FOOD SECURITY IN VIETNAM –
CHALLENGES AND POLICY
Nguyen Trung Kien
Acting Director, Commodity Markets Division
Institute of Policy and Strategy for Agriculture and Rural Development IPSARD
Contents
1. Food security situation in Vietnam
2. Possible risk scenarios of food security in Vietnam
3. Policy for managing food security risks
Food Security Situation
3
Food Availability by Commune
Per capita milled rice
Per capita foodgrain
Northern provinces
achieved food
sufficiency
Southern provinces
produced surplus
food (rice) for
export
Kg of milled rice equiv.
per capita in 2006
0 - 50
51 - 100
101 - 200
201 - 500
501 - 1500
1501 - 3000
3001 - 6763
Surplus supply now concentrated on:
“Core Rice Belt’ in six provinces
Vietnam per capita rice consumption has begun to
decline, this will likely to accelerate
P.C. Rice Consumption in Asia
(Kg/Yr)
Myanmar
PC Rice Consumption and PC Income:
China, Vietnam, Malaysia, Thailand, and
Philippines, 1995-2005
160
5000
Vietnam
135
Philippines
128
4000
Indonesia
104
3500
4500
3000
China
95
2500
South Korea
88
2000
Malaysia
80
1000
India
77
Japan
45
1500
500
0
50
70
90
110
130
150
170
190
Domestic Market Growth:
Changing size/composition of food expenditure
2010: $30 billion
2020: $65 -70 billion?
7
8
8
5
15
30
15
20
24
10
10
Cereals/Tubers
Fish
Source: WB
Meat
Out of home
20
15
Fr/Veg
Beverages
Cereals/Tubers
Fish
13
Meat
Out of home
Fr/Veg
Beverages
Changing economic role of rice
18
16
14
12
10
8
6
4
2
0
1996
2000
2005
2010
Share of Rice + Rice Processing in National GDP
Share of Rice in Average Household Expenditures
Source: Steve Jaffee, WB, 2011
2030
Food Affordability
Poverty Rate (%)
Domestic Food Price (VND/kg)
2006
2010
140
15.5
10.7
120
Urban
7.7
5.1
100
Rural
18
13.2
Vietnam
25.0
20.0
15.0
80
By region
60
Red River Delta
10.1
6.5
North East
22.2
17.7
North West
39.4
32.7
20
North Central Coast
26.6
19.3
0
South Central Coast
17.2
14.7
Central Highlands
24
21
South East
4.6
3.7
13.3
11.4
Mekong Delta
10.0
40
5.0
0.0
2002
2004
2006
2008
2010
Rice (1000 VND/kg)
Pork (1000 VND/kg)
Beef (1000 VND/kg)
Buffalo meat (1000 VND/kg)
Poultry (1000 VND/kg)
CPI (%)
Real income growth (%)
Source: VHLSS 2002 – 2012
Food Affordability
High margin attained but income from rice production is still
below $1 Per Capita/day
An Giang 2009/10 (MDI Survey Results)
Total Cost/KG
(vnd 000)
Profit/KG
(vnd 000)
Profit/Cost
Profit Per HH Profit Per HH
(VND Million) ($)
Winter –
Spring
2.87
1.53
53%
8.7
Summer
Autumn
3.96
(0.03)
-1%
(0.1)
Autumn
Winter
3.30
1.90
61%
8.0
Average
3.33
1.09
33%
527
485
1012
Average household size is 4.4 members
Average profit per capita $230/year = VND 3.8 million or 316,250/month.
