OVERVIEW OF RICE EXPORT AND THE IMPORTANCE OF
Concepts and characteristics of rice exports
Export plays a crucial role in foreign trade, highlighting the trade relationships between countries globally It encompasses a wide range of sectors, facilitating the exchange of consumer goods, manufacturing materials, and high-tech products, as well as intangible services The export process involves selling and supplying goods and services to other nations, utilizing currency for transactions and ensuring the movement of goods across customs borders This activity not only generates profits for the involved parties but also significantly contributes to a country's development by generating foreign currency revenue, enhancing socio-economic growth, and improving production capabilities.
Export activities refer to the transfer of goods and services across customs borders Under the Vietnam Trade Law 2005, exports are defined as the movement of goods out of Vietnam or into designated special areas within Vietnam that are recognized as separate customs zones, as outlined in Article 28, Section 1, Chapter 2 of the law.
Export activities occur on a global scale, varying in duration from short-term engagements to ongoing annual operations The export market is extensive and diverse, encompassing numerous countries worldwide As global economic integration advances, international trade is increasingly facilitated by organizations and economic blocs such as ASEAN, WTO, and the EU, which foster cooperation and establish beneficial agreements for all parties involved in commercial activities.
Export activities significantly enhance economic growth for both enterprises and the State They facilitate the expansion of production and operational scales, enabling the country to accelerate industrialization and modernization through foreign currency earnings and foreign investment in domestic production.
, promoting international cooperation with countries and the process of integration of the world economy.
1.1.3 The role of exports in general
Rice export serves as a crucial advantage for developing countries, particularly when foreign currency sources are limited for investing in large-scale factories and industrial parks Unlike industrial exports such as textiles, leather goods, or electronics, rice production incurs significantly lower foreign currency costs, resulting in a higher net foreign currency income For instance, in Vietnam, the foreign currency costs associated with rice production—such as fertilizers, pesticides, and petroleum—constitute only 15 to 20% of the total export value, highlighting the economic benefits of rice exports for these nations.
The rice-producing agriculture industry in developing countries, particularly Vietnam, is a significant labor-intensive sector, crucial for addressing the high population growth and youthful demographics Each year, millions of individuals enter the workforce, necessitating job creation For instance, cultivating and maintaining one hectare of rice in the Red River Delta requires approximately 20 workers annually By enhancing rice exports, the domestic rice production and processing industry can flourish, thereby providing employment opportunities for a substantial number of ordinary workers in Vietnam and other developing nations.
Natural conditions play a crucial role in enhancing competitive advantages in international trade, significantly boosting the economic development of agricultural nations Vietnam, with its long-standing tradition of wet rice cultivation, exemplifies a successful rice-paddy economy The country's favorable climate and fertile soil, combined with the expertise of experienced farmers, help lower input costs and enhance the competitiveness of its rice exports.
Thus, rice exports hold an important position and role in the economies of developing countries in general, Vietnam in particular.
Firstly, rice export activities will promote the development of domestic rice production, immediately solving employment problems for workers in developing countries and Vietnam.
Rice export activities play a crucial role in enhancing the trade balance and generating foreign currency This influx of foreign currency supports the import of essential machinery, equipment, and raw materials needed for domestic production Consequently, rice exports have directly fueled the growth and expansion of domestic production capabilities.
Rice exports represent a key sector for Vietnam, leveraging its comparative advantages in rice production This strategic focus enhances the competitiveness of Vietnamese goods and supports the country's economic integration into global markets.
Factors impacting rice production and export trends
1.2.1 Weather changes and development policies
Governments of developing economies as well as international development agencies have a very clear priority for increasing grain production
Rice production is central to Vietnam's agricultural sector, recognized as a traditional industry that dominates in both area and output The Vietnamese Party and Government have prioritized rice cultivation since the start of the Transitional Process, viewing it as crucial for national food security As green revolutionary technologies are successfully implemented, there is a growing consensus on enhancing rice production to meet the country's food needs.
The global climate has experienced significant volatility in recent decades, leading to severe consequences for rice production, particularly in countries like China, India, and Vietnam The warming of the Earth and the melting of polar ice have resulted in the loss of cultivated land, especially mangroves, which are crucial for rice farming Additionally, increasing natural disasters, such as floods and droughts, have further threatened rice yields In Vietnam, northern coastal provinces like Thai Binh and Thanh Hoa are facing land invasions, while storms impacting Central and South-Central regions are intensifying, adversely affecting rice production and exports The decline in food supply, notably in 2008, caused rice prices to soar, prompting major rice-exporting nations, including Vietnam, to implement export restrictions to safeguard national food security.
1.2.2 Principles and contents of rice export activities in the current economic situation a Principles of rice export activities
Sustainable development in rice exports necessitates a balance between ensuring national food security, enhancing farmers' and rural incomes, and fostering economic structural transformation.
