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Rice Value Chain Study:

Viet Nam

A Report Prepared for the World Bank

By

Agrifood Consulting International

September 2002

AGRIFOOD CONSULTING INTERNATIONAL


Rice Value Chain Study – Viet Nam

Preface

A report prepared for the Poverty Reduction and Economic Management (PREM) Unit of
the World Bank by Agrifood Consulting International.

This report1 presents the results of a study into the rice value chain in Viet Nam. It is one
of two reports looking at rice value chains in Viet Nam and Cambodia2. The objective of
the two country rice studies is to assess the current situation (constraints, costs, efficiency,
quality) of the rice markets and rice sector value-chains in Viet Nam and Cambodia with a
view to diagnosing issues and proposing policy options, strategies, and practices by which
the competitiveness of the rice sector in each country can be enhanced.

This is done with a view to proposing means by which returns to producers and the value
added by the sector in each country can be enhanced. The studies pay particular attention
to how such policies, strategies, and practices may benefit poorer populations engaged in
this sector, such as small farmers. They also pay particular attention to issues of quality
and strategic international marketing of the product that would increase domestic value
added. In so doing, the country studies take into account regional differences within
countries, as well as differences in rice varieties and their prospects in global markets.

The fieldwork for the studies was carried out over four weeks in July and August 2002
(Cambodia from 10 July to 24 July and Viet Nam from 24 July to 8 August). The studies
involved the analysis of background data, field trips and key informant interviews with
people involved in all sectors of the rice chain.

The report for Viet Nam is the result of a joint effort by the Study Team of Tim Purcell and
Karl Rich of Agrifood Consulting International. The Study Team would like to thank all
those people who assisted in providing information and help in completing the report. In
particular the team would like to express their appreciation to Prof. Dr. Mai Van Quyen
(Retired, Post-Harvest Technology Institute – Ho Chi Minh City) for the excellent support
and sharing of information

The views expressed in this report are those of the consultants and do not necessarily
reflect the views of the World Bank or the Government of Viet Nam.

Francesco Goletti
President, Agrifood Consulting International
Ha Noi, Viet Nam
16 September 2002

AGRIFOOD CONSULTING INTERNATIONAL

1
Agrifood Consulting International (2002) Rice Value Chain Study: Viet Nam. A Report Prepared for the
World Bank. Ha Noi, Viet Nam. Agrifood Consulting International.
2
Agrifood Consulting International (2002) Rice Value Chain Study: Cambodia. A Report Prepared for the
World Bank. Phnom Penh, Cambodia. Agrifood Consulting International.

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Rice Value Chain Study – Viet Nam

Table of Contents

Preface................................................................................................................................ 2
Table of Contents................................................................................................................ 3
List of Tables....................................................................................................................... 5
List of Figures...................................................................................................................... 9
List of Boxes...................................................................................................................... 10
List of Abbreviations and Acronyms .................................................................................. 11
Executive Summary .......................................................................................................... 12
1 Introduction ................................................................................................................ 14
2 Background to Study.................................................................................................. 16
3 Global Rice Trade and Major Issues.......................................................................... 17
3.1 Major Exporters................................................................................................... 17
3.2 Major Importers................................................................................................... 18
4 Overview of the Rice Industry in Viet Nam................................................................. 20
4.1 Topography and Climate..................................................................................... 20
4.2 Demographics and the Agricultural Sector.......................................................... 21
4.3 Rice and Rural Poverty in Viet Nam.................................................................... 21
4.4 Production........................................................................................................... 25
4.5 Food Security and Land Reassignment .............................................................. 28
4.6 Prices.................................................................................................................. 30
4.7 Trade .................................................................................................................. 30
4.8 Credit Services.................................................................................................... 31
4.8.1 Major Rural Credit Providers in Viet Nam........................................................ 31
4.8.2 Credit Access and Uses in the Rice Value Chain............................................ 35
4.8.2.1 Credit Access and Uses by Farmers .................................................... 35
4.8.2.2 Credit Access and Uses by Millers, State Owned Enterprises and
Exporters 37
4.8.2.3 Credit Access and Uses by Traders, Wholesalers and Retailers.......... 38
4.8.3 Issues and Constraints in the Provision of Credit in Viet Nam ........................ 38
5 Value Chain ............................................................................................................... 42
5.1 Overview............................................................................................................. 42
5.2 Value Chain Analysis .......................................................................................... 44
5.2.1 Producers ........................................................................................................ 44
5.2.1.1 Land Inputs........................................................................................... 44
5.2.1.2 Seed Inputs .......................................................................................... 45
5.2.1.3 Fertilizer Inputs ..................................................................................... 49
5.2.1.4 Pesticide Inputs .................................................................................... 49
5.2.1.5 Irrigation Inputs..................................................................................... 50
5.2.1.6 Labor and Machinery Inputs ................................................................. 52
5.2.1.7 Costs and Margins................................................................................ 53
5.2.1.8 Constraints ........................................................................................... 54
5.2.2 Collectors ........................................................................................................ 63
5.2.2.1 Costs and Margins................................................................................ 64
5.2.2.2 Constraints ........................................................................................... 64
5.2.3 Millers.............................................................................................................. 66
5.2.3.1 Costs and Margins................................................................................ 67
5.2.3.2 Constraints ........................................................................................... 68
5.2.4 Traders............................................................................................................ 71
5.2.4.1 Trade Flows.......................................................................................... 71
5.2.4.2 Institutional Purchases.......................................................................... 73

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5.2.4.3 Storage ................................................................................................. 73


5.2.4.4 Costs and Margins................................................................................ 74
5.2.4.5 Constraints ........................................................................................... 74
5.2.5 Retailers and End Users ................................................................................. 76
5.2.5.1 Costs and Margins................................................................................ 76
5.2.5.2 Constraints ........................................................................................... 77
5.2.6 Exporters ......................................................................................................... 78
5.2.6.1 Costs and Margins................................................................................ 78
5.2.6.2 Constraints ........................................................................................... 78
5.3 Marketing Margins .............................................................................................. 82
5.4 Marketing Chain.................................................................................................. 83
6 Competitiveness and Comparative Advantage of Vietnamese Rice .......................... 85
7 Policy Simulations and Analysis................................................................................. 87
7.1 General Characteristics of VILASEM .................................................................. 88
7.2 Overview of the Equations in VILASEM.............................................................. 89
7.3 Overview of Equation Symbols ........................................................................... 90
7.4 Equations in VILASEM........................................................................................ 90
7.4.1 Supply Equations ............................................................................................ 90
7.4.2 Demand Equations.......................................................................................... 92
7.4.3 Quantity Transported Between Regions.......................................................... 94
7.4.4 Domestic Prices .............................................................................................. 96
7.4.5 International Prices.......................................................................................... 96
7.4.6 Income ............................................................................................................ 98
7.5 Simulations ......................................................................................................... 99
7.5.1 Simulation 1: Reduction in World Prices ......................................................... 99
7.5.2 Simulation 2: Reduction in World Prices, Combined with Export Orders and
Cheaper Imports.......................................................................................................... 100
7.5.3 Simulation 3: Increase in Agricultural Productivity......................................... 101
7.5.4 Simulation 4: Reduction in Paddy Production in the Red River Delta............ 102
7.5.5 Simulation 5: Improvement in Milling Technology ......................................... 102
7.5.6 Simulation 6: Reduction in Post-Harvest Losses........................................... 103
7.5.7 Simulation 7: Reduction in Paddy Production in the Mekong River Delta ..... 103
7.5.8 Simulation 8: Reduction in Paddy Production in the Mekong and Red River
Deltas 104
7.5.9 Simulation Conclusions ................................................................................. 104
8 Major Constraints and Recommendations ............................................................... 106
9 Conclusions ............................................................................................................. 109
10 Tables................................................................................................................... 116
11 Figures ................................................................................................................. 328
References...................................................................................................................... 358
Terms of Reference ........................................................................................................ 362
List of Interviews ............................................................................................................. 366

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Rice Value Chain Study – Viet Nam

List of Tables

Table 1 World Production of Rice, 1997/98-2001/02....................................................... 116


Table 2 World Production of Rice, Selected Countries, 1997/98-2001/02 ...................... 116
Table 3 World Rice Trade, Selected Countries, 1997/98-2001/02 .................................. 117
Table 4 Comparison of Thailand and Viet Nam Prices for High-Quality Rice.................. 118
Table 5 Percentage of High-Quality Rice Exported by Viet Nam, 1994-1998 ................. 118
Table 6 Destinations for U.S. Exports of Rice, 2000 - 2001 ............................................ 118
Table 7 Value of Exports ................................................................................................. 118
Table 8 Total Harvested Area of Rice by Region ............................................................ 119
Table 9 Urban and Rural Population by Region (1999)................................................... 119
Table 10 Agricultural Land per Capita............................................................................. 119
Table 11 Contribution of Agriculture to 1999 GDP .......................................................... 119
Table 12 Estimated Magnitude and Incidence of Poverty, 2000 ..................................... 120
Table 13 Trends in Poverty Rates................................................................................... 120
Table 14 Trends in Household Income ........................................................................... 120
Table 15 Trends in Income Distribution........................................................................... 121
Table 16 Landlessness by Region (1994)....................................................................... 121
Table 17 Expenditures, Incomes, and Savings in Viet Nam by Quintile.......................... 122
Table 18 Social Indicators of Selected Southeast Asian Countries, 1997....................... 122
Table 19 Trends in Social Indicators ............................................................................... 123
Table 20 Paddy Productivity............................................................................................ 123
Table 21 Land and Land Quality, by Quintile .................................................................. 123
Table 22 Growth in Yield, Harvested Area and Paddy Production (1990-1999).............. 123
Table 23 Harvested Area, Average Yield and Paddy Production by Region (2001)........ 124
Table 24 Regional Yields for Seasonal Rice Plantings ................................................... 124
Table 25 Post Harvest Losses in Rice Production, 1992-1994 ....................................... 124
Table 26 Harvest and Post Harvest Losses, Long An Province, Mekong River Delta..... 125
Table 27 Production, Consumption and Food Balance for Rice, 2001............................ 125
Table 28 Food Balance for Rice Production, 1990-2001................................................. 126
Table 29 Per Capita Consumption of Rice on an Exported Residual Basis .................... 127
Table 30 Sown Area, Harvested Area and Maximum Physical Area of Paddy 1990-2001
................................................................................................................................. 127
Table 31 Planted Area of Winter - Spring Paddy by Region ........................................... 127
Table 32 Planted Area of Summer-Autumn Paddy by Region ........................................ 128
Table 33 Planted Area of Winter Paddy by Region ......................................................... 128
Table 34 Rice Crop Assessment for Food Balance 1999-2000 – Planted and Harvested
................................................................................................................................. 129
Table 35 Rice Crop Assessment for Food Balance 1999-2000 – Yield and Production.. 130
Table 36 Rice Crop Assessment for Food Balance 1999-2000 – Losses and Availability
................................................................................................................................. 131
Table 37 Rice Crop Assessment for Food Balance 1999-2000 – Requirements and
Balance .................................................................................................................... 132
Table 38 Rice Crop Assessment for Food Balance 2000 - 2001 Planted and Harvested 133
Table 39 Rice Crop Assessment for Food Balance 2000 - 2001 - Yield and Production 134
Table 40 Rice Crop Assessment for Food Balance 2000 - 2001 - Losses and Availability
................................................................................................................................. 135
Table 41 Rice Crop Assessment for Food Balance 2000 - 2001 - Requirements and
Balance .................................................................................................................... 136
Table 42 Area of Land for Aquaculture by Region .......................................................... 137
Table 43 Area of Harvested Paddy by Region ................................................................ 137

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Table 44 Change in Harvested and Planted Rice Area and aquaculture Land 2000-2001
................................................................................................................................. 137
Table 45 Area of Water for Fishery Cultivation................................................................ 138
Table 46 Gross Output of Shrimp Culture ....................................................................... 139
Table 47 Gross Output of Fish Culture............................................................................ 140
Table 48 Production and Exports of Rice 1990-2001...................................................... 141
Table 49 Export of Rice by Grade, 2001 ......................................................................... 141
Table 50 Export of Rice by Destination, 2001 ................................................................. 142
Table 51 Export of Various Quality Rice by Destination, 2001 ........................................ 143
Table 52 Sources of Rural Finance in the Mekong River Delta (1999) ........................... 144
Table 53 Summary of VBARD Operations FY1995-1999 ............................................... 144
Table 54 VBARD, Portfolio Details, December 2001 ...................................................... 145
Table 55 Source of Farmer Funds .................................................................................. 145
Table 56 Credit Usage and Provision for Fruit and Vegetable Producers: Regional Basis
................................................................................................................................. 146
Table 57 Details of Loans – Loan Amounts, Interest Rates and Type of Collateral: By
Source of Loan for Fruit and Vegetable Producers .................................................. 147
Table 58 Loans for Smallholder Livestock Producers in Thanh Hoa and Thai Binh
Provinces ................................................................................................................. 148
Table 59 Sources of Credit for Traders, Millers and SOEs ............................................. 148
Table 60 Sources of Credit for Millers by Type of Mill and Region.................................. 149
Table 61 Sources of Credit for SOEs by Region ............................................................. 149
Table 62 Credit Constraints of Traders, Millers, and SOEs............................................. 149
Table 63 Credit Constraints for Millers by Region ........................................................... 150
Table 64 Sources of Credit for Traders by Type and Region .......................................... 150
Table 65 Credit Constraints for Traders by Type and Region ......................................... 151
Table 66 Land Fragmentation, 1995 ............................................................................... 151
Table 67 Area of Paddy Planted to Different Varieties, Northern Provinces, 2000.......... 151
Table 68 Rice Varieties Planted, Northern Provinces 2000............................................. 152
Table 69 Area of Paddy Planted to Different Varieties, Central Provinces, 2000 ............ 152
Table 70 Rice Varieties Planted, Central Provinces 2000............................................... 152
Table 71 Rice Varieties Planted, Southern Provinces 2000 ............................................ 153
Table 72 Area under Hybrid Rice Cultivation in Northern Provinces in the 2000 Spring
Crop Season ............................................................................................................ 153
Table 73 Imported Hybrid Seed and Domestic Seed Production, 1998 - 2000. .............. 154
Table 74 Seed Classification Systems ............................................................................ 154
Table 75 OECD Seed Classification Systems................................................................. 154
Table 76 Farmer Input Use ............................................................................................. 154
Table 77 Imports of Fertilizer and Pesticides .................................................................. 154
Table 78 Imports of Fertilizer by Firm and Type, 2001.................................................... 155
Table 79 Imports of Fertilizer by Origin and Type, 2001 ................................................. 155
Table 80 Cost of Insecticide Use..................................................................................... 155
Table 81 Harvesting Machines Made in Viet Nam .......................................................... 156
Table 82 Manufacture of Machinery in Viet Nam ............................................................ 156
Table 83 Paddy Retention in the Mekong River Delta Region ........................................ 156
Table 84 Seeding Rate and Fertilizer Application, Mekong River Delta, 1999 ................ 156
Table 85 Source of Seed and Seed Retention, Mekong River Delta, 1999..................... 157
Table 86 Regional Water Use and Extraction by Sectors................................................ 157
Table 87 Irrigation Works ................................................................................................ 157
Table 88 Problem Soils in Rice Production Areas........................................................... 157
Table 89 Salinity in the Mekong River Delta Region ....................................................... 158
Table 90 Number of Dryers in the Mekong River Delta Region, 1998............................. 158

