Go organic: how to increase the value of Vietnam's rice exports

By An Hong   June 6, 2016 | 05:58 pm GMT+7

In an attempt to become more competitive on the international market, Vietnamese rice exporters are finding their ways into new markets that are more demanding but willing to offer higher prices.

As Vietnam is increasingly integrating into the global market following a variety of free trade agreements, it will be easier for rice exporters to access new markets.

When the Trans-Pacific Partnership trade pact takes effect, Vietnam’s rice exporters will gain considerable advantage from exporting to member countries, many of whom are top producers of wheat and corn rather than rice, said Phan Thi Dieu Ha, deputy head of the Import-Export Agency under the Ministry of Industry and Trade.

However, the fact that Vietnamese rice is less competitive on the international market because it has failed to differentiate itself makes it difficult for export companies to seize these new opportunities.

Ha said that despite fast-growing bilateral trade relations between Vietnam and Japan, Vietnamese rice exporters have been unable to really penetrate the Japanese market in the past five years.

The reason, she said, was the Southeast Asian country has failed to improve the quality of the grain and to build a national rice brand.

Industry experts agreed that although Vietnam is one of the world’s largest rice exporters, it lacks a national brand that could boost exports and help Vietnamese firms gain more credibility in the global market.

Professor and economist Vo Tong Xuan said that Vietnamese farmers and rice exporters often have to make export deals at lower prices as international dealers often penalize them for a lack of origin guarantee.

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Vietnam is focused more on quantity rather than quality, mainly exporting low-quality rice to less demanding markets at a price 40–60 percent lower than rice from India and Thailand. Photo from the government website of Vinh Phuc Province.

Vietnam traditionally focuses more on quantity rather than quality, which has actually backfired on the country’s rice exports, said Bui Huy Son, head of the Trade Promotion Department.

He suggested the government develop a strategy to help exporters to target high-end markets and support rice growers by shifting to organic farming.

As demand for organic produce has risen rapidly in recent years, Vietnam should invest more in organic rice farming to introduce crops free from pesticides, antibiotics or other banned chemical substances, said Vo Minh Hai, owner of the Hoa Sua organic rice export company.

He added that investments in research and development to create new paddy varieties such as diabetes-friendly rice would also boost rice exports to developed and demanding markets such as the U.S, the E.U. and Japan.

Vietnam harvests three crops of rice each year, of which the winter-spring crop is the biggest and mostly used for export.

The country, which produced a record 45.21 million tons of paddy last year, exports around 30 percent of its output, mainly to China, the Philippines and Indonesia.

Vietnamese rice exporters on one hand will need to maintain their position in the traditional markets, but on the other, gradually expand into niche markets which offer more profits, said Industry and Trade Minister Tran Tuan Anh.