Food security involves ensuring sufficient access to food and maintaining the quality and quantity of nutrition It is fundamentally linked to livelihood security, especially in the face of challenges such as natural disasters, epidemics, and climate change As the global population grows, the demand for food increases, compounded by rising input and fuel costs Therefore, countries must prioritize national food security in their rice export strategies A comprehensive national food security strategy should include a master plan for food production and rice cultivation, alongside the establishment of a food security information system to monitor production and harvesting effectively, enabling proactive rice storage and exportation.
Increasing rice production and exports is crucial for alleviating poverty and hunger The benefits of rice exports should directly impact rice growers and agricultural workers, leading to improved livelihoods Enhanced rice yields will result in higher profits for farmers and create more job opportunities, particularly for those in agriculture-related sectors.
Increased productivity in rice production and exports leads to a food surplus, allowing labor and resources to transition to the out-of-agriculture sector This growth results in lower rice prices, benefiting consumers, particularly the poor, including urban dwellers and landless farmers As rice becomes more affordable, employment opportunities in industrial and service sectors rise, facilitating a necessary shift in labor from agriculture for sustainable development Adhering to market principles is essential for this transformation.
To enhance the efficiency of rice exports within a market economy, it is crucial to eliminate direct impact ordinances and regulations that distort market demand and pricing.
The State plays a crucial role in the market, necessitating a clear definition of its relationship with market dynamics Export demand contributes to price stabilization, which is vital for ensuring food security and supporting development However, it is essential to explore the tools used to achieve this balance and understand how they may jeopardize the sustainable development of exporting enterprises.
Respecting market laws, particularly supply and demand and price formation, is essential for economic stability While the State may occasionally need to intervene through administrative orders, it should primarily rely on economic tools like import and export tax exemptions Additionally, State policies must be grounded in scientific analysis to avoid abrupt changes that could disrupt business operations and production plans, thereby ensuring a smooth process of international economic integration.
International economic integration is an unavoidable trend, necessitating that rice export activities adhere to global regulations concerning quality, safety, hygiene, and market access.
Countries engaged in a "common playground" must modify their domestic economic policies, particularly regarding rice exports Key adjustments include implementing investment incentive policies that adhere to non-discrimination and transparency principles, ensuring that tax exemptions and reductions for rice exports are equitable across all economic sectors Additionally, it is essential to eliminate direct subsidies, such as price and financial assistance, while minimizing indirect barriers to rice exports Furthermore, to meet global standards and specific market requirements, a robust quality assurance system for exported rice must be established.
RICE EXPORT SITUATION OF TAN LONG COMPANY
General introduction
2.1.1 Information about Tan Long Group
Tan Long Joint Stock Company, also referred to as Tan Long Group, was officially registered on December 8, 2006 Originally established as Tan Long Van Co., Ltd., the company holds business registration certificate No 01022000121, which was first issued by the Business Registration Office of the Hanoi Department of Planning and Investment on March 10, 2000.
Address: 48 Le Van Luong Road, Thanh Xuan District, Hanoi.
Transaction Office: No 1N7A Nguyen Thi Tu, Trung Hoa Nhan Chinh Ward, Thanh Xuan District, Hanoi.
Email: hn@tanlong.net.vn
2.1.2 The process of formation and development of Tan Long Joint Stock Company
The predecessor of Tan Long Industrial Chemical Joint Stock Company is Tan Long Van Co., Ltd., established and granted business registration certificate
Tan Long Van Co., Ltd., established under Business Registration No 01022000121 by the Hanoi Department of Planning and Investment on March 10, 2000, initially focused on importing and exporting fertilizers and industrial chemicals, including yellow phosphorus, urea, and DCP However, by 2004, the company shifted its business strategy to emphasize key agricultural products such as rice, corn, pepper, bean pulp, and cashew nuts, adapting to market demands over the past decade.
Based on the fluctuations of the external business environment, the change of management mechanism of the Company The development process of the company can be divided into 3 stages. ỉ Phase 1 (10.3.2000 – 10.1.2004)
In its early years, the company focused on trading essential products, including fertilizers and industrial chemicals like yellow phosphorus, urea, and DCP, starting with an initial capital of VND 20 billion and a workforce of 30 employees with limited qualifications and inadequate facilities Despite facing numerous challenges, the company has successfully navigated these obstacles and achieved significant growth Over the past four years, it has increased its capital to over VND 45 billion and expanded its workforce, demonstrating resilience and commitment to progress.
During the ongoing phase of construction and development, the company has strategically invested in agricultural product exports, aligning with the robust growth of the country's agriculture sector This initiative not only supports domestic consumption and national food security but also creates job opportunities for workers As the government implements new economic models, such as farm economies and innovative cooperatives, the significance of agricultural exports has intensified, contributing to the promotion of these models The company's leadership has demonstrated market awareness and adaptability through this transition Additionally, the workforce has expanded significantly, increasing from 70 to 130 employees, while the company's export portfolio has become increasingly diverse.