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Table 91 Expense of Flat Bed Dyers, Mekong River Delta Region, 1998 ....................... 158
Table 92 Cropping Patterns in the Mekong River Delta, 1999 ........................................ 159
Table 93 Farmer Partial Budget for Winter Spring Crop, Mekong River Delta, 1998-1999
................................................................................................................................. 160
Table 94 Farmer Partial Budgets, Can Tho Province 2001 Cropping Year..................... 161
Table 95 Farmer Partial Budgets, 2001 Cropping Year .................................................. 162
Table 96 Partial Budget for Rice Production, Quang Cat Commune, Thanh Hoa Province
................................................................................................................................. 163
Table 97 Partial budgets for Rice Varieties in Thanh Tien Commune, Thanh Hoa Province
................................................................................................................................. 163
Table 98 Gross Margins for Rice Production................................................................... 164
Table 99 Profit Margins for Rice Production.................................................................... 164
Table 100 Rural Households Growing and Selling Rice by Region and Income Level ... 165
Table 101 Sales of Paddy by Farmers in the Mekong River Delta, 1999 ........................ 165
Table 102 Marketing Channels for Farmers, 1996 .......................................................... 165
Table 103 Market Prices for Paddy, Can Tho Market ..................................................... 166
Table 104 Characteristics of Millers ................................................................................ 166
Table 105 Channels of Distribution and Sales for Millers................................................ 166
Table 106 Purchases of Paddy and Rice by SOEs by Region ........................................ 167
Table 107 Main Assets of Millers .................................................................................... 167
Table 108 Recovery Rates by Types of Milling Machines ............................................... 167
Table 109 Milling Recovery from Village Level Mills ....................................................... 167
Table 110 Partial Budget for Miller in Can Tho Province................................................. 168
Table 111 Cost Standards for Milling, Provincial Food Company Mekong River Delta ... 168
Table 112 Management costs - Provincial Food Company, Mekong River Delta............ 169
Table 113 Storage Losses - Provincial Food Company, Mekong River Delta................. 169
Table 114 Purchases of Paddy and Sales of Rice, Mekong River Delta, 1999 ............... 169
Table 115 Specialization of Sales by Retailers ............................................................... 170
Table 116 Characteristics of Traders .............................................................................. 170
Table 117 Distribution of Purchases by Retailers............................................................ 170
Table 118 Distribution of Sales by Retailers.................................................................... 171
Table 119 Distribution of Rice Varieties and Prices ........................................................ 171
Table 120 Miller Operating Costs.................................................................................... 172
Table 121 Costs and Returns for Export Rice and the Effect of Variable Purchase Prices –
MRD Provinces ........................................................................................................ 173
Table 122 Rice Exports ................................................................................................... 174
Table 123 Rice Exports by Quantity and Quality............................................................. 174
Table 124 Direct Rice Exporting Companies, 1999......................................................... 175
Table 125 Export of Rice from the Mekong River Delta, 1998 ........................................ 176
Table 126 Rice Price Quotes 27 August 2002 ................................................................ 176
Table 127 Places and Features for Paddy Trade with Thailand and Viet Nam ............... 177
Table 128 Cambodia - Viet Nam Cross Border Trade in Paddy...................................... 177
Table 129 Fee Collection on Paddy Trade in Takeo Province - 2000 ............................. 178
Table 130 IFPRI Rice Study Marketing Margins, 1996 and 2002.................................... 179
Table 131 Marketing Costs and Margins for Export Rice, July-August 2002 .................. 179
Table 132 Tradable Input Costs ...................................................................................... 180
Table 133 Non-Tradable Input Costs .............................................................................. 181
Table 134 NPCs/DRCs vis-à-vis Thailand (Rice Basis) .................................................. 182
Table 135 Computation of NPCs for Various Qualities of Rice ....................................... 182
Table 136 DRC Computations for Vietnamese Rice ....................................................... 182
Table 137 Commodity Indices for VILASEM ................................................................... 183
Table 138 Endogenous Variables in VILASEM ............................................................... 183

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Table 139 Simulation 1 - Changes in Quantities and Prices by Region .......................... 184
Table 140 Simulation 1 - Changes in Exports and Imports by Region ............................ 189
Table 141 Simulation 1 - Changes in total income by region .......................................... 193
Table 142 Simulation 1 - Changes in Commodity Flows Between Regions.................... 194
Table 143 Simulation 1 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 198
Table 144 Simulation 2 - Changes in Quantities and Prices by Region .......................... 202
Table 145 Simulation 2 - Changes in Exports and Imports by Region ............................ 207
Table 146 Simulation 2 - Changes in total income by region .......................................... 211
Table 147 Simulation 2 - Changes in Commodity Flows Between Regions.................... 212
Table 148 Simulation 2 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 216
Table 149 Simulation 3 - Changes in Quantities and Prices by Region .......................... 220
Table 150 Simulation 3 - Changes in Exports and Imports by Region ............................ 225
Table 151 Simulation 3 - Changes in total income by region .......................................... 229
Table 152 Simulation 3 - Changes in Commodity Flows Between Regions.................... 230
Table 153 Simulation 3 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 234
Table 154 Simulation 4 - Changes in Quantities and Prices by Region .......................... 238
Table 155 Simulation 4 - Changes in Exports and Imports by Region ............................ 243
Table 156 Simulation 4 - Changes in total income by region .......................................... 247
Table 157 Simulation 4 - Changes in Commodity Flows Between Regions.................... 248
Table 158 Simulation 4 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 252
Table 159 Simulation 5 - Changes in Quantities and Prices by Region .......................... 256
Table 160 Simulation 5 - Changes in Exports and Imports by Region ............................ 261
Table 161 Simulation 5 - Changes in total income by region .......................................... 265
Table 162 Simulation 5 - Changes in Commodity Flows Between Regions.................... 266
Table 163 Simulation 5 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 270
Table 164 Simulation 6 - Changes in Quantities and Prices by Region .......................... 274
Table 165 Simulation 6 - Changes in Exports and Imports by Region ............................ 279
Table 166 Simulation 6 - Changes in total income by region .......................................... 283
Table 167 Simulation 6 - Changes in Commodity Flows Between Regions.................... 284
Table 168 Simulation 6 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 288
Table 169 Simulation 7 - Changes in Quantities and Prices by Region .......................... 292
Table 170 Simulation 7 - Changes in Exports and Imports by Region ............................ 297
Table 171 Simulation 7 - Changes in total income by region .......................................... 301
Table 172 Simulation 7 - Changes in Commodity Flows Between Regions.................... 302
Table 173 Simulation 7 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 306
Table 174 Simulation 8 - Changes in Quantities and Prices by Region .......................... 310
Table 175 Simulation 8 - Changes in Exports and Imports by Region ............................ 315
Table 176 Simulation 8 - Changes in total income by region .......................................... 319
Table 177 Simulation 8 - Changes in Commodity Flows Between Regions.................... 320
Table 178 Simulation 8 - Changes in Commodity Flows Between Regions (Percentage
Change) ................................................................................................................... 324
Table 179 List of Interviews............................................................................................. 366
Table 180 List of Interviews - Continued ......................................................................... 367

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List of Figures

Figure 1 Regions of Viet Nam ......................................................................................... 328


Figure 2 Northern Provinces of Viet Nam........................................................................ 329
Figure 3 Southern Provinces of Viet Nam ....................................................................... 330
Figure 4 Geographic Distribution of Poverty.................................................................... 331
Figure 5 Area of Winter – Spring Rice Crop 2001 ........................................................... 332
Figure 6 Area of Summer – Autumn Rice Crop 2001...................................................... 333
Figure 7 Area of Lua Mua Crop 2001.............................................................................. 334
Figure 8 Area of All Crops 2001 ...................................................................................... 335
Figure 9 Yield of Winter – Spring Crop 2001................................................................... 336
Figure 10 Yield of Summer – Autumn Crop 2001............................................................ 337
Figure 11 Yield of Lua Mua Crop 2001 ........................................................................... 338
Figure 12 Average Yield of All Crops 2001 ..................................................................... 339
Figure 13 Production of Winter – Spring Crop, 2001....................................................... 340
Figure 14 Production of Summer – Autumn Crop, 2001 ................................................. 341
Figure 15 Production of Lua Mua Crop, 2001 ................................................................. 342
Figure 16 Production of All Crops, 2001 ......................................................................... 343
Figure 17 Provincial Food Balance 2001 ........................................................................ 344
Figure 18 Market Prices for Paddy, Can Tho Market ...................................................... 345
Figure 19 Quality of Rice Exports from Viet Nam............................................................ 346
Figure 20 Percent of Viet Nam Rice Exports by Destination ........................................... 347
Figure 21 Seasonal Household Labor Utilization Patterns – Selected Communes, Thai
Binh Province........................................................................................................... 348
Figure 22 Seasonal Household Exchange Labor Utilization Patterns – Selected
Communes, Thai Binh Province............................................................................... 349
Figure 23 Seasonal Household Cash Constraint Patterns – Selected Communes, Thai
Binh Province........................................................................................................... 350
Figure 24 Marketing Margins for Rice Trade ................................................................... 351
Figure 25 Local Market Distribution Channel – Mekong River Delta ............................... 352
Figure 26 Main Export Distribution Channel with State Owned Enterprises.................... 352
Figure 27 Main Export Channel with Private Enterprises ................................................ 353
Figure 28 Main Distribution Channel for Export and Reprocessing................................. 354
Figure 29 Main Distribution Channels for Domestic Trade under Private Enterprise ...... 355
Figure 30 Marketing Chain in the Mekong River Delta Region........................................ 356
Figure 31 Framework for Industry Policy......................................................................... 357

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List of Boxes

Box 1 Dimensions of Poverty in Viet Nam......................................................................... 24


Box 2 Credit Constraints Doc Lap Commune, Thai Binh Province.................................... 40
Box 3 Credit Constraints in Nam Trung Commune, Thai Binh Province ........................... 41
Box 4 Seed Constraints in Thai Binh Province.................................................................. 58
Box 5 Constraints Identified by MARD in the Provision of Research and Extension
Services ..................................................................................................................... 59
Box 6 The Southern Seed Joint Stock Company .............................................................. 60
Box 7 Pest and Disease Constraints, Thai Binh and Thanh Hoa Provinces ..................... 61
Box 8 Irrigation Constraints in Thai Binh Province ............................................................ 62
Box 9 On-farm use of Rice for Consumption and Cash Needs ......................................... 64
Box 10 Interview with Paddy Collector, Can Tho Province, Mekong River Delta .............. 65
Box 11 Rice Trading in Can Tho Province ........................................................................ 65
Box 12 Interview with Rice Transporter, Can Tho Province .............................................. 75
Box 13 Routes for Cambodian Paddy Trade with Viet Nam.............................................. 75
Box 14 Management of Rice Exports and Quotas 1989-1997 .......................................... 81

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List of Abbreviations and Acronyms

ACIAR Australian Centre for International Agricultural Research


ADB Asian Development Bank
ASPS Agriculture Sector Programme Support - DANIDA
AusAID Australian Agency for International Development
BS Breeder Seed
CGE Computable General Equilibrium Models
CLDRRI Cuu Long Delta Rice Research Institute
CPRGS Comprehensive Poverty Reduction and Growth Strategy
CS Certified Seed
DANIDA Danish International Development Agency
DARD Department of Agriculture and Rural Development (Provincial)
DRC Domestic Resource Costs
DUS Distinctness, Uniformity and Stability
FAO Food and Agriculture Organization of the United Nations
FSS Farmer Saved Seed
HDI Human Development Index
HPI Human Poverty Index
IFPRI International Food Policy Research Institute
IRRI International Rice Research Institute
JICA Japan International Cooperation Agency
MARD Ministry of Agriculture and Rural Development
MFI Micro-Finance Institutions
MOF Ministry of Finance
MOT Ministry of Trade
NCVESC National Center for Variety Evaluation and Seed Certification
NPC Nominal Protection Coefficients
PCF People's Credit Funds
PHTI-HCMC Post Harvest Technology Institute - Ho Chi Minh City
PSA Provincial Seed Agencies
RCA Revealed Comparative Advantage
SBV State Bank of Viet Nam
SME Small and Medium Enterprises
SOCB State-owned Commercial Banks
SOE State Owned Enterprise
UNCTAD United Nations Conference on Trade and Development
USDA-ERS United States Department of Agriculture – Economic Research Service
VBARD Viet Nam Bank for Agricultural and Rural Development
VLSS Viet Nam Living Standards Survey
WB World Bank
WFP World Food Program
WHO World Health Organization
WTO World Trade Organization

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Executive Summary

Rice plays an integral role in the economy of rural Viet Nam. Over 80 percent of
Vietnamese farmers cultivate rice, primarily through traditional farming practices. For most
of these farmers, rice is the major source of income and sustenance and thus is of critical
importance in the formulation of any type of agricultural policy. Yet the rice sector faces a
number of important constraints in Viet Nam. Although agricultural productivity is high, with
yields averaging 4.3 tonnes per hectare, there are significant differences between regions.
In some areas of the Mekong River Delta some farmers are achieving up to 10-12 tonnes
per hectare, while the average yields in some remote and mountainous regions are down
to 2.4 tonnes per hectare. Surpluses of rice depend critically on supplies from the Mekong
and Red River Deltas, with the rest of the country in deficit. Significant adverse climatic
conditions in just four of the Mekong River Delta provinces during the Winter-Spring and
Summer-Autumn crops would have severe consequences for food security in the rest of
the country. While surpluses of rice in areas outside the two deltas have occurred over the
past five years, such harvests are localized and remain dependent on favorable weather
and climatic conditions. Moreover, the majority of farmers outside of the two deltas
produce rice for subsistence needs, yet many remain food deficit for one to two months
per year. Farmers lack consistent access to income-generating activities and credit for the
purchase of inputs to rice production. This cycle of poverty remains a powerful force in the
rural sector in Viet Nam.

Further downstream, the rice processing and distribution sector faces a number of key
constraints. The milling sector is in a transition between a bimodal structure - with a large
number of small and medium sized mills catering for the domestic market and a few large
mills catering for the export market – and a more modern industry with fewer, larger scale
mills. In the domestic milling sector milling technology is often outdated, resulting in high
levels of broken rice. Furthermore, millers are fundamentally constrained by a lack of
working capital that limits their ability to purchase paddy from farmers and update
machinery. The lack of capital also perpetuates the low levels of technology implicit in the
sector. In the large milling sector preferential credit arrangements for SOE mills hampers
the ability of the private sector to compete effectively. The awarding of Government-to-
Government contracts to SOE mills also prevents private mills expanding the export base.

Institutional and infrastructural constraints also impede the sector. High costs in the
provision of credit dampen private investment by farmers and millers, forcing farmers to
seek unofficial sources of credit, and millers to delay or reduce investments.

