Monthly Archives: January 2015

JCR-VIS reaffirms entity ratings of Matco Rice Processing at A-/A-2

JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Pakistan’s largest basmati rice exporter, Matco Rice Processing (Pvt) Limited, at “A-/A-2” (Single A-Minus/ A-Two) with stable outlook. Despite being a highly competitive market with numerous international rice brands, rice exports from Pakistan increased by 3.3 percent in FY14 to US 1.9 billion dollars.

Matco was able to capture a larger share of the same as the company’s exports increased by 25 percent in FY14. Growth in exports has been achieved due to increased sale of basmati rice which fetched a better price in the international market compared to IRRI.

Sharing his thought on the rating, Chairman Matco Rice, Jawed Ali Ghori said, “This rating is yet another testament of our market leading product quality and reflects upon the trust of our valued customers. Our management has projected increased margins and overall profitability in the long-run and relishes the current entity rating of A-/A-2 by JCR-VIS with an aim to further enhance it in the years to come.”

He further added that “Matco Rice is constantly striving to increase the quality of products by applying international standards and strengthening rice procurement procedures.-PR

China’s Low-Tech Smuggling Fad: Vietnamese Rice

rice hq

Smuggling in the world’s second largest economy might conjure images of small-package, high-value commodities coveted by Chinese urbanites, such as iPhones, cocaine or even lobsters. But another contraband of a more common variety has been flowing in vast quantities across China’s 800-mile border with Vietnam: rice.

How much? It’s likely that more rice is being smuggled from Vietnam into China than the volume sent in legal shipments, the chief of China’s cabinet-level State Council’s rural policy unit Chen Xiwen said at a university conference over the weekend. That means there may be at least 1.2 million metric tons of rice smuggled into the mainland in the first 11 months this year – a quarter of the total amount of rice the U.S. consumes in a year.

By official volumes, Vietnam is already China’s largest rice supplier, accounting for slightly more than half of China’s total rice imports.

The contraband trade has already been partly responsible for triggering “Green Wind,” a Chinese government crackdown on illegal trade earlier this year that netted $1.16 billion in tax evasion on all contraband recovered.

High prices in China are drawing the illegal rice cargoes. Rice in China is currently selling for about 4,000 yuan ($643) a ton, well above the 3,100 yuan ($498) that Vietnamese rice can fetch, said Shanghai JC Intelligence Co. analyst Zhang Yan. It’s not the first time this sort of arbitrage has encouraged Southeast Asian smugglers – sugar has in the past also seen similar trends.

Much of this price discrepancy is thanks to Beijing’s support policy for farmers, who get to sell to the government at pre-fixed rates if market prices fall below its floor. Analysts say the government isn’t likely to change this policy anytime soon, given its political sensitivity among rural communities. Mr. Chen couldn’t immediately be reached for comment.

China offers rice cultivation technology to Bangladesh

China will transfer technology for its indigenous high-yield rice variety to Bangladesh as part of agricultural cooperation between the two countries, media reported Monday.

Bangladesh Foreign Minister Abul Hassan Mahmood Ali said Monday that Chinese Foreign Minister Wang Yi, during his just concluded visit, also talked about taking “necessary steps” for setting up a rice research centre in Bangladesh, bdnews24.com reported.

Ali said Wang’s visit was “very successful” as new areas of cooperation emerged, and he believed it strengthened the existing Dhaka-Beijing relations further.

He said Bangladesh would need to increase food production on its small arable land and the transfer of rice cultivating technology by China would help in this.

The Chinese foreign minister’s visit was aimed at reviewing the progress of the commitments both sides made during Bangladesh Prime Minister Sheikh Hasina’s Beijing visit in June.

It was also aimed at mapping out the details of joint celebrations marking the 40th anniversary of the establishment of diplomatic ties between the two countries next year when Dhaka expects the Chinese president to visit the country.

The Bangladesh foreign minister said that China would have 100 young Bangladeshis visiting the country as part of the celebrations next year.

China will finance the $1.2-billion project of building a tunnel beneath the Karnafuli river.

Ali said China has endorsed Bangladesh’s vision of acting as a bridge between south Asia and southeast Asia, given its strategic geographical location.

China assured Bangladesh of helping it to become a member of the Shanghai Cooperation Organisation (SCO) and Asia Pacific Economic Cooperation (APEC).

Both sides also agreed to work closely during next year’s multi-lateral discussions for adopting a post-2015 development agenda and during climate change talks.

They stressed on the need for quick implementation of the proposed Bangladesh, China, India and Myanmar (BCIM) economic corridor.

China has proposed to initiate free trade agreement (FTA) negotiations to narrow down the trade imbalance, the Bangladesh foreign minister said.

Ali said Wang termed Bangladesh an “important neighbour” and stressed on bilateral cooperation to strengthen the relations.

