FOOD SECURITY IN VIETNAM: SITUATION AND POLICY OPTIONS

Nguyen Trung Kien

Center for Agricultural Policy, Vietnam

.

MEETING FOOD SECURITY GOALS WITH GOOD POLICY PROJECT

2013 Meeting Food Security Goals with Good Policy Regional Dialogue

1

1. Food Security Situation

• Availability

• Affordability

• Utilization

2. Food Policies

3. Policy Options

2

Contents

Part 1: Food Security Situation

3

The State of Food Security in Vietnam – At a Glance

Source: World Bank (2012); FAO (2012); UNDP (2012)

Calorie supply per capita (2012)

2850* kcal/person/day

Percentage of population undernourished (2012)

9.01%

Food security and nutrition status core indicators

Cereals, roots, tubers as % of DES** (2007-2009)

62%

Life expectancy at birth(2012)

75.4 Under 5 morality rate (2011)

21.7/1000

Proportion of children under 5 underweighted (2008)

20% Percentage of adult with body mass index BMI*** < 18.5 (2000)

26.5%

Food consumption Health status Nutritional status

(*) Minimum dietary energy requirement: 1810 kcal/person/day. (**) Dietary Energy Supply (***) Body Mass Index

Rice Production, Use & Trade in Vietnam –

The Past Trend of 1990-2010

Unit 1990 1995 2000 2005 2010

Paddy Land 1000 ha 4109 4203 4213 4165 4106

Paddy sown area 1000 ha 6043 6766 7666 7329 7514

Paddy yield ton/ha 3.18 3.69 4.24 4.89 5.32

Paddy Output 1000 tons 19225 24964 32530 35833 39973

Paddy Seed, Feed & PH Loss 1000 tons 3268 4244 5530 6450 7195

Industry rice use & loss 1000 tons 363 471 614 873 973

Farm rice stock 1000 tons 1116 1198 1237 1261 1278

State Rice Reserve 1000 tons 100 200 1179 831 869

Rice export 1000 tons 1624 1988 3477 5255 6828

Per capita rice consumption kg/pr 109 133 142 136 134

Total population 1000 persons 66017 71996 77631 82394 86928

Rural population 1000 persons 53136 57057 58906 60061 60850

Major Trends

1. Paddy land decreases while cultivated area increases;

2. Paddy yield and output improve significantly;

3. Paddy kept for seed, feed and post-harvest losses doubles during 1990-2005. There has not been much improvement in reducing post-harvest losses.

4. Rice stock at farm seems no change but there is a big increase in rice state reserve;

5. Rice export peaks up;

6. Rice consumption per capita increases during 1990-2000, then declining during 2000-2010.

Food Availability by Commune 2006

• Enough self-sufficiency for the Northern communes

• Surplus from the Mekong must be sold

Per capita milled rice Per capita foodgrain

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: “Core Rice Belt’ in Six Provinces

Rice consumption per capita decreased in all regions at

1.4% on average (equivalent to 2kg/person/year) during

2002-2008

Region

2002 2004 2006 2008 Change

2008/2002

(%)

Annual

Change

2002-2008

(kg) (kg) (kg) (kg) (kg)

North West 162 164.4 157.2 159.6 -1.48 -0.4

North East 164.4 165.6 154.8 153.6 -6.57 -1.8

Red River Delta 147.6 150 140.4 136.8 -7.32 -1.8

North Central

Coast 150 150 145.2 140.4 -6.4 -1.6

South Central

Coast 132 133.2 127.2 123.6 -6.36 -1.4

Central Highland 150 147.6 141.6 139.2 -7.2 -1.8

South East 116.4 109.2 108 103.2 -11.3 -2.2

Mekong Delta 146.4 146.4 138 132 -9.84 -2.4

Country 144 144 136.8 132 -8.33 -2

Source: Vietnam Household Living Standard Survey (VHLSS) 2002, 2004, 2006, 2008 - GSO

Rice contributed to calorie consumption at peak of 75% during 1975-1985. This contribution has continuously decreasing: accounts for only 55% of calorie consumption at present

Meat Seafood Egg Soybean Vegetable Fruits

Vietnam 4.2 3.1 6.3 0 -0.5 2.8

Urban 1.9 1.9 2.7 0 -1.4 2.1

Rural 5.6 3.1 7.5 0 -1.1 3.2 50

55

60

65

70

75

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

Source: CAP, 2011.