The key conclusion of the study is that there is a fundamental lack of an enabling
environment, in terms of infrastructure and institutions. This enabling environment needs
to be developed in order to improve food security, alleviate rural poverty and generate
export revenues from the rice industry. The report highlights two themes where an
enabling environment will provide benefits in the development of the rice sector. The first
theme is that productivity in the rice sector needs to be enhanced and the second theme of
the report is that Viet Nam possesses the ability to become an exporter of small volumes
of niche and high quality varieties of rice. The report suggests that in order to address
these two themes, an enabling environment should be developed by both the private and
public sectors.

Productivity improvements need to be made in order to increase the yield of rice in Viet
Nam and to close the yield gap between regions. In order to increase yields from their

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current average level of around 4.3 tonnes per hectare, improvements need to be made in
seed varieties, access to inputs (credit, fertilizer, pesticides and irrigation) and agricultural
extension. It is argued that there is limited scope for increasing yields in the higher yielding
areas of the Mekong and Red River Deltas, but there is scope for increasing average
yields in more remote and mountainous areas.

It is argued that the role of the public sector in direct investments to increase productivity
should be limited to the provision of irrigation, where it is economically viable. The role of
the public sector in the other factors limiting productivity should be confined to an enabling
role, both through legislation and provision of enabling services, such as improved
infrastructure and public policies to reduce the transaction cost for credit provision.

The private sector should be encouraged to develop high valued niche markets, which will
benefit those few farmers who are supplying high quality varieties of paddy.
Simultaneously there needs to be efforts to encourage an increase in quantity and yield of
the bulk of the remaining rice crop. Again, the role of the public sector is an enabling role,
rather than to provide subsidized inputs or research.

Productivity increases and investments in the rice sector are unlikely to be major driving
forces for poverty reduction in rural Viet Nam. For the majority of Vietnamese farmers
outside of the Mekong and Red River Deltas, rice is still cultivated in small plots for
subsistence reasons. Even with increases in productivity, household income from rice is
likely to be only between $100 and $200 per hectare. Unless farmers have an extensive
amount of land, rice cultivation is unlikely to be the main source of poverty reduction in Viet
Nam. Rather, it suggests that investments in rice production may need to be combined
with policies aimed at achieving crop diversification to tackle poverty in rural areas.

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1 Introduction
The concept of export-led poverty reduction starts from the realization that the
determinants of national economic growth and social development have changed
profoundly as a result of global and regional trade liberalization. World trade is growing far
faster than world GDP, which means that growth opportunities are typically greater for
exports than they are for domestic sales. Export-led poverty reduction seeks to ensure that
poor producers benefit from the new economic opportunities arising from improved market
access conditions, which allow them to supply their products to regional and global export
markets (International Trade Center 2001, pg. 2).

This also recognizes that poor producers can establish a sustainable foothold in world
markets only if their production can stand up to the tough requirements of quality and price
dictated by global competition and only if their production is linked to larger producers
and/or marketers that can promote and sell their goods or services (International Trade
Center 2001, pg. 2).

There is further recognition that, even where others (business enterprises, national or
international NGOs, other agencies and donors) have worked in particular poor
communities to mobilize their entrepreneurial capacities, the linkage between those
capacities and actual exports remains typically weak. Ultimately, export-led poverty
reduction is about helping poor producers succeed in profit-making ventures in regional
and global export markets (International Trade Center 2001, pg. 2).

The poor may best benefit from trade (and growth more generally) by increasing their
productivity and returns from their existing factors of production, such as land or labor. In
the context of a global trading economy this would mean engaging and increasing
productivity in sectors where the country has a comparative advantage. Should these be
sectors in which the poor and their resources are employed, growth through increased
competitiveness and trade would be effective in reducing poverty.

However, at the same time, globalization has had its dark side. There has been an
increasing tendency towards growing inequity within and between countries and a growing
incidence in the absolute levels of poverty, not just in poor countries. These positive and
negative attributes of globalization have been experienced at a number of different levels.
The distributional pattern emerging in recent decades of globalization is thus
simultaneously heterogeneous and complex (Kaplinsky and Morris 2001, pg. 1).

If those who had lost from globalization had been confined to the non-participants, the
policy implications would be clear – take every step to be an active participant in global
production and trade. However, the challenge is much more daunting than this, since the
losers include many of those who have participated actively in the process of global
integration. Hence, there is a need to manage the mode of insertion into the global
economy, to ensure that incomes are not reduced or further polarized (Kaplinsky and
Morris 2001, pg. 1).

These issues pose serious problems for economic management, not just within
governments, but also within firms and other institutions. Thus, the key policy issue is not
whether to participate in global markets, but how to do so in a way which provides for
sustainable income growth. This is a particular problem for poor producers and poor

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countries who seem to have experienced more of the downside than the upside of
globalization over the past two decades (Kaplinsky and Morris 2001, pg. 18).

In practice, history and country context has determined sectors in which poor populations
have traditionally engaged and earned a livelihood. This is particularly so with the
production of food crops, especially among subsistence farmers. In much of Asia, and
indeed in Cambodia and Vietnam, the sector from which most of the poor earn a living is
through the cultivation of rice. Indeed the rice culture permeates the farming traditions of
this region.

These facts beg several questions. Is rice a commodity where these countries and their
populations indeed have a competitive advantage in a global, trading economy, given
demand in global rice markets? Can rice varieties be produced and marketed in such a
way that further adds value and efficiency so that this is a sector in which producers, and
the economy, can increase competitiveness and returns?

Given the fact that this sector is where the poor are employed and earn a living in Viet
Nam, it would follow that increasing productivity and returns to producers in this sector will
be important to improving the livelihoods of the poor. Understanding the constraints to
increased productivity and returns – whether they be issues related to policy, to input
markets, to infrastructure and access, to other “behind the border” factors, to trade policy,
to improving seeds and cultivation techniques, to improving milling and processing
techniques, to improving quality of the product (paddy and milled rice), to strategic
marketing – are therefore all critical and relevant issues to enhancing the benefits of the
poor from growth in the rice sector in general, and particularly from this sector through
trade.

In Viet Nam, the issues with respect to the rice value-chain are complex and multi-faceted.
The rice that is marketed is often of low quality, as a result of mixed varieties and poor
milling technologies. The challenge for Viet Nam is thus to understand and, more
importantly, prioritize the constraints facing the marketing system and develop strategies
to overcome these bottlenecks. These issues will be raised throughout the course of the
report. In addition, while the rice sector has important ramifications on rural poverty in Viet
Nam, it is also important to understand the competitiveness and profitability of rice
production with respect to regional competitors and in terms of alternative crops. While this
paper will address and identify some of these concerns, it remains an area for further
research as to the means to develop appropriate agricultural strategies aimed at alleviating
rural poverty.

The outline of the report is as follows. Section 2 presents a background and motivation to
the study. Section 3 presents an overview of the global rice trade. Section 4 presents an
overview of the rice industry in Viet Nam. Section 5 presents the analysis of the marketing
and value chain for rice in Viet Nam. Section 6 analyses the competitiveness of the
Vietnamese rice industry. Section 7 presents some policy simulations using a multimarket
model developed for Viet Nam. Section 8 summarizes the major constraints to the
development of the rice industry in Viet Nam. Finally, Section 9 concludes.

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2 Background to Study
Rice has long played a central role in the agricultural sector, economy and psyche of Viet
Nam. Viet Nam has been described as having the shape of a long pole, balancing two rice
bowls on either end. The two rice bowls are the deltas of the Red River in the North, and
the Delta of the Mekong River in the South. These two deltas are amongst the most
densely populated and heavily cultivated agricultural regions in the world. Climatic and
geographic conditions combine in these two regions to provide an ideal environment for
the production of rice.

Collectivization of rice production had led to stagnant or declining yields and production
levels of rice, and the full potential of the natural resources available for rice production
were not being realized. In 1986, Viet Nam began a process of doi moi, or renovation,
similar to the process started in China in 1978. The basic production unit in rural areas
was deemed to be the household, and production decisions and income earning potential
were devolved to that level. This reform, combined with reforms in land tenure and
taxation, resulted in a marked increase in agricultural production levels. Rice production
increased strongly from the late 1980s, and Viet Nam moved from a position of being a net
rice importer to being one of the dominant rice exporters in the world by the late 1990s.

In addition to policies designed to stimulate domestic production levels, trade policies


related to the rice sector in Viet Nam have also been liberalized. The major liberalization
was the removal of the quota system for rice exports, and the simultaneous
encouragement of all sectors of the economy to become involved in the rice export
system. This liberalization did much to increase the level of exports of rice from Vietnam.

The majority of people in Viet Nam live in rural areas, and make their livelihood from
agricultural production activities. A substantial number of these people base their
livelihoods on rice production. In the Red River Delta and Mekong Delta regions alone,
there are more than 27 million people living in rural areas, and for the majority of them, rice
production is the dominant production activity of the household.

It would seem that policies designed to increase rice production and stimulate exports
would accrue benefits to those involved in the production of rice. As many of the people
involved in rice production are poor, it would also seem that such policies would be a
useful tool in alleviating poverty in rural areas.

This study sets out to analyze the impacts of past increases in production and trade on
rice producers, and in particular the poor. The main aim of the study is to identify whether
future productivity increases and trade liberalization will bring real benefit to producers and
assist in the poverty alleviation process, and to identify the main constraints to increasing
productivity and generating improvements in producer livelihoods.

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3 Global Rice Trade and Major Issues


According to USDA-ERS (USDA-ERS 2001), world production of rice in 2001/02 was
estimated at 393 million tonnes, a slight decline from the 408 million tonnes produced two
years previously (see Table 1). Major producers of rice include China, India, Indonesia,
Bangladesh, Viet Nam, and Thailand (see Table 2). While global production of rice is
significant, the majority of rice production is consumed in local markets, with global trade in
rice averaging just 23 million tonnes over the past five years (USDA-ERS 2001) (see Table
3). Major producers such as China, India, Indonesia, and Bangladesh typically produce for
home consumption, with Indonesia, Bangladesh, and the Philippines deficit in rice despite
strong levels of production.

3.1 Major Exporters

Thailand is the leading exporter of rice in the world. During the past three years, Thailand
has produced roughly 25 million tonnes of paddy, of which 40-50 percent is exported. In
2002, Thailand is estimated to export 7 million tonnes of rice. Roughly 20 percent of its
exports are of Jasmine rice, which are exported primarily to the United States (USDA-ERS
2001). Thai exports of rice compete with high-quality rice exports of the United States,
particularly with Thai Jasmine varieties. IFPRI also notes that Thailand is a major exporter
of low-quality long grain varieties (IFPRI 1996). Despite the high levels of exports in
Thailand, yields remain low at about 2.3 tonnes per hectare, as many traditional, high-
quality varieties are low-yielding (IRRI 1999). Most rice in Thailand is rainfed, with only 25
percent of the rice areas having access to irrigation.

Thai varieties of rice typically receive a premium in world markets over comparable
varieties from regional competitors such as Viet Nam. As noted in Table 4, the export
prices of Vietnamese rice of 5 percent and 15 percent broken are about 90-95 percent of
the price of comparable Thai varieties. Interestingly, in the most recent (2001/02), export
prices for Vietnamese rice have actually been greater than Thai prices. USDA-ERS
attributes this to a weaker Baht, stronger price competition from India, and strong loadings
from older sales in Viet Nam (USDA-ERS 2002).

IFPRI (IFPRI 1996) identifies a number of factors that have enhanced the competitiveness
of Thai rice in world markets. These include:

• Large areas of rice under cultivation (nearly 10 million ha).


• High levels of integration and price responsiveness among Thai farmers to changes in
international markets.
• Subsidies on inputs and exemptions from taxes.
• Well-organized and integrated channels of distribution.
• High levels of milling technology.
• Role of the Thai Exporters Association in promoting quality and standardization among
members.
• Existence of brokers that act as intermediaries between buyers and sellers and serve
an important information role for each group.
• Institutionalized rice quality standards (32 in total) to meet demands of foreign buyers.

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• Diversity in export outlets – while Asia was the top destination, Thai rice has significant
penetration in Africa, the Middle East, Europe, and the United States.

Viet Nam is the second-leading exporter of rice in the world. Domestic production of paddy
in Viet Nam was estimated by USDA-ERS (USDA-ERS 2001) at 31.2 million tonnes in
2001/02, of which nearly 4 million is exported. Exports from Viet Nam have increased
rapidly since 1989, when the policy of doi moi was established. The majority of Viet Nam’s
rice exports are indica varieties of medium-to-low quality, with the quality of Vietnamese
rice declining in recent years after several years of improvements in the early 1990s (see
Table 5). The major destinations for Vietnamese rice include Indonesia, the Philippines,
Cuba, Africa, and Middle Eastern markets such as Iraq. Most exports are made on
government-to-government contracts that are typically agreed to a year prior to delivery.

The United States is the third-leading exporter of rice, annually exporting between 2.5
million and 3 million tonnes and competing mainly in high-quality markets, medium-grain
markets. The U.S. share of global rice exports has declined over the past twenty years on
account of the entry of Viet Nam and regional competitors in Latin America into the global
rice trade. According to IFPRI, U.S. rice achieves a price premium of $30-$50 per ton over
comparable Thai varieties (IFPRI 1996). Most U.S. rice is exported regionally to markets in
North and South America. The leading destination of U.S. rice is Mexico, which imported
403,500 tonnes of rice from the United States in 2000/01 (see Table 6). The United States
also exports a significant amount of rice to Japan under Minimum Market Access
requirements of the WTO. The success of U.S. rice is attributed to high quality and grading
standards among U.S. suppliers and the technological ability to supply exacting varieties
and qualities of rice to buyers (IFPRI 1996).

China has emerged as a major exporter of rice in recent years, though exports have
declined recently from their peak of 3.7 million tonnes in 1998. Plantings of rice in China
have declined since 1999/2000 (USDA-ERS 2001). India is also a major exporter of rice,
but its exports have also declined significantly since 1998. Projected exports in 2002 are
1.5 million tonnes, down from the 4.7 million tonnes exported in 1998, on account of
changes in pricing policy in India that have rendered much its surplus rice uncompetitive
on world markets (USDA-ERS 2001). Exports from India include high-quality basmati
varieties to Europe and the United States and low-quality parboiled rice to South Africa
and the Middle East.

Other major exporters of rice include Pakistan (1.9 million tonnes in 2002), Australia
(700,000 tonnes), Uruguay (650,000 tonnes), Egypt (650,000 tonnes), Myanmar (500,000
tonnes), the EU (350,000 tonnes), and Argentina (250,000 tonnes). Exports from Pakistan
include high-quality basmati varieties and low-quality rice destined for regional Asian
markets and Middle Eastern destinations. Exports from Uruguay and Argentina are
typically regionally bound, primarily for Brazil under preferential MERCOSUR
arrangements. Australian exports are generally destined for Asian markets.

3.2 Major Importers

Indonesia is the world largest importer of rice, despite producing over 50 million tonnes of
rice annually. Imports are estimated at 1.6 million tonnes for 2002, though this is
significantly lower than the record 5.8 million tonnes imported in 1998, due to weather
damage caused by El Nino (USDA-ERS 2001). Nonetheless, rice imports have grown
recently on account of higher demand and lower domestic stocks. While IFPRI categorizes

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Indonesia as an “occasional” importer, recent import trends show consistent levels of


imports over the past three years (see Table 3) (IFPRI 1996).

