Viet Nam will limit the number of rice exporters to 150 starting in 2015, according to a new Ministry of Industry and Trade decree.— Photo sgtt

Ha Noi (Biz Hub)— Viet Nam will limit the number of rice exporters to 150 starting in 2015, according to a new Ministry of Industry and Trade decree.

Despite being of the world's second biggest rice exporter, Viet Nam still faces many challenges in rice manufacturing and exporting. In the first eight months of the year, Viet Nam's rice exports reached 4.7 million tonnes, for an export value of about US$2 billion – a decline in both quantity and value.

The decree aims to help exporters overcome these difficulties, loosening many of the criteria for obtaining an export licence. If a rice exporter fails to reach 10,000 tonnes in the first year, it can keep its licence by increasing exports in the next year so that the total export volume in the two-year period reaches 20,000 tonnes. And while the previous decree specified 100 exporters, this one sets the limit at 150.

However, the new plan is more restrictive in that each trading company must either have its own growing area (preferred) or cooperate with rice farmers. Traders must be confirmed by provincial leaders in writing, with documents proving either the existence of a growing area or cooperative links with rice farmers.

The plan also assigns specific tasks to relevant ministries, agencies and localities, the Viet Nam Food Association and rice export traders.

Falling exports

The Ministry of Industry and Trade required the Viet Nam Food Association (VFA) and other relevant offices to increase rice exports by the end of this year, a ministry official said yesterday at a monthly online meeting in Ha Noi.

Rice exports have declined 14.3 per cent in volume this year to 5.35 million tonnes. Value has also gone down, sinking 16.5 per cent to US$2.35 billion.

In September, exports reached 400,000 tonnes – 200,000 tonnes less than the initial plan and 350,000 tonnes less than the same time last year.

Experts forecast that the last quarter would be equally gloomy for the country's rice exporters, who are currently struggling to obtain new contracts.

In August, the association cut its annual export forecast from 7.5 million tonnes to 7-7.2 million.

Many rice export contracts were cancelled last month, said Pham Van Bay, VFA deputy chairman, while previously signed contracts were adjusted in terms of both volume and price.

Traditional export markets such as Indonesia and the Philippines have a huge stockpile of rice; China, the largest importer of Vietnamese rice in recent months, did not increase import quotas last month.

Many farmers in southern Kien Giang Province have stopped selling rice because the purchasing price is so low, said Huynh Van Ganh, director of the province's industry and trade department.

Ganh suggested the VFA pay farmers more for their rice.

Le Duong Quang, deputy minister of industry and trade, said the VFA, Export Import Department and industry and trade departments should create favourable conditions for local rice exporters and closely follow the fluctuations of domestic and global rice markets.

A long-term strategy on producing and trading rice would increase the efficiency of rice exports, agreed experts at the meeting. — VNS