analysis of demand supply and market price of rice in vietnam

First, the USD price rose again along with the steady increase ingasoline prices in 2012, which seriously affected the production and production of agriculturalproducts; rice is constant

ANALYSIS OF DEMAND, SUPPLY AND MARKET PRICE OF RICE IN

VIETNAM

LECTURE : Mrs Lê Thị Thế Bửu

CLASS : MI17B

GROUP : RED (1)

Nguyễn Huỳnh Gia Hân QS170034

Đỗ Thị Lệ Quyên QS170068

Nguyễn Khưu An Khang QS170017

Võ Lê Diễm Quỳnh QS170055

Võ Như Trâm QS170004

Table of Contents

I INTRODUCTION 1

II DEMAND, SUPPLY AND PRICE OF THE VIETNAMES RICE MARKET 2

1 Theoretical background 2

1.1 Market 2

1.2 Demand 2

1.3 Supply 2

1.4 Market equilibirium 2

II The current state of the rice market in Vietnam 3

1 Vietnamese rice market in recent year 3

2 Rice market forecasting 5

3 Advantages, disadvantages and other weaknesses in Vietnamese rice industry 5

4 Activities of businesses in the industry: 8

5 Government polices 9

6 Solutions 10

III CONCLUSION 11

REFERENCES 11

I INTRODUCTION

Vietnam is a country specializing in agriculture Agriculture is the sector that contributes the most to GDP each year and also the sector that creates the most jobs for everyone Our country ranks second in the world after China There are many advantages to various rich, high-quality, low-cost products and agricultural products that significantly contribute to the economy, especially food crops such as rice, corn, and potatoes Agricultural exports are constantly increasing, especially rice bringing a large part of income to the country

However, there are two reasons why economic fluctuations significantly affect agriculture worldwide First, the USD price rose again along with the steady increase in gasoline prices in 2012, which seriously affected the production and production of agricultural products; rice is constantly falling in price, making production and export difficult Secondly,

in the face of the complicated developments of the global COVID-19 pandemic in recent years, the agricultural and rice production situation is facing unprecedented difficulties and challenges in 2019, when the country's rice production is gradually redeveloped and restored

In the face of the apparent fluctuations in rice supply and demand in the Vietnamese market in recent years, our team decided to implement the topic "Analyzing market supply and demand and rice prices in Vietnam"

1

II DEMAND, SUPPLY AND PRICE OF THE VIETNAMES RICE MARKET

1 Theoretical background

1.1 Market

A market is a group of buyers and sellers of a particular good or service The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product

1.2 Demand

- Quantity demanded: the amount of a good that buyers are willing and able to purchase

- Law of demand: the claim that, other things being equal, the quantity demanded of

a good falls when the price of the good rises

1.3 Supply

- Quantity supplied the amount of a good that sellers are willing and able to sell

- Law of supply: the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises

1.4 Market equilibirium

- Equilibrium: a situation in which the market price has reached the level at which quanity supplied equals quantity demanded

- Equilibrium price: the price that balances quantity supplied and quantity demanded

- Equilibrium quantity: the quantity supplied and the quantity demanded at the equilibrium price

II The current state of the rice market in Vietnam

1 Vietnamese rice market in recent year

1.1 Procuduction

According to the General Statistics Office, as of January 15, 2022, the country has cultivated 1,909.8 thousand hectares of winter and spring rice, equal to 104.9% of the same period last year, of which: Northern localities reached 132.1 thousand hectares, equal to 201.5%; the southern localities reached 1,777.7 thousand hectares, equal to 101.3%, in the Mekong Delta alone, reached 1,436.6 thousand hectares, equal to 100.6% (Huyen, n.d.) 1.2 Consumption

According to preliminary statistics from the General Department of Customs, rice exports to foreign markets in January 2022 increased by 3.2% However, they decreased by 2.8% in turnover and 5.8% in price compared to December 2021 In comparison to January

2021, there was a sharp increase of 45.4% in volume, up 28.2% in turnover but down 11.8% in price, reaching 505,741 tons, equivalent to 246.02 million USD, the average price of 486.5 USD / ton (baodautu.vn, n.d.)

Source: General Department of Customs Regarding the export market, the Philippines is still a large market of Vietnamese rice when importing 234 thousand tons, equivalent to 110 million USD, up 38% in volume and nearly 21% in value compared to the same period last year (baodautu.vn, n.d.)

Ivory Coast has overtaken the Chinese market to the second place in value, with production reaching 56,675 tons, equivalent to 23.38 million USD, and the average price of 391.9 USD / ton, a firm increase of 424% in volume, up 252.5% in value over the same period Rice exports to Malaysia also increased sharply by 104% in volume and 67.5% in value over

the same period in 2021, reaching 34,925 tons, equivalent to 16.07 million USD (baodautu.vn, n.d.)

