India exports maize and soybean cake to Vietnam and Vietnam re-exports part of the products back to India, causing a 'trade conflict' between the two countries. Cause: weevils.
Reuters reported that Indian enterprises have stopped exporting maize and soybean cakes to Vietnam after Vietnam decided to re-export nearly 50,000 tons of materials for making animal feed it imported from India before in early February 2010.
Halting exportation of animal feed to Vietnam has been described as retaliation by India, but the Vietnam Feed Association said that it was just “news circulated for intimidation”.
The information immediately worried Vietnamese feed producers, because India is now providing 30% of the total feed materials needed for Vietnam.
In 2010, Vietnam imported a little over 800,000 tons of oil-cakes, worth almost $400 million and 400-500,000 tons of maize worth around $108 million.
India remains a big material supply source for Vietnam also because the prices of the products are cheaper by $35-40 per ton than those offered by the US and Argentina.
Le Ba Lich, Chair of the Vietnam Feed Association, affirmed the information was just “news circulated for intimidation” and was released by Indian enterprises in order to threat Vietnamese enterprises.
The story began 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.
Meanwhile, the materials imported from India, though having lower prices are not high quality. A lot of imported consignments from India have contained weevils, a pest which can harm domestic production.
As Decision 1616 took effects immediately, both Vietnamese and Indian enterprises did not have enough time to adapt to the changes. Some import consignments were required to be re-exported, thus causing big losses to enterprises.
In the fourth quarter of 2010 alone, enterprises were forced to re-export nearly 50,000 tons of feed imported from India back to India after some harmful weevils were found.
From the beginning of the year to February 10, 44,500 tons of maize and soybean cakes were detained and re-exported for the same reason.
Treating the grains
MARD decided to allow enterprises to get customs clearance on February 17 after the consignments of products were treated.
However, the imports have caused losses of hundreds of thousands of dollars to enterprises as they had to pay storage fees, fines and for treatment.
Lich said that Decision No 1616 is a necessary move to protect domestic production, but also said that it is necessary to amend the legal document in order to avoid causing losses to enterprises.
He said that the imports which have already arrived in Vietnam and contain harmful weevils, should also be allowed to clear customs after they are treated.