Rice export: many businesses “give up the games”

After two months, the rice exporters who cannot meet the requirements stipulated in the Decree No 109, will be weeded out. To date, only 20 businesses have been recognized as meeting the requirements to become rice exporters.

Overly high requirements

The first Vietnamese business, which got the certificate on meeting all the requirements for rice export from the Ministry of Industry and Trade on June 9, or seven months after the Decree 109 was promulgated, was Angimex.

To date, about 20 enterprises have been allowed to export rice from October 1, 2011, the day when the decree takes effects. Meanwhile, there are more than 200 rice exporters in the market.

Under the new regulations, rice exporter has to have at least one specialized storehouse with the capacity of 5000 tons of rice, and a husking factory with the minimum capacity of 10 tons of rice per hour.

A director of a rice export company said that in order to build storehouses, one should have at least 5000 square meters of land located on advantageous position.

This proves to be an impossible mission for a short time. Even the Southern Food Corporation, a big rice exporter, once complained that it was very difficult to find suitable land plots to build stores under the government-initiated program on developing the storehouse system with the capacity of four million tons, because of the land price increases and the capital shortage.

After having land, enterprises would need to spend another 30-40 billion dong to build and run the stores. Also, as per the new regulation which has been released by the Ministry of Agriculture and Rural Development (MARD), enterprises also have to have driers and rice polishing lines.

Angimex, for example, has made heavy investment to build the storehouse system capable to contain 65,200 tons of rice, 11 husking workshops with the capacity of 5-30 tons per hour.

Under the Decree 109, enterprises also have to reserve the volumes of rice which are equal to 10 percent of the rice export volume of the last six months. If an enterprise exported 5000 tons in the last six months, it would have to keep in stocks at least 500 tons or rice. This means that 4.5 billion dong would be left idle.

Discouraged, many exporters accept to give up the games

A rice exporter complained that he has found the land for storehouse, but he still thinks about whether to continue the investment.

For the last many years, enterprises have been relying on their experiences in negotiations and market forecasting to do business. However, now, with the new decree, they have to jump into the fields where they do not have advantages – husking, drying and polishing rice.

Also according to the rice exporter, for the last many years, rice export companies have been flexibly using the storehouses of general sales agents and satellite enterprises, and this would be a big waste if they have to build storehouses of their own.

Meanwhile, it is unclear if farmers can use the same storehouses to reduce the post-harvesting loss percentage from the current level of 12-13 percent.

Many enterprises have reportedly sent applications to the Ministry of Industry and Trade for the certificates on meeting the requirements for rice export. However, the ministry has rejected the applications because of the lack of some necessary documents. Meanwhile, many other enterprises still keep quiet and take no actions. They do not intend to spend money to upgrade the material facilities, which also means that they plan to give up the games.

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