Source: Vietnam Household Living Standard Survey (VHLSS) 2002,

2004, 2006, 2008, 2010

Share of rice in

calorie consumption

in Vietnam

Annual growth rate of per capita consumption of major

food between 2002 and 2010

Food Affordability

Poverty Rate (%) Domestic Rice Price (VND/kg)

2006 2010

Vietnam 15.5 10.7

Urban 7.7 5.1

Rural 18 13.2

By region

Red River Delta 10.1 6.5

North East 22.2 17.7

North West 39.4 32.7

NorthCentral Coast 26.6 19.3

SouthCentral Coast 17.2 14.7

Central Highlands 24 21

South East 4.6 3.7

Mekong Delta 13.3 11.4

0.0

5.0

10.0

15.0

20.0

25.0

0

20

40

60

80

100

120

140

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

High poverty rate in the upland, but most of the poor is concentrated in the low land

Po

vert

y r

ate

Po

vert

y d

en

sit

y

Source: IFPRI Source: IFPRI

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 (VND Million)

Profit Per HH ($)

Winter – Spring

2.87 1.53 53% 8.7 527

Summer Autumn

3.96 (0.03) -1% (0.1)

Autumn Winter

3.30 1.90 61% 8.0 485

Average 3.33 1.09 33% 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

Activities of Labors at Working Age (%)

Ho

use

ho

l

d G

rou

p

Em

plo

yed

Inco

me-

Earn

ing

Jo

bs

Wag

e

Jo

bs

Ag

ricu

ltu

ral

Pro

du

ctio

n

No

n-F

arm

Act

ivit

ies

Use

of

Na

tura

l

Res

ou

rces

Ho

use

Work

s

Very poor 95.0 93.2 32.0 88.4 11.6 16.4 69.2

Poor 96.1 93.5 32.9 82.8 15.7 11.6 65.2

Average 95.2 92.3 34.6 81.2 18.3 7.9 64.5

Fairly rich 93.3 88.2 32.0 72.2 22.2 6.3 61.9

Rich 88.4 83.9 34.0 55.3 25.0 4.2 57.8

Overall 93.6 90.3 33.1 76.1 18.5 9.4 63.8

- Agricultural production plays important role in rural household

activities, but there is a tendency of diversification toward off-

farm activities. Richer households move to off-farm, while

poorer households stuck in agriculture

Food Utilization

Threat of Malnourished Children

Percentage of Under-5 Children Malnourished (weight for age)

Group/Region Percentage

VietNam 20.2

VietNam - Kinh/Chinese 18

VietNam - Other Minorities 29.7

Red River Delta 18.5

North East 22.3

North West 28.8

North Central Coast 21

South Central Coast 23.7

Central Highlands 23.2

South East 10.8

Mekong River Delta 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 people

(million)

21.0 16.7 13.3 9.6

Minimum calorie

request

(Kcal/person/day)

1710 1740 1780 1810

Calorie consumption

(Kcal/person/day)

2090 2310 2520 2770

Source: FAO, http://www.fao.org/hunger/en/

Mekong Delta:

malnutrition with food

surplus

Malnutrition rate is

higher in the

specialized area of rice

production in

comparison with areas

with agricultural

diversification (An

Giang 19.0 vs. 18.3%;

Dong Thap 18.7 vs.

16.6%)

There are correlations

between poverty and

malnutrition rate(1999-

2009)

Source: CASRAD, 2011

Part 2: Food Security Policies

17

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

18

Policy Objectives

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 on building the rice storage in MRD

5. Policy to fix conditions for the rice export

enterprises

6. 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

19

Food Security Policies

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.

20

Supply Interventions (1)

Vietnam’s Rice Balance in 2030 in the Worst Scenario

Yield: 5.8 tons/ha. Post-harvest losses: 10%

21

Scenarios

Projection in 2030

Paddy

quantity

Rice

consumption Rice export

3.8 mil ha 40.3 12.7 5.2

3.6 mil ha 38.2 12.7 4.1

3.3 mil ha 35.0 12.7 2.4

3.0 mil ha 31.8 12.7 0.8

Source: WB, 2011

2030:

Population:

110, 4 million

Consumption:

120 kg per

head

Urbanization

rate: 41,8%

Efficiency Question, 2011

22

Paddy Coffee

Export value (billion USD) 3.7 2.7

Area (million ha) 4.1 0.5

Water use (billion m3) 101.4 9.1

Household number (million

households) 9.3 0.5

Source: AgroCensus

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

23

Supply Interventions (2)

Profit of Paddy Production (Summer – Autumn season 2010) in MRD

24

Floor price: 4,000 VND/kg

Not ensure profit of 30% production costs

Source: Survey of the Crop Department-MARD

Specialty seed

High - quality

seed

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.

25

Supply Interventions (3)

Movement of rice price in 2008 - 2010

26

Effectiveness:

Building the paddy storage in MRD

27

Objective:

Build the storage system of 4 million

tons of rice in MRD to coordinate rice

production and business, enhance

production efficiency

Content:

Innovating the existing storages (1.5

million tons), building some new

storages with capacity of 2.5 Mil.

tons

Target: 3 years (2009 – 2011) 1.36

million tons in the Silo storages,

3.14 million tons in the engineering

steel structure frame storage.