Over the past decade, the company's import and export business has experienced significant and steady growth, particularly in the agricultural sector By facilitating the trade of agricultural products both locally and internationally, the company has generated thousands of jobs and provided essential resources for production This contribution has played a vital role in the socio-economic development of the country, enhancing the company's reputation and fostering trust and collaboration with domestic and foreign partners, as well as various sectors within provinces and cities.
Diagram 1.1: Structure of Tan Long Industrial Chemical Joint Stock Company
BOARD OF Control Board of Directors
Deputy Director 2 Mrs Lê Nguyễn Anh Thư
GENERALADMINISTRATIVEDEPARTMENT
Shareholders' Meeting: Decide on major issues related to the organization, management, and operation of the company.
The Board of Directors is responsible for formulating the company's strategy and annual business development plan, overseeing organizational management and operations, and reporting the company's status to the Shareholders' Meeting.
Board of Control : Check the entire management and administration of the
The company conducts its business activities in a manner that is both reasonable and legal Additionally, it is essential to implement measures that enhance and refine the organizational structure for management and administration, as well as to improve the reporting of control results to both the shareholders' meeting and the Board of Directors.
The General Director serves as the chief executive of the company, overseeing the operations of all departments and branches This role entails legal accountability for the company's activities and representation of its interests and obligations to the State.
Deputy General Directors play a crucial role in advising the director and managing specific areas as authorized They are accountable for their actions and decisions to the General Director, ensuring effective leadership and operational efficiency within the organization.
The Finance and Accounting Department is primarily responsible for overseeing the company's accounting and evaluating all business activities Additionally, the department prepares balance sheets and financial statements for presentation to the board of directors, while also formulating financial settlements with superiors and relevant agencies as required.
The Sales Department is responsible for developing business plans and generating monthly, quarterly, and annual reports for the Board of Directors Additionally, it conducts market research, negotiates customer transactions, and creates effective promotional strategies for the company.
The Import and Export Department is responsible for issuing essential import and export documents and invoices while maintaining strict oversight of goods and warehouse systems Additionally, it manages the execution of import and export business contracts and is authorized to sign company contracts as needed.
The Administrative Department plays a crucial role in managing the company's operations by welcoming guests and overseeing the entire property This department is also tasked with the regular monitoring and maintenance of both large and small repairs, ensuring that any administrative issues are promptly addressed and resolved.
The Human Resources Department plays a crucial role in optimizing departmental and individual performance within the company It focuses on effective recruitment and the development of staff to align with the company's strategic goals and requirements.
The Planning Department is responsible for researching and developing the company's long-term, medium-term, and short-term business strategies, as well as operational and quarterly plans It involves collecting, analyzing, and synthesizing market information to inform decision-making and to create effective marketing and advertising plans for the company.
2.1.3 Characteristics of production and business activities of the company ỉ Business field
Rice export situation of Tan Long Group
2.2.1 Operation status of Tan Long Group
Most of the company's development rate targets have increased over the years, but this rate increases unevenly Those indicators are shown under the following table of figures.
Table 1: Data Table On The Company's Growth Rate In 2018-2020
From 2018 to 2020, Tan Group experienced robust growth, with import and export turnover soaring to VND 464 billion and revenue exceeding VND 1,400 billion in 2019, representing a 150% increase from 2018 This impressive revenue generated a profit of VND 33 billion However, in 2020, the global Covid-19 pandemic severely impacted the company, resulting in a profit decline to only VND 3 billion compared to 2019, marking a 0.86% decrease in growth and a staggering 91% drop in profit.
Despite starting with limited capital, assets, and labor, the company has successfully navigated challenging times, particularly during the Covid pandemic, thanks to a unified approach and effective policies This resilience is reflected in the company's consistent annual revenue growth and positive growth rate.
Tan Long has established itself as a leading rice exporter, producing 350,000 tons annually The company boasts a network of food processing factories located in key raw material regions, ensuring efficient transportation and storage capabilities with a warehouse capacity exceeding 70,000 tons Equipped with modern rice milling and polishing machinery, Tan Long adheres to ISO 9001:2000 standards, guaranteeing high-quality products.
Each year, Tan Long exports between 300,000 and 350,000 tons of rice to various markets, including Singapore, Malaysia, the Philippines, Indonesia, Africa, Iran, Iraq, Cuba, Hong Kong, and Cambodia The company offers a diverse range of products, such as 5% rice, 10% plate, 15% plate, 25% plate, Jasmine rice, glutinous rice, Lady Nhen rice, seasonal rice, and Japanese rice Currently, Tan Long's business encompasses multiple sectors within the rice industry.
We specialize in the purchase, milling, and processing of rice for both export and domestic supply Our product range includes various types of rice, such as 5% broken rice, 10% broken rice, 15% broken rice, 25% broken rice, glutinous rice, fragrant rice, and Japanese rice.
Import of fertilizers, agricultural supplies, soybean pulp and raw materials for processing animal feed.
The company also joint venture with Viet Argo Company in Malaysia established Tan Long – Viet Argo Co., Ltd producing, processing, and trading rice.
As a capital contributor with Siba Food Co., Ltd retail business through supermarket system.
