March 2, 2011

 

India-Vietnam grain trade affected by weevils 

 

 

As India exports corn and soy cake to Vietnam, Vietnam will return part of these products to India due to weevils.

 

Indian companies decided to halt the exports of corn and soy cakes to Vietnam after the latter re-exported close to 50,000 tonnes of materials for making animal feed which it imported from India before early February 2010.

 

Although halting exportation of animal feed to Vietnam is deemed as a retaliation by India, the Vietnam Feed Association said that "the action is news circulated for intimidation".

 

The information caused Vietnamese feed producers to worry as India is giving 30% of the total feed materials required by Vietnam currently.

 

In 2010, Vietnam imported slightly more than 800,000 tonnes of oil-cakes worth almost US$400 million and 400-500,000 tonnes of corn worth approximately US$108 million.

 

India also continues to be a big material supply source for Vietnam as the prices of the products are lower by US$35-40/tonne when compared to those offered by the US and Argentina.

 

Le Ba Lich, Chairman of the Vietnam Feed Association, confirmed that the information was news circulated for intimidation and was given by Indian enterprises to threaten Vietnamese enterprises.

 

The story started with the release from the Ministry of Agriculture and Rural Development (MARD) of Decision No 1616 in September 2010 to tighten the control over farm produce imports.

Although the materials imported from India are cheap, the low prices do not guarantee high quality. In fact, a big amount of imported consignments from India have weevils, a pest which can harm domestic production.

 

As Decision 1616 took effects immediately, both Vietnamese and Indian enterprises did not have sufficient time to adapt to the changes. Some import consignments were required to be re-exported, thus, creating big losses to enterprises.

 

In the fourth quarter of 2010, enterprises were forced to re-export approximately 50,000 tonnes of feed imported from India to India again after some harmful weevils were found.

 

Similarly, 44,500 tonnes of corn and soy cakes were detained and re-exported for the same reason from January to February 10, 2011.

 

MARD decided to let enterprises to obtain customs clearance on February 17 after the consignments of products were treated.

 

However, the imports have created losses of hundreds of thousands of dollars to enterprises as they had to foot the bills for storage fees, fines and treatment.

 

Lich said that Decision No 1616 is a necessary move to protect domestic production, but it is also compulsory to edit the legal document in order to avoid causing losses to enterprises.

 

He said that the imports which contain harmful weevils should be allowed to clear customs after they are treated.