Price limit on imported rice dents Vietnam export prices

MANILA, Philippines —  Vietnam rice prices declined steeply last month as harvest in the world’s second-largest exporter is set to begin coupled by the imposition of a price ceiling on imported rice by the Philippines.

The United Nations’ Food and Agriculture Organization (FAO) reported that its all-rice price index in January dropped by 4.7 percent to 113.6 points on a monthly basis and declined by 20.4 percent on an annual basis.

The FAO noted that the Indica price index registered the “sharpest” decline last month as it slid by 5.4 percent from December to a 25-month-low of 120.3 points.

One of the reasons behind the drop in the Indica price index was the lower rice prices in Vietnam, where trade sentiment was weighed by its upcoming harvest and recent market developments in the Philippines, according to the FAO.

In particular, the FAO pointed out that the implementation of a maximum suggested retail price (MSRP) by the Philippines, which is Vietnam’s prime destination for rice, coupled by the declaration of a food security emergency on rice impacted Vietnam rice prices.

“These factors translated into a 14 percent monthly slide in Vietnamese quotations to their lowest since September 2022,” the FAO said.

“In the case of five percent broken rice, the slump positioned Vietnamese prices at a $9 to $62 discount to those of competing Asian origins,” the FAO added.

Based on its monitoring, the FAO said the average price of five percent broken Vietnamese rice last month stood at $416 per metric ton (MT), more than a third lower than the $634.5 per MT recorded in the same month of 2024.

Meanwhile, the 25 percent broken Vietnamese price has plunged by 35 percent year-on-year to $388.8 per MT from $599.3 per MT, according to the FAO.

Vietnam accounts for at least 75 percent of the country’s annual rice imports. About 3.6 million MT of the country’s total rice import volume of 4.81 million MT last year came from Vietnam.

The Bureau of Customs has also seen a sharp drop in its reference values for imported rice with five percent broken Vietnamese rice pegged at $399 per MT while its 25 percent counterpart estimated at $371 per MT.

The drop in Vietnamese rice prices have forced local traders and importers to hold off or cancel some of their contracts to take advantage of the more affordable prices, Reuters reported over the weekend.

Agriculture Secretary Francisco Tiu Laurel Jr. confirmed to The STAR that indeed there are rice contracts with Vietnamese exporters that were canceled by local importers and traders because of the drastic drop in prices.

The Department of Agriculture (DA) imposed an MSRP on premium imported rice stocks, or those with five percent broken, as part of its measures to pull down prices of the staple in the market and curb possible profiteering by wholesalers and retailers.

The MSRP started at a P58 per kilo ceiling and was revised downward to P55 per kilo last week. The MSRP is set to be implemented nationwide beginning Feb. 15.

Tiu Laurel  earlier said he expects a further reduction of the MSRP in the coming weeks, possibly below P50 per kilo by early March.

“After this reduction, we plan to lower it further to P52 a kilo by mid-February and then at P49 per kilo two weeks after. This should reflect the lower global prices of rice and the reduced tariff,” Tiu Laurel said.

Imported premium rice is currently selling from P50 to P58 per kilo in Metro Manila markets with an average price of P53.83 per kilo, based on DA price monitoring report.

Imported well-milled rice, meanwhile, ranges from P44 to P55 per kilo while its regular-milled counterpart costs P38 to P46 per kilo.