FINAL REPORT PRACTICES OF INTERNATIONAL TRADE ANALYSIS OF RICE EXPORT ACTIVITIES IN VIET NAM

TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION MAJOR: INTERNATIONAL BUSINESS FINAL REPORT PRACTICES OF INTERNATIONAL TRADE ANALYSIS OF RICE EXPORT ACTIVITIES IN VIET NAM Lecturer: Nguyen Thi Tuong Vy Group: Diamond - Ho Chi Minh City, 5th of November, 2020 ST T Shift: 03 xxx xxx xxx xxx xxx Chapter (2.1) xxx Evaluatio n 100% 98% 98% 98% 98% 98% Sign COMMENTARY OF LECTURER - Content Introduction Chapter 1: Overview of rice export in Viet Nam 1.1 Rice production in Viet Nam 1.2 Export activity of rice in Viet Nam 1.2.1 Rice export theory 1.2.2 Criteria for evaluating the quality of exported rice 1.2.3 Rice policy in Viet Nam 1.2.4 Supply and demand of Viet Nam rice 11 Chapter 2: Analysis of Viet Nam rice export activity 13 2.1 Process of exporting rice in Vietnam 13 2.2 Procedure of exporting rice in Vietnam 14 2.3 Vietnam export rice price 15 2.3.1 Vietnam’s export rice price and quantity 15 2.3.2 Factor affecting export price 17 2.3.3 The quality and categories of rice export in Vietnam … .17 2.3.4 Export price by market… .… 18 2.3.5 Vietnam's export rice competitors… 21 2.4 SWOT analysis… 22 2.4.1 Advantages analysis… 22 2.4.2 Disadvantage analysis… 23 2.4.3 Opportunity analysis… .23 2.4.4 Threat analysis… 24 2.5 Exporting rice sales contract… .25 2.6 Custom clearance in Vietnam… .27 Chapter 3: The solution of developing export activities…………………………….30 Conclusion Introduction Vietnam is in tcess of international integration Therefore, the development of economic activities is extremely important, including export activities In the current export structure, rice is one of the export strengths of our country Over the past years, Vietnam has always been one of the largest rice exporters in the world, maintained at a relatively high threshold, accounting for a large part of the total rice export value of the world Thanks to favorable natural conditions, culture is a wet rice civilization Vietnam is increasingly developing and asserting its economic strength Especially in 2020, the COVID-19 epidemic spreads strongly, but Vietnam still stabilizes the economy That has made the economy in general and rice export in particular achieve many proud achievements However, we have not fully exploited our strengths as well as limit risks in rice production and export On the other hand, to better understand current and future challenges, then find solutions So we decided to choose the topic "analysis of Vietnam's rice export activities" I Chapter 1: Overview of rice export I.1 Rice production in Vietnam Viet Nam is the 5th largest rice producer in the world In the first seven months of 2020, Vietnam is the country with the second highest output and export value of rice in the world while the context of the spreading Covid-19 epidemic Specifically, rice export in the first seven months of the year reached nearly million tons with a value of $2 billion Vietnam is an agricultural country with a long history of cultivation Rice is the main product of agriculture Rice not only contributes to ensuring people's lives, but also plays a strategic role in Vietnam’s food security Currently, it also contributes a huge part to the value of total export turnover promoting the industrialization and modernization of the country Vietnam has two major deltas, the Red River Delta and the Mekong River Delta In which, the Mekong Delta is the main rice exporter As of September 2019, the cultivated area of winter rice in the whole country reached 1,558.1 thousand hectares, equaling 96.5% of the same period in 2018, of which 1,075.9 thousand hectares in the North, the South reached 482.2 thousand hectares The cultivated area of winter rice in the North in 2019 was low, of which the Red River Delta region reached 497 thousand hectares, a decrease of 19.6 thousand hectares compared to the crop in 2018; The Northern Midlands and Mountains reached 421.5 thousand hectares, down 2.6 thousand hectares; The North Central Coast reached 157.4 thousand hectares, a decrease of 6.3 thousand hectares The main reason is that localities change part of the rice-growing area to use for other purposes In some localities, the area of winter rice decreased significantly: Hanoi decreased by 5.4 thousand hectares; Thanh Hoa decreased by 5.2 thousand hectares; Hai Phong decreased by 2.8 thousand hectares; Phu Tho decreased by 2.3 thousand hectares Up to now, early season rice tea in the North is in the stage of sure grain and ripening, and has harvested 176.5 thousand hectares, equaling 117.2% of the same period in 2018; the productivity was estimated at 50.2 quintal / ha, an increase of 0.7 quintal / The harvest progress of winter rice in 2019 is faster than the same period in 2018 due to being planted early As of October 15, the whole country harvested 888.7 thousand hectares, accounting for 54.8% of the cultivated area and equaling 