Up to 44 food traders will be able to engage in rice export under new standards applicable from October 1, comprising 29 enterprises having been licensed and 15 others pending the stamp of approval from authorities.
Phan Van Chinh, head of the Import-Export Department under the Ministry of Industry and Trade, told an online meeting held on Monday by the ministry that the number of eligible traders was suitable for the current situation of food trading as assessed by the ministry.
Chinh said for a rice market size like Vietnam’s, the number of traders allowed to engage in rice export should be between 50 and 60.
A new decree issued by the Government earlier this year set tougher criteria for rice exporters, but Chinh said local enterprises had up to nine months to adapt themselves to the new regulatory frame before the decree takes effect on October 1.
The ministry, Chinh said, has received numerous complaints from enterprises over new criteria, including those on the warehousing and rice milling facilities that are required to be installed in the same premises. Also controversial in such complaints are the requirement for a dryer system.
“We have worked with the Ministry of Agriculture and Rural Development… and have agreed on crossing out the standard to place all equipments on the same premises,” said Chinh. “However, enterprises are obliged to have dryer systems in their processing lines.”
However, the number is deemed too small by Huynh Minh Hue, general secretary of the Vietnam Food Association, or VFA.
Compared to the current number of rice exporters in the year’s first half at 211, Hue said, such a small number of food exporters would be unable to keep up Vietnam’s rice export in the upcoming time.
VFA told its recent review conference that 80 rice exporters should be licensed to ensure international competiveness.
Deputy Minister Nguyen Thanh Bien said the ministry would have a review on the disqualified documents from rice traders. The implementation of Decree 109 should not restrict the number of rice exporters given that market stability is needed, Bien said.
According to VFA, rice export in the January-July period reached over 4.6 million tons. Rice exporters are expected to have shipped some six million tons by the end of the third quarter, and thus will only have to export one million ton in the fourth quarter to reach the record volume of over seven million tons this year.
Rice exporters face big hurdles
In light of Decree 109/2010/ND-CP dated November 4, 2010 and effective from October 2011, to become eligible for rice export, businesses must have at least a specialised rice store with a minimal carrying capacity of 5,000 tonnes and a rice husking facility with capacity of at least 10 tonnes per hour positioned in the same location.
The new Ministry of Agriculture and Rural Development (MARD) requirements are seen as a major hurdle for firms getting rice export certificates.
The Vietnam Food Association (VFA) said these requirements were unreasonable as businesses often located rice husking facilities at material growing areas, while the store system and rice polishers are usually placed in different areas.
The VFA asked the MARD to address the issue in mid-July 2011, but no feedback had been received, according Northern Food Corporation general director Tran Ba Hoan.
Earlier on June 3, the Ministry of Industry and Trade forwarded enterprises’ proposals to the MARD, but no effective solutions are in place.
Under VFA appraisals, only around 80 firms are eligible to gain the rice export certificates in light of Decree 109 and just seven firms actually obtained the certificates.
As a result, the jury is out on whether the registered exporters can serve the nation’s needs.
VFA chairman Truong Thanh Phong said: “Streamlining rice export is crucial as of the 200 firms joining rice exports so far the year, only 50 firms reported export volumes of at least 10,000 tonnes each per month and their export volume made up 92.7 per cent of total, meanwhile around 100 firms just exported several hundred tonnes per month and had no rice stores or husking facilities at all.”
In regard to how to avoid price-related risks, chief AgroMonitor economist Pham Quang Dieu was quoted as saying “Hoarding materials first before clinching export deals is a wise decision. Otherwise, businesses will incur heavy losses in the face of escalating material costs.”