Bright prospects for rice exports

Bright prospects for rice exports

The conflict between Russia and Ukraine is fueling a global food crisis that affects many countries and has sent prices to record levels. In response, many countries are increasing food reserves, opening up opportunities for rice exporters in Asia, including Vietnam.

Supply down, demand up

In its August report, the US Department of Agriculture (USDA) lowered the global rice production forecast for the 2022-2023 crop to 512.4 million tonnes, down 2.3 million tonnes compared with its previous forecast, and down 1.2 million tonnes compared with the 2021-2022 crop, due to decreased rice production in India, Bangladesh and Europe. The USDA also reduced its inventory forecast to 178.5 million tonnes, down 4.2 million tonnes compared with the previous forecast and down three percent compared with the 2021-2022 crop, marking the third consecutive year of rice inventory decline.

Contrary to production, the USDA raised the global rice consumption forecast for the 2022-2023 crop to a record level 518.7 million tonnes, up 100,000 tonnes compared with the previous forecast, and up more than two million tonnes compared with the 2021-2022 crop. Increased consumption is forecast for Bangladesh, China, Nepal, Nigeria, the Philippines, and Vietnam.

Opportunities for Vietnamese rice

The global situation is forecast to have a positive impact on Vietnamese rice exports. Nguyen Van Hieu, Export Director at Loc Troi Group, predicted rice exports will increase towards year’s end due to high demand from the Philippines, China and the EU. Reasons include low inventory level in the Philippines. According to the Philippine Statistics Authority (PSA), by June 2022, this country had 2.2 million tonnes of rice in stock, down 12.3 percent compared with June 2021. The USDA forecast that the Philippines - the world’s second largest rice importer - will import 3.2 million tonnes this year, an additional 100,000 tonnes compared with the previous forecast (last year this country imported 2.9 million tonnes).

Global demand for rice is predicted to continue growing towards year’s end

“Glutinous rice is a major kind of Vietnamese rice exports to China. Severe weather conditions such as droughts and floods will affect rice production and other plants in China. Meanwhile, the Chinese consumer demand for glutinous rice is expected to increase towards year’s end, promising opportunities for Vietnamese rice exporters,” Hieu said.

Meanwhile, agricultural production in European and South American countries is also facing difficulties due to droughts. To make up for wheat shortages, European countries will buy more rice from Vietnam and other countries. The export price to the Philippines and China are not expected to increase, but the export price to discerning markets such as the EU, the US and South American countries will rise sharply.

Dr. Nguyen Dang Nghia, former director of the Research Center for Southern Soils, Fertilizers and Environment, predicted the global demand for rice will continue growing towards year’s end and promise new opportunities for Vietnamese rice exports. He said localities and businesses should encourage farmers to expand rice production.

VietNam Economic News