Rice exports are increasing significantly, and Vietnam must fully use FTAs

DNHN - Vietnamese rice has steadily grown into new and high-end markets such as the United States, Europe, and South Korea. However, Vietnam's rice has failed to grab a major market share in the UK market.

According to the Vietnam Food Association (VFA), rice export prices in Thailand and Pakistan have been falling for several sessions. This week, rice prices in these nations fell below the 400 USD/ton criteria for all three varieties of 5 per cent, 25%, and 100% broken rice. Meanwhile, Vietnam's rice price has remained consistent and is now the highest among the world's biggest rice exporting nations.

Vietnamese rice, in particular, has steadily grown into new and high-end markets such as the United States, Europe, and Korea in recent years. For the first time, 100 tons of ST25 Vietnamese rice were officially marketed and sold in Japanese supermarkets and retailers in early July, marking a historic milestone when Vietnamese rice first appeared on the table of Japanese family dinners.

Vietnamese rice may continue to dominate numerous markets from ASEAN to the EU due to its distinct advantages in quality and pricing, as well as incentives from Free Trade Agreements (FTAs), which should generate a competitive picture. However, for the UK market alone, Vietnam's rice has not yet secured a large market share, even though the two countries have made obligations to reduce tariffs under the Vietnam-UK FTA (UKVFTA).

According to the Ministry of Industry and Trade, the majority of Vietnamese rice sold in the UK has the brand of the distributor rather than the brand of the producer, the brand of the rice producing area, or the brand of the exporter, and hence is unknown to many local customers. The reason is that Vietnamese exporters have not created their brands, or local distributors believe that their brands are more successful in marketing than the brands of Vietnamese exporters.

Mr Nguyen Canh Cuong, Counselor of the Vietnamese Trade Office in the United Kingdom, said that Vietnam is now placed 15th among rice exporting nations to the United Kingdom, with a market share of just 0.42 per cent. The space for Vietnamese rice in the UK may also be expanded to the 100,000-strong Vietnamese population, due to tariff quotas under the UKVFTA.

Before the implementation of the UKVFTA Agreement, many Vietnamese products entering the UK market were subject to very high levies. As a result, the tax reduction under the UKVFTA agreement represents an excellent chance for many of Vietnam's strong goods, including agricultural and aquatic products, fruits, coffee, rice, textiles, furniture, and so on, to strengthen their competitiveness in this market.

In terms of goods trade, the UK agreed to eliminate 85.6 per cent of tariff lines for Vietnamese products as soon as the agreement goes into effect (January 1, 2021), to 99.2 per cent by January 1, 2027, and 0.8 per cent of the remaining tariff lines would benefit from a tariff quota (with an import tax within the quota of 0 per cent).

Notably, under this arrangement, aromatic rice imported from Vietnam would be tax-free rather than subject to 17.4 per cent as before. As a result, Vietnamese rice is more competitive in the UK than rice from other nations.

PV