Illustrative image.

Nguyen Quang Hoa, director of Duong Vu Co Ltd in the Mekong Delta province of Long An, said India has imposed a 20% export tax on the grain, and banned shipments of broken rice to soften domestic prices following a significant decline in production due to a poor monsoon.

The move would affect the global market for one of the most commonly eaten staple foods amid a surge in commodity prices following the prolonged Russia-Ukraine conflict.

It would also encourage buyers to shift to rivals such as Vietnam and Thailand, which have been struggling to increase exports and prices, he said.

“Vietnamese rice exporters are holding off on deals, expecting the price to rise”.

Nguyen Van Don, director of Viet Hung Co Ltd in Tien Giang province, said the prices of rice of all kinds have already gone up by an average of 300 VND per kilo compared to before the Indian restrictions.

Nguyen Van Hieu, export director of Loc Troi Group, said shipments of the grain are also expected to increase in the remaining months thanks largely to high demand from countries such as the Philippines, China and the EU.

The prolonged Russia-Ukraine conflict has led to a shortage of wheat and escalating food prices in the EU. European and South American countries are also in the midst of production difficulties.

To make up for this shortfall, European countries are likely to buy rice from Vietnam and other rice producers, according to Hieu.

Dr Nguyen Dang Nghia, director of the Southern Centre for Soil Fertiliser and Environmental Research, said global demand for rice is set to keep rising this year.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien said Vietnam is expected to export 6.5- 6.7 million tonnes in 2022 for 3.3 billion USD.

B.V. Krishna Rao, president of the All India Rice Exporters Association, has been quoted by Reuters as saying: “The [export] duty will affect white and brown rice, which account for more than 60% of India’s exports.

“With this duty, Indian rice shipments will become uncompetitive. Buyers will shift to Vietnam and Thailand.”

India accounts for more than 40% of global rice exports and competes with Vietnam, Thailand, Pakistan, and Myanmar in the global market.

Its exports hit a record 21.5 million tonnes last year, more than the combined volumes of the next four largest exporters, Thailand, Vietnam, Pakistan, and the US.

Vijay Setia, former president of the All India Rice Exporters Association, told the Indian Express newspaper, “A 20% duty is not going to render Indian rice uncompetitive.”

He said India currently exports 5% broken white rice for 340 USD a tonne (as compared to 380 USD for Pakistan, 395 USD for Vietnam and 430 USD for Thailand).

India exports rice to more than 150 countries, and so any reduction in shipments by it would increase food prices, which are already too high due to drought, heat waves and the Russia- Ukraine conflict.

Ukraine and Russia are also two major suppliers of wheat, whose global prices have risen substantially recently.

In its August report, the US Department of Agriculture (USDA) lowered its global rice production forecast for the 2022-23 crop to 512.4 million tonnes, down 2.3 million tonnes from its original forecast and 1.2 million tonnes compared to the previous crop.

But it increased projections for global consumption following the crop by up more than two million tonnes./.