101.7% of the same period last year Although the weather in the hot season is hotter than the average for many years, due to the alternating rainfall, the water source is guaranteed, farmers actively nurture, rice grows and develops well, and the localities actively to change the crop structure, use quality rice varieties, apply technical advances in production, promptly prevent diseases on plants However, due to the reduction of the cultivated area, the output of winter rice in 2019 reached 8.09 million tons, down 176.6 thousand tons compared to the previous season Along with the care and harvesting of winter rice, localities across the country basically finished the summer-autumn rice production with the cultivated area reaching 2,009.3 thousand hectares, down 43.7 thousand hectares compared to the summer-autumn crop In 2018, in some localities, the area of summer-autumn rice decreased much: Kien Giang decreased 14.4 thousand hectares due to changing the crop structure from summerautumn to autumn-winter; Tien Giang decreased by 11.9 thousand hectares; Binh Thuan reduced by 4.7 thousand hectares; Dong Thap decreased 2.3 thousand hectares According to reports by localities, the whole country's summer-autumn rice yield in 2019 was estimated at 54.8 quintals / ha, an increase of 0.2 quintals / compared to the previous summer-autumn crop, but due to the decrease in cultivated area, the output Overall, the whole summer-autumn crop in 2019 reached 11.01 million tons, down 197 thousand tons Of which, the Mekong River Delta reached 8.7 million tons, down 96.6 thousand tons I.2 I.2.1 Export activity of rice in Vietnam Theory of rice export Export is the activities of selling and transporting goods out of the Vietnamese territory or into a special area located on the territory of Vietnam which is considered a separate customs area under the provisions of law for production and business development Exports are more complex than domestic purchases on the basis of using currency as payment method Exports are the primary activity of foreign trade but play an important role in international business Rice export is the activity of selling and transporting rice out of Vietnam territory to other country in the world Use currency as a payment method Rice export is carried out in accordance with the process and law Rice exports contribute to the economic restructuring of our country, promote rice production, and help solve food and employment problems in Vietnam as well as in the world I.2.2 Criteria for evaluating the quality of exported rice To keep the brand as well as the price of rice exported, the state and enterprises will have criteria to evaluate the quality of rice This is a very important issue to be able to export rice to foreign markets, because each market will have different criteria for importing rice, so the exporters country must pay more attention Table 1.1: Export rice standards I.2.3 Rice policy in Vietnam Rice export is not simply exporting rice to other markets but it must follow strict policies and regulations on export issued by the Government The government has developed many policies to navigate, promote and develop rice production through policies such as: land policies, investment and signals policies, private agriculture policies, domestic rice distribution policies and international trade policies a Land policy From the planned economy to the market economy Vietnam took the first steps to initially grant land use rights to farmers Land policy is seen as a stepping stone, and the first steps are important role In 1988, the government granted farmers the right to use the land for a period of 1015 years and to choose the varieties and crops along with the number of products supplied to the market In 1993, the land law was revised Farmers are allowed to choose the type of land use and duration up to 20 years, but only apply to annual harvest crops Particularly for perennial crops, the term is up to 50 years It can be seen that it is an important criterion to make the effectiveness of rice production continuously increase over the years It is also through allowing people to exchange, transfer, lease, and mortgage From these positive effects, the Government has made policies to promote large-scale commodity agricultural production through parallel farm development While allowing a transformation of production structure based on concentration of land and reduction rice land b Investment and credit policy Over the years, the Government has attempted to renovate the irrigation system, mainly in terms of infrastructure supporting rural production and development to invest in agricultural In the 90s, irrigation investment accounted for 70% of total investment in the agricultural sector, especially is rice in the Mekong River Delta On official rural credit there is Vietnam Bank for Agriculture and Rural Development (VBARD) This is the Vietnam Bank for Farmers and the People's Credit