Improvement competitiveness of Vietnam’s Agriculture PhD. Đặng Kim Sơn

Overview of agriculture and export in Vietnam From 1998, agricultural production grows continuously and rapidly, 4% per year. Changing from self-sufficiency to production diversification and export orientation. Some products become competitive and important in the world market. GDP Growth and Agriculture

Export-oriented agriculture 38% 35% 31%

Export volume of some agricultural products (thousand tons)   1995 1998 2000 2004 Rice 1988 3748 3476 4070 Coffee 248 382 733.94 936 Rubber 138 191 273.4 485 Tea 18.8 33.21 55.66 96 Cashew 98.9 25.2 34.2 107 Pepper 18 15.1 37 109

Export volume of some agricultural products (million USD)   1995 1998 2000 2004 Rice 530 1024 672 947 Coffee 598 594 501 616 Rubber 188 127.47 166 565 Tea 25.3 50.5 69.61 92 Cashew 88.8 117 167.32 425 Pepper 38.9 64.45 145.93 148

Share of agricultural import markets from Vietnam

Some comparative statistics between Vietnam and other ASEAN countries

Vietnam and ASEAN: Agricultural export volume and Agricultural export volume per head of some ASEAN countries in 2002

Competitiveness of some agricultural products of Vietnam: Rice Rice production cost of Vietnam is lowest in Southeast Asia (labor cost is equal to 1/3 of Thailand’s) Vietnam ranks the second rice exporter in the world (accounting for 13 – 14% of total rice export of the world) However, it is a strong competitive market

Competitiveness of rice product Advantages Low production cost in Mekong River Delta High productivity Favorable natural conditions Many experiences of rice production Abundant labor Preferential policies of the Government Disadvantages Fragmented and small –scale farming High post-harvest loss Ineffective marketing Low-level facilities and other infrastructures (unloading means) No brand names of export rice Opportunities New technologies Expanded market as a result of the economic integration Government’s preferential policies of investment aimed at improving technologies, varieties and research Government’s priority policies of development post-harvest and processed technologies, and trade in services Developed enterprises Challenges Farmers’ profits is lower Competition from big exporters such as Thailand and India Competition from potential exporters like Cambodia and Myanmar Competition from products which may bring about higher profit Increase of input price Productivity is increasing up the ceiling

Competitiveness of some agricultural products of Vietnam: Breeding Breeding sector is growing stably, growth rate is 5.27%/year, which is higher than plantation. Breeding productivity of Vietnam is very low compared with the world. Small-scale breeding, bad cross-bred varieties, weak breeding technologies. Average end-weight of pigs is more than 70kg (6-8 months) in compared with 100-120kg (5-6 months) in the world.

Competitiveness of breeding products Advantages Abundant rural labor Breeding experiences Government’s preferential policies Disadvantages Low export market share High production cost Small-scale production Low profits for producers Low productivity Weak animal sanitary, loss by diseases Shortage of advanced processed machines Ineffective marketing No SPS Agreements with many countries Opportunities Increased income brings about increase in demand A habit of consuming fresh meat and local varieties Development of planting foodstuff Geographical closeness with large countries Increase in domestic consumption Government’s support Foodstuff price is lower by integration Challenges Intensive competition from both inside and outside of the country: milk, poultry and bovine products Complicated diseases

Competitiveness of some agricultural products of Vietnam: Tea Vietnam’s tea accounts for 4.6% of the world production, low productivity. Export volume is small, accounting for 2,6% export volume in the world. Vietnam has not got tea brand names

Competitiveness of tea product Advantages Favorable climate conditions Many experiences Product diversification Development of private enterprises in export Vietnamese people’s habit of tea drinking Foreign companies and join-ventures development Disadvantages Weak irrigation, old varieties, low productivities Low prices of primary exported tea No tea brand names Dependence on some large markets Manually procession Unstable quality of exported tea Opportunities Expanded domestic and global market Product diversification Rapid reform of enterprises Challenges Using much fertilizer and pesticide Unstable markets for export High-level competition Diversification of the drinking market

Competitiveness of some agricultural products of Vietnam: Pepper Pepper production is almost for export purpose, high competitiveness (one of six products which has export value more than 100 millions USD/year). Favorable natural advantage and multi-crops practice, productivity is higher than this of other export countries.

Enhancement competitiveness of Vietnam’s agricultural products To improve investment in research, application science and technology To speed up technology transfer To improve services (plantation protection, veterinary, variety production, technology standards, quality standard control) To apply international and regional standards To implement building infrastructure for production (irrigation, electricity…) To implement building infrastructure for marketing (road, storehouse…) To reform enterprises, improve business capabilities

Enhancement competitiveness of Vietnam’s agricultural products To improve trade promotion To increase vertical integration To attract and encourage investment in agriculture and rural area (concentrate on processed industry) To develop the role of community in management natural resources and rural development