Vietnam could export more than 3 million tons of rice in the first half of 2016, up 12 percent from a year ago, on rising demand from China and other Southeast Asian nations amid supply concerns caused by drought, the government said on Friday.
Rice shipments in the three months ending June are projected at 1.6 million tons, including sales to China, the government reported on its website citing the Vietnam Food Association (VFA). However, the VFA lowered their projection by 11 percent amid a drought in Vietnam's main rice-growing region, the government said.
Vietnam, the world's third-largest rice exporter after India and Thailand, shipped 1.55 million tons of rice in the January to March period, up 38 percent from a year ago, according to Vietnam Customs data released on Wednesday.
The Southeast Asian country has been fighting the worst drought and sea water intrusion in 90 years in its Mekong Delta food basket, brought on by climate change and the El Nino weather pattern. The El Nino typically brings hot, dry conditions to Southeast Asia.
The drought conditions have led other countries in the region to bolster rice imports. Late last year, Vietnam sold 1 million tons of rice to Indonesia and another 450,000 tons to the Philippines for delivery by the end of the first quarter of 2016.
The disasters have lowered the first-quarter growth of Vietnam's agriculture sector, reducing the Delta's winter-spring paddy output while lifting the country's rice export prices to a five-month high in late March.
"Given the relatively high prices, VFA reckons that rice exports could lose their competitive edge and market share in the coming time," the government report said.
Vietnam's paddy output could dip 0.5 percent this year, the first drop since 2010/2011, to 28 million tons due to the dry weather and government plans to switch from rice to corn production, said Aurelia Britsch, senior commodities analyst at BMI Research.
BMI forecasts global rice production to decline in 2015/2016, the first in seven seasons, and a global rice deficit of 13 million tons could emerge for 2015/2016 after consistent surpluses in the crop years from 2005/06 to 2013/14.
Vietnam could follow Thailand to restructure rice cultivation by reducing planting areas and switching to other crops with less water usage, said Le Anh Tuan, deputy head of the Research Institute for Climate Change under Can Tho university.
"Scientists and the authority should reassess the direction for the Delta and should not race into rice production," Tuan told Reuters.