Nigeria is the largest African importer of rice and traditionally one of the top three markets
for imported rice. In 2002, Nigeria is projected to import 1.2 million tonnes of rice, down
from 1.6 million in 2001 but on par with average quantities imported over the past five
years (see Table 3). Most imports by Nigeria are of parboiled rice from Thailand and India
(USDA-ERS 2001).

Iran and Iraq each consistently import over 1 million tonnes of rice per year. Neighboring
Middle Eastern countries import significant quantities as well, with Saudi Arabia projected
to import 875,000 tonnes in 2002 and Turkey to import 350,000 tonnes. Production in the
Middle East is relatively small, with limited ability to expand domestic production (USDA-
ERS 2001). USDA-ERS (USDA-ERS 2001) reports that imports comprise roughly 75
percent of consumption in the region. Imports by Iraq fall under the United Nations oil-for-
food program, with large amounts of imports coming from Viet Nam. Saudi Arabia
traditionally imports parboiled rice, while Turkey is a major market for japonica rice.

The Philippines has traditionally been a major Asian market for imported rice, though
recent trends have seen a steady decline in the quantity of imports, based on higher levels
of production since 1999/2000 (USDA-ERS 2001). Imports in the Philippines are projected
at 800,000 tonnes in 2002. Bangladesh is also a large importer of rice, despite being
fourth-largest producer of rice in the world. Imports have declined in recent years due to
record levels of productions, but increased demand and population growth have continued
to fuel demand for imports. Projected imports in 2002 are 500,000, mainly of parboiled and
low-quality varieties from India (USDA-ERS 2001). Other Asian markets, such as China,
Japan, Taiwan, and Korea, also import sizable volumes of rice. In the case of China,
however, most imports cater to an affluent urban demand for high-quality Thai rice.
Imports by Japan and Korea are mandated by WTO minimum access agreements and are
used in industrial applications3. North Korea is also a major importer of rice (450,000
tonnes in 2002), most of which is for food aid purposes.

Other major importers of rice include numerous countries in Sub-Saharan Africa and Latin
America. South Africa imports about 525,000-550,000 tonnes of mainly parboiled rice per
year. Senegal is projected to import 750,000 tonnes of rice in 2002, while Cote d’Ivoire is
predicted to import 650,000 tonnes, based on strong demand for rice in these markets that
outstrips production (USDA-ERS 2001). Brazil is projected to import about 500,000 tonnes
of rice from MERCOSUR partners Argentina and Uruguay in 2002, down sharply from the
1.6 million tonnes imported in 1998. This is due to stagnant consumption and expanded
production in Brazil (USDA-ERS 2001). Mexico is a large market for U.S.-origin rice, while
Caribbean markets, such as Cuba, Haiti, and the Dominican Republic also import sizable
amounts of rice.

3
The World Bank Study Team noted that donations of Japanese rice to the World Food Program in
Cambodia consisted of re-bagged US Calrose rice. At least some of the WTO minimum access agreement
rice imported by Japan is being re-routed for food aid purposes.

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4 Overview of the Rice Industry in Viet Nam


4.1 Topography and Climate

Viet Nam is located on the eastern end on the Indochina Peninsula, extending 1,650 km
from North to South. It borders the South China Sea, Gulf of Tonkin, and Gulf of Thailand
to the east, China to the North, and Laos and Cambodia to the west (Central Intelligence
Agency 2001). It has a total land area of 325,360 square kilometers, with approximately
20-25 percent of the land used in agricultural cultivation (Minot and Goletti 2000; Central
Intelligence Agency 2001). Despite the limited amount of land dedicated to agriculture,
over half of the land is devoted to the production of rice. The total harvested rice area is
7484600 hectares, of which 3056900 hectares are winter-spring planting, 2179800
hectares are summer-autumn planting and 2247900 hectares are monsoon planting.

Viet Nam is divided into 61 provinces in 8 agro-ecological zones. The zones are Red River
Delta, North East, North West, North Central Coast, South Central Coast, Central
Highlands, North East South and Mekong River Delta (see Figure 1). The first 4 zones
listed are located in the Northern part of Vietnam, whilst the second 4 zones listed are
located in the Southern part of Vietnam (see Figure 2 and Figure 3).

The main rice production areas are in the two deltas along the Red and Mekong Rivers.
The deltas account for about 15 percent of total areas in the country but account for over
two-thirds of rice production in Viet Nam (Minot and Goletti 2000). The Northern
Mountainous region is a poor, hilly region with significant numbers of ethnic minority
groups and where maize and livestock production are common (Minot and Goletti 2000).
The Central Coast regions (North and South) are narrow, mountainous regions, with
fishing as an important industry. The Central Highlands are a mountainous area with a
significant coffee industry. The North East South is the area to the North and surrounding
Ho Chi Minh City that is more urbanized and the main center for agribusiness (Minot and
Goletti 2000).

Viet Nam is governed by two main seasons: a dry season during the Winter and a
monsoon in the Summer and early Autumn months. The climatic conditions experienced in
Viet Nam vary between tropical climatic conditions in the South and sub-tropical to
temperate conditions in the North. Destructive typhoons sometimes develop over the
South China Sea during hot weather. Mean annual sea level temperatures
correspondingly decline from 27°C in the south to 21°C in the extreme north.

Mean annual rainfall ranges from 1300 to 2300 mm. Rainfall is usually evenly distributed in
June to October or November. In the Mekong Delta, the summer monsoon brings 5-6
months of rainfall above 100 mm/month. October is the wettest month of the year. The
differences in climatic conditions between the North and the South mean that there is also
a difference between the agricultural production systems utilized in the North and the
South.

Rice is grown in all agro-ecological regions in Vietnam, but as Table 8 shows, the majority
of rice is produced in the delta lands of the Red River in the North and the Mekong River in
the South.

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In the Red River Delta, North East and North West regions, the typical cropping pattern is
rice planting during the winter-spring and monsoon seasons, interspaced with a crop of
maize or sweet potato during the summer-autumn season. The cropping pattern in the
regions in the South, including the Mekong River Delta region are generally a triple crop of
rice, with rice planted in the winter-spring, summer-autumn and monsoon seasons. Thus
the Mekong River Delta region, with a little over double the land area of the Red River
Delta devoted to rice can have a harvested area more than three times that of the Red
River Delta.

4.2 Demographics and the Agricultural Sector

Agriculture plays a relatively important role in the economy of Vietnam. Agriculture


contributes 24 percent of GDP and generates 20 percent of export revenues (see Table 7).
Over 70 percent of the national labor force is employed in the agricultural sector, and it is
likely that a further 6 percent are employed in the agricultural post-production sector.

Over 80 percent of the population lives in rural areas of Vietnam, a total of almost 58.5
million people in 1999. The proportion of population living in rural areas varies between 50
percent in the North East South region, to almost 88 percent of the population of the North
Central Coast region (see Table 9).

The cropping sub-sector in Viet Nam is characterized by a large number of small scale
producers with a relatively small land area. Table 10 shows that the average land area per
capita in the rural areas in Viet Nam varies between 0.06ha in the Red River Delta and
0.29ha in the Central Highlands region. The national average is 0.14ha (1400m2) per
capita in rural areas.

Agricultural productivity in Viet Nam declined over the 1990s, with the share of agricultural
GDP in total GDP declining from about 40 percent in 1990, whilst the proportion of labor
force employed in agriculture has remained relatively constant over that period. The
average level of productivity of agricultural production over the 1990s was $US211 per
agricultural worker (ANZDEC 2000).

As Table 11 shows, cropping is the major agricultural activity in terms of GDP contribution,
followed by livestock and forestry. The proportional distribution of GDP contribution
between the agricultural sub-sectors changed little between 1990 and 1999.

4.3 Rice and Rural Poverty in Viet Nam

Viet Nam has experienced a significant reduction in the level of poverty during the 1990s.
Using the VLSS definition of total poverty4, total poverty rates in Viet Nam fell from 58
percent in 1993 to 36 percent in 1998 (see Table 13). According to the Viet Nam Living
Standards Surveys (General Statistics Office 1993, 1998), real per capita expenditure by
rural households increased 30 percent between 1992-93 and 1998, implying an annual
growth rate of over 5 percent. This growth was widely distributed across regions: even the
4
The VLSS studies use to poverty lines: a “food poverty line” and a “total poverty line”. The food poverty line
is equal to the amount of money needed to purchase 2100 calories of food given the consumption patterns
of poor households. The total poverty line is equal to the sum of the food poverty line and an allowance for
basic non-food requirements. The non-food portion of the poverty line is based on the average value of non-
food spending among households whose food expenditure is near the food poverty line.

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slowest growing region experienced a 25 percent increase in per capita expenditure


(ANZDEC 2001).

The living standards of people in many areas, especially rural and especially
disadvantaged areas, have improved. In 1999, although Vietnam’s per capita GDP
country ranking was only 167, its HDI country ranking was much higher at 101, which
places Vietnam, with an HDI index of 0.682, in the average category (in 1990 Vietnam’s
HDI ranking was 121 with an HDI index of 0.456). According to the UNDP’s Human
Development Report, Vietnam ranks 89 of the whole of 162 countries in gender equality
indicator (GDI) (Government of Viet Nam 2002).

The percentage of poor households in Vietnam remains relatively high According to the
VLSS, Vietnam’s poverty incidence was over 37% in 1998, and is estimated at about 32%
in 2000 (equal to a halving of the number of poor households from 1990) (Government of
Viet Nam 2002, pg. 17). Applying Vietnam’s food poverty standard (2100 calorie intake per
day), the poverty rate was 15 percent in 1998 and was estimated at 13 percent in 2000.
The Government of Viet Nam estimates put the number of poor households in 2000 at 2.8
million or 17.2 percent of the total number of households in the whole country
(Government of Viet Nam 2002, pg. 18).

Between the two VLSS in 1992-93 and 1998 the poverty rate fell in both urban areas (from
25 to 9 percent) and in rural areas (from 66 to 45 percent). On the other hand, it appears
that income inequality has increased slightly. For example, the ratio of urban to rural
incomes rose from 1.8 to 2.2. Similarly, the ratio of the income of the richest 20 percent to
the poorest 20 percent has also increased (ANZDEC 2001). There remain marked
differences in poverty rates on a regional basis, however, though it should be noted that
poverty rates fell across all regions during this period. For example, rural poverty rates fell
from 66 percent in 1992-93 to 45 percent in 1998. In every region, poverty rates fell at
least 10 percentage points. In other words, the effect of rapid economic growth in reducing
poverty was greater than the effect of rising inequality in increasing it. The strongest
reduction in poverty occurred in the Southeast (from 33 percent to just 8 percent) and the
Red River Delta (from 63 percent to 29 percent) (see Table 13). Curiously, the smallest
reduction in poverty occurred in the Mekong River Delta (from 37 percent to 27 percent).
The Government of Viet Nam estimates that in 2000 the percent of rural poor was around
19.7 percent and urban poor 7.8 percent (see Table 12). Over 90 percent of the poor is
concentrated in rural areas (see Box 1).

From the 1998 VLSS data there remains a concentration of poverty in the Northern
Uplands (59 percent), Central Highlands (52 percent), and North Central Coast (48
percent). Figure 4 demonstrates the regional basis on poverty based on the previous
(1992-93) Viet Nam Living Standards Survey (General Statistics Office 1993; Minot and
Goletti 2000).

In addition to the reduction in poverty rates during this time, per capita income has also
increased for most households. The VLSS shows that per capita expenditure increased by
41 percent in real terms during 1993 to 1998, with increasing occurring in every region
(Table 14). Urban areas saw a 60 percent increase in real expenditure during this period,
fueled by growth in the Red River Delta and Ho Chi Minh City area, while rural areas had
an increase in expenditure of 30 percent. Traditionally poor areas, such as the Central
Highlands and Northern Uplands, saw expenditure increases of 25 to 30 percent (see
Table 14). While incomes have grown in Viet Nam, inequality has also increased, as
shown in Table 15. Per capita income in urban areas was 2.2 times that in rural areas, an

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increase from 1.8 times in 1993 (see Table 15). The expenditure gap between the richest
quintile and poorest quintile has also increased from 4.9 to 5.5. Table 17 shows
expenditure and income levels based on the 1998 VLSS (General Statistics Office 1998)

There have also been substantial improvements in living conditions, as evidenced by


social indicators provided in Table 19. In particular, social indicators such as secondary
school enrollment, stunting rates, and access to clean water and electricity have improved
dramatically during 1993-1998. This progress does not mean that poverty is no longer a
problem. Many rural household remain poor and without access to adequate health and
education services. In spite of the progress, only 29 percent of Vietnamese households
have access to clean drinking water, while one third of all Vietnamese children remain
moderately stunted from poor nutrition. Moreover, in traditionally poor regions such as the
Northern Uplands, food insecurity is a major factor in poor health and levels of child and
female welfare (ANZDEC 2000).

Despite the improvements in poverty rates in Viet Nam, poor households remain
vulnerable. Farmers than are income constrained and subject to food insecurity and poor
health often find themselves in a perpetual debt cycle that increases food insecurity. This
is compounded by the fact that poor farmers often have limited assets and low levels of
savings to drop upon in times of crisis (see Table 17). ANZDEC reports that 23 percent of
the lowest income quintile does not save and suggests that access to rural financial
institutions is limited (ANZDEC 2000). Of those households that do save, the value of
savings is just 9 percent of their income, compared with 32 percent for the richest quintile
(see Table 17).

Poor households have low levels of formal credit access, due to low asset values, limited
collateral, and poor management and education (ANZDEC 2000). This forces many poor
households to obtain credit from informal sources, such as moneylenders, which charge
up to 8-12 percent per month. Other credit arrangements include in-kind labor to pay
debts, though ANZDEC reports poor households in Soc Trang selling their labor at a 50
percent discount to pay debts (ANZDEC 2000).

Poverty is much more common among farming households than others. Approximately 80
percent of poor are farmers (ANZDEC 2000). Almost half of the households for which
agriculture is the main source of income (48 percent) are poor. By contrast, less than a
quarter of the households whose main source of income is outside agriculture are poor. In
fact, farm households have higher poverty rates than unemployed households (ANZDEC
2000).

According to the 1998 VLSS, landlessness is most common in the Southeast and the
Mekong River Delta (see Table 16), and is concentrated among the rich and the very poor
(General Statistics Office 1998). The vast majority of the rural poor, over 90 percent of
them, do have at least some land (General Statistics Office 1998). Overall, landless rural
households are no more likely to be poor than other households. About 20.5 percent of the
landless are in the first quintile. Since, by definition the first quintile contains 20 percent of
rural households, this means that rural households without land are no more likely to be
poor than those with land (General Statistics Office 1998; ANZDEC 2000).