Tan Long is the leading rice exporter in Vietnam and ranks among the top 10 in Asia for rice trade The company's diverse business sectors and extensive customer base contribute to its success Implementing an effective customer care policy will enhance Tan Long's reputation in the market.
2.2.2 Development orientation of the company
Investing in diverse areas, including the expansion of new product lines, is essential for growth Increasing the share of services alongside rice in the company's revenue structure is particularly important, especially within the high-tech industry.
To achieve our goal of becoming the leading food company in Vietnam by 2030, we are committed to maintaining high food quality and expanding our business Our strategy includes increasing exports to Africa and Asia, while also boosting production in the European market We aim to export premium rice to targeted retail markets and gradually establish a strong brand presence in the rice industry.
Continue to maintain and improve the ISO 9001 – 2000 system Improve qualifications, skills and incomes for employees and employees Maintaining the title of one of Vietnam's 500 largest enterprises
Table 2: Business results of Tan Long Group (2018 – 2020)
Source: Accounting Department of Tan Long Group
The company's primary business revolves around the food sector, focusing on both exported and domestic rice In 2019, revenue surged by 58.98% compared to 2018, largely driven by a spike in rice prices in late April and early May However, by July, demand and global market prices declined significantly while supply remained plentiful Capitalizing on the earlier price increase, the company boosted rice exports in the initial months of the year, resulting in the highest revenue recorded in three years.
In 2018, the rice market experienced significant fluctuations, leading to a continuous rise in rice prices As a result, it became crucial for companies to carefully manage contracts with customers Incorrect pricing in contracts could lead to substantial losses if customers returned goods due to high prices Therefore, companies must prioritize accurate pricing strategies to mitigate potential damages.
To drive quick sales and boost transaction frequency, implementing commercial and sales discounts is essential These strategies significantly contributed to the increase in company deductions in 2020.
The year 2020 posed significant challenges for Tan Long, as the company navigated market fluctuations, trade barriers, and the impact of the COVID-19 pandemic, which sharply decreased purchasing power Additionally, constant exchange rate fluctuations disrupted the business plans for importing goods such as cashew nuts and fertilizers, making the focus on deductions increasingly essential for maintaining operational stability.
Table 3 Business results 6 months in 2018 to 2020
Source: Accounting Department of Tan Long Group Compared to 2018, 2019 and 2020, 2018 is still the top year in terms of revenue Typically, revenue in
2018 increased 227.11 billion equivalent to 17.47% compared to 2019 This is also due to price fluctuations in the first months of 2018 And revenue in the 6 months of 2020 decreased by VND 3.19
In 2020, revenue decreased by 0.3% compared to 2019, totaling 21 billion, primarily due to a drop in rice prices early in the year Additionally, revenue deductions surged by 687.64%, amounting to VND 6.12 billion, driven by significant price fluctuations To ensure quality in exports, the company adopted a cautious approach during the export process, leading to increased expenditures on quarantine, fumigation, and quality assurance compared to 2019.
Figure 1: After- tax profit situation
According to the Accounting Department of Tan Long Company, after-tax profit in 2018 saw a significant increase, rising by VND 181.99 billion compared to 2017, which equates to an impressive growth of 1198.88%.
VND 122.68 billion, equivalent to 62.22% compared to
In 2018, the company transitioned to a joint stock model, leading to larger operational scale and increased profits, partly due to high rice export prices However, in 2019, profits sharply declined as rice prices fell and the cost of goods sold rose significantly by 41.14%, totaling an increase of 531.38 billion VND The company's profit after tax remained unstable during the first half of 2018, 2019, and 2020 Nevertheless, 2020 marked a significant improvement, as revenue decreased but profits rose by 18.62 billion VND, reflecting a 49.59% increase compared to 2019.
2.2.3 Analysis of rice output and export turnover of Tan Long Group
Figure 2: Rice export turnover from 2018 to 2020
Source: Sales Department of Tan Long Company In Figure 4, we see that in
Assessing the situation of rice export activities of Tan Long Company
2.3.1 Assessment of rice export orientation objectives
Rice constitutes 23.8% of agricultural products, playing a crucial role in stabilizing Vietnam's food security and significantly contributing to global food production This staple not only provides substantial foreign currency for the Vietnamese economy but also enhances the country's standing in the international market The importance of rice extends beyond domestic consumption, impacting international trade and the overall economic development of Vietnam, particularly for companies like Tan Long.
The export strategy has effectively aligned with the country's production and scientific advancements, focusing on a gradual transition from low-quality raw rice to high-quality rice exports This approach includes developing tailored scenarios to adapt to fluctuations in the global rice market and specific regional demands.
However, there are still many challenges for the company's rice exports. For example, trading between countries is still limited in terms of trading
2.3.2 Assessing the specific implementation of rice production and export activities from 2017 to 2020
From 2017 to 2020, the company significantly enhanced its rice export activities, achieving growth in both volume and quality, thereby increasing its competitiveness in the market Consistently ranked among the top 10 rice exporters in Asia, the company competes strongly with major rice-producing nations like Thailand and India Notably, in 2019, the price of Vietnamese rice rose nearly 10% compared to the previous year, allowing it to better align with Thai prices and make inroads into premium markets such as Japan.
