In Vietnam’s Mekong Delta, often dubbed the nation’s “rice bowl,” traders are becoming increasingly cautious in their purchasing decisions. This hesitation stems mainly from uncertainties regarding rice exports to the Philippines, a key market. “I am only buying cautiously to sell domestically, as export shipments are on hold, awaiting new signals from buyers,” said Huyen, a seasoned trader from An Giang Province.
Meanwhile, in Dong Thap Province, rice mills are working diligently to fulfill existing contracts with the Philippines, focusing on old agreements as new orders have noticeably dwindled. Recent market shifts have seen prices for popular varieties like Dai Thom 8 and OM18 rice decrease by 4%, landing at VND11,000 (US$0.42) per kilogram.
An anonymous rice export company in Dong Thap voiced concerns over the impact of the Philippines’ two-month import suspension, a significant disruption for a market that represents almost 45% of Vietnam’s rice export revenue. “The business plans have been thrown into disarray,” the company representative lamented.
The timing couldn’t be worse, coinciding with peak harvest season. The slowdown in contracts has caused inventory levels to swell while storage expenses have surged. Nguyen Chi Thanh, the rice division director of agriculture exporter Angimex, remarked that prices for the summer-autumn and autumn-winter seasons are likely to decline drastically, making the struggle to find new markets even more daunting. “Other importing countries might seize this opportunity to negotiate lower prices,” he warned.
Additionally, exporters have faced long-standing challenges in obtaining phytosanitary certificates required by the Philippines, a lengthy process that has complicated the establishment of long-term contracts since 2019. While online licensing began on July 7 of this year, the extensive paperwork and rising costs continue to put pressure on profit margins.
The ripple effects of the Philippines’ import suspension are widespread. According to Do Ha Nam, chairman of the Vietnam Food Association, halted contracts have led to mounting inventories and intensified downward pressure on domestic rice prices. The Ministry of Industry and Trade highlighted that these developments have depressed export prices and narrowed profit margins, severely impacting farmers’ incomes. It urged businesses to maintain reserves and avoid panic selling while fostering collaboration among agencies to explore new markets, particularly in the Middle East, Africa, and Northeast Asia.
The Philippines justified its decision by aiming to protect its domestic market amid plummeting local rice prices. In response, the Vietnam Food Association has called on the trade ministry to engage in dialogue with the Philippines to clarify which rice types are affected and to resolve procedural hurdles to sustain trade, minimize losses, and safeguard farmers’ interests.
Both nations are implementing a memorandum on rice trade cooperation that was signed on January 30 last year and remains valid until the end of 2028. The Vietnamese rice sector now seeks assistance from various ministries to ensure seamless production and exports amidst market volatility. The trade ministry has appealed to Prime Minister Pham Minh Chinh to direct financial measures, including expediting value-added tax refunds for exporters, and to plan national rice reserve purchases to mitigate unfavorable market fluctuations.
Remarkably, in the first seven months of this year, rice exports to the Philippines saw a decline of 13.5% year-on-year, while other markets flourished, including Ghana (53.5%), Ivory Coast (96.6%), and an astonishing increase in exports to Bangladesh by 188 times.
How has the rice export market been affected by the Philippines’ import suspension?
The suspension has disrupted contracts, increased inventories, and pressured domestic prices, with exports to the Philippines dropping by 13.5% in the first half of the year.
What are the primary concerns for Vietnamese rice exporters?
Concerns center around rising storage costs, reduced profit margins due to decreased prices, and challenges in obtaining necessary export certifications.
What steps is the Vietnamese government taking to address these market challenges?
The government is urging companies to maintain reserves while exploring new markets and has called for expedited financial measures to support rice exporters facing losses.
