Rice exports from Vietnam, the world's second-largest shipper after Thailand, will rise to a record seven million tons this year as higher prices set by Thailand's new government are pushing buyers toward Vietnam, officials say.
Thailand's Puea Thai (For Thais) Party, which won a landslide election victory on July 3, campaigned on a promise to buy rice directly from farmers at 15,000 baht (US$488) per ton, well above the current market rate of 7,000-8,000 baht.
Analysts said the new policy will push Thai export prices up to $850-870 a ton"”from the current rate of $525. Meanwhile, Vietnamese rice is currently selling for under $500 a ton.
Given that many buyers are turning away from Thai rice, Vietnamese rice exporters are contracting to sell high volumes of the staple to Indonesia, Bangladesh, China, and African countries, the Vietnam Food Association (VFA) said during a meeting on Tuesday.
The Philippines, Vietnam's biggest rice importer, signed its first purchase contract with Vietnam in March after several months of delay due to changes in the rice import policy. The Philippines also plans to increase its purchases in the coming months.
"Before, Vietnam's rice quality was much lower than Thailand's," said Le Viet Hai, director of the Mekong Company based in Can Tho City. "But now, the gap has been narrowed and thus, Vietnamese companies no longer have any difficulty in selling the grain to foreign markets."
In the first six months of this year, Vietnam shipped 3.9 million tons of rice abroad, generating a turnover of $1.85 billion. This represents an 18 percent increase in volume and 25 percent increase in value compared to the same period last year.
In addition, Bangladesh signed a deal to import one million tons of the grain in the second half of this year. The Philippines, the world's largest rice buyer, plans to buy between 400,000 to 600,000 tons of Vietnamese rice next March.
"In the coming time, Vietnam's rice exports will be very bright as our output has been increasing and the world market shows many positive signs," said Truong Thanh Phong, chairman of the VFA.
An increase in rice exports are boosting prices. In the Mekong Delta (often referred to as the rice basket of Vietnam) one kilogram of paddy rice sold for VND5,750-VND6,050 ($0.28-0.29) on Thursday. This represents a VND200,000-VND250,000 ($9.7-$12.2) per ton increase"”compared to the week before.
Meanwhile, 25-percent broken rice rose to VND8.5 million ($413) per ton, on Thursday, from VND8.35 million ($406) last week. At the same time, the higher quality 5-percent broken rice advanced to VND9.45 million ($460) a ton, up VND200,000 compared to last week.
After calculating the volume of rice shipped in the first half of the year, the VFA has raised the export target for the whole year from six million tons to seven million tons.
Last year, Vietnam exported 6.75 million tons of rice worth nearly $3 billion at an average price of $431 per ton.