The volatility of the global agricultural market has created favorable conditions for exports, while the decline in used prices has further benefited the industry Additionally, Vietnam's membership in the WTO has allowed the country to capitalize on these opportunities effectively.
The company's rice production and export have encountered significant challenges, including a lack of interest in establishing and developing a strong rice brand, as well as an unclear emphasis on product quality These issues have hindered the overall assessment of the export scale.
For years, our company has been a leading rice exporter in Asia, consistently ranking among the top 10 We maintain strong competitiveness against major rice-producing countries like Thailand and India Currently, Vietnamese rice is exported to over 100 countries, capturing 20% of the global rice market share.
Vietnam is the second-largest rice exporter globally; however, it ranks lower in export value, coming in at third and fourth This discrepancy is largely due to its underdeveloped processing and marketing systems Additionally, most Vietnamese farmers cultivate rice on small plots, limiting their ability to engage in large-scale production that could reduce costs.
Vietnam faces constraints in increasing rice production due to limited expansion opportunities, unlike Thailand, Myanmar, and Cambodia, which have significant potential to enhance productivity and expand their rice-growing areas Additionally, an evaluation of rice production costs and export prices is essential for understanding the competitive landscape in the region.
In general, the company's rice export prices have been gradually boosted over the years However, compared to rice exporting countries in the world, our rice price is always lower.
Research from experts involved in a national project to enhance the competitiveness of Vietnamese goods and services reveals that Vietnam boasts the lowest rice production costs in Southeast Asia In the Mekong Delta, these costs are among the lowest globally, being only 80-95% of those in Thailand This advantage stems from labor costs, which are one-third of Thailand's, coupled with rice yields that are 1.5 times higher However, the infrastructure for rice production and distribution, including markets, warehouses, and specialized export ports, remains underdeveloped, leading to higher transportation and handling costs compared to other countries.
As the economy grows, the advantages previously held by Tan Long Group are diminishing, necessitating a shift towards quality competition rather than relying solely on low prices Despite the government's efforts to increase investment in agriculture and scientific research, Vietnam's investment levels remain significantly lower than those of its Asian competitors Currently, agricultural science research funding in Vietnam is just 0.15% of agricultural GDP and 0.19% of the state budget, in stark contrast to Thailand's 1.4% and 1.1%, Indonesia's 0.27% and 0.29%, and China's 0.43% and 0.54%.
Analysis of rice procurement transactions for Vietnam’s export purposes shows:
Free sale without a contract offers numerous advantages, aligning with traditional trading practices of farmers, which contributes to its popularity today However, this trading method has notable limitations, including intermediary stages that do not enhance product quality or appearance, yet still inflate prices primarily to ensure profitability for intermediaries Consequently, farmers often remain disconnected from processing facilities and exporters.
Processors and exporters do not manage the quality of products, so usually the products are not high quality.
Written contracts, including direct agreements between businesses and individual households, as well as contracts with cooperatives and groups of farmers, offer significant advantages characterized by "4 stability": stabilizing the raw material supply, ensuring consistent product quality, maintaining customer relationships, and fostering an environment for businesses to grow and develop However, this approach faces challenges, such as the small and fragmented production scale of farmers, which complicates business transactions, and a lack of investment and technical support from enterprises to leverage high productivity and quality products effectively.
The wholesale markets have evolved into shopping centers, offering numerous advantages for trading However, in our country, newly established markets face limitations, with trading primarily confined to wholesale transactions between domestic enterprises and traders These transactions are typically immediate, lacking secondary market exchanges or post-delivery activities Consequently, traders handle all aspects of buying and selling goods, while market management boards mainly focus on service activities, such as leasing space, loading and unloading goods, and providing security.
Despite improvements in the quality of rice exported by our company, it still lags behind some Vietnamese competitors in both quality and variety Our high-quality rice, comprising 5-10% broken grains, represents over 40% of our exports, whereas Thailand dominates the market with over 70% The competition for low-end rice is intensifying among countries like Vietnam, India, and China, while global demand for high-quality rice is growing at a faster pace.
Vietnam's rice exports suffer from low quality primarily due to inadequate preservation and processing methods The country's post-harvest loss rate ranges from 13-16%, significantly higher than Thailand's 7-10% and Japan's 3.9-5.6% The major contributors to these losses are drying, storage, and milling, which collectively account for 68-70% of the total post-harvest losses.
SOLUTIONS TO PROMOTE RICE EXPORT ACTIVITIES OF
Company's SWOT analysis in rice export
3.1.1 General comments on the rice market situation
The global demand for rice is intricately linked to economic and population growth, with the U.S Department of Agriculture (USDA) predicting that the world population will rise from 7.6 billion today to 10.89 billion by 2030, predominantly in developing countries Africa and the Middle East are experiencing the highest growth rates at 2.3% and 2.5% annually, while Asia and Latin America follow with rates of 1.3% and 1.4% In contrast, developed nations, particularly Japan and former Soviet states, show minimal population increases As a result, the anticipated growth in the global population will drive a significant rise in food demand, particularly for rice, leading to substantial expansion in the international rice market in terms of output and trade value.
