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. Prices for white rice have risen dramatically in recent months, reaching $873 per metric ton in June, up from a yearly average price of $244.37 per metric ton in 2006. These high prices are not likely to fall, either. Global demand is growing, but production is likely to rise only slightly. Projections by the U.S. Department of Agriculture estimate that global demand will grow by 1 percent per year while global supply is expected to increase by 7 percent over the next 10 years. Particularly in Southeast Asia, the world's top rice producing and consuming region, population growth is far outpacing growth in rice production. Most types of rice can only be efficiently grown in highly irrigated terrain, much of which is found in Southeast Asia (though the most efficient production in the world occurs along the Nile). Globally, suitable rice cropland is limited, and most is already in use. Any increases in rice production will come from technological developments — such as new strains of rice that are drought- and flood-resistant — as opposed to new plantings. In rice-producing countries, the response to rising prices has varied. Across the board, even major rice producers are highly concerned about protecting local markets from price increases. Countries that have reacted to rising prices by locking down exports include India, Pakistan, Thailand, Cambodia and Egypt, while countries that stand to benefit from rising prices include the United States and Uruguay. India, concerned about falling rice stockpiles, banned exports of low-grade rice, and both India and Pakistan have raised the threshold price for exporting rice in hopes of keeping domestic supplies at home. But India is also expecting a bumper crop this year and will consider lifting its export restrictions as early as September. Thailand, which has begun to more heavily subsidize rice farmers, has started dipping into stockpiles in order to reduce domestic prices and has proposed a global rice cartel (which has received little support from other rice producers). Cambodia briefly imposed a complete ban on rice exports in March, although the ban has since been lifted. Meanwhile, Egypt has not only banned rice exports but is also moving away from rice production altogether. In order to take advantage of high corn prices, Egypt will reduce rice production by 67 percent and instead grow corn. Although U.S. exports are expected to decline in 2008, over the long term high prices are expected to boost production as high global rice prices equalize the cost-of-production difference with Asian countries. Uruguay is also expected to take advantage of higher global prices and may double production, injecting another 1 million metric tons of rice into the global market. Of the consuming countries, most are protected from high levels of market exposure (measured as the percentage of rice consumed that is imported) by their low per capita consumption levels. The few exceptions to this rule include Singapore, which both consumes a large amount of rice per capita and must rely on imports to support that consumption. In the end, the fact that the global rice market is a small portion of total global consumption means that most major rice consumers are largely protected from the consequences of rising prices. Given the lack of excess rice in the market, the most vulnerable countries will be the high per-capita consumers that also produce a great deal of rice. The thing to watch for, then, is major rice crop die-offs in countries that rely heavily on rice as a staple. This would expose them to the global market, which has a limited ability to respond, and incur serious hardship for domestic populations. However, as technology advances, the risks associated with unpredictable weather and pests also decline.