Current poverty line is VND 400,000/person/month
Food Utilization
Threat of Undernourished Children
Percentage of Under-5 Children Undernourished (weight for age)
Group/Region
Vietnam
VietNam - Kinh/Chinese
VietNam - Other Minorities
Red River Delta
North East
North West
North Central Coast
South Central Coast
Central Highlands
South East
Mekong River Delta
Percentage
20.2
18
29.7
18.5
22.3
28.8
21
23.7
23.2
10.8
20.4
…. More rice cannot solve all problems of
food insecurity…
Indicators
90-92
95-97
00-02
05-07
Malnutrition rate (%)
31
22
17
11
Number of malnourished
21.0
16.7
13.3
9.6
people (million)
Minimum calorie request
1710
1740
1780
1810
(Kcal/person/day)
Mekong Delta: malnutrition
with food surplus
Malnutrition rate is higher in
the specialized area of rice
production in comparison
with areas with agricultural
diversification
There
are
correlations
between
poverty
and
malnutrition rate (19992009)
Source: CASRAD, 2011
Calorie consumption
2090
(Kcal/person/day)
Source: FAO, http://www.fao.org/hunger/en/
2310
2520
2770
Food Security Risk
13
World food market has witnessed 3 times of price shock since 2007, with amplitude
50% higher than the last 2 decades, and strong correlates with energy prices
250
200
World
Price
Chỉ sốFood
giá LT
thếIndex
giới (2002-04 = 100)
Food
Cereals
150
100
0
Source: FAO
1/2000
1/2001
1/2002
1/2003
1/2004
1/2005
1/2006
1/2007
1/2008
1/2009
1/2010
1/2011
1/2012
1/2013
1/2014
50
The rate of fertilizer price increase is higher than the rate of production growth
and rice price increase
16,000
Price of rice
Giá lúa tẻ thường
14,000
Giá
NPK
Price
of NPK fertilizer
Giá
Ure
Price
of nitrogen fertilizer
12,000
10,000
8,000
6,000
4,000
2,000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5
2008
Source: Agroinfo
2009
2010
2011
2012
2013
2014
Import and price of material for animal feed is increasing
650.0
4,000,000
600.0
3,500,000
550.0
3,000,000
Rice
Giá
trịexport
XK gạovalue
(000USD)
2,500,000
Giá
trị NKfeed
TACN
vàinputs
Animal
and
Nguyên
import liệu(000USD)
value (000 USD)
500.0
450.0
2,000,000
Gía
gạo
XK (USD/Ton)
Rice
export
price
400.0
1,500,000
Gía
Ngô
NK price
Corn
import
1,000,000
Soybean
import NK
price
Gía
Đậu tương
350.0
300.0
250.0
500,000
200.0
2009
2010
2011
Source: GSO, Vietnam Animal Feed Association
2012
2013
Land use changes by land class and scenario, 2007 -2030
Source: Van Dijk et al., 2013
Climate change and impact on crop yield
Impact of climate change in Vietnam, 2020 - 2010
Source: MONRE, 2009
Source: Van Dijk et al., 2013
Flood Risk
Area with high flood risk in high climate
change impact scenario
Source: Van Dijk et al., 2013
Impacts of natural disasters on agriculture
Number of flash flood over years
National Centre for Hydrometeorological Forecasting, MONRE 2010
Paddy & cultivation area loss due to natural calamity
(000 ha)
Central Committee for Flood and Storm Control, 2010
Food Security Policy
21
Policy Objectives
 Focus on rice self-sufficiency
 Policy objectives:
•
•
•
•
•
•
•
To ensure national food security
To ensure food supply sources
To meet nutrition needs
To ensure benefit of rice farmers
To ensure people’s accessibility to food
To increase efficiency of paddy land
To improve international position of Vietnam
Food Security Policies
Supply intervention:
1. Policy to ensure supply sources
2. Policy to fix floor price for rice procurement
3. Procurement policy for temporary storage
4. Policy to fix conditions for the rice export enterprises
5. Direct support policy for paddy farmers
Demand intervention:
1. Policy to restrict export in emergency case
2. Policy to stabilize price by fixing the retail price
3. Rice provision for poor households
Supply Interventions (1)
To ensure supply sources
Objective: To ensure national food security
Content: Planning and keeping 3.8 million ha of paddy land by 2020, of which
3.2 million ha is irrigated for >2 crops/year
Effectiveness:
 It is an important policy to ensure food security
 Vietnam remain to have enough domestic supply with only 3 million ha of
paddy land
 To improve income, farmers still convert the planned paddy land to other
annual crops
 Need to consider rice export strategy to grasp the multi-dimensional benefits
of rice production.
24
Vietnam’s Rice Balance in 2030 in the Worst Scenario
Yield: 5.8 tons/ha. Post-harvest losses: 10%
Projection in 2030
Scenarios
Paddy
quantity
Rice
2030:
Rice export
consumption
 Population:
5.2
110, 4 million
3.8 mil ha
40.3
12.7
3.6 mil ha
38.2
12.7
 Consumption:
120 kg per
4.1 head
3.3 mil ha
35.0
12.7
 Urbanization
2.4 rate: 41,8%
3.0 mil ha
31.8
12.7
0.8
Source: WB, 2011
25
Efficiency Question
Paddy
Coffee
Export value (billion USD)
3.7
2.7
Area (million ha)
4.1
0.5
101.4
9.1
9.3
0.5
Water use (billion m3)
Household number (million
households)
Source: AgroCensus
26
Supply Interventions (2)
Policy to fix floor price to ensure a minimum profit of 30% production
costs for farmers
Objective: Ensure income of paddy farmers
Content:
• Food enterprises purchase paddy at floor price .
• MOF, MARD set up method; provincial authorities estimate and declare
floor price
• Provincial authorities monitor and manage the process of procurement.