Fund (PCF) to help support rural finance and secure inputs for agricultural production; increase the Figure 2: Top 10 rice export markets of Vietnam get the most price in the first months of 2020 Source: Vietnambiz, top 10 thị trường xuất nhiều nhât tháng đầu năm 2020 In addition, in the first months of 2020 Rice exports increased over the same period last year Strong increase in some markets such as Senegal with 26 times in quantity and 18.3 times in turnover, reaching 28,435 tons and equivalent to 9.73 million USD Indonesia increased 130.8% in quantity and 192.1% in turnover, reaching 34,986 tons, equivalent to 19.83 million USD Export to France increased 164.2% in quantity and 171.6% in turnover, reaching 1,918 tons, equivalent to 1.11 million USD Rice exports fell sharply in some markets such as Brunei, down nearly 92% in both quantity and turnover, Algeria down 92.9% in quantity and 89% in turnover; Angola reduced 89% in quantity and turnover; Turkey decreased 77% in quantity and 83% in turnover; The US decreased by 75.5% in quantity and 69.2% in turnover 20 AI Chapter 2: Analysis of Vietnam’s rice export II.1 Process of Vietnam’s rice export A complete export process will help exporters save time and manpower For the rice export, exporters must follow the correct process and law The rice export process has the following steps: Step 1: Send the sample, after receiving the buyer's request to purchase and provide the necessary information The importer will ask the exporter to send the samples with the correct quality Step 2: After the importer accepts the sample, the two parties will negotiate the terms in the contract such as: Price, production time, delivery location, payment method, shipping Step 3: Signing a contract: This is one of the most important steps of the export process, after the two sides agree on the terms, the contract will be signed by fax or signed in Vietnam (in case partnership to Vietnam) Step 4: Open international payment: The importer will open the international payment procedure as agreed in the contract in the form of L/C, T/T Enterprises need to check the valuable vouchers to see if the content is correct as in the agreement, should notify the partner to correct immediately if the payment conditions are not in accordance with the agreement Step 5: Prepare the goods: prepare the goods with the right quality and output standards as in the signed contract Note about the delivery time, the exporter must check the goods carefully before they are shipped for export All must be completed before the contract deadline and international billing deadline Step 6: Inland transport: Goods are packed into the correct supply container according to the quantity signed with the customer in the contract and transported to the port Before the goods arrive at the port of export, the goods must have a full set of documents such as a certificate of origin, a certificate of goods inspection, an invoice Step 7: International transportation: Usually shipped on CIF or FOB terms Ensure safety for the goods 13 Step 8: Send payment documents: the enterprise brings all documents and documents of the exported shipment to the bank where it registered for an account to apply for international payment All contents of the voucher must be completely accurate compared with the bank's valuable voucher, the payment will save time for the business Step 9: Receive money: Depending on the payment case signed in the contract, the importer will pay differently For example, in the case of paying by L/C, 7-10 days after the bank has approved the documents of the business, the money will be fully transferred to the enterprise's account In case of payment by T/T, importer will transfer money when the goods are on board or arrived at the port of destination II.2 Procedures of Vietnam’s rice export To be able to export rice according to the correct process, you need to complete the following procedures: Certificate of eligibility for rice export business Enterprise registration and established in accordance with the law Having at least one specialized warehouse with a minimum capacity of 5,000 tons of paddy, one facility for milling, dead rice and rice with a minimum capacity of 10 tons of paddy / hour according to the general regulations of the Ministry of Agriculture and Rural Development promulgate Registration of rice export contracts The written proposal, the original or a copy of the signed rice export contract The original report on available paddy and rice, clearly stating the total amount of paddy and rice the trader has available in the warehouse, specific address and the amount of paddy and rice in each warehouse of paddy and rice of the trader A valid copy of the valid certificate of eligibility for rice export business Necessary documents when submitting to customs Customs declaration, contract, invoice, packing list, bill of lading, C/O (if any) 14 Certificate of eligibility for rice export