Slow progress due to insignificant

support from State budget and

banking system

.00% .00% .00% .00%

60.400%

15.429%

66.00%

58.00%

40.00%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Long

AnĐồng

Tháp

Cần

Thơ

Hậu

Giang

Tiền

Giang

Kiên

Giang

VNF1 VNF2 Cả

nước

Progress by the end of 2011

Tỷ lệ % thực hiện Compared to plan (%)

Whole

Country

Source: Decision No. 3242/QĐ-BNN-CB issued 02/12/2010

Supply Interventions (4)

Conditionalities on rice export enterprises

28

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

Supply Interventions (5)

Conditionalities on rice export enterprises

29

Assessment:

No clear conditions on long-term farmer-enterprise

relationship

Exclusive opportunities for big enterprises

Some enterprises are qualified but unable to export rice.

In contrast, many enterprises are competitive in rice

export but not eligible for certification (Source: Vietnam

Food Association)

Supply Interventions (5)

Direct support to paddy farmers

30

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

Supply Interventions (6)

General Support

31

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 .....

Supply Interventions (7)

Policy to restrain export in emergency case

32

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,

Demand Interventions (1)

33

Export restriction

time (25/3/2008)

US Okays Japan export

stock (5/2008)

Policy to restrain export in emergency case

Profit analysis of stakeholders in the period of price fluctuation in 2008

(USD/ton)

Enterprises are passive in export plans

34

• Planning rice export by year and quarter.

• Enterprises have to deliver on 2 months duration from date of

signing contract

• Have to follow criteria of VFA (price, volume, payment

method)

• Export plan may be changed (banned or temporary stopped) if

affecting to food security=> miss chance to export with high

price.

Face the risk that the contract signed cannot be implemented.

Export plan of enterprises depend on export management

scheme in each period, so it’s difficult to make long term

plans.

Retail price stabilization

35

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)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

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

2008 2009 2010 2011 2012

CT:

03/2008/CT-

BTC

(01/12/2008)

CT: 03/CT-

BTC

(31/12/2009)

CT: 05/CT-

BTC

(22/12/2010)

CT: 03/CT-

BTC

(12/12/2011)

Movement

of retail

price of

rice

(VND/kg)

Demand Interventions (2)

Retail price stabilization

36

Assessment:

Costly for local budget (tax concession and interest rate

subsidies)

Low impact on price stabilization

Creating two-price system.

Ineffectiveness for the poor. Supermarket account for small share of total domestic trade (less than

15%)

Supermarkets concentrate in big cities

Customers mainly are the middle class

Increase in food price reduces the welfare of low - middle

income group in urban areas.

Demand Interventions (2)

Direct food support

37

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

Demand Interventions (3)

Direct food support

38

Assessment:

This is one of the direct support policies for the poor

Lack of M&E system to identify right beneficiaries,

quantity, efficiency of the programs

Narrow scope of food-for-work program

Dependency attitudes

Demand Interventions (3)

Part 3: Desired Policy Directions

39

CHANGING APPROACH

40

Current Approach New Approach

Protect paddy land

Protect agricultural land

Food security Increase farmer income

Food export Promote the multi-

dimensional benefits of rice

export (economic and

international cooperation)

Administrative control Market-based intervention

Dominant role of VFA and

SOEs

Level playing field

Inflation control Target to poor and vulnerable

groups of consumers

POLICY RECOMENDATIONS

41

For Rice Specialized Zones:

Focus on developing “small farms, large field’ models

Export enterprises: Required to have contracts with farmer groups/cooperatives in the zones (seed, technology, purchase, processing, marketing)

Gov: integrated supports for these zones (infrastructure, credit, extension, trade promotion)

Develop policies to take multi-dimensional benefits of rice export: Long term investment partnership in VN or in foreign country to ensure international food security

For Other Areas:

General support as other commodities and sectors (irrigation, research, extension, credit)

Land transformation: food to feed

POLICY RECOMENDATIONS

42

Demand Interventions:

Market-based interventions: storage conditions, export tariff

For the poor:

o Provide vouchers to vulnerable groups (old, disabled, vulnerable

ethnic minorities). Establish distribution channel for these groups

o Step by step replace direct support to livelihood support

o Expand scope of food-for-work programs to cover public

infrastructure development and other public services

(environment, security, cultural protection)

POLICY RECOMENDATIONS

Food Utilization: o Close collaboration between MARD, MOH, MOLISA, MPI,

MOE, local governments, the private sector, and civil society

organizations

o Strengthen legal framework and institutions for food safety and

hygienic enforcement

o For child malnutrition, emphasis on maternal health,

breastfeeding practices, dietary balance, disease control, and safe

water supply.

Thank you for your attention!

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