HANOI: Vietnamese rice exporters have urged the Ministry of Industry and Trade to provide support after the Philippines, Vietnam's largest rice buyer, announced a two-month suspension of rice imports starting Sept 1 to protect local farmers.
The pause could disrupt signed contracts, increase inventories and create pressure on exporters' liquidity as well as directly impact farmers’ incomes, as the Philippines accounts for 40-45% of Vietnam’s annual rice export value, said President of the Vietnam Food Association Do Ha Nam.
Many contracts signed in August may have to be delayed for at least two months, he added. In addition, a 5% value-added tax rate on exports applied since July 1 has further weighed on exporters' working capital.
The association proposed a low-interest rate package and debt extensions to be implemented together with measures to help exporters store rice until the suspension is lifted to avoid distress sales.
It also proposed that the ministry work with Philippine authorities for guidance on which rice varieties are temporarily halted with regard to the bilateral rice trade memorandum of understanding signed on Jan 30, 2024, and effective until the end of 2028, to maintain partial exports during the import freeze.
The suspension was undertaken to protect Philippine farmers following a year-on-year drop of 16% in local rice prices in July, as low import tariffs pushed up imports.
After the suspension was announced, Vietnam’s rice export prices rose as Philippine buyers increased purchasing in August. The cost of Vietnam’s 5% broken rice reached US$391 per tonne, the highest price in Asia, $11 higher than India and higher than Thailand and Pakistan. Fragrant rice climbed $10-15 to $505-510 per tonne.
Traders said that the Philippines’ suspension is not expected to have a significant impact on Vietnam’s rice market, as the summer-autumn harvest has mostly been sold already, and the next crop is mainly special rice for domestic consumption.
In the long term, the Philippines remains dependent on imports to ensure food security.
Vietnam’s rice exports in the first half of the year totalled 4.7 million tonnes, worth $2.44 billion, up 3.8% in volume but down 15.4% in value.
The Philippines is the largest buyer of Vietnamese rice, accounting for 44.6% of Vietnam’s export volume and 42.6% of export value over the same six-month period. - Vietnam News/ANN
