Vietnam rice trade in a limbo as Covid crisis spreads
Published on: August 20, 2021.
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Hanoi farm ministry might cut foodgrain output of next crop
Rice trade in Vietnam is affected by worsening of the Covid pandemic with practically no buyers for the autumn harvest of the foodgrain.
Vietnam, which reported only 1,500 Covid positive cases during the first outbreak last year, has reported 2.83 lakh positive cases so far, with at least 35 per cent of the south-east Asian nation under lockdown.
20-30 per cent drop
This has resulted in no trader or exporter coming forward to buy the autumn rice harvest that began arriving from December-end. This affected Indian rice exporters, who had shipped consignments to Hanoi, with buyers demanding discounts of over $100 (approximately ₹7,500). Indian exporters have begun offering discounts to resolve the issue and avoid heavy losses in the bargain.
“At least 50 per cent of the autumn rice crop has arrived and lack of buyers has left the Vietnam trade in a limbo,” said S Chandrasekharan, a Delhi-based trade analyst.
Reports from Hanoi quoted an official of the Department of Crop production as saying that buying of the autumn rice has dropped 20-30 per cent this year. A people’s representative has gone on record to say that two food corporations have been “immobilized”.
Labour shortage
With Vietnam enforcing Covid protocols strictly, rice mills are able to deploy only 50 per cent of their workforce, while there is a shortage of “seasonal” labourers for harvest, loading, and unloading of rice.
Vietnam’s autumn rice crop is projected at 15.2 million tonnes (mt), higher than last year’s 15.06 mt, according to the US Department of Agriculture (USDA). Despite the higher autumn output, Vietnam’s 2021-22 production is estimated to be 43.4 mt compared to 43.9 mt in 2020-21.
Vietnam has three rice crops – Winter-Spring, Summer-Autumn, and Lu Mua or 10th month. The Winter-Spring crop accounts for 46 per cent of the nation’s total rice production.
Drop in prices
In view of the rice trade coming to a virtual halt, prices of the foodgrain have declined sharply. Vietnam’s offer of five per cent broken rice in the global market has slipped 20 per cent year-on-year as a result.
According to the International Grains Council, Vietnam currently quotes $387 (₹28,775) a tonne from $390 (₹29,000) on Monday. Last week, prices had hit a 52-week low of $381 (₹28,350), but recovered after Hanoi took measures to lift the rates.
In order to ensure that growers did not suffer and got buyers for their produce, it has proposed a “green lane” to be opened quickly. This will result in the waterway transport being opened up for smooth transport and trading of the foodgrain.
Vietnam’s Ministry of Internal Transport is of the view that opening up the waterway transport from the Mekong region, which accounts for over 50 per cent of the country’s rice production and 90 per cent of the Autumn crop, will help exporters maintain supply chains to ports.
‘No risk for growers’
The other important decision by Hanoi is its move to cut the Lua Mua crop production. Vietnam’s Minister for Agriculture and Rural Development, Le Minh Hoan, said in a statement earlier this week that his government would have to consider cutting the area under rice to make way for “crops that are more profitable”.
He said growers could not be asked to face risks for exports to thrive.
According to the Vietnam Food Association, the country exported over 3.49 million tonnes of rice till July this year, down 12.7 per cent compared to last year.
The minister has not spelt how much of the Lua Mua crop area would be cut though. Some traders put the downsizing at five per cent.
According to Chandrasekharan, this would present Indian exporters with an opportunity later this year when major importers such as Malaysia and the Philippines would be looking to source rice.
In the first two months of the current fiscal, India exported 2.9 mt of non-Basmati rice against 1.1 mt during the same period a year ago. According to the Agricultural and Processed Food Products Export Development Authority, rice exports during April-May are up 125 per cent in rupee value.
