Author: Mei Ling Tan

Indian government on July 20 announced a ban on non-basmati white rice as retail rice prices climbed 3% in a month after heavy monsoon rains caused significant damage to crops.

India accounts for more than 40% of world rice exports, and non-basmati white and broken rice accounted for around 10 million tons of a total of 22 million tons of Indian rice exports last year, according to the U.S. Department of Agriculture. With the ban taking effect, global insiders have raised concerns about food price rises.

Professor Vo Tong Xuan, an economist and expert in rice farming, said given the situation, the second half of the year will offer a golden opportunity for Vietnamese rice exports.

In the first half of the year, the average export price of Vietnamese rice increased by 11% to US$539 a ton.

After this ban, Xuan thinks the price could be as high as $600 per ton on average and high-quality varieties that can be sold at $700 a ton.

The professor said India’s sudden export ban will “create big impacts” on importing countries because they cannot find replacing rice shipments from countries with small supply.

Therefore, Vietnam and Thailand will be their next destinations. He forecast that Vietnam’s export turnover in the second half of this year could increase dramatically.

The director of a rice export company in Can Tho said that in July, the company’s rice export orders increased by 20% from the previous month and by 30% compared to the same period last year.

“Two days after the news that India banned rice exports, many buyers have asked us to sign them long-term contracts to ensure supply, but we’re still considering the offer,” said the director.

He added that in the first half of this year, the company’s rice export price increased by 22% over the same period last year.

After the ban, he forecasted that export prices could increase by 30-40% compared to last year.

The Rice Exporters Association says that rice is a staple for more than 3 billion people, and nearly 90% of the water-intensive crop is produced in Asia, where the El Nino weather pattern usually brings lower rainfall. Global prices are already hovering at their highest level in 11 years.

According to official data, India’s rice shipments reached a record 22.2 million tons in 2022, more than the combined shipments of the world’s next four biggest exporters of the grain – Thailand, Vietnam, Pakistan and the U.S. India exports rice to more than 140 countries.

Nguyen Duy Thuan, CEO of Loc Troi Group, agrees that India’s ban on rice exports is an opportunity for rice-exporting countries and that Vietnam can take advantage of this opportunity to act as a sustainable rice supply source for the international food market.

However, he noted that Vietnamese rice still has many challenges to face in terms of quality and export scale.

“In particular, farmers are yet to have access to high-quality varieties and therefore the rice yield has not reached the optimal level,” Thuan said.

Meanwhile, their farming techniques are still limited, resulting in many fertilizers and pesticides, affecting the rice’s quality and the environment.

In addition, the large-scale management capacity of Vietnam’s rice industry is still limited, Thuan added.

Thuan suggested that Vietnamese rice needs to improve quality and traceability in the supply chain to gain trust from consumers and regulators.

Professor Xuan said the government needs to take specific actions to monitor planting areas and create favorable legal corridors to support businesses.

“At the moment, in order to secure a large rice output for export, businesses need to associate long-term cooperation with traders and farmers, and ensure benefits for them,” Xuan said.

With import partners, businesses should ask them to sign long-term contracts to ensure stable export activities and also help farmers feel more secure in production.

Forecasting for this year’s supply, Xuan said that Vietnam has quite favorable weather and the yield could be high. He said that Vietnam can produce nine million tons of rice this year.

Data from the Ministry of Agriculture and Rural Development shows that rice exports in the first six months reached 4.27 million tons in volume and $2.3 billion in value, up 22.2% and 34.7%, respectively against the same period last year.

The U.S. Department of Agriculture has raised its forecast for Vietnam’s rice exports 2023 to 7.2 million tons, up from 7.05 million tons in 2022. Vietnam will rank third in the world in rice exports this year, after India and Thailand.