VIETNAM RICE ECONOMY: POLICY AND PERSPECTIVE

Dang Kim Son Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) Ministry of Agriculture and Rural Development of Vietnam (MARD) Myanmar, June 2011

Paddy production continues growing in despite of limiting land area

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Rice export reached record level in terms of volume and value

Total export quantity: 76,8 mil. tons Export turnover: 21,3 bil. USD Record export volume in 2010: 6.8 mil tons Record export value in 2010: 3.2 bil. USD Record export price in 2008: 1,005 USD/ton

Net importer until 1988 Export volume reached 1 mil. Tons in 1989, just after Resolution 10 issued in 1988 Strong growth of rice export, and becoming the second leading exporter in terms of volume

Vietnamese rice market

Source: UNCOMTRADE

Supply related policy

Decollectivization: Transformation of land and production materials from collective to household system Land policy: Keep minimum 3.8 million ha of arable land for paddy cultivation to ensure national food security. Investments to build concentrated food production areas, disease-free areas, rice production areas meeting GAP (Good Agriculture Practices) Infrastructure investment: Investment for irrigation system construction, enabling adequate irrigation in double-crop rice land. Agricultural R&D: accounts for one third of the S&T government budget. The budget investing in agricultural research, extension and information activities increase annually 10-15%. Support hybrid rice varieties for farmers. Support to farmers: Farmers have access to credit provided by Bank for Agriculture and Rural Development. Favored loan interest for companies to buy paddy for temporary stock at the peak of harvest season to ensure the farmer minimum profit of 30%.

Demand related policy

Domestic market are liberalized. The National Food Reserve reserving enough rice in case of food shortage Building storage system being able to store 4 million tons of paddy/rice Rice provision for poor households: Poor households involved in forestation and forest protection receive 15 kg rice/capita/month. Determining minimum export price (MEP) on the basis of proposition from Vietnam Food Association (VFA), Ministry of Industry and Trade (MOIT), MARD and local authorities Signing Government-to-Government rice export contract

Trade policy for rice export

Vietnam is likely to become world largest rice exporters in term of volume

Source: Matthey Holger, FAO, 2011

Vietnam becomes largest rice exporter

Rice: important yet declining economic shares:

42.6% land area for annual and perennial crops, 7.3 % of agricultural GDP

Source: Steve Jaffee, WB, 2011

Perspective of Vietnam rice economy

Rice production growing mainly by increasing productivity focusing on highly comparative advantage areas. Developing business-farmers linkage within associations to link all stakeholders in the value chain Rice consumption in domestic market will reduce in term of volume but increase in quality requirement Rice trade will emphasize to added value As growing concerns of food security internationally, Vietnams rice would contribute in securing food imbalance at international/regional level Consider to include social and environmental costs in rice price to ensure an sustainable development of rice sector

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