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UPDATE ON RICE TRADE: Opportunity for Vietnam

28/02/2024 09:05

This presents an opportunity for rice export businesses in the early months of the year to tap into the Indonesian market.

(Vietnam's rice exports gain additional opportunities with Indonesia's increased import)

On February 26, 2024, the Vietnamese Embassy in Indonesia reported that Indonesian Minister of Trade, Zulkifli Hasan, announced that the Indonesian government has decided to increase the rice import quota for 2024 by an additional 1.6 million tons due to a shortage in domestic rice production.

This situation stems from delays in the main cultivation season's planting due to insufficient irrigation caused by the El Nino phenomenon in 2023. The expected harvest for this crop is now scheduled for May and June 2024 instead of the usual March and April.

The Vietnamese Embassy in Indonesia stated that with the additional 1.6 million tons of rice imports, the total rice quota the Indonesian government decided to import in 2024 would be 3.6 million tons.

As of now, the Indonesian Ministry of Trade has issued import licenses for 2 million tons. The import license for the additional 1.6 million tons will be issued soon after completing relevant administrative procedures.

According to the Embassy, in recent days, rice prices in the Indonesian market have sharply increased due to a severe shortage of supply. By February 2024, Indonesia has experienced 8 consecutive months of rice shortages, leading to scarcity in supermarkets.

The Indonesian Minister of Trade has urged citizens to switch to purchasing government-stabilized rice to avoid excessively high prices in the free market. Retail rice prices in the market have reached up to 80,000 rupiahs (equivalent to 5.17 USD) per 5 kg, compared to the government-set ceiling price of 69,500 rupiahs (4.45 USD) per 5 kg.

According to Indonesian statistical authorities, in January 2024, the country imported 441.93 thousand tons of rice, an 82.19% increase compared to January 2023, with a value of 279.2 million USD. Among them, rice imports from Thailand were 237.64 thousand tons, from Pakistan 129.78 thousand tons, from Myanmar 41.61 thousand tons, and from Vietnam 32.34 thousand tons, with Cambodia contributing 2.5 thousand tons.

In 2023, Indonesia emerged as Vietnam's second-largest rice importer, with a volume exceeding 1.1 million tons and a trade value of over 640 million USD, marking an impressive 878% increase in volume and a 992% increase in value compared to 2022.

The Vietnamese Embassy in Indonesia emphasized that with the severe rice shortage, amid the main harvest season yet to begin and the Ramadan month for Muslims starting mid-March 2024, causing an increased demand for food, the Indonesian government is likely to continue early procurement of additional rice, beyond the 500,000-ton procurement on January 17, 2024, where Vietnamese rice exporters won contracts for over 300,000 tons.

Therefore, the Vietnamese Embassy in Indonesia advised Vietnamese rice exporters to closely monitor market information and seize opportunities to export rice to the Indonesian market in the early months of the year.

According to recent statistics from the General Department of Customs, in the first half of February (1-15/2), Vietnam exported 150,944 tons of rice, generating revenue of 104.34 million USD. This result brings the total rice export volume from the beginning of the year until February 15 to 663,209 tons, with a total revenue of 466.6 million USD.

Compared to the same period in 2023, rice exports increased by 14.4% (equivalent to over 83,000 tons), while revenue increased by a substantial 53% (equivalent to nearly 161 million USD).

The high revenue growth compared to volume resulted in the average export value of rice in early 2024 surpassing that of the same period last year. Specifically, the average value reached over 703 USD/ton, representing a 33.65% increase (compared to around 526 USD/ton in the same period of 2023).

In summary, the beginning of 2024 has seen strong growth in rice exports in terms of volume, revenue, and average value.

In 2023, there were record-breaking figures in rice exports. Specifically, the quantity of exported rice reached 8.1 million tons, marking a 14.4% increase, and the revenue amounted to 4.68 billion USD, showing a 35.3% rise compared to the previous year.

Within 2023, the ASEAN region emerged as the largest rice export market for Vietnam, accounting for a substantial 61% of the country's total rice exports with 4.9 million tons, reflecting a 24% increase compared to the previous year.



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