Ranking behind India, Vietnam is the second largest Rice Exporter in the world. Global economic uncertainties such as the post-covid effects, climatic uncertainties, and the turmoil between Russia and Ukraine have pushed up the global import demand of rice. The Vietnamese General Department of Customs reported that the country’s rice exports reached 713,546 tonnes, worth more than US$341 million, in October, up 22.3 % in volume and 23.9% in value compared to September.
Low-Quality Rice In Vietnam
The Ministry of Industry and Trade in Vietnam is drafting a decree on rice trade to limit the import of low-quality grain. The volume of low-grade rice such as broken rice which the country imports from India has surged due to its low prices and a zero import tax under the ASEAN-India Free Trade Area which has potentially affected Vietnam’s own rice production and food security.
The low-quality rice grain, including the broken rice category which is imported from India, is mainly used for making noodles, cakes, animal feed, beer, and liquor.
Rice Trade In Vietnam
In the previous year, Vietnam imported a million tons of rice from various countries, including over 72% from India, according to statistics presented by the ministry. According to the ministry, Vietnam exports around 6-6.5 million tons of mainly high-grade rice annually to 156 countries and territories and had imported only around 5,000 tons of Indian rice in 2019.
Pham Thai Binh, the General Director of Trung An Hi-tech Farming Joint Stock Company, stated to a news agency “Vietnamese farmers’ income is still very precarious. Instead of importing low-quality rice, enterprises can buy rice in the domestic market, helping increase selling prices and farmers increase their income.”
Changes In India’s Rice Export Policy
The government’s move to place a blanket ban on broken rice exports has helped to boost domestic supplies and since then, there has been an adequate supply for domestic consumption, and thus the Government of India has lifted the short restrictions on organic non-basmati rice exports including broken rice exports. With this, the exports of broken rice will be carried out in a similar fashion prior to the government’s ban and therefore the rice is being imported in bulk quantities by Vietnamese importers of the commodity.
Course Of Action
According to the draft decree, if rice import volumes increase sharply, potentially affecting domestic production, its imports would be restricted. Besides, rice traders face stiffer penalties for failure to make quarterly and annual reports on exports and inventories as required.
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