Five priority areas of cooperation — trade, agriculture, industry, energy and infrastructure — were identified.

China welcomed Bangladesh’s proposal of forming a joint working group on trade and industry and a bilateral investment forum.

The issue of the specialised economic trade zone that Bangladesh offered to China during Prime Minister Sheikh Hasina’s visit was also discussed.

Wang reportedly said that Chinese companies were eager to relocate factories to Bangladesh.

He promised Chinese cooperation in setting up power plants and exploring oil and gas in Bangladesh.

Hasina, during her meeting with Wang Sunday, said her government was inclined to strengthen strategic ties with China and would follow the Asian giant as its development model.

“Bangladesh will follow China as the development model. China’s development means development of Asia. The two countries can attain the goal of poverty eradication through mutual assistance,” Hasina’s press secretary A.K.M. Shamim Chowdhury quoted the prime minister as saying.

BUSINESS Vietnam should stop cross-border trade with China: WTO Center

Rice HQ

Vietnam should reduce and eventually cease cross-border import and export activities with China in order to narrow its trade gap with the country, a unit under the Vietnam Chamber of Commerce and Industry has proposed.

Import-export transactions between the two countries should only be done via the official mechanism rather than across the border, the WTO Center said in a report, which also outlines many other strong suggestions to narrow Vietnam’s trade deficit with China.

Cross-border trading is a legal international economic activity between people of two neighboring states. The products usually are traded in small volumes and values, and require less paperwork than official trading activities.

The cross-border trading mechanism has been designed to facilitate traders in border areas to manufacture and exchange goods in small volumes, but the policy has in fact failed to attain its objective, according to the WTO Center.

Many traders have made use of the cross-border trade to dodge taxes, it elaborated.

Vietnam’s trade deficit with China widened to US$28.9 billion this year, up 21.8 percent from the $23.7 billion recorded last year, according to the General Statistics Office.

The WTO Center functions as a channel of online consultation, discussion and support for Vietnamese business associations and enterprises about the World Trade Organization and other legal international trade issues.

The center provides legal documents, updated information, publications and training materials on WTO and other legal issues of international economic integration, according to its website.

Many Vietnamese agricultural products are mostly exported to China across the border.

In 2013, for instance, China imported 2.1 million tonnes of rice from Vietnam, most of which was done via cross-border transactions, according to the Vietnam Food Association.

In the first five months of this year, China’s imports of Vietnamese rice rose 50 percent from a year earlier to 600,000 tonnes.

However, 64 percent of the rice export contracts with China have been canceled, and Chinese traders usually force Vietnamese exporters to sell at low prices, the association noted.

Economic experts have attributed the huge shipments of Vietnamese agricultural products to China to the low requirements of the Chinese importers for product quality.

The simple paperwork and short distance of transport via cross-border trade are also a plus for local traders to focus on selling goods to China.

Muoi Son, a rice trader in the southern province of Tien Giang, said he prefers selling to China across the border as “it is an easy market with high demand.”

Son admitted to a local newspaper that he does acknowledge there are payment risks in cross-border trade.

“But we got used to this method so it’s hard to get rid of it,” he said.

Rice import on the rise

Statistics from Ningbo Inspection and Quarantine Bureau shows that up to Dec. 18 the bureau has inspected 167 batches of imported rice, of 105,300 tons and worth $45.92 million, up 0.92, 1.81 and 2.04 times respectively over last year. The import of rice from Ningbo Port has been on the rise since two years ago. The total volume this year exceeds 100,000 tons, surpassing the total of 2007 and 2013, the historical high.
According to statistics, the imported rice from Ningbo Port in 2014 is mainly from Vietnam, Thailand, Pakistan and Cambodia. 70% of the total is from Vietnam, which are mainly for sale or used as production material.
The huge price gap is the major cause for the rapid increase of imported rice. Since 2012, the rice price in China is obviously higher than countries like Vietnam. The imported rice has price advantage. As a result, the domestic food processing factories are more likely to replace domestic rice with imported one, which leads to the rapid increase of the rice import. Thanks to the geographical advantage of Ningbo Port and the preferential polices by the Municipal Inspection and Quarantine Bureau, the customs clearance of Ningbo Port has been optimized and thus attracted numerous rice importers. Ningbo Port has become a major port for rice import in East China.

Nigeria’s New Rice Policy Criticized for Creating $216 Million Losses to Exchequer

Experts have slammed Nigeria’s new rice policy of granting waivers and concessions to importers as part of efforts to bridge supply-gap of import-grade rice of around 1.5 million tons in the country, according to local sources.

