Vietnam's Rice Bowl Feels the Strain

In the heart of Vietnam's Mekong Delta, a region celebrated as the country's "rice bowl," traders are navigating uncertain waters. The recent halt in rice imports by the Philippines has led to a cautious approach in purchasing, with many focusing on domestic sales amid the export standstill.

"Export shipments are on hold," shares Huyen, a seasoned trader from An Giang Province, reflecting the growing concern among local traders.

Farmers harvest rice in the Mekong Delta. Photo by VnExpress/Thuy Tien

Price Drop and Market Disruptions

The immediate aftermath of the Philippines' decision is a noticeable 4% drop in prices for popular rice varieties like Dai Thom 8 and OM18. This downturn comes at a particularly inopportune time—the peak harvest season—exacerbating challenges for rice mills and exporters in Dong Thap Province.

An anonymous rice export company highlighted the dual blow of halted contracts and escalating storage costs, further strained by financial pressures from high borrowing rates and a recent 5% value-added tax increase.

Searching for New Horizons

With the Philippines accounting for nearly half of Vietnam's rice export revenue, the search for alternative markets is urgent yet fraught with challenges. Nguyen Chi Thanh of Angimex warns of potential sharp price declines and the risk of importing countries leveraging the situation to negotiate lower prices.

Despite efforts to streamline export processes, such as the introduction of online licensing, bureaucratic hurdles and additional costs continue to erode profit margins, leaving the industry in a precarious position.

A Call to Action

The Vietnam Food Association and the Ministry of Industry and Trade are mobilizing to mitigate the crisis, advocating for dialogue with the Philippines and exploring new markets in the Middle East, Africa, and Northeast Asia. Meanwhile, the government is urged to implement supportive measures, including expediting VAT refunds and bolstering national rice reserves.

As Vietnam and the Philippines work to uphold their rice trade cooperation agreement, the industry remains hopeful for a resolution that safeguards the livelihoods of farmers and stabilizes the market.