RI is Vietnam's top rice market

RI is Vietnam's top rice market

Bloomberg, Hanoi

Indonesia took over from Iraq as the top market for Vietnamese rice last year, after war in the Middle East cut purchases from what was Vietnam's biggest market in 2002, according to the U.S. Embassy in Hanoi.

Vietnam, the world's fourth-biggest rice exporter based on U.S. figures, shipped at least 837,050 metric tons to Indonesia in 2003, according to a report by the embassy's agricultural attache's office. The figure is up by one-eighth from Vietnam's exports to Indonesia in 2002 of at least 740,900 tons, based on U.S. figures.

Iraqi rice imports from Vietnam tumbled more than three-fifths last year to at least 336,520 tons, as overall Iraqi rice purchases slid by two-fifths, according to U.S. figures. Vietnam was able to make up for some of the loss by boosting its share of the Indonesian market at the expense of Thailand, the world's biggest rice exporter.

"Vietnamese rice has a price advantage over Thai rice, and that was an important factor in Vietnam's expansion in the Indonesian market," said Henry Schmick, the agricultural attache at the U.S. Embassy in Hanoi.

The average export price of 25 percent broken-grain Vietnamese rice during the first 10 months of last year was US$164 per ton, compared with $175 per ton for the same quality of Thai rice, according to the Food and Agriculture Organization of the United Nations.

The trend has held into early this year, according to the U.S. Department of Agriculture.

"Since last month, Thai export price quotes increased, largely due to the strengthening of the Thai baht," the U.S. Department of Agriculture said in its January "Rice: World Markets and Trade". "In Vietnam, with virtually no exportable supplies, export price quotes have generally moved sideways over the past few weeks."

Vietnam's ability to tap into the Indonesian market -- the world's biggest -- may be hampered this year by a ban on rice imports that Indonesia's government put in place this month, the agricultural attache's report said. The ban may last until May, according to the report.

"With record production and ample domestic supplies, Indonesian rice imports are estimated to drop 1 million tons to 2 million in calendar year 2004," the U.S. Department of Agriculture said.

The Philippines, the second-biggest market for Vietnamese rice in 2003 with imports of at least 499,740 tons, will also probably cut its imports this year, the U.S. Department of Agriculture said. The department estimated that overall Filipino rice imports will decline 23 percent this year, while the Philippines' National Food Authority has put the decline at a maximum of 10 percent.

"Based on the temporary ban in Indonesia and market changes in the Philippines, it's going to be very challenging this year for Vietnam to find markets," said Schmick, the U.S. agricultural attache in Hanoi. "Vietnam will have to find newly emerging markets in places like Africa."

Vietnam's rice exports to Africa more than doubled last year to at least 801,050 tons, the U.S. report said. Markets for Vietnamese rice in Africa included Senegal, Ghana, Tanzania, Angola and Rwanda.

The U.S. Department of Agriculture's final export figures for 2003 show that India and the U.S., the world's second- and third- biggest exporters in 2002, probably held off challenges from Vietnam to retain their positions on the global rice shipment tables.

Vietnamese rice exports rose 17 percent last year to 3.8 million tons, according to the U.S. Department of Agriculture. The U.S. agricultural attache's office, which uses different figures, put Vietnam's exports last year at 3.87 million tons.

Meanwhile, Indian exports fell 34 percent in 2003 to 4.4 million tons, while American shipments rose 17 percent to 3.85 million tons, the U.S. Department of Agriculture said.

The drop in demand from Indonesia and the Philippines will probably cut Vietnamese exports to 3.5 million tons this year, the Hanoi agricultural attache's report said. Even with the decline, Vietnam would move past both India and the U.S. in 2004, based on U.S. Agriculture Department estimates.