In order to encourage investment in the rice sector and support its rice self-sufficiency plan, the Federal government has decided to provide duty waivers to existing millers as well as new investors in the country. According to the new rice policy, existing millers and investors have been receiving a preferential levy of 20% and duty of 10% while other importers are required to pay a higher levy of 60% and 10% duty to the government. Accordingly, the Federal Ministry of Agriculture and Rural Development has been allocating rice import quotas to various importers, millers and investors.

Experts say this policy has some flaws. First, investors who do not have a strong base in the country’s rice sector have been applying for preferential import quotas. They noted that of the 28 beneficiaries so far, only 16 have invested in mills and the remaining 12 did not have investment in mills but have accounted for higher imports than those who really have mills. They also noted that most of the investors who got import allocations have been trading their quota, which they got at 20% levy, to other stakeholders between 60 – 80% levy. They have slammed the government for granting import quotas indiscriminately and creating losses to the extent of N20 billion (around $108 million) to the exchequer.
They said the new policy of the government would encourage rice smuggling in the country leading to another N20 billion (around $108 million) losses.

However, the Agriculture Minister denied the experts’ claims saying the Ministry has not been granting import quotas indiscriminately and they have been following a specific methodology to do so. He noted that that importers/millers/investors applying for preferential import levy are required to submit a Domestic Rice Production Plan (DRPP) to prove that they have been working towards increasing rice production in the country.

Myanmar’s rice export earns over 300 mln USD in 9 months

Myanmar earned over 342 million U.S. dollars through exporting 914,969 tons of rice in the first nine months (April-Dec) of fiscal year 2014-15, local media reported Sunday.

Of the rice export, 716,272 tons were sold through border trade.

Myanmar’s rice is mainly exported to China and other Asian countries and regions, as well as Russia and some European countries and African countries.

One ton of Myanmar rice was priced at about 400 dollars last month.

In addition to maritime trade, Myanmar also exported rice through border points which accounted for 70 percent of the total rice export volume.

According to official statistics, the rice export earning during 2013-14 was 460 million dollars, a 15.4-percent drop from 544 million dollars in 2012-13.

Vietnam’s rice output seen up at 44.84 mln T in 2014

Vietnam, the world’s third-largest rice exporter, produced an estimated 44.84 million tonnes of paddy rice this year, up 1.8 percent from 2013, thanks mainly to higher yield, the Agriculture Ministry said on Friday.

The rice acreage this year dropped 1.2 percent from 2013 to 7.8 million hectares (19.27 million acres), while the average yield rose 3 percent, the ministry said in a monthly report.

The country’s rice exports this year would ease 0.9 percent from 2013 to an estimated 6.53 million tonnes, the ministry said, putting the Southeast Asian country far behind major grain exporters Thailand and India.

Two witnesses to be questioned in Yingluck rice case

The joint panel of public prosecutors and graft-busters has agreed two more people still need to be questioned about the purported government-to-government rice sales before a decision can be made on the indictment of former prime minister Yingluck Shinawatra over the loss-ridden scheme, the Bangkok Post reported, citing NACC secretary-general Sansern Poljiak.

Asia Rice: trading slows on thin demand; prices mixed

Trading in Asia’s rice market weakened on thin demand amid price declines in Vietnam, but rates held up in Thailand as exporters stockpiled the grain before the holidays, traders said on Wednesday. “A major exporter has been buying a lot of rice from the market for the past few days,” a Bangkok-based trader said, adding fears prices could rise after the holidays prompted more buying. “Thai rice prices have never been this low so they probably think it is a good time to buy,” he said.

Thai benchmark 5 percent broken grade rice edged up to $418 per tonne on Wednesday, free-on-board (FOB), from $413-$415 a week ago, thanks to the domestic purchases. On Monday, Thailand’s military junta approved the sale of 247,000 tonnes of rice in an open tender, part of continued efforts to offload rice from huge stockpiles accumulated under the previous regime.

On Friday, Thailand struck a deal to sell 2 million tonnes to China, also the biggest buyer of Vietnamese rice this year. In Vietnam, prices eased as buyers stayed away during the holiday-shortened week while stocks thinned, traders said. The 5 percent broken rice dipped to $385-$390 a tonne, FOB Saigon Port, from $390-$395 a tonne last Wednesday. The 25 percent broken rice stood unchanged at $360-$365 a tonne.

“The remaining stocks are very low now and only from late February can Vietnam offer its fresh winter-spring rice,” a trader in Ho Chi Minh City said, referring to the country’s biggest rice crop with its harvest peaking in March/April. Thai rice exports this year could touch 10.2 million tonnes, just 500,000 tonnes below its 2011 record high, a level that could help it displace India as the top exporter, the UN Food and Agriculture Organisation (FAO) said in a quarterly report issued earlier this month. It projected India’s exports at 10 million tonnes and said Vietnam will ship 6.6 million tonnes during the whole of 2014. The three countries would account for 67 percent of global rice trade in 2014, the FAO data showed.