In contrast, rice exports to China in January 2022 unexpectedly decreased by 36% in volume and 37% in turnover compared to last year, reaching 37 thousand tons with a value of nearly 19 million USD (baodautu.vn, n.d.)

Source: General Department of Customs 1.3 Price

According to the Ministry of Agriculture and Rural Development (MARD), in the world market, the price of Vietnamese rice updated to today (February 11) remained stable at 393 USD / ton for 5% broken rice, 373 USD / ton for 25% broken rice and 328 USD / ton for 100% plate rice Meanwhile, Thailand's 5 per cent broken rice continued to fall by $4 a tonne

to $405 a tonne, while Pakistan dropped $5 a tonne to $348 a tonne (Gạo Xuất Khẩu Của Ấn

Độ Tắc Nghẽn, Cơ Hội Cho Việt Nam Bán Gạo | Dân Việt, n.d.)

According to preliminary statistics from the General Department of Customs, the average rice export price in the first month of the year was 486.5 USD / ton, down 11.8% compared to the same period last year (Gạo Xuất Khẩu Của Ấn Độ Tắc Nghẽn, Cơ Hội Cho Việt Nam Bán Gạo | Dân Việt, n.d.)

As for domestic rice prices, January 28 prices continued to level off for all rice varieties surveyed Accordingly, IR 50404 rice is in the price range of 5,300 - 5,500 VND / kg, IR

50404 (dry) rice continues to anchor at the mark of 6,000 VND / kg, Dai Thom 8 maintains trading in the range of 5,900 - 6,100 VND / kg, Nang Hoa 9 does not increase, remains at the mark of 5,900 - 6,000 VND / kg, Nang Nhen (dry) keeps the price of 12,000 VND / kg (Giá lúa gạo hôm nay 28/1, 2022)

For OM varieties, the purchase price of OM 5451 is about 5,300 - 5,500 VND / kg, OM

380 rice remains the same in the range of 5,400 - 5,500 VND / kg and OM 18 rice currently ranges from 5,900 - 6,000 VND / kg (Giá lúa gạo hôm nay 28/1, 2022)

The price of sticky varieties continues to remain the same as the old price, the intestinal stickiness continues to cost 14,000 VND / kg, Long An sticky (dry) is priced at 6,500 VND /

kg and the peel (dry) is priced at 6,800 VND / kg (Giá lúa gạo hôm nay 28/1, 2022)

In An Giang market, rice prices go sideways on a large scale Specifically, rice is usually

at about 11,500 - 12,000 VND / kg, fragrant rice with long grains anchored at 18,000 VND /

kg Nang Nhen rice maintains at the mark of 20,000 VND / kg Huong Lao rice is stagnant at 19,000 VND / kg, Soc rice is usually 14,000 VND / kg, and typical white rice costs 14,000 VND / kg (Giá lúa gạo hôm nay 28/1, 2022)

2 Rice market forecasting

Vietnam's rice exports will decrease slightly, temporarily moving to the second position after two consecutive years of standing and down to third place after Thailand and India with the export output of about 6.3 million tons because Vietnam is following the strategy on the project "Restructuring Vietnam's rice industry to 2025 and 2030" clearly defined to 2025 and

2030 In 2025, rice export output will only be about 5 million / ton, and the amount of rice will gradually decrease to focus on improving the quality, value and brand of rice in Vietnam This

is a very right decision, and the business people also very approve and respond to the above temple and have opinions, market research as well as monitor the behaviour of consumers, many businesses have transferred white rice to high-quality fragrant rice so that from there will have a more stable market The quality and the brand are good and not much competition

3 Advantages, disadvantages and other weaknesses in Vietnamese rice industry

3.1 Adavantages

- Favorable natural conditions help:

+ Diversifying agricultural products

+ Applying measures of intensive farming, increasing the crop, shifting the crop structure

+ Based on the terrain, the land has different forms of cultivation

- Investment in agricultural science and technology, combined with the acquisition and application of scientific and technological achievements in rice countries in the region and the world, is increasing

- The system of mechanisms and policies of the State encourages and creates conditions for the development of agricultural production

- Vietnam has joined the WTO This is an excellent opportunity to create favourable conditions for rice and other agricultural products to have equal rights to participate in the world's agricultural trade market

- Our country is effectively exploiting tropical agriculture:

+ Focused mainly on two factors: soil and climate In agriculture, people still have a saying: "What kind of land does that plant or potato plant strange fields?" and "Until March, when the rice flowers fall, apply sesame seeds"

