Vietnam, one of the world's three largest rice exporters, is navigating the situation caused by India’s rice export ban while seeking to ensure sufficient domestic supplies.
If India, the world’s largest exporter, sticks to its ban, millions of people are likely to be plunged into hunger by skyrocketing rice prices, which are already at an 11-year high, according to the Food and Agriculture Organization (FAO).
India’s decision to take 10 million tons of rice off the global export market has sent shock waves across almost every continent. The main reason behind India's export ban is uncertainty over its domestic production and consumption of rice.
Vietnam’s Ministry of Industry and Trade (MoIT) has asked the Vietnam Food Association to order its members to strictly follow rules to maintain rice reserves equivalent to at least 5% of their export volume from the previous six months to ensure domestic food security.
The ministry also instructed domestic rice traders to closely monitor market conditions to make appropriate production and export plans to ensure profitability.
In July, Vietnam’s rice exports continued to post significant growth, according to the association, which represents rice exporters and processors across the country.
Vietnam is the world’s third-largest rice exporter, after India and Thailand. In the first seven months of this year, the country exported more than 4.48 million tons of rice, earning a turnover of nearly $2.4 billion, up more than 17% in volume and 28% in value over the same period in 2022, according to government customs data.
According to the FAO, the average export price of Thai 5% broken rice, which is a benchmark for the global rice trade, increased by 12% from September 2022 to $600 per ton in July, the highest level since 2014. Vietnam's 5% broken rice also rose by 9% to $545 per ton at the same time.
The Ministry of Agriculture and Rural Development (MARD) had earlier forecast that Vietnam's rice exports in 2023 would reach some 7.2 million tons, bringing home more than $4 billion. This prediction is not much higher than last year’s total shipments, which reached 7.1 million tons (according to GSO data), but higher than last year’s revenue, which reached $3.46 billion.
Amid shockwaves in the global export market, Vietnam’s General Department of State Reserves plans its largest ever stockpile of 250,000 tons of rice as the El Nino phenomenon disrupts supplies.
El Nino is a periodic warming of the Pacific Ocean that alters the global atmospheric circulation and rainfall distribution. In 2022, a strong El Nino developed in the Indo-Pacific region, resulting in abnormal excess and deficit distribution of rains in many parts of the region.
An MARD report delivered at the ministry’s meeting on July 6 showed that Vietnam had planned to cultivate 7.1 million hectares of rice in 2023, with average productivity estimated at 6.07 tons of unmilled grain per ha, the Vietnam News Agency said. Total output is expected at 43.11 million tons, up 400,000 tons against 2022.
About 3.3 million ha with 21.8 million tons of unmilled rice had been harvested by early July. The remaining 3.75 million ha with 21 million tons will be harvested until January 2024, according to the MARD report.
The Vietnam News Agency quoted Vietnam’s agriculture minister Le Minh Hoan as telling the meeting that his ministry was working with the MoIT and other sectors to rapidly tackle hindrances facing rice exports and helping domestic exporters seize market opportunities.