Vietnam rice exporters expect higher prices as India slaps curbs to reduce global supply

Bags of rice are loaded on to a ship for exports. Việt Nam is expected to export 6.5- 6.7 million tonnes in 2022 for US$3.3 billion. — VNA/VNS Photo

HCM CITY — With India’s recent rice export restrictions, Vietnamese exporters expect to increase shipments and hike prices, industry insiders have said.

Nguyễn Quang Hòa, director of Dương Vũ Co Ltd (Long An Province), said India has imposed a 20 per cent export tax on the grain, and banned shipments of broken rice to soften domestic prices following a significant decline in production due to a poor monsoon.

The move would affect the global market for one of the most commonly eaten staple foods amid a surge in commodity prices following the prolonged Russia-Ukraine conflict.

It would also encourage buyers to shift to rivals such as Việt Nam and Thailand, which have been struggling to increase exports and prices, he said.

“Vietnamese rice exporters are holding off on deals, expecting the price to rise.”

Nguyễn Văn Đôn, director of Việt Hưng Co Ltd (Tiền Giang Province), said the prices of rice of all kinds have already gone up by an average of VNĐ300 per kilo compared to before the Indian restrictions.

Nguyễn Văn Hiếu, export director of Lộc Trời Group, said shipments of the grain are also expected to increase in the remaining months thanks largely to high demand from countries such as the Philippines, China and the EU.

The prolonged Russia-Ukraine conflict has led to a shortage of wheat and escalating food prices in the EU. European and South American countries are also in the midst of production difficulties.

To make up for this shortfall, European countries are likely to buy rice from Việt Nam and other rice producers, according to Hiếu.

Dr Nguyễn Đăng Nghĩa, director of the Southern Centre for Soil Fertiliser and Environmental Research, said global demand for rice is set to keep rising this year.

Deputy Minister of Agriculture and Rural Development Phùng Đức Tiến said Việt Nam is expected to export 6.5- 6.7 million tonnes in 2022 for $3.3 billion.

Buyers shift to Việt Nam

B.V. Krishna Rao, president of the All India Rice Exporters Association, has been quoted by Reuters as saying: “The [export] duty will affect white and brown rice, which account for more than 60 per cent of India’s exports.

“With this duty, Indian rice shipments will become uncompetitive. Buyers will shift to Việt Nam and Thailand.”

India accounts for more than 40 per cent of global rice exports and competes with Việt Nam, Thailand, Pakistan, and Myanmar in the global market.

Its exports hit a record 21.5 million tonnes last year, more than the combined volumes of the next four largest exporters, Thailand, Việt Nam, Pakistan, and the US.

Vijay Setia, former president of the All India Rice Exporters Association, told the Indian Express newspaper, “A 20 per cent duty is not going to render Indian rice uncompetitive.”

He said India currently exports 5 per cent broken white rice for $340 a tonne (as compared to $380 for Pakistan, $395 for Việt Nam and $430 for Thailand).

India exports rice to more than 150 countries, and so any reduction in shipments by it would increase food prices, which are already too high due to drought, heat waves and the Russia- Ukraine conflict.

Ukraine and Russia are also two major suppliers of wheat, whose global prices have risen substantially recently.

In its August report, the US Department of Agriculture (USDA) lowered its global rice production forecast for the 2022-23 crop to 512.4 million tonnes, down 2.3 million tonnes from its original forecast and 1.2 million tonnes compared to the previous crop.

But it increased projections for global consumption following the crop by up more than two million tonnes. 

Source: Vietnam News