+ In the past, our ancestors had learned from such experiences, and today, the distribution

of crops and livestock is more and more noticed by economic efficiency

3.2 Disadvantages

- Irrational structure of agricultural production:

The structure of agricultural products has not been suitable for market demand With effective exploitation and use of land and water resources for production, high distribution, productivity and quality of crops and livestock are still low

- Strong and sustainable agricultural product value chains have not yet been established: The objective and subjective factors for the creation and development of the agricultural commodity value chain are very primitive and have not been fully formed; popularizing the lack of organic linkage mechanism between agricultural production and processing, packaging and consumption of agricultural products; The policy to encourage the production and consumption of agricultural products through contracts under the Prime Minister's Decision

No 80/2002/QD-TTG dated June 24, 2002, is not strong enough to create close links between farmers and businesses and agribusiness organizations

- Policies to support the development of domestic production have not created a strong enough incentive to overcome the current weakness of agricultural production

+ Policies on agricultural land has not been directed towards the same level of concentrated agricultural production areas and has not yet promoted the creation of large-scale production units;

+ Policies to support taxes, freight, and other fees have not been fully applied and are not attractive to investors to invest in the agricultural business;

+ Preferential credit policy in terms of the loan amount, lending conditions, and the loan period are not flexible to effectively support large-scale production of goods

+ The investment policy is also not large enough to create infrastructure to meet the requirements of large-scale commodity agricultural production development, especially infrastructure in concentrated production areas of industrial crops and fruit trees

+ The policy on the development of agricultural and human resources is slow to be implemented and is ignored, making agricultural and human resources unable to meet the requirements of modern production, being cooperative and strictly complying with regulations

on hygiene and safety food safety according to WTO commitments;

+ Agricultural science and technology policies have not had enough impact on improving productivity, quality and competitiveness of agricultural products Many agricultural product industries such as split, mulberry, vegetables, fruits, poultry and pig raising lack competitive technology in breed, cultivation and harvesting processes, limiting the value enhancement increase

3.3 Other weaknesses

+ The industry has not yet focused on serving the needs of suitable machinery and equipment with high labour productivity in agriculture Most post-harvest and agricultural product processing equipment must be imported at high prices, and there is no service manual

or warranty, causing many difficulties for agricultural producers

+ The quality control system for agricultural products and inputs has not yet been established to create a healthy market for agricultural products and inputs The backlog of residues of pesticides, antibiotics banned from being used in agricultural products, and the status of harmful agricultural materials without instructions for use, which can be freely

imported, are common—causing many difficulties and pressing difficulties for agricultural producers and consumers It reduces quality goods and does not meet the requirements for quality and safety for health

4 Activities of businesses in the industry:

In January 2022, most rice enterprises recorded positive business results In particular, the profit before tax in the fourth quarter of 2021 of Trung An Hi-tech Agricultural Jsc (TAR) increased nearly six times in the same period last year to 46 billion VND TAR's net revenue reached 3,120 billion VND, an increase of 15% compared to 2020; Gross profit reached 282 billion VND, up 32% Revenue from financial activity doubled while financial expenses rose just 12 per cent However, the financial cost tripled, causing the company's full-year pre-tax profit to increase only 8% compared to the previous year, reaching

107 billion VND (Bao-Cao-Thi-Truong-Gao-Thang-1-2021-16453256191281074711515.Pdf, n.d.)

At Loc Troi Group JSC ( LTG), in the fourth quarter of 2021, LTG recorded revenue of VND 3,110.1 billion, and profit after tax reached VND 159.72 billion, 12% and 2.3%, respectively, compared to the same period last year In particular, the gross profit margin improved from 20.1% to 21.4% In the period, gross profit decreased by 6.2% over the same period, corresponding to a decrease of VND 44.1 billion to VND 666.6 billion; financial expenses increased by 52.8%, respectively by VND36.18 billion to VND 104.68 billion; the cost of sales and management of enterprises increased by 5.2%, respectively increased by VND 22.58 billion to VND 457 billion; other profits increased by VND55.88 billion to VND55.83 billion and other activities fluctuated negligibly Accumulated in 2022, the company recorded revenue of VND 10,224.1 billion, and profit after tax reached VND 421.87 billion, up 36.2% and 14.4%, respectively, compared to implementation in 2021.(Bao-Cao-Thi-Truong-Gao-Thang-1-2022-16453256191281074711515.Pdf, n.d.)

Vinaseed Group JSC (NSC) also recorded positive revenue and profit growth results over the same period Specifically, in the fourth quarter, net revenue reached VND 749 billion, an increase of 12.5% over the same period Meanwhile, the capital cost increase rate was lower, only 10% leading to gross profit from sales and service