Farmers in the Mekong Delta, Vietnam's biggest rice production region, are selling at higher prices in the wake of an export halt imposed by India, the world's largest supplier.
Bui Van Phuoc, a farmer in Tam Nong District of Dong Thap Province, harvested around 49 tons of rice on a farm of seven hectares last week.
Farmers harvest rice in An Giang Province, July 2023.
As per a contract he signed with a trader at the beginning of the harvest season, he sold the rice at VND7,000 per kilo and pocketed a profit of VND200 million, which is 20% higher than the previous winter-spring crop.
"This is the first time ever that I could earn more for a summer-autumn crop. Traders have bought a lot of rice this season and they did not even bargain the prices," the 60-year-old man said.
Phuoc added that although he already sold all of his rice, many traders have kept calling asking him for more.
In Can Tho City, farmers said rice prices offered by traders have kept rising over the past few days.
Nguyen Van Thanh in Co Do District said paddy plants on his farm have just started blooming, but traders have already come to make deposits.
Late last week they offered to pay VND6,400-6,500 per kilo but by Monday prices had climbed to VND6,700, VND7,000, and even VND9,000 per kilo depending on the varieties.
In An Giang Province, Nguyen Van Hao in Tri Ton District said his family will harvest rice next week, but they are not signing any contracts with traders yet because they believe prices will continue to rise.
Compared to the last crop, the price of rice in An Giang is currently higher by VND500 per kilo.
Nguyen Van Tuan, owner of a plant processing rice for export in Can Tho's Thoi Lai District, said rice export prices have increased by US$15-20 per ton to US$560-580 per ton this week.
Tuan said traders have bought rice at higher prices but supply has not been enough to serve demand.
"With India halting export now while the autumn-winter harvesting season still has months to go, rice prices will continue to stay high over the next two-three weeks," he said.
The Indian government announced on July 20 a ban on the export of non-basmati white rice after heavy monsoon rains damaged crops and retail rice prices climbed 3%.
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, industry insiders have raised concerns about global food price hikes.
Nguyen Van Don, director of rice processing and trading firm Viet Hung Co. Ltd in Tien Giang Province, said rice harvested in the summer-autumn crop is usually cheaper because of lower quality than winter-spring crop yields.
But the story this year has been different.
He said that traders have rushed to buy so quickly that rice export companies are selling stocks before they can even store them.
"In general, exporters are still observing the market as the global food supply chain is being affected not just by India's policy, but by the ongoing extreme weather [as well]...prices are still unpredictable," he said.
Professor Vo Tong Xuan, an economist and rice farming expert, 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."
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, he said.
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 currently raised its forecast for Vietnam's rice exports in 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, it said.