Vietnam’s clever rice strategy

Vietnam, the world’s second largest rice exporter, this month made a surprising move by starting to import the grain from India.

It is importing the cheaper Indian rice to meet domestic demand while saving its own output, which is currently selling at a multi-year high, for the export market.

Vietnamese rice prices recently have been outperforming those of Thailand, which traditionally attracted a high premium. One reason is that Vietnam has concluded a free trade agreement with the EU, opening the door to the lucrative European market. The recently signed Regional Comprehensive Economic Partnership (RCEP) will also open more markets for higher-priced rice.

Vietnam is in a good position to take advantage of these opportunities, having worked hard to improve the quality and variety of its rice. In addition to producing more high-quality fragrant rice, Vietnamese researchers also have been developing varieties targeted to market trends, such as soft-textured white rice, as well as reorganising production methods, improving food safety and quality management, and increasing yields.

These efforts have led to higher yields, better brand recognition and global accolades, such as winning the best rice variety at the World Rice Trade Conference in 2019 and coming second to Thailand last year.

Thailand once held the crown as the world’s biggest rice exporter but has now slipped to third place after India and Vietnam. Thailand needs to learn from how Vietnam adapted its trade to fit market developments.

Thai rice has been losing popularity in recent years as consumers have shifted to softer rice types. The country risks dropping to fifth place over the next decade if it remains complacent and does not develop a more diverse and competitive long-term rice strategy.

There are some positive signs that policymakers are taking action on this front. Last year Commerce Minister Jurin Laksanawisit announced a five-year strategy to accelerate the development of 12 new rice varieties: four hard-textured varieties of white rice, four varieties of soft-textured white rice, two varieties of Thai Hom Mali fragrant rice, and two varieties of high-nutrition rice.

However, Thailand will need to do more to regain its crown as the world’s largest rice exporter. To judge from Vietnam’s experience, the entire supply chain needs to be looked at. Thai productivity has also lagged regional competitors for years — local rice yields are about 450 kilogrammes per rai compared with 960kg for Vietnam and two tonnes for China.

One way Thailand can find its way out of the economic crisis triggered by Covid-19 is to build on our advantages as a food-producing country by adding value and improving efficiency. Rice would be a good place to start.

By Suwatchai Songwanich – The Bangkok Post – January 25, 2021