Effectiveness:
• It is difficult to calculate production costs
• Mainly apply in MRD, not for other regions
27
Households by Farm size (%)
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Red River Delta
Northern
midlands and
mountain areas
< 0.2 ha
Source: agrocensus 2011
North Central
and Central
coastal areas
Central
Highlands
South East
0.2 ha - 0.5 ha
0.5 ha - 2 ha
>=2ha
Mekong River
Delta
Income Source of Paddy Farmers in MRD, 2010
Farm size
The average
Total average
Contribution by
income per capita
income per capital paddy production
of a rural household
(000 VND)
(%)
(VND/month)
1 ha
1 – 2 ha
3 ha
4 ha
1.070.500
859
19%
1183
26%
1930
36%
1972
68%
29
Supply Interventions (3)
Procurement policy for temporary storage
Objective: increase demand to push procurement price
Content:
 Support 100% interest rate for enterprises procuring for temporary storage
within 3 months
 The amount of procurement is proposed by VFA at market price to stabilize
national reservation, consumption and export.
30
Unclear impact of the storage procurement policy
20/9 buy 0.5 mil tons
Thailand 5% broken rice
price (USD/ton)
Source: Agroinfo data
Vietnam whole sale rice price (USD/ton)
Supply Interventions (4)
Conditionalities on rice export enterprises
Objectives:
 Develop long-term relationship between enterprises and paddy farmers to stabilize market
outlets and income for farmers
 Ensure the balance between export and domestic consumption
 Stabilize rice market, enhance efficiency of export
Content:
Setting conditions for enterprises to participate in rice export:
 > 5000-ton specialized storage
 >1 milling factory with capacity of >10 tons/h
 Located in province/cities with rice surplus for export and international seaport .
=> Maintain the minimum storage, equivalent to 10% of export volume of rice in 6 months ago=>
if the domestic price of rice increase suddenly, the storage will provide rice to meet demand
Source: Decree No. 109/NĐ-CP/2010
32
Supply Interventions (5)
Direct support to paddy farmers
Objectives: Support to protect and develop paddy land
Content:
 Supporting 500.000 VND/ha/year for organizations, households, privates producing on specialized
land of wet rice;
 Supporting100.000 VND/ha/year for organizations, households, privates producing on the other
paddy land except the area of upland rice can expand themselves without following any regulations
and plans of paddy land use.
Effectiveness:
 Support famers directly
 Difficult to implement and monitor
 Difficult to identify upland rice area in land use planning
 Low effectiveness: Income of paddy farmers do not improve significantly => Move to other crops
or to non-farm activities
Source: Decree No. 42/2012/NĐ-CP issued 11/05/2012
33
Supply Interventions (6)
General Support
Objective: to increase income of farmers from agricultural production
Content:
 Exempting agricultural land use tax to the poor households, agriculture
households in the disadvantaged areas, reduce 50% of agriculture land use
tax for the others.
 Support in borrowing loans to buy facility, materials with priority interest rate.
 Exempting irrigation fee
 R&D
 Seed subsidy
 Rural infrustructure
 New rural village program
 .....
34
Demand Intervention (1)
Policy to restrain export in emergency case
Objectives: Reduce inflation, stabilize domestic consumption price and
ensure food security
Content:
 In 2008, crisis of global food price => The guidance of Prime Minister
to stop signing any new contracts of rice export
 The Government imposes tax on rice export (period of validity: from
21/7-19/12/2010)
Source: Decision No.104/2008/QĐ-TTg issued 21 /7 /2008,
35
Policy to restrain export in emergency case
Profit analysis of stakeholders in the period of price fluctuation in 2008
(USD/ton)
Export restriction
time (25/3/2008)
US Okays Japan export
stock (5/2008)
36
Demand Interventions (2)
Retail price stabilization
Objectives: Support the low income group in case of high inflation
Content: Subsidize the sale of basic foods: tax concession and interest rate
subsidies for retailers (focus on supermarket system)
14,000
CT:
03/2008/CTBTC
(01/12/2008)
12,000
Movement
of
retail
price
of
rice
(VND/kg)
CT: 03/CTBTC
(31/12/2009)
10,000
8,000
6,000
CT: 03/CTBTC
(12/12/2011)
CT: 05/CTBTC
(22/12/2010
)
4,000
2,000
1
3
5
7
2008
9 11 1
3
5
7
2009
9 11 1
3
5
7
2010
9 11 1
3
5
7
2011
9 11 1
3
2012
5
37
Demand Interventions (3)
Direct food support
Objective: Direct food support
Content:
 Poor households involved in forestation and forest protection will
receive 15 kg rice per capita per month during the period when they are
not able to provide themselves with staple food (not over 7 years).
 Poor household in the border areas will be granted 15 kg
rice/person/month until they can self- sufficient in food.
 Support for food-deficit provinces before the harvest
 Direct food support for provinces suffered from natural disasters
38
Changing Approach
Current Approach
Protect paddy land
New Approach
Rice self-sufficiency
Protect agricultural land
Increase farmer income and improved
nutrition
Resource intensive
Production focus
Technology intensive and environmental
friendly practices
Post-harvest and trade focus
Small farm and middleman domination
Administrative control
Large scale and value chain linkage
Market-based intervention
Food export
Utilize the benefit of international integration
Inflation control
Target to poor and vulnerable groups of
consumers
39