Poor households have lower agricultural productivity than other households. For example,
in the case of rice, paddy yields for the poorest quintile average 3.37 tons/ha, while the
richest quintile gets 4.11 tons/ha from land (see Table 20). Given that poor households
have less land per capita, and the land cultivated being of lower quality than richer

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households (see Table 21), this translates in lower levels of food production per capita.
The lower productivity is due to a number of reasons, including poor access to assets such
as land, irrigation, and credit. Indeed, as noted in Table 21, only 58 percent of the land
cultivated by the poorest quintile is irrigated, compared to 70 percent for middle quintiles
and 82 percent for the richest quintile (see Table 21). Total expenditures on agricultural
production are also lower for poorer households.

Box 1 Dimensions of Poverty in Viet Nam

Poor people tend to lack many resources and fall into a vicious cycle of poverty and lack of resources. Poor
people are likely to remain poor because they are unable to invest in their own human capital. On the
contrary, limited human capital prevents the poor from escaping from poverty.

Poor households have very little land, and this condition of lacking land tends to perpetuate. This is
especially the case in the Mekong River Delta. Their lack of land affects their capacity to ensure food security
and prevents them from diversifying their production and shifting to higher value crops. A majority of the poor
prefer to opt for the self-sufficiency strategy, and to maintain traditional modes of production that generate
low value, because they lack opportunities for employing more profitable production strategies. Because of
their pursuit of traditional modes of production, their productivity is low, their products are of low value and
competitiveness; this in turn keeps them trapped in a vicious cycle of poverty.

In addition, most of the poor do not have many opportunities to access production enhancing services like
agricultural and fishery extension and animal and plant protection. Many production inputs such as electricity,
water, crop seeds and animal varieties, fertilizers, etc. contribute to increasing the cost of their production
and thus decreasing their revenues per unit product.

Poor people also have limited access to various sources of credit. Without enough capital, the poor cannot
easily renovate production, introducing new technologies and new varieties, etc. Although the poor’ access
to credit has improved greatly thanks to the Project on Providing Credit to the Poor under the National
Program on Poverty Reduction, a considerable number of poor people, especially very poor people, still have
no access to credit. On the one hand, poor people, because they have no collateral, are forced to rely on
small and inefficient loans that limit their repayment capacity. On the other hand, most poor people do not
have concrete plans for production and may use these loans for purposes other than the one they have
committed to with their lenders; this limits their opportunity to access future loans and in the end they
become even poorer.

The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) (Government of Viet Nam 2002,
pp. 21-22)

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4.4 Production

In terms of contribution to agricultural GDP, cropping is the most important sub-sector,


accounting for almost 70 percent of agricultural GDP in 1999. The growth rate of rice
production between 1990 and 1999 was an average of 5.6 percent per year, driven by
increases in yield (2.8 percent per year) and planted area (2.7 percent per year). As shown
in Table 22, this pattern of production growth varies considerably between regions.
Production growth was highest in the North West region and the Mekong River Delta
region. The highest increases in yields were recorded in the North West and Red River
Delta regions. The area of rice harvested in the Central Highlands and Red River Delta
regions fell over the period 1990 to 1999, whilst the harvested area increased in all other
regions over a comparable period.

As shown in Table 23 and, the total harvested area of rice in Viet Nam is almost 7.5 million
hectares, with the largest proportions of rice harvested area being in the Mekong River
Delta (50.5 percent) and Red River Delta regions (16.1 percent). Average yield of paddy in
Viet Nam is 4.27 tons per harvested hectare and total production in 2001 was 31,970,200
tons of paddy. Table 23 and Figure 5 to Figure 16 show the harvested areas, average
yields and production in 2001 by region.

In the Northern regions of Vietnam, rice is generally grown during the Lua Mua (monsoon)
season and the Dong Xuan (Winter-Spring) season (see Figure 5 and Figure 7). In the
Southern regions, triple cropping is more common, with an additional crop planted in the
He Thu (Summer-Autumn) season (see Figure 6). The yield of Dong Xuan rice is generally
higher than the average yields of Lua Mua or He Thu rice. The regional and national yields
for different rice plantings are shown in Table 24 and Figure 9 to Figure 12.

Manual transplanting of seedlings is commonly utilized in the Red River Delta, while in the
Mekong river Delta region, direct seeding or broadcast seeding is more widely used. This
leads to increased quantities of seed being utilized per hectare in the Mekong River Delta
region, relative to the Red River Delta.

Many high yielding varieties of rice have been developed (both by IRRI and also from
within Vietnam) and released for cultivation. Traditional varieties are still grown by farmers
due to the high quality of their grain. Hybrid rice cultivation is also increasing in popularity,
particularly in the Red River Delta region.

Viet Nam produces a surplus of rice, and has been a significant net exporter of rice since
1990. In 2001, export volumes of rice were around 3.56 million tons, an increase over the
3.37 million tons exported in 2000, but significantly lower than the record export level of
4.6 million tons in 1999.

In order to estimate rice food balances on a provincial and regional basis, a number of
assumptions about the conversion of paddy production into rice for consumption need to
be made. These include proportion of seeds retained for planting (farm saved seed), post-
harvest losses and paddy utilized for animal feed. In addition, assumptions need to be
made about the milling recovery ratio (conversion factor from paddy to polished white rice)
and the provincial and regional consumption levels. The derivation of these coefficients is
detailed below.

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• Seed retention for farm saved seed is estimated at 5 percent. This figure was derived
from estimates provided by the Seed Component of the Danida supported ASPS
(World Bank Study Team Interview 5 August 2002). This figure would vary between the
North (where hand seeding and transplanting is commonly practiced) and the South
(where broadcast seeding is commonly utilized).

• Postharvest losses are estimated at 9 percent. This figure is based on estimates


provided by the Post Harvest Institute of Technology (World Bank Study Team
Interview 1 August 2002). This relatively high figure takes into account the practice of
sun-drying of paddy by smallholders, and the fact that milling is normally performed in
small-scale local mills (custom mills). Discussions with some informants indicated that
this figure may be too high. However, Table 25 presents some data on post-harvest
losses between 1992 and 1994. The data indicate very high losses of between 13 and
16 percent, with between 4.5 to 5.6 percent occurring on-farm. Table 26 presents some
more recent data from Long An Province in the Mekong River Delta. Although still high,
the losses are less than the data from 1992-1994. Post Harvest losses in 1999-2000
averaged 10.7 percent, with losses in the Summer-Autumn crop significantly higher
than those in the other two cropping seasons. Accordingly, the Study Team views
losses of 9 percent as being a conservative estimate.

• Retention of paddy is estimated at 3 percent of paddy production. This is an estimate of


the likely amount, as data on this parameter is not available. PHTI estimates that
retention of paddy for animal feed is around 5.4 percent in the Mekong River Delta (see
Table 83), but it is unlikely that this amount would be translated country wide. A more
conservative figure of 3 percent is chosen.

• Based on data from Cambodia, and estimates from the Post Harvest Technology
Institute, the milling recovery rate is estimated at 66 percent. This figure takes into
account the fact that milling is primarily undertaken in custom mills.

• Food requirement levels can be calculated in two ways. First, the food requirements
can be estimated using the 1997-1998 VLSS data (General Statistics Office 1998),
which estimate rural consumption levels at 13.24kg/capita/year and urban consumption
levels at 10.04kg/capita/year. The level of provincial and regional consumption was
obtained by multiplying these figures by 12 to obtain a yearly per capita consumption
figure, and then multiplying this figure by the appropriate population figure. This gives a
per capita annual food requirement of 149.37kg per year. This figure, however, may
underestimate the annual food requirement as it does not include rice eaten outside the
home. The second method of estimation is that utilized by the FAO project on Food
Security Information, which utilizes data from a socio-economic survey undertaken in
2001 by MARD, which indicates annual consumption of rice inside and outside the
home to be 178kg per capita.

Table 27 show the regional rice food balance figures if the VLSS consumption estimates or
the FAO food security information project estimates are utilized. As the use of the FAO
food security information project data gives a net balance of around 3.5 million tons
(closely approximating export volumes for the year) this consumption data will be utilized
in place of the VLSS data.

It is clear from Table 27 and Figure 17 that with the exception of Red River Delta (with a
slight surplus), all regions with the exception of Mekong River Delta are in rice deficit.
Mekong River Delta, in comparison has a surplus of production over consumption

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requirements of almost 5.8 million tons. As will be discussed later in the sections on
marketing channels and exports, the majority of rice exports are of rice produced in the
Mekong River Delta, while the remainder of the production surplus is transported, either by
road or rail to other deficit regions of Vietnam. The food balances from 1990-2001 are
presented in Table 28 and detailed food balances on a provincial level for 1999-2001 are
given in Table 34 to Table 41 and Figure 17.

The amount of rice available for export has almost doubled since 1996, when the export
quota was relaxed. The increase in production has been due to increases in yield,
particularly for the Winter-Spring and Lua Mua crops, but also due to the increase in area
under production for the Winter-Spring and Summer-Autumn crop. Interestingly, while the
area sown to the Summer-Autumn crop has increased, yields of that crop have not,
indicating that productivity increases have been confined to the Winter-Spring and Lua
Mua crops.

In the case of rice, yield improvement is not only the result of improved varieties, but also
of expanded irrigation, improved plant nutrients, and better management. A closer look at
rice yield growth, suggests a considerable regional variation, particularly between the
Mekong River Delta and the rest of the country. Whereas yield growth in the Mekong River
Delta has declined from 1.8 percent in the first half of the 1990s to 0.4 percent in the
second half of the 1990s, in the rest of the country it has increased from about 4 to 5
percent on average. The Mekong River Delta provides about 52 percent of total rice
production in the country and is the main source of rice exports, whereas all the other
regions are either marginally self-sufficient or rice deficit areas. Yields in the Mekong River
Delta have been stationary for the past five years at about 4 tons/ha whereas in the Red
River Delta have increased from 4.4 tons/ha to 5.4 tons/ha. The impressive growth of
production of rice in the Mekong River Delta over the 1990s has been mostly the result of
increased in cultivated area rather than yield. The opposite is the case in the rest of the
country.

As Table 28 shows, the assumptions underlying the percentage of post-harvest loss,


milling recovery and per capita consumption are critical in determining whether food
balances have been in surplus. This is particularly the case for the per capita consumption
figure.

There is no real evidence to suggest that post-harvest losses or milling recovery rates
have improved greatly over the years (despite continued investment in large modern mills,
the majority of the milling is carried out at small and medium size mills). Thus most of the
change in food balance is hypothesized to have been due to changes in per capita
consumption.

For example, while the surplus for 2001 of 3.5million tonnes is approximately the same as
the amount exported, as is the 2000 surplus of 4 million tonnes, the export of rice in 1990
was 1.5million tonnes but the food balance was actually in deficit of 1.2million tonnes for
that year - with the current domestic consumption rates used. This indicates that the use of
the FAO consumption data for pre-1999 food balances may not be appropriate. Using the
VLSS consumption data of 149.37kg/person for 1990-1999, the results show rice
surpluses being above exports for 1993-1999. This indicates that there is a possibility that
per capita consumption rates have increased over time. Table 29 shows per capita
consumption calculated as domestic consumption being a residual after exports (excluding
storage). The data indicate that potential per capita consumption has increased from
137kg/person/year in 1990 to 184.75kg/person/year in 2000. Production of rice increased

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from 1990 to 2000, and declined slightly between 2000 and 2001. Domestic total and per
capita consumption levels also largely followed this pattern, showing a decline between
2000 and 2001 after an almost continuous increase between 1990 and 2000.

One conclusion that can be drawn from this is that the strategy of removing the export
quota (and thereby increasing exports) has not had a negative effect on domestic
consumption or food security and that, conversely, the population has enjoyed an
increasing surplus of rice for domestic consumption purposes.

As shown in Table 30, the total harvested area of paddy in Viet Nam increased by almost
24 percent between 1990 and 2001. The harvested area of rice increased continuously
between 1990 and 2000 and declined slightly in 2001. Table 30 also shows that this
increase in the total harvested area is not necessarily attributable to increases in the
physical area of land utilized for rice production, and that while the total harvested land
area has increased; the amount of land utilized for different rice production systems has
varied considerably over the period.

Rice production between 1990 and 2001 shifted away from Lua Mua production and
towards Summer-Autumn and Winter-Spring production. During this period, the area of
land planted to Winter-Spring rice increased by 47.42 percent and the area planted to
Summer-Autumn rice increased by 79.3 percent. During the same time, the area planted
to Lua Mua Rice decreased by 18.36 percent. After 1995, Winter Spring rice was planted
on a larger area than Lua Mua rice, and has maintained this dominant position ever since.

While harvested area of paddy increased between 1990 and 2000 and declined in 2001, it
is instructive to note the pattern of the maximum physical area planted to rice at any one
time during each year. The figure for maximum physical area is simply the largest number
of hectares planted to rice, either in the Winter-Spring, Summer-Autumn or Lua Mua
seasons. In contrast to the total harvested area, the maximum physical area of rice
increased between 1990 and 1992, declined between 1992 and 1996, increased to 2000
and declined in 2001. Overall, the maximum physical area planted increased by around 11
percent between 1900 and 2001, while the total harvested area increased by 23.86
percent. This could imply that around half of the increase in harvested area is due to
increased physical land being utilized for rice, whilst the other half of the increase can be
attributed to increased intensity of production on existing land.

4.5 Food Security and Land Reassignment

Historically, food security has been one of the top priorities of the Vietnamese
Government. The need to ensure sufficient levels of rice production in order to ensure
adequate supplies of grain to meet the needs of the Vietnamese population meant that
government policy was directed towards expansion of rice production areas and the
development of irrigation infrastructure and that the government was committed to the
non-conversion of wetland rice growing areas into alternative uses. The policy of non-
conversion of rice land was enshrined in a number of pieces of legislation including
(Directive 247-TTg 28 April 1995).

Viet Nam became a significant net exporter of rice in the 1990’s, and since the mid 1990’s
successive surplus levels of rice production have led to a change in policy relating to
conversion of rice land to alternative uses. With concerns about food security decreasing,
government policy about non-conversion of rice land was relaxed, and some rice growing

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areas were allowed to be converted to alternative uses, notably shrimp aquaculture and
fruit tree growing. Recent legislation covering this changed policy include (Resolution
03/2000/NQ-CP 2 February 2000) and (Resolution 09/2000/NQ-CP 15 June 2000). These
new principles of land conversion will reportedly be formally outlined in the new Land Law.

This has significant potential impacts for both rice production levels and also for farmer
livelihood in the areas where conversion is occurring. Without an increase in rice yield
(through improved varieties, fertilizer inputs or techniques) a decrease in the area of land
planted to rice will result in a decrease in production levels. While it would take a
substantial reduction in harvested area to threaten national food security, reductions in
land area due to conversion could impact negatively on export levels of rice from Vietnam.
One of the main rationales for the relaxation of the non-conversion policy is that allowing
farmers to change their production systems from low value rice cropping to potentially high
value activities, such as shrimp aquaculture or fruit tree production, will contribute to
poverty alleviation in these areas. This is especially the case if conversion is undertaken
on marginal land, or non irrigated land. The low rice yields in these areas and the higher
levels of poverty mean that the benefits to farmers of conversion of this marginal land
could be significant.

