According to the commitment from the Vietnam - EU Free Trade Agreement (EVFTA), the EU gives Vietnam a quota of 80,000 tons of rice per year, including: 30,000 tons of regular white rice, 20,000 tons of unmilled rice and 30,000 tons of fragrant rice (9 varieties: Jasmine 85, ST 5, ST 20, Nang Hoa 9, VD 20, RVT, OM 4900, OM 5451, Tai Nguyen Cho Dao). In addition, the EU completely liberalizes broken rice.
EXPORTS TO EU ARE MAINLY HIGH VALUE RICEThese commitments will enable Vietnam to export an estimated 100,000 tons to the EU each year. For rice products, the EU will reduce the tax rate to 0% after 3-5 years.
Up to now, Vietnamese rice and rice products have basically enjoyed a 0% tax rate on the amount of rice within the quota. This has opened up opportunities for Vietnamese rice to compete with other countries when exporting to the EU.
Data analysis from the Ministry of Industry and Trade shows that in 2022, the EU imported a large amount of rice from Vietnam with a quantity of 96.7 thousand tons, an increase of over 65% compared to 2021, with a turnover of about 79.5 million Euros. The EU has allocated all the rice in the quota in 2022, Vietnam has used 74,772 tons of rice in the quota of 80 thousand tons.
Of which, Vietnam has exhausted its quota of 30 thousand tons of milled rice and 30 thousand tons of fragrant rice. However, our enterprises have not yet used up all the amount of whole grain milled rice exported to the EU.
In 2023, the EU allocated 73,345 thousand tons, because EU importers did not register all the amount of whole grain rice and paddy rice equivalent by the deadline for registration to implement the rice quota.
Regarding the Belgian market, due to the small market size, Vietnamese rice exporting enterprises are not interested in exporting rice to this market. Enterprises and distribution systems in Belgium mainly import Vietnamese rice from major importers in France and the Netherlands.
According to Eurostat data, in 2023, Vietnam exported rice to Belgium with a total value of 56.3 thousand euros. This is a very small number compared to the potential of the Belgian market, which imports 500 million euros of rice annually from countries around the world.
According to the Vietnam Trade Office in Belgium and the EU, the price of Vietnamese rice exported to the Belgian market and EU countries is higher than the average of other countries because the types of rice exported to this market are mainly high-value fragrant rice such as ST25 and ST24.
Some Vietnamese rice products such as pho, vermicelli, rice paper and rice have successfully penetrated the modern distribution system of the EU in Germany, Czech Republic, Belgium, Netherlands, France, and Northern Europe. Due to the high price of rice in the world due to India's ban on rice exports, the price of rice in Belgium has also increased for all imported rice lines.
In Belgium, in the fragrant rice segment, Thai rice is the most expensive at about 3 euros/kg, Vietnam ranks second at about 2.5 euros/kg, Italian rice is cheaper at about 2 euros/kg and Cambodian rice is the cheapest at 1.4 - 1.5 euros/kg.
Vietnamese rice is mainly sold in Asian supermarkets because there is no business distributing Vietnamese rice in Belgium to supply the chains.
CARE ABOUT RICE QUALITY MANAGEMENTAssessments show that the demand for rice imports in this market is not large, but this is a market worth paying attention to for high-value rice exporting enterprises, because the two sides have had tariff incentives on rice products when implementing EVFTA.
The average annual consumption per capita in the EU is around 6 kg, while the average global rice consumption per capita is around 54 kg/person.
The EU is not as advantageous in rice production as Asian countries. However, some Southern European countries such as Greece, Portugal, France, Romania, Bulgaria and Hungary also produce some rice to serve domestic consumption needs.
The EU's rice production area is about 450,000 hectares. The EU produces 1.6-1.7 million tons of rice annually. The total rice market capacity of the EU region is about 3.3 million tons/year, so the average annual production reaches about 50-70% of the total rice consumption.
The EU is self-sufficient in Japonica short-grain rice. However, the region depends on imports for Indica long-grain rice, specialty long-grain rice, such as Basmati and Jasmine from India and Pakistan, Thailand and milled rice for processing and restaurants from Cambodia, Myanmar, Vietnam.
Notably, from January 18, 2022, the EU has officially lifted special safeguard measures imposing tariffs on rice imported from Cambodia and Myanmar for 3 years from 2019 (175 Euro/ton), 2020 (150 Euro/ton) and 2021 (at 125 Euro/ton). Therefore, in 2022, the amount of rice exported from these two countries to the EU will increase sharply again, with Cambodia's output exported to the EU reaching 174 thousand tons, and Myanmar's reaching 322 thousand tons.
The Ministry of Industry and Trade said that Vietnam and the EU are currently discussing the list of fragrant rice imported into the EU under the EVFTA Agreement with more preferential tax rates. Therefore, in addition to the EVFTA tax rate, Vietnamese rice will compete for the common tariff quota compared to other countries.
To export high-value rice to this market, according to the Vietnam Trade Office in Belgium and the EU, businesses need to pay attention to rice quality management, especially pesticide residues.
"The threshold for pesticide residues in rice is below 0.01 mg/kg and importers and EU regulators will regularly check food safety quality. Lesson learned in 2021, when marketing ST25 rice, Belgian businesses had to recall it because the pesticide residue was 0.017 mg/kg," the Vietnam Trade Office in Belgium and the EU warned.
On the other hand, currently fragrant rice varieties ST 24, 25 are being marketed in Belgium and the EU, but this rice variety has not enjoyed incentives under the EVFTA framework, so it has to compete for common tariff quotas with other countries. Therefore, the Vietnam Trade Office in Belgium and the EU recommends that Vietnam should speed up renegotiations and expand the list of rice varieties exported to the EU.
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