Market enhancement policy backfires on Vietnam rice exporters

Source: Pano feed

A government decree hoped to better manage the rice export sector in Vietnam has had adverse effects after more than three years of implementation, industry insiders have complained.


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Many rice exporters have lamented that they are not qualified to export their abundant stocks due to what they blasted as the “strict and unreasonable regulations” of Decree No.109, which took effect on January 1, 2011.



The policy, issued in a bid to prevent incapable firms from joining the rice export market, stipulates that a rice business must have a warehouse capable of stocking at least 5,000 tons or rice, and a rice husking plant with a 10-ton per hour capacity, to be eligible to export their products.


“The decree has stripped many rice firms of their right to export their high-quality products, and eliminated many of their business opportunities,” Vo Minh Khai, director of Vien Phu JSC, a rice exporter based in the southernmost province of Ca Mau, said.


Vien Phu Co won a contract to export 14 tons of high-quality rice to Russia in August, but was unable to carry out the order as it was not able to obtain an export license.


The company’s warehouse is only capable of stocking 2,000 tons of rice, and the capacity of its husking plant is only 2.5 tons per hour, far below the standards set by Decree No.109, according to the director.


“It’s not necessary to pump money into setting up a larger warehouse, as the whole supply of organic rice in Asia is less than 5,000 tons,” Khai said.


While there were 284 rice exporters in Vietnam in 2010, the number dropped to around 100 shortly after the decree took effect.


The unqualified rice exporters thus had to switch to selling their products across the border, or authorizing their exports to eligible firms, at fees ranging from $0.5 to $5 a ton, according to Dr. Vo Hung Dung, director of the Vietnam Chamber of Commerce and Industry branch in the Mekong Delta city of Can Tho.


“Qualified exporters are not interested in small orders of a few hundred tons, while those willing to take such contracts are not eligible to get a license,” Dung said.


“The unqualified firms have no choice but to reject such high-value contracts.”


The expert also said the requirements on rice warehouses and husking plants could be wasteful.


“A number of larger warehouses and husking plants have been built to meet the decree requirements. But these facilities will not be able to operate at full capacity if the rice export market suffers a slowdown,” he warned.


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Đăng ký: VietNam News