Recent forecasts indicate that developed countries will experience a growth rate of approximately 2.7% annually from 2017 to 2020, reflecting a slight decline of 0.1% per year compared to the previous period Meanwhile, East Asian economies are expected to recover and grow steadily due to structural reforms, although their growth will remain below pre-crisis levels Despite a challenging global economic outlook, food experts suggest that the impact of international trade on the world rice market will be minimal, as rice is a fundamental consumer item that meets essential human needs Consequently, the long-term trend of global economic growth and rising incomes is likely to increase demand for rice worldwide.
Specifically, when considering the operation of the world rice market, the growth rate of import and export is forecasted as follows:
Regarding rice import growth: The growth rate of rice imports is uneven between high-income countries and developing countries.
While rice imports in high-income countries tend to slow down because:
Low or negative population growth leads to a decline in food demand, particularly for staple products like rice However, as economies recover and living standards improve over the long term, the demand for ordinary goods, including rice, is expected to decrease In contrast, developing countries are experiencing significant growth in rice imports, averaging 6.2% annually Notably, Central and North African nations, along with the Middle East and East Asia, are projected to see even higher import growth rates of 8.3%, 7.3%, and 5.2% per year, respectively.
Export growth: Rice exports of companies are forecasted to grow soon.
In the period from 2019 to 2020, countries like Thailand, Vietnam, Pakistan, and India are set to boost both rice production and export value Vietnam aims to sustain its rice exports at 4.5 to 5 million tons, while India is expected to average around 4.0 million tons annually Notably, Pakistan is projected to ascend to the position of the world's third-largest rice exporter, with an output ranging from 4.0 to 4.5 million tons.
Price trend: In contrast to the downward trend in most goods soon, the price of exported rice has been highly volatile but will generally remain high.
In May 2008, world rice prices peaked at approximately $1,000 per ton, but have since dropped to between $400 and $500 per ton Despite this decline, current prices remain elevated compared to the levels seen from 2005 to 2007 Experts predict that rice prices will soon stabilize around $400 per ton.
3.1.2 Opportunities for rice export activities
Integrating into the global economy presents the company with significant opportunities, particularly in expanding its rice export markets This integration allows the company to align its export prices with global trends, enhancing competitiveness and profitability in the international market.
Market expansion is crucial for transitioning from subsistence to commercial agriculture in Vietnam, with a strong focus on promoting rice exports as a key strategy for agricultural development By engaging in bilateral and multilateral trade agreements and participating in regional and international economic organizations, Vietnam can enhance its presence in the global rice market This international integration not only opens up opportunities but also drives the need for innovation in production processes, leveraging advancements in science and technology to capitalize on Vietnam's tropical agriculture, rich biodiversity, and abundant rural labor resources, ultimately increasing the value of rice exports.
The integration of the global economy is set to enhance Vietnam's agricultural sector, particularly the rice industry, by attracting investment capital aimed at improving product quality and reducing unnecessary costs Vietnamese rice products have established a strong presence in the international market, supported by the Vietnamese government's encouragement and incentives for investment in agriculture and rural areas This international integration fosters a better investment environment, instilling confidence in investors As a result, robust foreign investment in domestic rice production will lead to a modernized and intensive production industry, with high-quality rice products processed through multiple stages, ultimately increasing the value of rice exports.
International integration compels Vietnamese farmers and exporters to engage in long-term planning, not just to satisfy domestic needs but also to accumulate rice for global export markets These markets impose complex and stringent quality, timing, and delivery requirements To enhance rice exports, stakeholders must recognize the significance of factors beyond rice's basic consumption value, including brand reputation, product marketing, and support services.
International economic integration offers Vietnam significant opportunities to enhance its rice export activities by facilitating skill development and the adoption of advanced operational models As Vietnam becomes more embedded in the global economy, it can effectively leverage technology transfers to maximize the potential of its rice-paddy agriculture By implementing efficient management models that streamline production, procurement, and processing, Vietnamese rice exporters can minimize intermediary costs and risks through direct contracts with farmers, ultimately boosting export effectiveness.
In addition to the great opportunities when international integration, rice export activities will also face significant challenges.
Natural disasters and objective factors pose ongoing challenges to rice production and exports, which rely heavily on natural conditions These disasters lead to significant damage in agriculture, particularly rice, resulting in land erosion, environmental pollution, and depletion of forest resources Furthermore, inadequate facilities for forecasting and mitigating the impacts of natural disasters exacerbate these issues This precarious situation threatens the stability of Vietnam's rice production and hampers the country's ability to fulfill international commitments.
