Vietnam‘s rice exports to Africa faced numerous difficulties in the first quarter of this year due to competitive prices from Thailand and India.
Statistics show Thailand exported more than 1 million tonnes of rice to Africa in Q1 offering competitive prices of US$5-10 per tonne less than the Vietnamese rice. India and Pakistan continued to reap the advantages of transport costs, US$30-40 per tonne cheaper than Vietnam.
According to the Vietnam Food Association (VFA), Vietnam’s rice export earnings from Africa dropped by nearly 63%, accounting for just 7% of the country’s total global exports.
Cumbersome payment procedures are one of the two key factors that affect Vietnam’s rice exports to Africa. Due to limited financial capacity, African importers often prefer CIF contracts with deferred payment over 30 to 90 days and they refuse to open L/C due to high fees. In addition, both sides lack information about each other.
To avoid risks, Vietnamese businesses select international intermediaries to ship rice to Africa that drives up rice prices and reduces the competitiveness of the product.
The United Nations Food and Agriculture Organization (FAO) report that rice consumption in Africa reached 24-24.5 million tonnes per year between 2011-2013 and the average consumption per capita was 22.1 kilo per year.
To maintain this potential market, the Ministry of Industry and Trade (MoIT) has dispatched delegations to African countries for trade promotions and held meetings between banks of both sides.
Vietnam has exported rice to 35 out of 55 African countries, with 2013’s total turnover fetching US$775.02 million, up 2% over the previous year.