The rice race has changed, and Vietnam's not in the running

By Vu Kim Hanh   December 16, 2019 | 10:49 pm PT
The current consumption trend heavily favoring food quality, safety and clear origins is putting Vietnamese rice on the back foot.
Vu Kim Hanh

Vu Kim Hanh

I received an email from a Thai friend who works in the rice import-export industry several weeks ago, informing that one million tons of high-quality Thai rice was likely to go to China.

On November 25, their agriculture minister has sent to China the second list of companies that will export rice to China, and the Chinese government has promised to complete the procedures to take in the Thai rice as soon as possible, the email said.

Rice imported from Thailand has become more and more popular in China.

This has happened after the Thai government sent the Chinese General Administration of Customs a batch of rice for quality and safety assessment. Following that first batch, 49 big and small rice firms in Thailand have already been approved to sell rice to China.

The fact that China is considering the second list of Thai rice exporters is a positive sign that could open the door for one million more tons of rice worth 27 billion baht ($893 million) to enter the Chinese market.

What's more important is that the Chinese customs has pledged to make arrangements soon for deals that could facilitate agricultural trade between the two countries.

The two sides have agreed that after rice, Chinese would consider importing fruits, frozen pork, live cattle and bird nest from Thailand. They have also discussed the possibility of sending fruits from Thailand to China via the control station that has just been put into service right in the area of Mong Cai-Dongxing international border gate in Vietnam's northern province of Quang Ninh and China's southwest Guangzi Zhuang Autonomous Region. That station lies just 150 meters away from Vietnam's Mong Cai agricultural product market.

And my Thai friend did not stop there. He continued by saying that once exports increase, it will create more pressure to ensuring product quality, and fraudulent activities will merge in issuing standard certificates.

To deal with this threat, Thailand plans to extend application of the blockchain technology. This involves a growing list of records, called blocks, that are linked using cryptography, and each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. This is the way Thailand would ensure that all related parties can feel secure about the authenticity of the supply chain.

A farmer transports freshly-harvested paddy in bags at a field in An Giang Province in Vietnams Mekong Delta region, June 2019. Photo by VnExpress/Huynh Van Thai.

A farmer transports freshly-harvested rice in bags at a field in An Giang Province in Vietnam's Mekong Delta, June 2019. Photo by VnExpress/Huynh Van Thai.

Reading his email, I could feel a fresh breeze blowing in cross border trade between China and Thailand. Whether it has already been there and is now being reinforced or it is making a new start, this is completely different from what Vietnam's agriculture industry has been doing for export.

First of all, the focus of Thai agricultural exports is to ensure  that the products are organic or high-quality ones with application of advanced technology to ensure their authenticity. Secondly, it is the Thai government that is being proactive in promoting bilateral trade, taking care of the quality checks, and supporting exporters with needed procedures.

Following up on that email, I began to look for information on how Thailand has applied technology in its export activities. What I found is that the Thailand's Trade Policy and Strategy Office (TPSO) has announced it would use the blockchain technology to track the origins of exported products. It will start doing this first for organic rice before expanding the process to other types of agricultural products.

Using blockchain to track organic rice is a project that Thailand will officially start from mid next year in order to gain the trust of importers.

The TPSO also said it is speeding up discussions with experts, relevant agencies and financial institutions to boost the development of the blockchain system to serve the export industry to the maximum. The office has also talked with paddy famers and invited up to 5,000 farmers from Surin, a northeastern province of Thailand, to take part in the project.

The blockchain system will track the entire cultivation process, starting from cameras installed at the paddy fields, allowing one to verify if the paddy is truly organic or not. The entire production and packaging process is also closely monitored to help buyers check the origin of the rice. In case they find out that the rice is not "organic" enough, they can refuse to buy.

According to the Thai Ministry of Agriculture and Cooperatives, the blockchain project is being implemented at a crucial juncture. It will build customer confidence for Thai organic rice, reduce buyers' rejections, avoid fraud in which unqualified products find ways to stand alongside legitimate ones, raise the value of Thai rice and create more opportunities to expand export markets.

And even when Vietnam passed Thailand to win first place at the 11th annual World's Best Rice Contest earlier this month with the ST25 variety, Thailand remains firmly in the driver's seat in the rice race.

The work Thailand has done so far includes boosting exports of organic rice, applying new technology to gain buyers' trust and taking steps to ensure product quality remains consistent.

More importantly, the Thai government has continuously promoted high-quality organic products for which origins can be easily tracked, particularly for the Chinese market, where there is a consumption trend favoring such products.

What about us?

Our rice export has not showed any progress even after years of Vietnam being one of the top rice exporters in the world in terms of volume, currently standing behind India and Thailand.

Recent results have painted a picture that is not so bright. Vietnam’s rice exports value fell 9.8 percent year-on-year to $2.24 billion in the first 9 months of this year as demand from China and other major markets dwindled. The reason mentioned is that Vietnamese exporters have failed to meet China's tightened import standards that seek to ensure safety and quality.

The World's Best Rice Contest should work as a wakeup call for us. It is time we looked again at the strategy of selling rice at low cost to lure customers. Vietnam's agriculture ministry should switch to following the current consumption trends on the global markets, which focus on quality, safety and clear origin.

The going will be tough, but we have no option but to get tough and get going.

*Vu Kim Hanh is chair of the Business Association of High-Quality Vietnamese Products. The opinions expressed are her own.

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