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Vietnam has revoked its severe restrictions on rice exports and will resume exporting the grain, the government said June 20. The world’s No. 2 rice exporter decided to renew its rice shipments after determining that it had enough stockpiles to meet domestic needs.
Earlier this year, Hanoi limited rice exports to slow inflation and avoid rice shortages, fearing a public backlash. Now, with the harvest outpacing last year’s output by 20 percent so far and rice producers looking to take advantage of high global prices, Hanoi has lifted export limitations by 1 million metric tons, about 4 percent of the global market. This will raise Vietnamese exports to a year’s total of 4.5 million metric tons — about 17.5 percent of global rice trade — in line with its normal export volume.
The boost to global supply will go some way toward meeting demand and could help lower the price of rice. However, a cascade of reactions by major exporters, many of whom have imposed export restrictions, will make it difficult to determine the net impact on price.
This is partly because the international rice trade is actually very small. Right now global rice production has reached its highest point since 1945, yet only 8 percent of rice produced is exported. The countries that have high rice consumption rates per capita are also the big producers, but they do not really have much in the way of surpluses above consumption. That global rice trade is so limited means that the price of rice can be affected easily by the export policies of the small handful of rice exporters.
Roughly half of the countries in the world rely on imports for more than 50 percent of their rice consumption, creating great exposures to the market. However, countries that do not grow rice also do not tend to eat much of it, so the risk that skyrocketing global prices will create shortages or serious hardship for these countries is low.
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