MUMBAI/HANOI: Vietnam, the world's third biggest exporter of rice, has started buying the grain from rival India for the first time in decades after local prices jumped to their highest in nine years amid limited domestic supplies, four industry officials told Reuters.

The purchases underscore tightening supplies in Asia, which could lift rice prices in 2021 and even force traditional buyers of rice from Thailand and Vietnam to switch to India - the world's biggest exporter of the grain.

Indian traders have contracted to export 70,000 tonnes of 100% broken rice for January and February shipments at around $310 per tonne on a free-on-board (FOB) basis, the industry officials say.

"For the first time we are exporting to Vietnam," B.V. Krishna Rao, president of the Rice Exporters Association, told Reuters on Monday. "Indian prices are very attractive. The huge price difference is making exports possible."

Vietnam's 5% broken rice is offered around $500-$505 per tonne, significantly higher compared to Indian prices of $381-$387.

"Rice imported from India is mainly used for producing animal feeds and for breweries," said a rice trader based in Ho Chi Minh City.

Dwindling supplies and continued Philippine buying lifted Vietnamese rice export prices to a fresh nine-year high. Vietnam's total paddy output in 2020 fell 1.85% to 42.69 million tonnes, equivalent to around 21.35 million tonnes of rice, preliminary data from the government's General Statistics Office showed.

The country's rice exports in 2020 were forecast to have fallen by 3.5% to 6.15 million tonnes.

Robust demand from Asian and African countries has also been lifting Indian prices but they are still very competitive due to ample stocks, said Nitin Gupta, vice president of Olam India's rice business. Vietnam could make more purchases as long as the price difference remains, Gupta said.