently waiting for prices to fall further before continuing to buy.

“The average export price of rice used to be up to 623 USD/ton, but now it is only 441 USD/ton. The reason for the decrease in rice prices is because India has reopened its rice export market, and some countries have achieved some food self-sufficiency,” said Mr. Phung Duc Tien.

From the business perspective, Mr. Nguyen Vinh Trong - Director of Viet Hung Company Limited (Tien Giang) - said that the sharp decrease in export rice prices is due to pressure on output when many businesses still have inventory and this year the main crop was harvested early and had a good harvest. Meanwhile, on the import side, the two largest markets, the Philippines and Indonesia, also have inventory from the previous year so they are not in a hurry to buy and they know that Vietnam is entering a new crop, with abundant supply, so they are waiting for better prices.

The sharp drop in export rice prices has caused rice prices in the domestic market to plummet. According to an update from the Department of Agriculture and Rural Development of An Giang province, on February 7, raw rice OM 380 decreased by VND100/kg, fluctuating at VND7,300 - 7,400/kg compared to yesterday; finished rice OM 380 fluctuated at VND8,800 - 9,000/kg; raw rice IR 504 fluctuated at VND7,700 - 7,800/kg compared to before Tet; finished rice IR 504 fluctuated at VND9,500 - 9,700/kg; raw rice 5451 fluctuated at VND8,800 - 8,900/kg.

Currently, the price of IR 50404 rice (fresh) fluctuates at 5,400 - 5,600 VND/kg; OM 5451 rice fluctuates at 5,800 - 6,000 VND/kg; Dai Thom 8 rice (fresh) fluctuates at 6,600 - 6,800 VND/kg; OM 380 rice fluctuates at 6,600 - 6,700 VND/kg; OM 18 rice (fresh) fluctuates at 7,600 - 7,800 VND/kg; Nhat rice fluctuates at 7,800 - 8,000 VND/kg; Nang Hoa 9 fluctuates at 9,200 VND/kg. With the current price, farmers only make very little profit, even earning their living expenses, not like previous years.

What is the solution for rice export?

According to a report by the Ministry of Agriculture and Rural Development, the estimated volume and value of rice exports in January 2025 reached 500,000 tons and 308 million USD, up 1% in volume but down 10.4% in value compared to the same period in 2024.

Estimated rice export volume and value in January 2025 reached 500 thousand tons and 308 million USD

Industry players say that the unit price of rice exported during this period is still high thanks to old contracts and there are many contracts to export specialty rice ST25 at a price of more than 1,000 USD/ton. The new price level will be reflected in the February report.

However, some opinions also said that the current rice market is facing difficulties but only temporarily and hope that the market will recover soon. Rice prices are currently at rock bottom so in the near future, it is expected that importers will increase purchases and prices will increase.

Faced with the decline in rice export prices, Mr. Phung Duc Tien said that promoting trade and diversifying markets is an issue that needs to be raised. Accordingly, along with markets such as the United States and China, businesses also need to pay attention to the EU, Japan, South Korea, and Philippines markets.

According to Mr. Phung Duc Tien, in 2024, the Philippines will be Vietnam's largest rice consumer market with a market share of 46.1%. Indonesia and Malaysia are the next two largest markets with market shares of 13.2% and 7.5%, respectively.

Compared to 2023, the value of rice exports in 2024 to the Philippines market increased by 48.9%, to the Indonesia market by 16.6%, and to the Malaysia market by 2.1 times. In the group of 15 largest rice export markets, the value of rice exports increased the most in the Malaysia market with an increase of 2.1 times; the market with the sharpest decrease in export value was China with a decrease of 68.4%.

“For the Philippine market, in 2024 we will export over 2.9 million tons of rice and earn a relatively good amount. For the Indonesian market, we are promoting to keep the rice export volume stable and the price suitable for each period.

On the other hand, regarding the Halal market, the Ministry of Agriculture and Rural Development has also directed a number of enterprises that have exported products. The Ministry has convened meetings with enterprises to discuss and promote solutions for us to enter new markets, in order to maintain the scale and growth momentum in 2025," said Mr. Phung Duc Tien.

In 2024, the volume and value of rice exports in 2024 will reach 9 million tons and 5.67 billion USD, up 11.1% in volume and 21.2% in value compared to 2023. The average export price of rice in 2024 will reach 627 USD/ton, up 9.1% compared to 2023.

Source: https://congthuong.vn/gia-gao-xuat-khau-dang-thap-nhat-the-gioi-giai-phap-nao-cho-gao-viet-372676.html