Appetite in Europe, Philippines may boost Vietnam's 2017 rice exports - USDA

By Ho Binh Minh   April 20, 2017 | 04:32 pm GMT+7

Vietnam's global rice export ranking this year is expected to remain unchanged, trailing behind Thailand and India.

Preferential import taxes in Eastern European countries and an extended rice supply agreement with the Philippines may help boost Vietnam's rice exports this year by around 9 percent to 6 million tons, a U.S. Department of Agriculture attache said.

The 2017 forecast, up from the 5.5 million tons shipped last year, leaves Vietnam's global rice export ranking unchanged in third place, trailing Thailand and India, according to USDA projections.

Vietnam can benefit from preferential import duties in Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan after the Vietnam-Eurasia Economic Union Free Trade Agreement came into effect in October 2016, the USDA attache said in a report released on Tuesday.

It also cited a rice trade agreement renewed in January, under which Vietnam can supply up to 1.5 million tons annually to the Philippines from 2017-2018.

Rice exports to China, the biggest buyer of Vietnamese rice, are also expected to stay strong, now that China has approved 22 Vietnamese export firms, the report said.

In a separate report released on Wednesday, the U.N. Food and Agriculture Organization also forecast Vietnam's rice exports this year to jump 11 percent from 2016 to 6.9 million tons, citing demand from the Philippines and China.

Exports slow

Despite a positive outlook, Vietnamese export businesses said rice sales to eastern European countries have not been made easier because countries such as Russia often require high-quality grain. 

"There may be preferential import duties, but the cost to process rice and keep it pest-free would be higher than paying the import tariffs," a Ho Chi Minh City-based exporter told VnExpress International.

Asked about the Philippines, he said there were mixed reports, with some saying Manila was going to buy soon, while others said the National Food Authority, the country's logistics agency in charge of importing rice, has not finalized any purchasing plans. 

Vietnam's first-quarter rice exports fell 17.5 percent from a year ago to 1.29 million tons, extending a decline seen since May 2016, even though demand from China, Singapore and the Ivory Coast pushed March shipments alone to 550,700 tons, the highest monthly figure in a year, Vietnam Customs data shows.

China is projected to import 5 million tons of rice in the 2016/2017 marketing year ending June 2017, up 4 percent from the previous year, a USDA report said in January.

China bought 1.74 million tons of Vietnamese rice in 2016, down 17.5 percent from the previous year, based on customs data. The statistics did not include an estimated 1.5 million tons sold across the land border, according to a Vietnamese industry analyst.

Shipments to the Philippines last year plunged 65 percent from 2015 to 396,000 tons, based on customs data.

Vietnam is projected to export around 5 million tons this year, the Vietnam Food Association has said. Last year, the Southeast Asian nation shipped 4.8 million tons, the lowest since 2008, due to rising competition and growing production in key regional buyers, as well as higher stocks in Africa.

In 2016, rice slipped to the third-biggest earner among Vietnam's agro-exports, after seafood and fruit.

Thinner stocks

With rising exports expected in 2017, Vietnam's stocks could drop to 1 million tons at the year-end from 1.42 million tons last year, the USDA report said, adding that output and domestic consumption would remain steady.

Vietnam's 2017 milled rice output is projected at 28.1 million tons, 0.7 percent up from last year due to higher yields, and domestic consumption and residual would edge up 0.4 percent to a combined 22.8 million tons.

While per capita consumption has been easing thanks to rising incomes, there is "higher use of rice in home-made animal and aquaculture-feeds, and growth in the food processing sector, especially in the beer and rice wine industries," the report said.