Experts question motivation behind China’s big rice purchases
Advisor to the Vietnam Food Association (VFA) Truong Thanh Phong said Chinese merchants have been stepping up rice imports from Vietnam recently. This has led to a domestic rice price increasing rapidly in recent weeks.
The Can Tho port area in the Mekong River Delta is very bustling with over 30 ships going in and out. They ship rice to the border gates where rice is carried across to China.
Chinese businessmen are buying as much as Vietnamese farmers can provide. The high supply has made domestic 5 percent broken price soar by VND200 per kilo to VND8,300 per kilo.
The phenomenon, in the eyes of the VFA advisor, is “abnormal”.
Meanwhile, Vietnamese businessmen believe that Chinese merchants are trying to collect rice because of the tension escalating in the East Sea.
However, no one can say for sure what the true reasons are. A report of VFA showed that the rice export volume across the border to China soared to 600,000 tons, a sharp increase of 50 percent compared with the same period of last year.
“The domestic price has been escalating rapidly these days, while the upward trend will continue in the upcoming days, since ships are still awaiting rice,” Phong said.
Vietnam witnessed a sharp decline of 20 percent in the export amount and export turnover in the first four months of the year.
Therefore, the higher demand from China should be seen as good news for Vietnamese exporters.
If the Chinese high demand is maintained, Vietnam will be able to continue selling rice to China. This means that Vietnamese farmers would not have to worry about the sale of the summer-autumn crop rice they will harvest soon.
However, rice exporters have also been warned that they could face very high risks if the Chinese suddenly stop importing rice from Vietnam.
China unexpectedly became the Vietnam’s rice biggest importer one year ago. In 2013, Vietnam sold 2.2 million tons of rice through official channels to China, which accounted for 33 percent of the total amount of 6.6 million tons of rice exported to the country with 1.4 billion consumers.
As such, China now consumes some 50 percent of Vietnam’s total output.
High risk: Vietnam loses markets
Vietnamese rice experts have admitted that Vietnam has lost many important markets at the hands of direct rivals.
After the global economic crisis, a lot of rice import countries began making heavier investments to produce food themselves to ease reliance on imports. Indonesia, for example, which imported 1.2-1.4 million tons of rice a year from Vietnam in the past, has stopped buying since 2012-2013.
The Philippines, which imported 2 million tons of rice a year in the past, has announced that it would buy 500,000-1.2 million tons this year. Meanwhile, many contracts have been signed with Thailand – Vietnam’s biggest rival.
Experts have warned that the loss of loyal markets and the increased reliance on China will bring high risks to Vietnam.
