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Vietnam increases its quota for Kingdom’s rice to 300K tonnes

Content image - Phnom Penh Post
A farmer works in a rice paddy field outside Phnom Penh on December 5, 2016. Post Staff

Vietnam increases its quota for Kingdom’s rice to 300K tonnes

After the EU decided to impose tariffs on Cambodia’s rice exports from January, Vietnam agreed this week to expand its import quota for the Kingdom’s rice to 300,000 tonnes.

Vietnam’s actions come as the Chinese government late last night agreed to increase its import quota for the Kingdom’s rice to 400,000 tonnes this year from the previous year’s 300,000 tonnes.

The agreement was announced after Minister of Commerce Pan Sorasak on Wednesday met with Do Quoc Hung, the representative of the Asia-Africa Market Department at the Vietnamese Ministry of Industry and Trade.

According to the Ministry of Commerce’s Facebook page, Vietnam agreed to extend its quota for Cambodian rice to 300,000 tonnes per annum and tobacco leaves to 3,000 tonnes, starting from this year and next year.

Ministry spokesperson Seang Thay on Thursday said the quota for rice exports to Vietnam is a carry-on from a previous agreement as Vietnam previously provided a quota for Cambodian rice exports for many years.

Price competition

However, he said the Kingdom never exported rice as much as the market allowed due to price competition. Cambodian rice exporters also enjoyed exporting to the EU duty-free.

“Vietnam provided us with a quota, but successfully exporting there still depends on price agreement. They generally offer us a low price because it is also a rice-producing country,” he said.

However, Thay said Cambodian exporters will pay more attention to exports to Vietnam, as they want to test the new market after the EU imposed rice tariffs on Cambodia at €175 ($200) per tonne of rice this year.

“We used to buy T-shirts because they were comfortable, but now they are wet. So, why not try wearing denim shirts?” he said, using the wet shirt as an analogue to the EU market.

Government data said the Kingdom exported a total of 626,225 tonnes of rice last year, of which only 26,712 tonnes were exported to Vietnam.

Amru Rice (Cambodia) Co Ltd chairman and CEO Song Saran on Thursday said Vietnam is generally buying raw products such as paddy, rather than milled, rice.

However, he said the quota would encourage more Vietnamese to import the Kingdom’s rice, despite needing time to reach the 300,000-tonne quota.

“We expected more demand to come from Vietnam in the incoming years. It will take time to convince Vietnamese consumers and traders to import rice."

“It is also possible that in the long term, more Vietnamese consumers will be interested in high-quality rice since the Vietnam middle classes have grown a lot in recent years.”

Having higher quotas from China and Vietnam is helpful to the marketing of Cambodian rice. But, Chinese and Vietnamese buyers in the past did not buy as much as they agreed to. The reason, according to industry insiders, is because buyers offer lower prices.

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