However, the impact of this policy on poverty alleviation may not be as substantial as
expected. While the policy is designed to encourage the conversion of marginal land out of
rice production, many of the poor farmers who are currently producing rice on this land
may lack the necessary capital and expertise to undertake conversion of their land to
alternative uses. Developing land for shrimp aquaculture requires a high level of initial
investment and also requires ongoing investments in order to ensure the viability of the
production system. Fruit trees have a long non-productive period, before farmers can
begin to obtain income from their orchard. Poor farmers may be unable to obtain credit on
appropriate terms to undertake this conversion. Therefore it is likely that much of the rice
land being converted to alternative uses is not marginal land, and that the farmers
benefiting from this conversion are medium income or better off farmers, rather than the
poor.

Another problem that is likely to occur with the conversion of rice land to shrimp
aquaculture is that this production system may not be sustainable in the long term, and
may result in the degradation of converted land to such a degree that it is unable to be
reconverted to rice production. This is due to the introduction of high levels of salinity into
the production system. The problem of “shrimp farming graveyards” (abandoned shrimp
farms that are unusable for any agricultural purpose) is already prevalent in the coastal
regions of Thailand.

Table 42 and Table 45 shows that the area of land utilized for aquaculture in Viet Nam has
increased from around 453,000 hectares in 1995 to over 755,000 hectares in 2001. The
area of land utilized for aquaculture increased in all provinces over that period, and in the
Mekong River Delta region (the major aquaculture region in Vietnam) the area of land
utilized for aquaculture almost doubled between 1995 and 2001. Most of this land has
been used to produce fish, but the percentage of shrimp production has increased
dramatically between 1998-2001 with an average of 24 percent per year growth in shrimp
output between 2001-2002 (see Table 46 and Table 47).

Table 43 shows that the harvested area of paddy in Viet Nam increased between 1995
and 2000 and then has declined between 2000 and 2001. This decline in harvested area
has occurred in the Red River Delta, South Central Coast, North East South and Mekong

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River Delta regions. The net national decline in harvested area of paddy between 2000
and 2001 is 181,700 hectares.

Table 44 compares the falls in paddy land in Red River Delta, South Central Coast, North
East South and Mekong River Delta regions between 2000 and 2001 with the increase in
aquaculture area over the same period. Table 44 suggests that the increase in aquaculture
land in Red River Delta, South Central Coast and North East South can be linked with falls
in the area of rice land, as the decline in available rice land is greater than the increase in
aquaculture land in those regions. However, in the Mekong River Delta region, the
increase in aquaculture land between 2000 and 2001 was greater than the reported
decline in rice land. Therefore, it can be concluded that not all of the increase in
aquaculture land area can be attributed to conversion of rice land in this region.

4.6 Prices

The Study Team did not have enough time to conduct any analysis on prices for paddy
and rice in Viet Nam. Data collected by IFPRI (IFPRI 1996) was the only data available on
paddy and rice prices. IFPRI noted that during the period 1986-1995 there were no
considerable differences in growth rates of paddy and rice prices between regions, or
between paddy and rice. The growth rates between 1986-1990 and 1991-1995 were
slightly higher for the North in the first period and slightly higher for the South in the
second period (IFPRI 1996, pg. 143). When the growth rates of rice and paddy were
compared with the index of retail prices, IFPRI noted that the relative prices of paddy and
rice decreased over the period, implying a benefit for consumers and a disincentive for
farmers (IFPRI 1996, pg. 143). In the face of declining real prices, the growth in production
has been due to increased productivity through increases in yield and a move towards
multiple cropping. IFPRI noted that unless improvements in productivity can be maintained
(through irrigation, research and extension) to compensate for the reduction in real prices
the negative price effects on production will be felt very strongly (IFPRI 1996, pg. 150).

Seasonality is a major factor in rice and paddy prices, with fluctuations more pronounced
in regions outside the Mekong River Delta. There are provincial and district level variability
in the data and IFPRI hypothesized that this was due to a more irregular production
system and less developed marketing system (IFPRI 1996, pg. 150). Further research
needs to be conducted in order to verify this hypothesis.

The volatility in prices had decreased over the period 1986-1995, but it is unknown
whether this trend has continued. Study Team interviews indicated that volatility is still a
major concern for all actors in the marketing chain. Government floor prices for paddy
have been in place for quite a few years, but in the absence of any data, or time to conduct
analysis, it is unknown whether these measures have been effective in reducing volatility.
Further research into this area needs to be conducted.

4.7 Trade

Exports of rice from Viet Nam have increased in the period since 1990. Between 1990 and
1999, exports increased from 1.48 million tons per year to a record level of 4.6 million tons.
Exports of rice declined in 2000 to 3.37 million tons, and increased again in 2001 to 3.56
million tons (see Table 48 and Table 122).

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While production growth has been relatively steady over this period, the variable nature of
export levels means that the proportion of production that was exported has varied
between 9.5 percent (in 1991) and 26.74 percent (in 1999). As discussed in the section on
production, the majority of these exports come from rice production in the Mekong River
Delta region.

Around 10 percent of rice exported is of an unknown grade, and less than 1 percent is
exported in cooked form. The majority of rice exported from Viet Nam is in the form of
various grades of broken grain rice. In 2001, around 32 percent of export rice was 25
percent broken and another approximately 5 percent of rice exported was 100 percent
broken. Despite these relatively high levels of lower quality grain exports, more than 25
percent of exports in 2001 were of 5 percent broken rice (see Table 49 and Table 122 and
Table 123).

While Viet Nam exports rice to many countries, exports of rice in 2001 were dominated by
exports to Asia (53.11 percent) and Africa (23.92 percent). The largest single destinations
of Vietnamese export rice were West Africa (23.12 percent) and the Philippines (15.62
percent). In the Asian region, the largest customers of Vietnamese rice were the
Philippines, Iraq and Indonesia. Viet Nam’s former trading bloc partners of North Korea,
Russia, Ukraine, Poland and Cuba accounted for a total of about 14 percent of exports, of
which more than half was accounted for by Cuba. (See Table 50)

Table 51 shows the proportion of exports of different qualities of rice to various


destinations in 2001. Iraq is the major customer of 5 percent and 10 percent broken rice,
while Indonesia is the major customers of 15 percent broken rice and the Philippines is the
major customer of 25 percent broken rice. Over 96 percent of the exports of 100 percent
broken rice go to West Africa.

Official imports of rice into Viet Nam are at a relatively low level, of around 20,000 tons per
year. These imports are generally of high quality Thai Jasmine rice, and are usually
imported in the leadup to the Tet holiday. The official level of tariff on import of rice is
dependant on bilateral agreements reached between Viet Nam and the exporting country,
but is generally set at 40 percent. While official imports of rice into VN are low, it is
relatively common to see large stocks of Thai Jasmine rice in the markets of Ho Chi Minh
City and surrounds.

4.8 Credit Services


4.8.1 Major Rural Credit Providers in Viet Nam

Credit sources for agriculture are fairly extensive. PHTI-HCMC reports that numerous
credit schemes to support agricultural production have been implemented through the
Agriculture Development Bank System (PHTI-HCMC 1999). In Table 52, a number of
programs found in the Mekong River Delta are briefly described.

Institutional providers of finance can be categorized into five groups (FAO 2002):

1. State owned commercial banks, including Vietnam Bank for Agricultural and Rural
Development, Bank for Foreign Trade of Vietnam (Vietcombank), Industrial and
Commercial Bank of Vietnam (Incombank), and Bank for Investment and Development
of Vietnam. These accounted for over 61 percent of total outstanding loans in 1999.

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The Bank for Investment and Development does not provide loans to the agricultural
sector as they provide credit for SOEs and development projects approved by the
Central Government and provincial authorities.

2. Around 47 Joint Stock Banks with around 13 percent of total outstanding loans in 1999.

3. Foreign invested banks with 24 percent of total outstanding loans in 1999. According to
banking regulations foreign banks are not allowed to offer Dong currency loans to
Vietnamese enterprises. Consequently, agricultural trading activities are not financed
by foreign owned or Joint Stock Banks.

4. People’s Credit Funds with 1.5 percent of total outstanding loans in 1999.

5. Financial leasing companies with less than 0.5 percent of total outstanding loans in
1999.

In addition to the formal financial system mentioned above, there is the informal financial
system. On one hand there are the money lenders who usually provide short-term loans at
very high interest rates. On the other hand there are low interest rates loans or even
interest-free loans from friends and relatives. The informal sector is used much more than
the formal sector as it is much easier to obtain loans. Lending procedures, easier access,
flexible lending and repayment schedules, and less collateral requirements are major
reasons for the popularity of informal lending.

The Viet Nam Bank for Agricultural and Rural Development

The Viet Nam Bank for Agricultural and Rural Development (VBARD) is one of the major
sources of finance for rural lending. VBARD operates through sub-district offices and the
so-called mobile banking units. VBARD has 1,564 branches in all provinces and cities,
districts and in many communes and villages. Consequently, VBARD has access to 99
percent of communes in Vietnam. It covers 21 provinces in the Southern part of Viet Nam.

VBARD was established in March 1988 out of the former State Bank of Viet Nam's (SBV)
“Agriculture, Fisheries and Salt Production” Department. In 1990, the Vietnamese banking
system was reorganized into a two-tier structure, with SBV relinquishing most retail lending
operations and assuming the role of a central bank. In the same year, the various lending
departments of SBV together with VBARD received their charters and were transformed
into State-owned Commercial Banks (SOCBs). VBARD operates under the framework of
the Law on the SBV and the Law on Credit Institutions. Under its charter, VBARD is
allowed to carry out commercial banking and development banking activities to all sectors
of the economy with emphasis on agriculture and rural development. It is also allowed
autonomy in operating and financial management.

The basic policies observed by VBARD are prescribed in the Law on SBV, the Law on
Credit Institutions, the VBARD Charter, and regulations issued by SBV and MOF from time
to time. The main financial policies are summarized as follows:

1. VBARD shall give priority to financing SMEs in the agriculture and the rural sectors
which are engaged in food-production, labor-intensive and are export-oriented or
import-substitute;

2. Maintain minimum adequacy ratio of eight per cent;

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3. Maintain minimum liquidity reserve ratio of five per cent of total deposits less than 12
months and minimum current ratio of one;

4. The maximum ratio of short-term funds allowed for extending medium and long-term
loans is 25 per cent;

5. Assets with arrears in payment are to be suitably classified and prudent provision for
losses made (Decision 48/1999/QD-NHNN5);

6. Single borrower limit shall not exceed 15 per cent of net worth;

7. VBARD shall adopt the chart of accounts issued by SBV including accounting for loan
interest income on accrual basis (Decision 435/1998/QD-NHNN5); and

8. VBARD’s annual financial statements shall be audited by independent auditors from


the 1999 financial year.

A summary of VBARD’s operations for the period FY1995 to FY 1999 is given in Table 53.
The loan portfolio at end 2000 was D 39,393 billion ($2,626 million equivalent) with an
average loan size of about $300, growing by more than 20 percent per annum. Loans to
households at D 38,069 billion ($2,538 million) and to non-SOE enterprises at D 3,063
billion ($204 million) accounted for 76 per cent of the total loan portfolio in 2001 (71 per
cent in 1999 and 2000). Loans to SOEs, operating mainly in agriculture, as at end 2001
amounted to D 12,931 billion ($862 million) or 24 percent of the portfolio (having declined
from 69 percent of total loan portfolio in 1995). By loan term, forty-six per cent (23 per cent
in 1995) of total loans or D 23,229 billion in 2001 were medium and long-term, with the
rest, short-term. Details of the loan portfolio are provided in Table 54. Over 50 percent of
the loan portfolio is for Agriculture, and 53 percent of the loans are short term loans.

VBARD provides about three fourths of the rural credit in the country in absolute terms and
its outreach extends to one third of the country’s estimated 12 million rural households or
70 percent of the rural households served by the formal financial institutions. Loans made
by VBARD are for seeds, land preparation inputs, insecticides, and labor costs. VBARD
limits the loan amount to 4 mill Dong per ha. In order to loan up to 10 million Dong per
farmer, VBARD requires as collateral the certificate of land use, or “red book” (World Bank
Study Team Interview, 25 July 2002). If the farmer does not have the red book, the
commune must certify the land holding on behalf of the farmer.

VBARD offers two types of loans. Investment loans are medium-term loans (3-5 years)
aimed at capital improvements, such as irrigation and machinery. VBARD charges an
interest rate of 1.15 percent per month for these loans, with interest paid every three
months and a portion of principal and interest two times per year. Production loans are for
seed, fertilizer, and investment and are for a shorter term (6 months), with loans repaid at
harvest. Current interest rates are 1 percent per month. The payment of interest depends
on the loan terms. In some cases, farmers will pay interest once after harvest, while others
pay month-by-month. Principal is always paid at harvest for short-term production loans. In
both types of loans, only simple interest is charge (World Bank Study Team Interview, 25
July 2002). VBARD notes that 75 percent of their loan portfolio on rice is short-term loans,
with the remainder being medium and long-term loans.

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On 27 July 2002 an article appeared in the Tuoi Tre Newspaper indicating that VBARD
would no long be extending credit for medium and long-term loans as there was a lack of
capital. The article noted that “In the first 6 months of 2002 the debt of medium and long
term loans occupied about 39 percent of total debt – Ð24,206 billion out of Ð63,476 billion”
(Tuoi Tre 2002). Following this, VBARD announced on VTV1 on the morning of 31 July
2002 that from 1 August 2002 the rate of interest on savings deposits would increase from
0.96 to 0.98 percent per month. These events signaled to the Government that liquidity
constraints were hampering the effective operations of VBARD. Consequently the
following week the Government announced a non-transferable bond issue to the bank
which could be used to increase its capitalization levels in order to make it eligible to
obtain further loans from foreign banks. The same announcement also indicated that while
VBARD could not use this bond issue as collateral for loans, it could, however, approach
SBV and on the basis of the bond issue apply for a loan from the SBV.

Bank for Foreign Trade of Vietnam

The Bank for Foreign Trade of Vietnam (Vietcombank) is the oldest commercial bank for
external affairs in Vietnam and mainly provides loans for export activities. The Bank’s
network consists of 22 domestic branches and three representative offices overseas. At
the end of 2000, its total outstanding loans were Ð14,421 billion. In 2000, Vietcombank
increased its share to 31.1 percent of the country’s total import/export value.

Vietcombank is mainly involved in large loans to big SOE exporters and its loan products
are very similar to those offered by VBARD. However, Vietcombank normally charges
lower interest rates, but only to low risk enterprises. Vietcombank is thus more
commercially orientated than VBARD.

Local currency loans are around 58 percent of total loans, while short-term loans are 50
percent of the total portfolio. According to FAO, the proportion of overdue loans is running
at 3.3 percent, most of which are due to the agricultural component of their loan portfolio
(FAO 2002). Vietcombank lending preferences are for SOEs rather than private
enterprises, even if there is sufficient collateral. This is due to government guarantees for
SOE loans, while foreclosure on private sector loans is extremely difficult given the
difficulty in seizing assets.

People Credit Funds

The People’s Credit Funds (PCFs) were established in July 1993 to issue loans for
production development, handicraft and small-scale business. The share of loan portfolio
dedicated to agricultural production is around 53.5 percent and to agricultural trading
activities 10.9 percent. Funding comes from savings and deposits from private individuals.
At the end of 2000, an estimated 960 PCFs were operating in 53 provinces with a total
operating capital of Ð2,633 billion and total outstanding loans of Ð2,282 billion (FAO
2002).