business or a consignment contract of the company to export and a company has enough conditions to export rice Rice export contract registration certificate II.3 Vietnam’s export rice price II.3.1 The quantity and export rice price Rice Export From 2015-2020 Billion USD 6.57 2.78 Million tons YEAR OUTPU T (Million tons) VALUE (Billion USD) Figure 1: Rice export situation from 2015 to 2020 (According to the Ministry of Agriculture and Rural Development) The VFA report said that in 2015, the amount of exported rice reached 6.568 million tons, the FOB value reached 2.68 billion USD, the CIF value reached 2.78 billion USD Average export price reached 407.97 USD / ton FOB With this result, the number of exports increased by 4%, but the FOB value decreased by nearly 4%, the CIF value decreased by nearly 6%, the average export price decreased by 33.7% USD / ton compared to 2014 With the result This fruit, Vietnam's rice export in 2015 ranked third after India (10.23 million tons) and Thailand (9.55 million tons) In 2016 was an unfavorable year for Vietnam's rice industry, with stagnant rice exports resulting in lower prices for rice and rice Rice export quantity in 2016 reached 4.88 million tons and 2.2 billion USD, down 25.8% in quantity and 21.2% in value compared to 2015 In 2017, the rice export turnover reached 5.79 million tons, up 20.4% compared to 2016, the value reached about 2.62 billion USD, up 21.2% The average fob price for export was 451.9 USD / ton, up 0.7%, equivalent to an increase of USD / ton compared to the export price in 2016 In 2018, export rice will maintain its growth momentum, expected to reach 6.15 million tons with a turnover of $ 3.15 billion, up 5.7% in quantity and 19.6% in value over the year 2017 In 2019, the whole country exported 6.37 million tons of rice, equivalent to 2.81 billion USD, up 4.1% in quantity but down 8.4% in turnover compared to 2018 Export price reached 440, USD / ton, down 12.1% According to preliminary data of the General Department of Customs, Vietnam's rice exports, after a 3-month decline in a row, by the end of 2019 increased sharply, up 36.7% in quantity and 35.6% in quantity turnover compared to the previous month, reaching 499,573 tons, earning 227.97 million USD; Compared to the same month in 2018, it only increased slightly by 4.5% in quantity but decreased by 0.5% in turnover According to statistical sources of the General Department of Customs, in the first eight months of 2020, Vietnam's rice exports not only increase in quantity but also increase in export prices Rice output reached 605,566 tons, average price 502.6 16 USD/ton, turnover 304.33 million, up to 26.3% in quantity, up to 3.8% in price and 31% in turnover compared to July Vietnam has exported nearly 4.61 million tons of rice, the average price is 489.2 USD/ton, turnover is over 2.25 billion USD, increasing in both quantity, price and turnover over the same period in 2019, with the corresponding increase is 0.6%, 13% and 12.4% The high price of rice for export is partly due to the fact that many countries around the world have the need to buy and hoard from the Covid-19 outbreak This is partly due to the remarkable improvement in Vietnamese rice quality in recent years II.3.2 The quality and categories of rice export in Vietnam a The quality of rice export in Vietnam The price of rice for export increases due to increased rice quality To achieve that, the Vietnamese agricultural sector has followed many strict cultivation processes to ensure the correct quality of rice seeds and improve production efficiency For example: “3 decreases, increases” programs; "1 must, decrease", "1 must, decrease" Raising awareness and production level of farmers has helped reduce pest and diseases across the country, and serious diseases in rice have also been absent The use of science and limited use of plant protection drugs makes the amount of pesticides in rice almost nonexistent Implement the Global GAP cooperative model to attract farmers to participate in production Applying science and technology in cultivation, researching and breeding new types of rice suitable to soil conditions, with high yield and quality against pests and diseases Thus Vietnam’s agriculture has high quality rice such as: ST24, ST25, Jasmine 85, Tai Nguyen, Dao market, Nang Hoa, Especially, ST 25 rice is honored as the best rice The world has enhanced its position in terms of quality and brand value of Vietnamese rice 17 b The categories of rice export in Vietnam Along with the development of rice quality, it is the categories of rice The State of Vietnam has made decisions to breed new varieties, promote the development of farming, produce and export high quality rice varieties The cultivated area of fragrant rice in the provinces of the Mekong River Delta annually reaches about 25% of the total cultivated area (equivalent to about million ha), aromatic rice production is estimated at 5.5 million