Food security’s price

The Philippines, the world’s top rice importer, and Vietnam, the biggest producer of grains worldwide, have formed a strategic partnership that will secure a supply for Manila while guaranteeing a stable market for Hanoi.

The heads of the agriculture agencies of Vietnam and the Philippines sealed the alliance between both countries that will result in an investment partnership.

The Philippines is the largest buyer of Vietnam rice, accounting for 35 percent to 40 percent of the country’s global sales.

In the first half, Vietnam’s grains export totaled 4.68 million tons, worth $2.98 billion, an increase of 104 percent in volume and 32 percent in value over the same period last year.

Vietnam needed a stable market as its production of the Asian staple undergoes fundamental transformations in terms of production, domestic consumption, and exports to address demands from the global market, consumer tastes and climate change.

Vietnamese Minister of Agriculture and Rural Development Le Minh Hoan said his country has been focusing on improving quality, reducing costs, adapting to climate change, reducing emissions, ensuring national food security, expanding export markets, and building sustainable rice brands.

Agriculture Secretary Francisco Tiu Laurel Jr. said the Philippines faces low productivity that can be augmented through imports. The country imported 2.17 million tons of rice in the first half, of which 1.59 tons were from Vietnam.

Laurel said the Philippines mainly benefits from the partnership through opportunities to import machinery and technologies for rice cultivation from Vietnam. The first thing would be for the country to import fertilizer from Vietnam.

Both agriculture ministers acknowledged the value of the investment partnership in the rice industry will allow an exchange of technologies to optimize the grains production chain instead of exporting just milled rice.

Laurel said the country is particularly looking at a partnership with major fertilizer firm Binh Dien Fertilizer Joint Stock Co. to boost farm output.

Department of Agriculture officials led by Laurel sought a distribution agreement following a visit to the company’s facility in Hanoi last 6 July.

“We have high expectations following a visit to Binh Dien’s factory. Their management and technical team’s expertise is impressive and much needed in the Philippines,” Laurel said.

Binh Dien is contemplating the supply or even the manufacture of its fertilizer in the Philippines as part of its international expansion, he added.

The Viet agriculture company is considered the leading producer of NPK (a mixture of nitrogen, phosphorus, and potassium in fertilizer) in Vietnam, with a total capacity of 1 million metric tons (MMT) equivalent to 30 percent of that country’s domestic fertilizer requirement.

With its grains program, Vietnamese rice exports continue to gain both in volume and value making it a top exporter of the grain.

The price for Vietnam’s 5-percent broken rice, at US$585 per ton, is higher than the same type of Thailand by US$3 per ton, and US$10 per ton higher than the same product of Pakistan, said the association.

From rice exports, Vietnam earned $2.08 billion in the first four months from the sale of 3.23 million tons of rice, up 36.5 percent in value and 11.7 percent in volume over the same period last year, according to the Ministry of Agriculture and Rural Development.

Vietnam’s rice output is expected to reach 43 million tons in 2024, which covers domestic consumption and meets the export demand of more than 8 million tons.

The Philippines in turn is expected to remain as the top buyer of rice in the world market as the population grows while local farm output drops.

Through the deal, Vietnam would likely allot grain output to sell to the Philippines, which in turn would guarantee purchases.

While the relationship is skewed against Filipinos in that it will bind them to importing Vietnam rice, it guarantees constant supply that will have an impact in terms of lower prices.

It may result in the realization of prices nearer the campaign promise of P20 per kilo of rice, only this is imported from Vietnam.