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Vietnam Agribusiness Report Q4 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Vietnam |
Published |
6 August 2009 |
Number of Pages |
60 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Vietnamese rice exporters have been busy restaking their place as major players in the world's rice market over the past few quarters. Exports through most of 2008 proceeded slowly as the government imposed restrictions on export volumes in an effort to protect Vietnamese consumers from the spiralling world price of rice. This policy saw stocks increase and since restrictions were lifted, rice export volumes have boomed .
In 2009, we now expect exports for the full year to reach 5.5mn tonnes, up from 4.7mn tonnes in 2008 .
Exports could even climb as high as 6mn tonnes if government policy allows. The surge in exports has brought the government's rice export policy under scrutiny. The Vietnam Food Association (VFA) in particular has come in for criticism, as it has been responsible for setting export quotas for individual firms and provinces .
Exporters have charged that the VFA's policies have been unfairly favourable to large companies .
Provinces with large surpluses have complained that they have been unable to export rice while provinces that struggle to produce enough rice to feed their own inhabitants have large export quotas which can be filled only by bringing in rice from other parts of the country. The government has now scrapped provincial rice export quotas and in June the Ministry of Industry and Trade (MOIT) also accepted that there were problems with the current system .
The problem facing the government is balancing the desire to guarantee food at an affordable price for consumers with providing enough of a profit incentive for farmers to invest in increasing production. The government has been facing similar problems in other sectors of agriculture, coming under pressure from livestock producers to further raise tariffs on imported meat. While obviously good for domestic farmers, such a move will be less welcome for consumers as prices in the shops rise .
Livestock producers have undoubtedly been suffering over the past year as feed prices have squeezed profits. Despite this, there has been some promising news from the sector. At the end of June 2009, a new chicken farm complex opened in the province of Binh Phuoc near Ho Chi Minh City. There have been a number of modern poultry farms springing up to supply the southern commercial capital and the area has attracted investment from major international players such as Thai conglomerate CP Foods .
As with most Vietnamese agricultural sectors, improving efficiency in livestock production will be essential for the long-term health of the sector. As Vietnam's World Trade Organization commitments on tariff reduction begin to take effect, it will be harder to protect domestic producers from cheaper imports .
This should help spur investment in modernising agriculture in the country.
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