tons, equivalent to about 3.5 million tons of fragrant rice Exported white rice and fragrant rice tended to increase while other rice products fell sharply in the first quarter of 2019 compared to the same period in 2018 Specifically, the quantity of exported white rice is 791.36 thousand tons, which is the amount of rice with the highest export quantity Accounting for 56.3% of the total rice export quantity of Vietnam Compared to the same period in 2018, it increased to 12.1% Exported fragrant rice was 483.9 thousand tons and increased by 8.8% over the same period in 2018 In contrast, Japanese rice varieties decreased by 47.7% The group of brown rice, organic rice, and dragon blood rice decreased by 63.4% The categories of rice for export with the biggest decrease was sticky rice with 64.3% Decree No.103/2020/ND-CP dated 4/9/2020 of the Government regulating the certification of fragrant rice exported to EU Therefore, Vietnam's fragrant rice is qualified and qualified for export to the EU market Under the EVFTA Agreement, the EU will grant Vietnam a quota of 80,000 tons of rice with a 0% tax rate on milled, unmilled and fragrant rice Including 30,000 tons of fragrant rice in the quota, according to the EVFTA Agreement, there are aromatic rice varieties: Jasmine 85, ST 20, ST 5, Nang Hoa 9, VD 20, RVT, OM 4900, OM 5451 and Tai Originally Cho Dao II.3.3 Vietnam’s rice export market Vietnam has exported rice to about 150 countries and territories around the world (2017), of which the Asian market accounted for 68.41% of the total rice export quantity, followed by the African market with 14.93% and America market accounts for 6.54%, Oceania accounts for 5% In which China and the Philippines are one of the top rice importers of Vietnam 18 China is one of the top rice importers of Vietnam In 2017, the amount of rice exported to China reached 2.29 million tons, with 39.5% of the total export quantity In 2018, the amount of rice that China imported was 1.33 million tons and the export value was 683.36 million USD, down by nearly million tons compared to 2017, but China is still the leading country in import Vietnamese rice In 2019, China is no longer the leading rice importer of Vietnam, but instead is the Philippines In the first months of 2019, the Chinese market only imported nearly 224 thousand tons of rice, worth more than 111.3 million, down nearly 74% over the same period in 2018 (according to the Ministry of Industry and Trade - Report of the Export Department import) And at the first months of 2020, the amount of rice exported to China reached 429,261 tons, equivalent to 257.37 million, the average price is 599.6/ton, accounting for nearly 13.9% of the total quantity and nearly 17, 2% of the total rice export turnover of the country; up 92.4% in quantity, up 131.2% in turnover and up 20% in price The Philippines is also one of the top rice importers of Vietnam From 2019 until now, the Philippines has always held its position as the largest rice importer of Vietnam In 2017, the Philippines was Vietnam's second largest rice importer after China, with Vietnam's rice export to the country was 552.9 thousand tons and the export value reached $ 222.6 million, an increase of 40 % compared to 2016 In 2018, Vietnam's rice export quantity to the Philippines reached 1.02 million tons and the export value was 459.52 million USD In 2019, the Philippines became the top rice importer of Vietnam, the amount of rice exported to the Philippines reached 2.13 million tons of rice with a value of $ 885 million, accounting for 38.6% of the country's total exports The output and export value in 2019 will be double that of 2018 In the first months of 2020, the amount of rice exported reached 1.3 million tons, earning 598.61 million USD, equivalent to 459.6 USD / ton Only the amount of rice exported to this country accounts for more than 41% of the total rice export quantity of Vietnam and accounts for nearly 40% of the total turnover, compared to the same period in 2019 an increase of 22.4% in quantity, an increase of 41.4% in turnover turnover and increase 15.5% in price 19 Figure 2: Top 10 rice export markets of Vietnam get the most price in the first months of 2020 Source: Vietnambiz, top 10 thị trường xuất nhiều nhât tháng đầu năm 2020 In addition in the first months of 2020 Rice exports increased over the same ... 2: Analysis of Viet Nam rice export activity 13 2.1 Process of exporting rice in Vietnam 13 2.2 Procedure of exporting rice in Vietnam 14 2.3 Vietnam export rice price... improvement in Vietnamese rice quality in recent years II.3.2 The quality and categories of rice export in Vietnam a The quality of rice export in Vietnam The price of rice for export increases due to increased... improvement in Vietnamese rice quality in recent years II.3.2 The quality and categories of rice export in Vietnam a The quality of rice export in Vietnam The price of rice for export increases due to increased