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Lots of enterprises shift to parboiled rice manufacture and export. Not only sold at higher price but also solve problems in current rice production in Vietnam.
Parboiled rice is received from paddy soaked into hot water or hot water steam then dried up, after that being processed through stages of husking, milling and polishing.

As per VietFood foundation , this year in the first 3 months, Vietnam has exported nearly 16,400 tons of parboiled rice. This makes up around 1.13 % of rice exported from Vietnam.

However, exporting parboiled rice is not so easy because its market at present belongs to Thailand and India and also the technology investment into manufacturing of parboiled rice costs much more than that in white rice.

[As reported in Tuoi Tre newspaper dated Wednesday 10th April 2013 (Vietnam)]
High price, stable material source
Under scorching day of early April, workers at parboiled rice plant of VAP Food Company Ltd (Moc Hoa, Long An) are still working industriously to finish the work as schedule. Inside, the steaming, drying, crushing and polishing machine lines with 1st phase capacity of 500 paddy tons/day, are being installed. It is estimated to test run in June and officially come into operation by July.

VAP is a joint venture between Vinafood II and two other foreign parties, which are Auro Capital and Phoenix Commodities. Jointly having an investment of around 15 million USD in the 1st Phase. This is the 3rd parboiled rice plant in Vietnam. The other two are Vinh Phat Joint Stock company in An Giang and Thailand company in Tien Giang.

Mr. Arup Kumar Gupta, VAP General Director said, the joint parties realize that this is the good time to invest into parboiled rice plant in Vietnam, as although being the world leaders in rice exports, parboiled rice export from Vietnam is insignificant.
“Rice trading volume worldwide is about 35-36 million tons per year, parboiled rice makes up to 5-6 million tons of this. However, parboiled rice supply comes mainly from Thailand and India having a share of 70% of overall volumes” Mr. Arup told. Ideally, Vietnam has more advantages than these two giants in parboiled rice export as Vietnamese rice quality is better with lots of grades plus infrastructure serving export activities has improved after years of trade. Vietnamese rice price may not be lower but delivery capacity is stable which is quite different with “unstable” export policy of India. …. As for Thailand, Vietnam rice pricing is more competitive.

According to experts, investment into parboiled rice manufacture shows the development of Vietnam rice industry and the indispensable trend in rice exporting strategy of Vietnam. Cambodia, Myanmar, Pakistan appears as potential rice suppliers and they also choose white rice segment as main products. In recent years, Vietnam rice trade has become more and more difficult to compete with these countries as the price comes down continuously. Therefore, product diversification is necessary to “reduce burden” on white rice as well as to enhance export value of Vietnam rice.

Many risks on the market
Some experts say, parboiled rice manufacturing only needs uniform paddy materials and not distinguish grade as white rice. That’s why the plants can use IR50404 long grain paddy for manufacturing parboiled rice. This partly helps for output of the paddy that government bodies have warned not to use much, but has not been effective. Moreover, parboiled rice processing can use wet paddy bought directly from the field, this helps farmers by not spending time drying and preserving, especially in autumn – summer crop when its rainy season in Mekong Delta.

However, Mr. Nguyen Tho Tri, VAP chairman said, parboiled rice market is belonging to multi countries groups and it is not easy to penetrate and take it away from them. This explains why Vinafood II decided the joint venture cooperation instead of doing all self, despite being the one which makes up 40% of rice export volumes from Vietnam. In this Joint Venture, VNF II is responsible material supply for both, quantity and quality. The output will be taken care of by foreign partners.

“ Co-operating with partners who are strong in finance and have market for this product helps VNF II to limit risks in the market for the product” said Mr. Tri. According to him, primary markets for parboiled rice is Muslim population in West Africa, Middle East, South Africa. With presence of Phoenix Commodities all over the world, parboiled rice output of VAP is secured.

Being the first unit to export parboiled rice since 2010, till date, VNF II has exported parboiled rice to many countries in Middle East, South Africa at price of 40-50 USD/ton higher than white rice of the same grade.

However, as per Mr. Tran Ngoc Trung, General Director of Vinh Joint Stock Company, it is more difficult to invest into parboiled rice unit in comparison to white rice due to high investment capital and finding markets for exports. Therefore, there are not many companies to invest bravely.
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