As Vietnam engages in international economic integration, it is participating in various regional and global economic institutions such as the ASEAN Free Trade Area, the U.S.-Vietnam Trade Agreement, and the World Trade Organization These institutions impose specific commitments on agriculture, primarily focusing on enhancing regulations to align agricultural policies, including the reduction of non-government subsidies for agricultural exports Consequently, Vietnam is required to decrease rice export subsidies, placing this sector on a level playing field and exposing it to significant competition and potential risks.
World economic integration poses significant challenges for Vietnam's domestic regulations, subsidies, and export policies, particularly in the rice sector The government's strategy of purchasing and storing 1 million tons of rice at a floor price, along with the limited role of state-owned enterprises in supporting farmers' minimum selling prices, is modest compared to practices in wealthier nations International pressure may compel Vietnam to restrict these policies further Additionally, the substantial volume of rice exports limits the government's ability to intervene effectively in maintaining minimum prices Currently, Vietnam's price interventions are largely separate from the procurement efforts aimed at supporting disaster-affected communities.
Despite Vietnam's rice trade being open without quotas or export licenses, a significant increase in rice exports or prices is unlikely in the near future Rising consumer demands and intensifying global competition pose challenges, while the quality of Vietnamese rice remains low due to issues such as unclear origins and outdated processing technologies Additionally, exporters lack comprehensive control over the entire supply chain, from seed selection to sales, hindering their ability to meet the high standards expected by importers.
The competition among global rice-exporting countries is intensifying, as highlighted by the FAO (United Nations Food and Agriculture Organization) In the short to medium term, the world market prices for rice do not offer much optimism for producers Additionally, the small size of the rice export market makes the economies and farmers of leading rice-exporting nations particularly susceptible to market fluctuations.
View and orientation of rice export of Tan Long company
3.2.1 General view on Vietnam's rice exports
The Party and Government have established guidelines for economic development and trade, focusing on enhancing rice production and export activities The X Party Congress emphasizes the goal of creating a large, diverse, and sustainable agricultural sector characterized by high productivity, quality, and competitiveness This includes a strategic shift towards producing high-value, economically efficient products, promoting intensive cultivation through integrated and advanced production processes, and ensuring stable food production area planning.
To boost exports, it is essential to rapidly enhance the share of high-value-added processed products that are technologically advanced and competitive This involves developing new key export products while gradually phasing out the export of natural resources and unprocessed agricultural goods Additionally, consolidating and expanding export markets will help establish stable markets for competitive items, increase market share in major markets, and explore potential new markets.
The Ministry of Agriculture and Rural Development (MARD) is shifting its focus from merely increasing agricultural output to enhancing the quality, economic efficiency, and competitiveness of agricultural products This marks a significant transformation in the agricultural sector, which historically prioritized output growth for food security, often leading to oversupply and price drops, particularly in commodities like coffee and pepper For over a decade, Vietnam's rice exports have predominantly consisted of low-quality varieties, lacking in specialty and high-quality options, resulting in a competitive disadvantage compared to other rice-exporting nations, such as Thailand.
In the context of international economic integration, the future of rice exports should focus on maintaining a balanced approach that prioritizes both food security and high-quality exports This involves increasing investments in production, market research, and forecasting to adapt to the volatile international rice market Additionally, it is crucial to streamline export administration and adhere to the WTO accession roadmap, which aims to reduce governmental restrictions and ultimately phase out state-imposed measures on rice exports.
3.2.2 Orientation on the functions and role of economic sectors in rice export activities a The State organizes and manages rice exports
To foster a thriving market for agricultural products, particularly rice, the State plays a crucial role by encouraging various stakeholders to engage in rice export activities, simplifying licensing processes, and eliminating export quotas Additionally, it is essential for the State to enhance the framework of agencies overseeing rice exports to safeguard domestic production and mitigate the adverse effects of foreign market competition on national interests.
The State plays a crucial role in disseminating knowledge about international economic integration and Vietnam's commitments in the agricultural sector following its WTO accession This initiative targets farmers and rice exporters, fostering a transformative mindset in rice production and organizational practices.
The Vietnamese government has actively researched and implemented agricultural subsidy solutions that align with its commitments to the WTO, establishing a solid legal framework to enhance rice exports Additionally, there is a focus on strengthening collaboration between the government and enterprises to effectively expand market opportunities.
The state's role in rice export activities involves facilitating trade negotiations, providing legal frameworks, and offering market information and trade promotion, while refraining from direct intervention in market operations This approach ensures that enterprises can operate freely and effectively in the rice export sector.
Connecting management agencies with exporting enterprises in the process of trade information promotion, policy support, land, credit, dispute resolution
The trend of establishing industry associations (Vietnam FoodAssociation) along with proactively developing business strategies and market strategies of enterprises to enhance export activities.
Solutions to enhance rice export activities of Tan Long Company
3.3.1 Group of solutions to support rice export activities a Policies on credit finance, insurance and export support
A well-defined credit policy is crucial for expanding the rice export market, ensuring effective allocation of export credit capital This approach not only addresses the need for sound management of credit resources but also aligns with global integration commitments, aiming to eliminate unnecessary incentives and establish fair regulations within the international economic sector.
