Agriculture Reference
In-Depth Information
BOX 8.1
Management of rice exports and quotas, 1989-97
In the first years of rice surplus (1989-91), the government did not limit exports,
as most households had stocks of rice for their own consumption and the marketed
surplus was available to be exported. Because export quotas were not allocated on
a company basis but were issued on a commodity basis, any company with a gen-
eral import-export license was able to export rice, irrespective of their core busi-
ness. Stiff competition between companies resulted in a decline in the export price
combined with an eagerness to sign contracts, and hence, many SOEs found them-
selves in a position of not being able to deliver to contract specifications.
The open system of rice exports was difficult to control, and between 1992
and 1995, the government issued quotas on a company basis. However, the num-
ber of companies with an export license was still large. In 1992, 40 companies
(mostly in the south) had export permits, with up to 60 companies involved in ex-
ports of rice during peak periods. Between 1994 and 1995 the number of compa-
nies with export licenses was reduced further, and the government approved the
yearly quota. The Ministry of Trade allocated 70 percent of the quota to the main
SOE exporters, with the remaining 30 percent allocated among those companies
that were seen to be able to open new markets and contact foreign customers.
Provincial food companies in provinces with a total rice output of more than
200,000 tons were eligible for export permits, while provinces producing more
than 600,000 tons could have two food companies with permission to export. In
July 1995 the VINAFOODs (1 and 2) were established to oversee the operations
of the provincial food companies.
During this period the allocation of the quota was based on the previous
year's exports, rather than the quantity of rice held by that company in the cur-
rent quota period. This practice resulted in companies that did not have enough
rice to meet their license provisions selling their quotas to other companies to
maintain their export quantities and enable them to receive a quota license the fol-
lowing year. The quota licenses were issued every quarter, and the government
refrained from approving large quantities of exports during the first part of the
year, until the domestic demand conditions became more certain. The issuing of
quota licenses every quarter prevented companies from signing long-term con-
tracts with overseas buyers, as they could not ensure continuity of supply. This
situation resulted in large export quotas in the last few months of each year, and
relatively smaller amounts over the rest of the year. During the last few months
of the year companies were struggling to find customers, complete contracts, and
ship large quantities of rice.
Starting in 1996, the government rearranged the quota distribution to take
into account production of rice in each region and the ability of companies to ex-
port. The quota was on a yearly basis, but still suffered from a lack of informa-
