Rice exporters call for action after Philippines halts imports

Rice exporters call for action after Philippines halts imports

The pause could disrupt signed contracts, increase inventories and create pressure on exporters' liquidity as well as directly impact farmers’ incomes, as the Philippines accounts for 40-45 per cent of Việt Nam’s annual rice export value, said President of the Việt Nam Food Association Đỗ Hà Nam.

Rice harvested in a field in An Giang Province. Việt Nam’s rice exporters have urged the Ministry of Industry and Trade to provide support following a pause on imports from the Philippines. — VNA/VNS Photo Công Mạo

Vietnamese rice exporters have urged the Ministry of Industry and Trade to provide support after the Philippines, Việt Nam's largest rice buyer, announced a two-month suspension of rice imports starting September 1 to protect local farmers.

The pause could disrupt signed contracts, increase inventories and create pressure on exporters' liquidity as well as directly impact farmers’ incomes, as the Philippines accounts for 40-45 per cent of Việt Nam’s annual rice export value, said President of the Việt Nam Food Association Đỗ Hà Nam.

Many contracts signed in August may have to be delayed for at least two months, he added. In addition, a 5 per cent value added tax rate on exports applied since July 1 has further weighed on exporters' working capital.

The association proposed a low-interest rate package and debt extensions to be implemented together with measures to help exporters store rice until the suspension is lifted to avoid distress sales.

It also proposed that the ministry work with Philippine authorities for guidance on which rice varieties are temporarily halted with regard to the bilateral rice trade memorandum of understanding signed on January 30, 2024, and effective until the end of 2028, to maintain partial exports during the import freeze.

The suspension was undertaken to protect Philippine farmers following a year-on-year drop of 16 per cent in local rice prices in July, as low import tariffs pushed up imports.

After the suspension was announced, Việt Nam’s rice export prices rose as Philippine buyers increased purchasing in August. The cost of Việt Nam’s 5 per cent broken rice reached $391 per tonne, the highest price in Asia, $11 higher than India and higher than Thailand and Pakistan. Fragrant rice climbed $10-15 to $505-510 per tonne. 

Traders said that the Philippines’ suspension is not expected to have a significant impact on Việt Nam’s rice market, as the summer-autumn harvest has mostly been sold already and the next crop is mainly special rice for domestic consumption.

In the long term, the Philippines remains dependent on imports to ensure food security.

Việt Nam’s rice exports in the first half of the year totalled 4.7 million tonnes, worth $2.44 billion, up 3.8 per cent in volume but down 15.4 per cent in value.

The Philippines is the largest buyer of Vietnamese rice, accounting for 44.6 per cent of Việt Nam’s export volume and 42.6 per cent of export value over the same six-month period.

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