Export insurance plays a crucial role in supporting exporters by mitigating risks, stimulating export growth, and enhancing funding opportunities Establishing a robust export insurance system is essential for safeguarding exporters and encouraging international trade Additionally, strengthening the export support fund is vital for assisting businesses with export potential that lack access to bank financing due to insufficient collateral Implementing effective investment policies and creating market opportunities will further bolster export development.
To enhance the investment structure, it is crucial to synchronize investments across the production, processing, and export sectors The government must identify key investment sectors and areas, such as concentrated rice production zones and the development of transportation systems and transaction centers.
The Party's resolution highlights the need for synchronizing market types to foster a dynamic environment for the movement of goods based on an orderly market mechanism To effectively implement this policy and enhance rice export activities in both the short and long term, several key actions must be undertaken.
To boost rice exports, it is essential to continuously expand market access and enhance regional trade Emphasizing technology application and innovation will facilitate participation in international labor divisions and foster cooperation Additionally, implementing open trade policies will further strengthen these efforts.
Secondly, diversifying consumption channels with many different levels to export rice circulation smoothly, fastest at the lowest cost from the exporter.
Thirdly, to attach importance to the role of markets and commercial gatherings in rural areas through the construction and development of economic
Regional clusters focusing on cultural, technical, commercial, and service sectors are essential for fostering collaboration among small and medium-sized enterprises By encouraging domestic businesses to unite, these clusters aim to establish robust economic corporations that can enhance competitiveness in the global rice export market.
Fourthly, developing trade promotion, export promotion from central to local level, to exchange information, exchange science and technology,anticipate domestic and world trade activities.
3.3.2 Solution group to increase production stability and meet the quality of exported rice a Solutions for planning exported rice areas to create specialized conditions, increase quality to meet contracts
To enhance rice production for export, it is essential for sectors and levels to streamline approved planning through strategic capital investment and advancements in science and technology The planning and investment strategies for rice-exporting regions must align with the evolving demands of the global rice market at each stage.
To effectively realize planning objectives, it is essential to implement synchronization solutions that promote the accumulation and concentration of rice land in key export areas such as the Mekong Delta, South Central, and Red River Delta This approach aims to modernize the rice production process, thereby enhancing the quality of rice exports Additionally, it is crucial to successfully manage and develop high-quality rice regions.
Focusing on 1 million hectares of land dedicated to skilled labor and production capital is a strategic priority To enhance this initiative, developing a robust network for rice collection and transportation under export contracts is essential.
The evaluation of rice procurement transactions in Vietnam highlights the critical role of written contracts in facilitating exports This method offers significant advantages, including stability in material areas, consistent product quality, and reliable customer relationships, which are essential for the sustainable development of production and business However, existing limitations necessitate robust solutions to enhance post-harvest modernization, thereby strengthening the foundation for rice export activities.
To enhance rice exports, it is essential to establish new rice processing facilities in production areas, aligning with strategic planning This initiative aims to create a network of rice collection through cooperatives or purchasing cooperatives, fostering collaboration among localities via economic contracts and fair pricing.
To enhance the profitability of rice production, it is essential to establish satisfactory relationships among the State, farmers, and rice exporters, prioritizing the interests of rice growers This includes upgrading and modernizing existing rice processing facilities and constructing new ones as per strategic planning Additionally, investing in budget capital to improve warehouse systems, drying facilities, and transportation infrastructure, particularly at Can Tho port, is crucial for efficient rice exportation Upgrading port equipment and unloading mechanisms will significantly reduce delays and transportation costs Furthermore, increasing investment in research and the implementation of seed, fertilizer, and irrigation programs is vital for sustainable agricultural growth.
Focusing on investment in breeding research, investment in technological innovation in processing and preservation Priority should be given to irrigation works in rice-exported areas for scientific irrigation.
To enhance competitiveness in the rice industry, it is crucial to implement technical advancements that lower production costs This can be achieved through synchronized agricultural extension services, improved seed programs, and effective policies promoting the consumption of agricultural products via contractual agreements.
3.3.3 A group of market-friendly solutions to create a Rice brand a Solutions to diversify export markets
To enhance Vietnam's rice exports, it is essential to implement market solutions that focus on multilateralization and diversification while stabilizing existing markets Additionally, there is a need to actively explore new, larger markets that demand high-quality rice In the long run, Vietnam should pursue a dual strategy of targeting low-end rice markets while simultaneously improving the quality of its rice products.
Asian and African countries currently purchase 25% of Vietnam's rice exports, but as their economies improve, a shift to 15% rice consumption could impact Vietnamese exporters To adapt, Vietnam must focus on enhancing the quality of its rice while still catering to low-quality rice demands to maintain access to these markets Presently, almost 50% of Vietnam's rice exports consist of low-end varieties, highlighting the urgent need for investment in better rice quality to meet the standards of rapidly evolving export markets.
EU, Japan, USA b Solutions to diversify export forms