Vietnam’s rice exports were at a new high last year at more than six million tons, but analysts cautioned against complacency saying the country owed the success to external factors rather than internal strengths.

They said demand for Vietnamese rice surged since other major exporters like Thailand and India cut back on exports while the economic slump boosted demand for rice worldwide as a substitute for other foods.

The question, they said, is how long the market situation will remain so favorable for Vietnamese rice exports.

With the population increasing and farmlands shrinking globally, rice demand is expected to stay high in the future.

But many countries facing food security threats have begun to deal with it themselves.

The Hanoi-based Institute of Policy and Strategy for Agriculture and Rural Development said the Philippines, for instance, had earmarked US$1 billion for a program to boost rice production.

Malaysia has approved a 2.4 billion ringgit ($700 million) food security plan while China is offering various financial incentives to increase rice output.

Vietnam is forecast to have abundant rice for export but all predictions may turn out to be wrong if climate change accelerates and more farmlands are gobbled up by the creep of industrialization.

The country should therefore not just count on increasing exports in the coming years, analysts said.

Rice exports increased 28 percent by volume last year to overhaul the 2005 figure of 5.17 million tons, fetching $2.4 billion.

Middlemen prosper

Analysts also said that when prices are low, it would not mean much to farmers even if exports rise to 7-8 million tons a year.

A survey by the Institute of Policy and Strategy for Agriculture and Rural Development found that farmers’ profits from the 2009 winter-spring crop fell by between 8.3 and 31.2 percent from a year earlier due to higher fertilizer and pesticide costs.

By the time prices of the grain surged at the end of the year, most farmers had already sold their harvests.

In an analysis of the rice value chain, the Vietnam Chamber of Commerce and Industry’s Can Tho branch said farmers are too far away from end users and so are not fully aware of market trends.

While farmers do not earn much, middlemen pocket up to 67 percent of the added value.

Vo Hung Dung, director of the branch, was quoted by the Rural Economic Times as saying Vietnamese rice fetches $60 per ton less on the global market than Thai rice because of the lack of an effective distribution system.

It is necessary to cut the layers of intermediaries and let farmers deal directly with processors so that they can get higher profits, he said.

The country has signed contracts to export 2.38 million tons this year, of which around 1.47 million tons will be shipped in the first quarter.

Quotes for 25 percent broken, a lower-end variety, are quite high this year, ranging from $480 to $664.9 per ton, according to the Vietnam Food Association.

Source: Thanh Nien, Agencies