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Industry insiders dismissed concerns that Vietnam could follow India to impose copycat curbs on rice exports.
Farmers work in a rice field in Vietnam.
HANOI: Vietnam is seeing soaring demand and skyrocketing prices for its rice after India – the world's biggest rice supplier – imposed export curbs last month.
Industry players said the spike in global rice prices is an opportunity for Vietnam to boost production and exports, but concerns have arisen over unfavourable weather patterns attributed to climate change affecting future crops.
India slapped an export ban on its non-basmati white rice in July in a bid to keep the prices of the staple down at home, on the back of inflation and fears of shortage. The curbs followed a restriction on shipments of broken rice in September last year, which is still in place.
The move has caused global rice prices to surge as buyers turned to other sources, amid worries that the limited supply will fuel global food inflation and cause similar curbs by other suppliers.
DEMAND OUTSTRIPS SUPPLY
At the Mekong Delta known as Vietnam's rice bowl, where 90 per cent of the nation’s rice exports are grown, farmers said they can barely keep up with the demand.Rice farmer Le Thanh Ben said all the crops on his 26,000 sq m paddy field have been reserved, even though they will not be ready for harvest until October.
A trader approached him just days after India's rice export curbs took effect and offered him a deal significantly higher than the usual market price.
“Paddy prices in the past few years have been around US$0.22 to US$0.23 per kilogramme. So when the trader came and offered me 28 cents per kilogram, I was happy,” the 39-year-old told CNA while inspecting his paddy field in Can Tho, a city in the southern Mekong Delta region.
“But I had no idea the price could go up so high. I do regret that I made that deal (so fast),” he said, adding that the price has increased to US$0.34 and is showing no signs of slowing down.
Local paddy prices have shot up by 50 per cent to an all time high.
The nation's rice exports prices have also jumped by about 35 per cent, the sharpest increase in 15 years.
“Since India banned rice exports, rice prices here have skyrocketed. The price would go up every few hours, not just by the day,” said Mr Pham Phuoc Huu, chief production officer of rice exporter Hoang Minh Nhat Food.
CHAOTIC TIME FOR TRADERS
While the soaring prices are good news for farmers, rice traders are facing an uncertain – and even chaotic – time as demand outstrips supply.“In the last month, 90 per cent of the ships coming to Vietnam had no rice to transport on their vessels,” said Mr Nguyen Duy Thuan, chief executive officer of agriculture firm Loc Troi Group.
“Only 10 per cent that have contracts with rice farmers and millers have rice in the quantity and quality that they need.”
Many of Vietnam's rice exporters are reluctant to sign new contracts with international buyers due to the sharp price fluctuations. They are also finding it difficult to fulfil existing contracts with buyers.
“Competition is extremely fierce among traders. Local buyers are pushing up the price to get enough stock,” said Mr Huu.
Industry insiders hope the current market volatility will also prompt improvements to restructure Vietnam's rice industry, and create a more integrated and stable value chain.
This could involve having exporters work more closely with farmers on crop planning, financial support and commitments to prices and volumes.
“Any exporter with no link with farmers will suffer. Now there is a significant change, and anybody who has better links, who has long-term contracts in big quantities, can survive and develop throughout this chaos,” said Mr Thuan.
He dismissed concerns that Vietnam could follow India to impose curbs on rice exports.
“Our domestic market consumes about 30 per cent to 50 per cent of the total rice that we produce,” he said. “So, export is a must.”
Rice is the most consumed staple food in the country, with each Vietnamese eating about 90 kilograms a year, according to official estimates.
The nation has exported nearly 4.9 million tonnes of rice in the first seven months of 2023, an almost 20 per cent jump year-on-year in volume. Export revenue totalled US$2.58 billion, up close to 30 per cent from last year.
MORE RICE BEING GROWN
More rice will soon be grown in the fields of the Mekong Delta region, with authorities aiming to ramp up rice production by about 200,000 tonnes this year.The nation, which is the world’s third largest supplier of the staple, plans to export 7.8 million tonnes of rice in 2023, a 10 per cent increase from last year.
“The plan is to help us take full advantage of the shortage of rice in the global market, which Vietnam can supply,” said Mr Nguyen Nhu Cuong, director of crop production at Vietnam's Agriculture Ministry.
“We have rice varieties with a short growth period, so we can grow an additional 50,000 hectares of paddy for the fall-to-winter crop, without any impact on the following winter-to-spring rice crop of 2023-2024.
However rice traders emphasised that Vietnam is not able to fill the supply gap created by India's rice export ban, as the latter accounts for about 40 per cent of the global rice trade. Vietnam's rice is often offered at higher prices compared to India’s rice.
Vietnam rushes to grow more rice as demand soars following India’s export ban
Industry insiders dismissed concerns that Vietnam could follow India to impose copycat curbs on rice exports.