The People’s Credit Funds’ objective is to gradually replace the role currently played by
the informal financial sector by offering short-term and medium-term for individual farm
traders for operating capital and investment. Under the existing banking and financial
regulations, the funds are not allowed to give long-term loans to its borrowers. In addition,
millers are normally not customers of the PCFs since the Funds only provide loans to
individuals and households, but not to enterprises (FAO 2002). In general, PCFs are

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based at the commune level and have a minimum of procedural delays. Usually
applications are processed quickly without much paperwork for borrowers.

In order to accelerate the funds’ operation in agricultural sectors, the SBV sets the basic
interest rate for PCFs at 0.3 percent per month higher than the basic interest rate for other
institutional credit providers. Consequently, the offering interest rates for short-term and
medium-term from PCFs are 0.95 percent per month and 1.0 percent per month,
respectively.

Most of PCFs’ total outstanding loans are short-term. Similar to other official loan
providers, the duration for short-term loan is up to 12 months, while the duration for
medium-term loan is over 12 months to 60 months. Most loans are on the basis of social
capital and in order to minimize risk the amount of loans to each individual or household is
limited to less than Ð6 million.

The biggest constraint to the expansion of the PCFs is the ability to mobilize capital from
savings and deposits. Despite attractive interest rates, most people are reluctant to open
savings accounts due to lingering doubts about the viability of the financial system after
the collapse of credit funds at the end of the 1980s. The future expansion of the funds in is
also hindered by a lack of qualified staff and competition from VBARD (FAO 2002).

Other Programs

There are two major national programs for poverty reduction through development of
infrastructure in poor communes (Programs 133 and 135). Between 1992 and 2000 a total
investment of approximately Ð21,000 billion was made through national programs directly
related to hunger elimination and poverty reduction (Government of Viet Nam 2002). The
figure for the two years 1999 and 2000 alone was nearly Ð9,600 billion. This comprised
Ð3,000 billion from the State budget, over Ð800 billion from joint financing from other
programs and projects, over Ð300 billion from savings and deposits, and over Ð5,500
billion from concessional credits to poor households (Government of Viet Nam 2002).

Concessional credits to the poor are provided from the Bank for the Poor. In addition, the
Government has provided considerable support to ethnic minority people living in
especially disadvantaged areas. This includes a total grant of Ð70 billion and zero interest
rate loans provided to nearly 90,000 households for production purposes (Government of
Viet Nam 2002).

4.8.2 Credit Access and Uses in the Rice Value Chain


4.8.2.1 Credit Access and Uses by Farmers

Just one third of rural households have access to formal credit in a given year, and most of
this credit is short term (less than one year) and the average loan size is small (about $
300) (ANZDEC 2001). Interest rate ceilings prevent the VBARD and other banks from
offering credit to riskier or smaller borrowers, as well as limiting their ability to mobilize
savings (see Box 2 and Box 3). The dramatic growth of lending by the People’s Credit
Funds (PCF) is evidence that there is latent demand for credit at higher interest rates and
that the main constraint for most rural households is not the interest rate but rather access
(ANZDEC 2001).

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Most smallholder farm households are credit constrained and need to borrow money in
order to fund cash expenses for agricultural production. Figure 23 shows seasonal cash
constraints for smallholder farmers in Thai Binh Province. As Figure 21 shows, these cash
constraints correspond with the cropping cycle as farmers come to the end of the cropping
season their cash reserves are low and they need funds to purchase fertilizer and
pesticides for agricultural production. The IFPRI survey in 1996 showed that farmers in the
Mekong River Delta and North East South regions have greater access to credit services
than farmers in the rest of the country (see Table 55) (IFPRI 1996).

The Study Team was unable to obtain updated information on credit usage by rice
producing farmers. However, several extensive surveys of farmers for other commodity
groups have been carried out as recently as December 2001.

In the IFPRI/MARD Fruit and Vegetable Producers survey of 1505 producers (Agrifood
Consulting International 2001c) (survey conducted November 2000), just over 25 per cent
of producers in the survey used credit to fund their agricultural activities (see Table 56 and
Table 57). This differed significantly between producers, with producers in the North more
likely to have loans (40.5 per cent) compared with producers in the South (8.14 per cent).
Producers in Ninh Binh province in the Red River Delta had the highest rate of loans taken
out (73 per cent of producers). Of those producers who had taken out credit, 63 per cent
indicated that this was sufficient for their needs. This level of “credit satisfaction” varied
between 98 per cent for producers in the South to 56.8 per cent of producers in the North.
This high rate of satisfaction in the South coincides with a low uptake of credit, indicating
that liquidity (of cash reserves) is not as much of a problem with producers in the South as
it is in the North. For those producers who did not have enough credit to fund their
operations, the main reason given (55 per cent of producers) was that credit applicants
had difficulties dealing with the bank (or credit institution). The major reason for this
difficulty appears to be credit limit regulations imposed on the banks by the government
(Agrifood Consulting International 2001c).

In a survey of 210 smallholder livestock producers in Thai Binh and Thanh Hoa Provinces,
ASPS-DANIDA showed that most farmers obtain credit from the Agricultural Bank, Other
Credit Institutions or friends and relatives (see Table 58). The Agricultural Bank interest
rate was lower than other sources of credit, but the difficulties in accessing these loans
means that producers are credit constrained. The use of other sources of credit with higher
interest rates means that firstly farmers have difficulty in accessing commercial loans from
the bank, and secondly that the interest rate charged by the banks are below free market
rates.

The past emphasis on subsidized interest rates in programs to help the poor may have
limited the expansion of commercial banking and the sustainability of rural financial
institutions (ANZDEC 2000). The success of PCF who serve more remote areas and rural
households usually not reached by VBARD, and charge higher interest rates is evidence
that rural financial institutions in Viet Nam can grow without subsidized interest rates.

The credit constraints faced by the private sector are compounded by the preferential
treatment of SOE in credit allocation (ANZDEC 2000). In the case of agriculture, there is
evidence that SOE are making net losses (for example in 1998, total net losses of central
SOE in agriculture were Dong 288 billion or US$ 22 million) (ANZDEC 2000). Some losses
are very high and more than offset the profits made by the majority of the SOEs.
Moreover, SOE contribution to employment in agriculture is very small (ANZDEC 2000).

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The negative effects of shocks can be greatly mitigated if households have access to
markets, assets, institutions, and information. But the poor have low savings and low
savings rate; for example the lowest quintile of the population saves only 9 percent of its
income (ANZDEC 2000). Moreover, among the lowest quintile, 23 percent of the
population is not saving, versus less than 2 percent in the highest quintile. Improvement in
rural finance could help mitigate this situation. However, low assets limit access of the
poor to formal credit. As a consequence, the very poor are often trapped into exorbitant
credit arrangements, sometimes involving forms of labor bondage (ANZDEC 2000). The
recent regulations allowing formal institutions to give loans of up to Dong 10 million (US$
700) without collateral are largely ineffective (ANZDEC 2000). Subsidized interest rates
are not the solution, but in fact they aggravate the problem of access to credit by the poor,
since they put a downward pressure on mobilization of rural finance (ANZDEC 2000).

4.8.2.2 Credit Access and Uses by Millers, State Owned Enterprises and Exporters

According to IFPRI, the major sources of credit for millers in Viet Nam are formal sources,
such as the Agricultural Bank (37 percent of millers) and commercial banks (30 percent)
(see Table 59) (IFPRI 1996). Millers borrow about 19 percent of their funds from informal
sources such as friends and relatives. SOEs generally borrow from the Agricultural Bank
(VBARD) or commercial banks (see Table 59) (IFPRI 1996). Small millers rely
predominately on own funds or agricultural bank credit for financing their operations, while
more commercial operations, such as large mills and miller-polishers make greater use of
either commercial bank or agricultural bank credit (see Table 60). SOEs rely mainly on
agricultural banks and own sources in the Northern regions of Viet Nam, while in the North
East South and Mekong River Delta, there is a greater reliance on commercial bank credit
rather than from agricultural banks (see Table 61).

The provision of export credit differs markedly among private millers and SOEs. SOEs that
possess an export contract are allowed to borrow 100 percent of the value of the contract.
Private millers, by contrast, may only borrow up to 70 percent of the value of the miller’s
collateral in the form of buildings and equipment; land is excluded from the valuation of
collateral. This disadvantages private millers, particularly those involved in exports.

There is a remarkable difference in scale in access to credit by the private sector and
SOE. For example, in the Mekong River Delta wholesalers and medium millers have
access on average to less than $10,000, while large miller-polishers have access to
$100,000. SOEs in the same region, however, have access to about hundred thousands to
few millions of US dollars (FAO 2002).

While SOEs have greater access to credit, they appear to be more restricted in their use of
capital. One SOE remarked that any capital investments or improvements with a value of
500 million Dong or greater required the approval of VINAFOOD 2 (World Bank Study
Team Interview, 29 July 2002). In addition, the quantity of funds borrowed by SOEs is
generally pre-determined by provincial people’s committees on the basis of production
targets and capacity, rather than the actual borrowing needs of the company (World Bank
Study Team Interview, 30 July 2002). One of the major burdens facing SOEs are the
carrying costs associated with borrowing large amounts of money to finance government-
to-government contracts that were signed at times of low export prices. Given the rise in
paddy prices over the past year, this implies that millers often must fulfill these contractual
obligations at a loss in addition to financing interest payments made for these sales.

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The interest rates currently paid by millers ranges from 0.65 percent to 0.85 percent per
month, based on a number of interviews with private and state-owned millers. Lower
interest rates (0.65 percent to 0.75 percent) are available to SOEs.

IFPRI reports that the gap between available credit and credit requirements is high, as
reported in Table 62 and Table 63 (IFPRI 1996). Overall, credit requirements for millers
are over 22 times the amount borrowed, though for most millers, the gap is between 4 to 8
times the amount borrowed (Table 63). For SOEs, credit requirements are only 3.5 times
the amount borrowed (see Table 62). No clear patterns emerge by mill size in terms of the
ratio of credit required to borrowed (see Table 63), although polishers and miller-polishers
in the South show consistently higher credit gaps than pure millers (see Table 63).

4.8.2.3 Credit Access and Uses by Traders, Wholesalers and Retailers

Traders have a greater reliance on credit from own sources and moneylenders than millers
or SOEs (see Table 59). Approximately 37 percent of credit requirements of traders come
from own funds or those of relatives, with an additional 19 percent coming from
moneylenders. Formal credit sources, such as from agricultural banks or commercial
banks, are used by 37 percent of the sample from IFPRI (IFPRI 1996). Moneylenders are
particularly important sources of credit by retailers and wholesalers in the South and
wholesalers and assemblers in the Red River Delta, while in other provinces, they are
unimportant (see Table 64). Family sources of credit are generally more important for
assemblers and retailers than for wholesalers, who rely more on formal credit from the
agricultural bank and other sources (see Table 64).

Like millers, traders are particularly constrained in terms of the gap between the credit
required and amounts actually borrowed. As noted in Table 62, traders require an average
of over 16 times the amount of funds actually borrowed. However, with the exception of
one wholesaler in Ho Chi Minh City, most credit gaps for traders range from 2-5 times the
amount of credit borrowed (see Table 65). Credit requirements and amounts borrowed are
largest for wholesalers, with assemblers and retailers typically borrowing less than
US$1000 (see Table 65).

In addition, traders typically pay higher interest rates than millers (3.6 percent per month in
1996, compared to 2.7 percent per month for millers), ostensibly due to the shorter terms
of the loans (an average of 4 months, compared to over 6 months for millers) and greater
use of informal sources of credit, such as family, friends, and moneylenders (see Table
62).

4.8.3 Issues and Constraints in the Provision of Credit in Viet Nam

The key issues cited by numerous actors in the rice value chain in Viet Nam were the
significant interest rates and limited access to funds from commercial banks and MFIs. In
its Comprehensive Poverty Reduction and Growth Strategy (CPRGS), the Government of
Viet Nam noted that while the amount of funds mobilized from the private sector remains
small, commercial bank operations show weaknesses with respect to credit analysis, and
focus of credit provision has not been on efficient enterprises. Further, credit quality has not
been high and the percentage of bad debts is still large (Government of Viet Nam 2002, pg.
15).

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Access to credit is less of a constraint than in Cambodia, due to concerted efforts by the
Government to provide loans at concessional interest rates. However, implementation
problems are significant and often the targeted groups are not the ultimate beneficiaries of
the loans. Despite government and NGO schemes to develop Grameen Bank type of
loans, the use of commercial banks (like VBARD) to disperse these funds puts them in
conflict with their commercial accountability mandates. Understandably the commercial
banks are reluctant to loan money to farmers based on social capital collateral and put in
place approval procedures which slow down the rate of dispersal.
The issue of insufficient collateral is often involved since the banks take land user rights as
collateral but at their official price, which is only a fraction of the market price. Additionally,
if the borrower cannot repay the debt, banks find themselves in a very difficult position to
auction the land since the Government of Vietnam has not recognized of formal market for
land as all land ownership still belongs to the State. In fact, banks rarely sell the land
directly. Only the people communes or other state agencies are allowed to do so. This
situation greatly limits the link between credit and land markets and slows down the
expansion of agricultural credit (FAO 2002).
Furthermore, there is reluctance by virtually all institutional credit providers to accept
moveable assets as collateral. Since there is not any kind of certified warehouse
established in the country, it is impossible for any commercial banks to accept traders’
stocks as collateral. There is not any other practical way for banks to block traders from
selling their collateral against their interest (FAO 2002).

For farmers, the rate of interest, while an important factor, is less of an issue than the
ability to receive small loans for inputs (mainly fertilizer) and emergency needs quickly.
However, administrative procedures of banks and MFIs combined with the limited number
of commercial institutions in rural areas imply that farmer access to formal credit is
severely limited. In some cases, farmers will secure in-kind credit from traders, middlemen,
and retailers, with the money for inputs lent in exchange for a quantity of rice at harvest. In
other cases, particularly where cash is needed quickly due to calamities or other
unforeseen events, farmers are often forced to borrow from moneylenders at interest rates
in excess of 20-40 percent per month. Such a cycle of lending puts farmers in a perpetual
debt-cycle that makes income prospects difficult.

In spite of the expansion of the People’s Credit Funds, many farmers do not have access
to financial institutions that offer attractive interest rates on savings. Greater access to
rural savings institutions would facilitate “self-insurance” in which farmers save during
times of high prices to cover periods of low prices (ANZDEC 2001). Findings from other
developing countries show that farmers will save much of the windfall of commodity
booms, provided that they understand it is temporary and have access to rural financial
institutions (ANZDEC 2001)

Credit is available for SME and SOE mills with loans up to 70 percent of collateral.
However, credit gaps range from 2-16 times the amount of funds actually borrowed (see
Table 62 and Table 65). While SOEs can obtain preferential loan conditions, these are not
conducive to a competitive private sector. Further, loans for exporters do not appear to be
made on the basis of the financial soundness but rather on the presentation of signed
export contracts. In the absence of any risk reduction mechanisms by exporters (like
hedging or production contracts) a severe strain on the financial system could result. It is a
question for future research to design ways to alleviate credit constraints in a financially
sustainable fashion.

