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Vietnam's Rice Becomes World's Priciest Export: A Double-Edged Sword

Vietnam's Rice Becomes World's Priciest

Vietnam has clinched a significant milestone in its agricultural exports as its rice prices soar to the top of the global market. Surpassing major rice-exporting nations like Thailand and Pakistan, Vietnamese rice now stands as the most expensive in the world. However, this achievement rings both as a triumph and a potential red flag for the country's export industry, prompting varied responses from experts and industry insiders.

Recent figures from the Vietnam Food Association (VFA) reveal a striking reality: Vietnam's 5 percent broken rice reached an unprecedented $653 per ton, eclipsing Thailand's ($565) and Pakistan's ($568) prices. The trend extends to the 25 percent broken rice category, where Vietnam's prices stood at $643 per ton, significantly higher than Thailand's ($526) and Pakistan's ($488) rates.

The domestic market reflects this surge as well. Farmers witnessed an uptick in unhusked paddy prices, reaching VND10,033 per kilogram at warehouses. The spike continued across various rice categories, with first-class white husked rice hitting VND15,775 per kilogram, signaling record highs in Vietnam's rice economy.

Experts weigh in on this unprecedented hike, offering divergent perspectives. Vo Tong Xuan, a respected rice authority, sees this as a testament to Vietnam's enhanced rice quality and stable supply, significantly boosting exports and elevating farmer incomes. However, Do Ha Nam, VFA's vice president, raises concerns over the pitfalls of excessively high prices. He warns that this could lead importers to seek alternatives, potentially causing Vietnam to lose significant market shares, particularly in fragrant rice varieties.

The ramifications of these skyrocketing prices are felt acutely in the export sector. Recent bids by Vietnam's rice exporters to fulfill orders from Bulog, Indonesia's state-owned food distribution agency, faltered due to the inflated domestic prices. Nam attributes these price hikes to supply chain complexities, exacerbated by futures contracts signed by export companies that now clash with surging domestic rates.

While projections by the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) indicate a record-breaking year for rice exports—8 million tons valued at $4.5 billion—concerns linger regarding the sustainability of these prices. The fear of losing customers due to unmanageable prices looms large for exporters, posing a precarious situation.

Nevertheless, amidst these challenges, Vietnam holds a strategic advantage. The country's relatively unaffected 1.5-hectare growing area and adaptive agricultural practices position it favorably against climate-induced adversities faced by other rice granaries in Asia. This advantage could pave the way for increased exports and sustained high prices, ensuring Vietnam's prominence in the global rice market.

As the Ministry of Agriculture and Rural Development (MARD) reports a stellar performance in the first ten months of 2023—7.12 million tons of rice exported, valued at nearly $4 billion—the road ahead remains uncertain. Vietnam stands at a crossroads, balancing the allure of record-high prices with the perils of potential market loss. How the nation navigates this delicate equilibrium will shape its role as a dominant player in the world's rice trade.

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