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China’s refusal of cross-border rice shipments has little impact on Vietnam: experts

Tuesday, August 12, 2014, 12:36 GMT+7
China’s refusal of cross-border rice shipments has little impact on Vietnam: experts
Farmers harvest rice in a paddy field in Vinh Long Province, located in southern Vietnam.

China’s cessation of importing Vietnamese rice across the border does not affect the Southeast Asian country’s rice exporting activities very much, experts asserted Monday, three days after exporters confirmed cross-border rice shipments were rejected.

The Vietnamese rice sector had been concerned about reports that China would prohibit rice imports via the border with Vietnam starting early August, and the reported ban actually took effect late last week.

Nguyen Cong Khanh, a trader who sells rice via the border to China, told trade newswire Vietnam Quality on August 8 that only official rice exports are accepted by the Chinese side.

Cross-border trading is a legal international economic activity between people of two neighboring states. The products usually are traded in small volumes and values, and require less paperwork than the official trading activities.

“China bans cross-border rice imports because many Chinese businesses and traders have evaded their rice import duties,” Khanh said.

Vietnam’s rice sector has been relying heavily on China over the last three years, according to industry insiders. But most Chinese traders demanded that the grain be exported across the border.

Vietnam shipped 615,844 metric tons of rice in July, of which 32 percent was brought to China via the border, according to the Vietnam Food Association (VFA). Nearly two million metric tons of Vietnamese rice was shipped to the neighboring country in the first seven months of this year, the VFA reported.

Little effect

After ceasing imports from Vietnam, China is sourcing rice from Cambodia, a move Dr. Nguyen Duc Thanh, director of the Vietnam Center for Economic and Policy Research, said shows that the ban has been well planned.

But Dr. Le Van Banh, head of the Mekong Delta Rice Research Institute, said that the impact of the cross-border import ban is inconsiderable.

“Vietnam has recently signed huge contracts with other traditional markets such as the Philippines, Indonesia, and Malaysia,” he explained.

Vo Hung Dung, director of the Vietnam Commerce and Industry Chamber branch in the Mekong Delta city of Can Tho, concurred with Dr. Banh, saying Vietnam’s rice trading activities are unfazed by China’s cessation of imports.

“Even when China stops importing rice via the official channel, there will be no impact,” he asserted.

Dung reiterated that Vietnam has contracted to supply rice to the Philippines, Indonesia, and Malaysia, and is likely to receive more orders from these markets in the future.

“So we don’t need to worry about where to export our rice from now till the end of this year,” he said.

Dr. Banh of the Mekong Delta Rice Research Institute noted that Vietnamese rice firms must consider getting rid of the cross-border business with China, given this latest move from the Chinese side.

Vietnam exported its 5 percent broken rice at US$465 a metric ton in July, a strong rise from $420 a metric ton a month earlier, according to the VFA.

Export price in August slightly dropped to $450 a metric ton, but the rate is still much higher than in the last three years, the association said.

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