Vietnam Grain and Feed 2015 - Annual report

SITUATION AND OUTLOOK 
  
        In calendar year 2014, Vietnam shipped local corn for selling through the border to China due mainly to the price difference. In turn, Vietnam imported extra volume of Brazilian corn to substitute for the demand gap. This makes Vietnam become again a seasonal corn exporter, which happened in the last decade. 
 

      Ministry of Agriculture and Rural Development (MARD) had signed Decision 69/QD-CT-CLT which recognized three genetically modified corn varieties of Syngenta Co., This event officially allowed growing of GM corn for commercialization in Vietnam. Post forecasts an increase of the corn production in CY 2016, given favorable policy from the GVN and the use of GMO corn varieties. The CY 2016 Vietnam corn production is forecasted to increase thanks to the GVN’s new policy. 

         Unlike feed wheat, which has fluctuating consumption levels depending on many factors, milling wheat has an increasing trend in the pace of urbanization and consumers becoming more familiar with the usage of convenience food, in recent years, and, increased sophistication and exposure to the Western lifestyle and Western food products. Wheat-based foods, therefore, are being increasingly consumed in Vietnam, in place of the rice-based diet that still dominates Vietnamese cuisine. The booming of the giant fast food chains coming into Vietnam, McDonalds, Dunkin Donuts, Burger King and others is also a key factor to boost the use of wheat based food. The use of wheat based food, however, is still limited to big cities. The level of increased consumption of milling wheat, therefore, is still moderately small or unchanged. There is predominantly the change of using more high quality wheat for higher quality wheat based products introduced in the western food outlets. The demand for U.S. wheat, which is considered as premium quality wheat, therefore, increases steadily. Overall, total demand for milling wheat is ranging from 1.50 to 1.55 million tons a year. 
  
        During the past few years, numerous provinces in the Mekong River Delta have set up large-scale rice farms, attracting the participation of plant protection companies and local farmers. Companies provide farmers with rice seed and pesticides and, in turn, they get to buy rice from farmers immediately after harvesting. The model allows using machineries and pesticides effectively so as to gain higher yields.  However, numerous farmers have complained that plant protection companies take nearly all the profits from these projects, consequently leaving farmers taking part in the model with little benefits. Particularly, participating farmers are buying rice seed and pesticides from these companies at prices higher than the market prices while the companies buy harvested rice at a price equal to that set by the Vietnam Food Association. The model to grow large-scale rice farms has helped farmers reduce production costs. Meanwhile, Vietnam’s Ministry of Agriculture and Rural Development considers this model as the modern scheme for rice production and is now targeting to expand the model to one million hectares nationwide from hundreds of hectares during the last crops. However, rice farmers are still facing hardships as rice exporters and intermediary traders often gain the most in the rice industry. 
  
        The Ministry of Agriculture and Rural Development developed a program for shifting from rice crops to other cash crops, prioritized for corn and soybeans. This is the second year of the program and there is a targeted 100,000-110,000 hectares of rice cultivation changing to corn and soybean crops per year, i.e., a total 200,000 ha in two years. In reality, the harvest area from MY 2012/2013 to MY 2014/2015 has shrunk from 7.86 million hectares to 7.70 million hectares (about 160,000 hectares in those 2 years).  The program is not considered as successful as people expected.  However, the planted/harvested rice area continues to be cut in MY 2015/2016.