With many businesses switching to processing and exporting parboiled rice instead of the traditional grain, Vietnam is hopeful that exporting this new commodity will help solve the difficulties of its rice exporting sector.

Parboiled rice is rice that has been partially boiled in the husk. The parboiling process includes soaking, steaming and drying, which boost the rice’s nutritional profile, and change its texture.

Parboiled rice thus fetches higher export price than those traditionally processed.

There are currently two rice parboiling plants in Vietnam, one operated by Ho Chi Minh City-based Vinh Phat JSC in the Mekong Province of An Giang, and one by a Thai company, located in Tien Giang.

A third facility, a US$15 million plant, is under construction in Long An.

“The 500-ton plant is expected to become officially operational in July,” said a representative of VAP Food Co Ltd, the facility’s operator.

VAP is a joint venture between the Vietnam Southern Food Corporation (Vinafood 2) and two international partners, Auro Capital and Phoenix Commodities.

All of the three parties acknowledge this is a prime time to invest in processing parboiled rice in Vietnam, said VAP CEO Arup Kumar Gupta.

Although Vietnam is among the world’s leading rice exporters, its parboiled rice exports are almost inconsiderable, he added.

Some 36 million tons of rice are traded worldwide on an annual basis, 6 million tons of which is parboiled rice, but the market is dominated by Thailand and India, which account for up to 70 percent of the total volumes, according to Gupta.

Chances

The CEO said Vietnam has potentials to compete with the said rivals, given its high quality rice and a developed infrastructure for rice exporting.

Even when Vietnam does not export its parboiled rice at lower prices, its service will be more stable than that of India, and its prices are more competitive than Thailand, he commented.

Other experts, meanwhile, said switching to exporting parboiled price is an inevitable step during the development of the country’s rice exporting industry.

White rice, the country’s traditional export commodity, has recently been challenged by competitors from Cambodia, Pakistan, and Myanmar, while prices have gradually declined, experts said.

Hence, diversifying export commodities is a right track to follow in order to reduce pressure for white rice export as well as to increase the export values of Vietnamese rice, they concluded.

Challenges

Nguyen Tho Tri, deputy CEO of Vinafood 2, said it is not simple to penetrate the parboiled rice exporting market, as it is currently dominated by many major multinational groups.

“That’s why we decided to team up with two international partners for the joint venture instead of carrying out things alone,” he added. Vinafood 2 currently accounts for as much as 40 percent of Vietnam’s total rice exports.

At VAP, the state-run company will be in charge of raw materials, while the partners will ensure outlets for the products, Tri elaborated.

Meanwhile, Tran Ngoc Trung, CEO of Tri Phat JSC, which is the first company to export Vietnamese parboiled price in 2010, also said the market is full of challenges.

“High investment costs are required, and it is also difficult to find exporting markets,” he elaborated.