A brief on Agriculture sector of Vietnam

In 2016, the agricultural sector contributed only 16.5% to GDP (£26.6 billion), in spite of 50% of the population working as farmers; This leaves plenty of room for the further development in the sector. In the first half of 2017, the total amount of new FDI registered capital in the fields of agro-forestry and fishery increased by 86.5%, totalling US$53 million including new projects and ongoing projects supplemented with new capital. Vietnam plans to have at least 10 hi-tech agriculture production zones comprising 200 enterprises by 2020. To date, it has attracted 26 enterprises. Vietnam’s PM earlier this year introduced a preferential credit package of £3.4 billion to support high-tech agriculture and clean agriculture projects and enterprises and urged commercial banks to join the initiative. So far 10 commercial banks have registered for the initiative, exceeding the number of £4 billion.

Vietnam has become the world’s fifth largest exporter of agro-food commodities, including aquatic products, rice, coffee, tea, cashews, black pepper, rubber, and cassava. The sector accounts for 23-35% of the national export value (£24 billion). However, while increasing Vietnam’s status as a global exporter, the sector’s growth has slowed to an average of just 2% per annum in the last 5 years. Problems are the lack of value-added products for export, due to poor technology in post-harvesting and processing, low scale production with traditional farming methods and inconsistency in quality given poor quality control management. However, it must be noted that in the last two years the sector has been hit by falling commodity prices and bad climatic conditions which have affected production. These above are areas foreign players can tap into, given the government’s aim to reach £31 billion in agriculture export value by 2020.

That is to say, foreign players can focus on technology, which can improve post-harvest efficiency, processing and preservation for exported produce, especially rice cropping; vegetables, flowers and fruits cultivation; fish and prawn farming; as well as efficient management practices. Dairy is eyed as a dynamic sub-sector which yields a 12.5% annual growth. Locally produced goods only accounts for 20% of consumption and the remaining is met by imports. Moreover, there have been increased investments in dairy farming to reduce the reliance on imports of raw materials. Several local companies are investing heavily in their farming, production and distribution, and building several new dairy farms. Import demand comes from raw materials for production, dairy breeding, technology for farming and milk processing, which can worth billions of GBP.

Public concerns over food safety and the fact that the current traditional agriculture fails to identify clear origins of food and lack of efficiency in use of resources has attracted leading local corporations and conglomerates such as Vingroup, TH Group, Hoang Anh Gia Lai, FPT and Hoa Phat who have poured millions of dollars in hi-tech agriculture and clean agriculture. They often look for foreign partners with a proven-track and expertise in this field.

Source: DIT Vietnam












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