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EVFTA helps Vietnam's rice compete fairly in Europe

04/08/2022

Thanks to effectively taking advantage of the advantages from the EVFTA Agreement, Vietnam's rice exports to the European Union (EU) have made a strong breakthrough in recent years.

Only in the first six months of 2022, Vietnamese enterprises have exported more than 50,000 tons of rice to the EU market, earning nearly USD 37 million, a sharp increase of 84% in volume and 96% in value over the same period in 2021. Of which, nearly half are fragrant rice (ST25, ST24, ST20, Dai Thom 8, Jasmine, etc.), the rest are white rice, Japanese rice, brown rice, organic rice, etc.

In the EU, consumer tastes are mainly for high-value and high-quality rice, therefore, the average export price of Vietnam's rice to this market is up to USD 729/ton, higher than the average USD 489/ton of the whole country.

Notably, while the country's average rice export price decreased by 10.2% in the first 6 months of the year, Vietnam's rice export price to the EU still recorded an increase of 6%.

Regarding the market, Italy suddenly rose to become Vietnam's largest rice import market in the EU with 19,691 tons, worth more than USD 14 million, an increase of 5.4 times in volume and an increase of 5.6 times in value over the same period last year; accounting for 39.2% of Vietnam's total rice exports to the EU. Italy is currently experiencing its worst drought in 70 years, causing crop damage.

The next major markets to import Vietnam's rice in the EU are Germany with 9,326 tons, an increase of 57.6%; Netherlands with 6,361 tons, an increase of 19.2%; especially Sweden with 3,693 tons, an increase of 201%.

The EVFTA is believed to be the main reason for the growth of rice exports to the EU market. According to the regulatory agencies, rice is always among the commodities with the highest rate of using the EVFTA C/O form with the rate of 100% in 2021.

According to the commitment from the EVFTA Agreement, the EU will give Vietnam a quota of 80,000 tons of rice per year, including: 30,000 tons of milled rice, 20,000 tons of unmilled rice and 30,000 tons of fragrant rice. In particular, the EU will completely liberalize broken rice, this commitment helps Vietnam to export an estimated 100,000 tons to the EU annually. For rice products, the EU will bring the tax rate to 0% after 3-5 years.

Before the EVFTA took effect, Vietnamese rice exported to the EU was subject to quite high import tax. In addition, Vietnam at that time had not yet been granted a tariff quota by the EU, so it was difficult to compete with rice from other countries that were allocated tariff quotas such as Thailand, the US, Australia, India, and Pakistan and less developed countries that were exempt from tax and were not subject to quotas such as Laos, Cambodia, and Myanmar.

Therefore, the EVFTA has opened an opportunity for Vietnamese rice to compete fairly with other countries' rice when exporting to the EU, especially for high-value specialty rice lines.

In fact, many businesses have conquered this market by creating product brands for businesses and for Vietnamese rice when entering the EU market.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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