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Box 2 Credit Constraints Doc Lap Commune, Thai Binh Province

Focus Group Discussion on Credit Constraints

Focus group participants cited capital for fertilizer, pesticides and irrigation as the biggest constraint for
cultivation activities. The biggest capital constraints for cultivation occur in January and July when farmers
have to purchase fertilizer and pesticides and pay irrigation fees for their rice crop.

Focus group participants said that in order to obtain enough capital for cultivation activities farmers have to
sell paddy rice or livestock or try to obtain money from credit institutions. Credit institutions available to
farmers in Doc Lap commune include Banks, the Poverty Fund from mass organizations, moneylenders,
relatives and neighbors.

In order to borrow money from the bank at concessional rates, farmers must belong to the hamlet borrowing
group. The bank and commune agree to set up a borrowing scheme for hamlets, with the hamlet leader or
leader of a mass organization as head of the borrowing group. Since the leader of the borrowing group acts
as guarantor of the loan, the membership of the borrowing group is restricted to those farmers whom the
leader believes has good character and has the capacity to repay loans. With membership of the hamlet
borrowing group, farmers can borrow up to 10million dong with only social capital as collateral, at an interest
rate of 1 per cent per month.

Another scheme available to farmers is the Poverty Fund of the various mass organizations such as the
Women’s Union or the Farmer’s Union. Under this fund, farmers can borrow between 0.5 - 2million dong, at
an interest rate of 0.5 per cent per month with the principal paid back at the end of the borrowing cycle.

Focus group participants cited several approaches they perceived might solve their capital constraint
problems. Firstly, participants saw that a reduction in the use of inputs into cultivation would reduce their
capital requirements. This included a reduction in the use of inorganic fertilizer and pesticides and an
increase in manure. Secondly, participants saw an increased role for the commune cooperative in reducing
the prices of agricultural inputs and increasing their marketing effort to find new markets for agricultural
outputs.

(Agrifood Consulting International 2001d, pp. 165-166)

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Rice Value Chain Study – Viet Nam

Box 3 Credit Constraints in Nam Trung Commune, Thai Binh Province

Focus Group Discussion on Credit Constraints

Focus group participants indicated that most farming households need money to buy inputs (seed, nitrogen
fertilizer, potassium fertilizer) for two rice crops and for one additional crop (maize, cassava). They also need
money for livestock production all the year. The credit requirements for livestock are secondary to the main
crop. Given a choice of what farming activity to obtain credit for, participants mentioned that they would give
priority for crops rather than livestock.

The problems farming households have with availability of capital is that household has difficulty in meeting
the eligibility requirements for loans and that the amount of the loan households are eligible to take out is
very small. The participants said that under the poor household scheme from the bank the loan is restricted
in the number of households that can receive the loan. For example, in a hamlet of 150 households only
seven households can receive the loan of amount 0.5-1million dong. In some cases, the person who gets the
loan divides it between them and their neighbors.

Focus group participants mentioned that it was very difficult to get loans from banks because of the collateral
requirements. The participants said that the collateral is the biggest issue, rather than the interest rate. Each
member of household, up to a total of four (husband, wife and two children when they become adults), is
2
entitled to 480m of cultivated land from the commune. The cultivation land has a red book and is lodged as
collateral with the bank. If the farmer defaults on the loan, the bank can give the right of cultivation of that
parcel of land to another farmer for a fee (but cannot "sell" the land to the other farmer as the land is owned
2,
by the government). With 480m the farmer can borrow only 1-2 million dong. With a 5 million dong loan and
above they need to get the guarantee from the commune.

While the bank interest rate is only 1.05 per cent per month with a repayment period of a maximum of 2
years, if they cannot get a loan from the bank, they have to get a loan from moneylender at 2-3 per cent per
month.

Some possible solutions to the difficulty of obtaining loans from banks mentioned by the focus group
participants included borrow money from neighbors and relatives and organizing a saving fund.

Participants explained that a saving fund consisted of a group of seven to ten people who each contribute a
certain amount a month to the fund and take it in turns to withdraw money from the fund. However, the
amount of money is small, around 500,000dong. Even such an amount of money cannot be used for crops
or livestock, but is used to pay for the banks interest on their other loans. Consequently, the interest payable
on their loans accumulates and they do not have money to cultivate their land or buy livestock for fattening.
This means that with accumulation of interest they cannot produce enough crops for sale to pay back the
interest. One additional solution mentioned by focus group participants was that extending the repayment
schedule from 2 years to 4-5 years would enable farmers to pay back loans without undue hardship.

(Agrifood Consulting International 2001d, pp. 118-119)

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5 Value Chain
5.1 Overview

The value chain methodology is a tradition developed from two strains of literature: the
business literature on strategy and organization of Porter (Porter 1990) and the literature
of global commodity chains promoted by Gereffi and developed in numerous studies in the
late 1990s (UNCTAD 2000). The “value chain” is defined by Kapinsky as “the full range of
activities which are required to bring a product or service from conception, through the
intermediary phases of production, delivery to final consumers, and final disposal after
use” (Kaplinsky 1999, pg. 121). Briefly, such analysis focuses on the interaction of actors
along each step of the production system (from raw producer to consumer) as well as the
linkages within each set of actors (UNCTAD 2000). Such an approach thus considers
international trade relations as being part of a series of networks of producers, exporters,
importers, and retailers, whereby knowledge and relationships are developed to gain
access to markets and suppliers. As UNCTAD notes, such a perspective means that the
success of developing countries in value-adding their production lies in the ability of these
countries to access these networks (UNCTAD 2000).

The role of governance is central to the literature on value chains; that is, who controls the
power relationships within the chain. Two types of value chains have been identified in the
literature. Producer-driven chains are those in which companies that produce the product
control the networks within the chain. As UNCTAD points out, producer-driven chains are
most common in capital- and technology-intensive industries where high barriers to entry
exist in production (UNCTAD 2000). Buyer-driven chains, by contrast, are controlled by
groups that market the product (UNCTAD 2000). In the case of agriculture, there are
instance of both types of governance structures, though increased consolidation in the
retail sector has led to an increase in the power of retailers in food distribution.

UNCTAD remarks that such governance issues are of increasing importance in


agriculture, given the greater emphasis on product differentiation, food safety, and product
standards required in the competitive market environment (UNCTAD 2000). Such issues
place a premium on strong linkages within the value chain between agents within the
chain.

Two additional elements of the value-chain are also important with respect to agriculture.
First, the role of upgrading by upstream actors is an important concept, given that
competitiveness is a dynamic, continual process. In the context of value-chain analysis,
upgrading takes the form of either developing new, higher-value market niches or by
expanding the range of activities employed. For the latter, this could include a
manufacturer expanding into distribution or R&D, for instance (UNCTAD 2000). The role of
governance structures is important in how such upgrading by suppliers occurs, as is the
support of government and other institutions (UNCTAD 2000). The second issue concerns
the means by which benefits are distributed within the chain. This refers to the amount of
benefit obtained by various actors in the chain as well as ways actors try to improve their
position within the chain, through the differentiation of services and roles.

Kaplinsky and Morris (2001) observe that in the course of globalization, there has been a
perception that the gap in incomes within and between countries has increased. They
argue that value chain analysis can help to explain this lacuna, particularly in a dynamic

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perspective. First, by mapping the range of activities in the chain it provides the capacity to
decompose total value chain earnings into the rewards that are achieved by different
parties in the chain. Other ways of viewing global distributional patterns provide only partial
insights into these phenomena. For example, trade statistics only provide data on
aggregate, gross returns rather than on net earnings, and branch-specific analyses
(agriculture, industry, services) only capture part of the story. Secondly, a value chain
perspective analyses the way in which particular firms, regions and countries are linked to
the global economy. This mode of insertion will determine to a large extent the
distributional outcomes of global production systems and the capacity which individual
producers have to upgrade their operations and thus to launch themselves onto a path of
sustainable income growth.

A major benefit of value-chain analysis is through the identification of the nature and extent
of barriers to entry along the chain. As a result, such an approach is amenable to explain
many of the distributional outcomes that occur in the course of globalization as well as the
evolution of such relationships over time (Kaplinsky and Morris 2001).

Value chain analysis has been applied to the understanding of commodity chains and
export strategies in a number of developing countries. Dolan, Humphrey, and Harris-
Pascal use this approach to analyze the impact of consolidation and market power in the
UK supermarket industry on fresh vegetable suppliers in developing countries (Dolan,
Humphrey et al. 1998). The authors note that this commodity chain is a buyer-driven
chain, with specifications and standards determined by the supermarkets and enforced
upon the suppliers. While this presents opportunities for value-adding by potential
exporters who can meet the strict standards of these retailers, numerous challenges exist
for suppliers in developing countries. These challenges include producing high-quality
produce that is reliably supplied, low cost, ethically produced, and safe, that continually
innovates to meet the changing needs of consumers. This has consequently restricted
access to these commodities chains.

The rewards for such value-adding are significant – the authors note that the price of
various types of packaged carrots earn a premium of 7 to 15 times that of ordinary bulk
carrots. Yet there is constant pressure among actors in the chain to maintain and upgrade
their positions and continually upgrade and innovate to stay ahead of potential
competitors. These pressures put exporters in a tenuous position vis-à-vis retailers, who
are argued to have greater power and leverage in the chain. As a result, exports and
suppliers need to find way to diversify

While the integration of high-value production with retailers in developing countries has
positive benefits for developing countries, Dolan, Humphrey, and Harris-Pascal remark
that the benefits are mainly concentrated among larger farms and exporters (Dolan,
Humphrey et al. 1998). In Kenya, sourcing was once common from smallholders, but has
since declined, with less than 20 percent of sourcing by leading exporters coming from
smallholders. Reasons given for this decline include problems with credit provision to
smallholders, loan defaults, and “side-selling” (selling contracted produce to other buyers)
(Dolan, Humphrey et al. 1998, pp. 29-30). Institutional impediments, particularly agronomic
practices and post-harvest technologies, are often constraints. Nonetheless, the authors
note that there can be an advantage to smallholder suppliers, particularly with respect to
the care of production and reduced risks of plant diseases. They also note less supervision
of wage labor is required for smallholders. While examples of successful smallholder
sourcing exists, the need for greater control of the supply-chain reduces the reliance on
smallholders by retailers.

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5.2 Value Chain Analysis

5.2.1 Producers
5.2.1.1 Land Inputs

Before 1988, agricultural production was organized around collectives, although


households were allowed to sell limited amounts on the private market. Resolution No. 10
of 1988 identified the household as the primary unit of agricultural production, giving them
long-term land-use rights. It initiated a process of allocating collective land to individual
households.

The Land Law of 1993 formalized the rights of households to rent, sell, inherit, mortgage,
or transfer their use-rights. It also established a system of land-use certificates to be
allocated to households. By 1999, 10 million households (87 percent of the agricultural
households) had been allocated certificates for 5.7 million hectares (78 percent of the
agricultural land).

Even though agricultural value added per ha is relatively high in Viet Nam by international
standards (about $1000/ha), the small holding size (0.14 ha/capita) prevents agricultural
households from earning high income (ANZDEC 2000). Land fragmentation (about 6 plots
per rural household) compounds the problem of small land size by increasing cost of labor
utilization, mechanization, and use of water (see Table 66).

In the North, families are allocated 1 sao5 (480m2) per person up to a maximum of 4
people in the household. With newly-weds starting their own families the allocation of land
for each additional person within the confines of the commune area necessarily leads to a
fragmentation of the land holding.

The Land Law currently sets ceilings on the amount of land that may be owned by farm
households. By allowing land transfers since 1993, however, the law set in motion a
system of exchanges that inevitably will conflict with current ceilings on the allowed size of
land holdings. Even though large landholdings are allowed, provided that the excess land
is rented, it is very difficult that in the long term the law can control some form of land
concentration in the hands of the most enterprising or rich households (ANZDEC 2000).
The current policy on land ceilings limits a process of land consolidation that could
contribute to bigger investment in rural areas and rapid growth. The policy resolution on
commercial farms (Resolution 03/2000/NQ-CP 2 February 2000) has recognized the
existence of large farm holdings and encouraged their development. However, land
ceilings on land user rights are still maintained (ANZDEC 2000).

The allocation of land user rights in upland and forest land has been slow. ANZDEC noted
that as of 1999, only 10 percent of land had been allocated. Moreover, most of this land
(44 percent) has been allocated to enterprises, while households have received only 11
percent of land user certificates (ANZDEC 2000).

Even though land can be used as collateral in accessing bank credit, in practice this is not
yet resulting in an expansion of rural credit. Use of land as collateral is limited by the ability

5
Sao sizes differ between North, Central and South Viet Nam.

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of banks to auction land. This constrains the link between credit and land market and
slows down the expansion of rural credit.

Until recently paddy land was not allowed to be converted to alternative and often more
profitable uses. For example (Directive 247-TTg 28 April 1995) prevented the
reassignment of paddy land to other uses.The logic behind these restrictions is to ensure
food security; however, the logic is consistent with a policy of self-sufficiency rather than a
policy of food security. If alternative uses of land are more profitable, they will generally be
more conducive to higher income and improved food security than paddy. In recognition of
this principle (Resolution 03/2000/NQ-CP 2 February 2000) and (Resolution 09/2000/NQ-
CP 15 June 2000) outlined new incentives for the reassignment of paddy land into high
valued activities like fruit trees and aquaculture.

5.2.1.2 Seed Inputs

The varieties of rice grown in Viet Nam vary across provinces and seasons (See Table 67
to Table 71). There appears to be more Chinese imported varieties grown in the north, due
to the proximity and adaptability of Chinese varieties (see Table 72), with more IR and
improved varieties grown in the south. There are a large number of varieties grown in Viet
Nam, despite the fact that the top 10 varieties account for over 60 percent of the
production area. The rest of the varieties each account for less than 1 percent of the area.
For example, in a survey by MARD in 2000 identified over 200 different varieties being
grown in each of the cropping seasons (Ministry of Agriculture and Rural Development
2002). This was consistent over cropping seasons and regions, with the lowest number of
varieties (131 varieties) being identified in the Winter-Spring crop in the Central region of
Viet Nam (see Table 70).

The majority of rice production in the northern region of Viet Nam is based on imported or
hybrid rice production (57-58 percent) (Chinese open pollination, hybrid rice or two-line
hybrid rice). As Table 68 shows, Khang Dan 18 and Q5 are the two most popular varieties
grown, comprising 15 and 12 percent of the Winter-Spring crop and 18 and 14 percent of
the Lua Mua crop respectively.

In contrast, in the central region of Viet Nam IR varieties play an important role. As Table
70 shows, IR17494 and Khang Dan 18 are the two most popular varieties grown in the
central region, comprising 21 and 13 percent of the Winter-Spring crop and 12.5 and 8.2
percent of the Summer-Autumn crop respectively.

IR50404 and OM1490 are the two most popular varieties grown in the southern region of
Viet Nam. These comprise 13.4 and 12.7 percent of the Winter-Spring crop and 10 and
12.9 percent of the Summer-Autumn crop respectively. Interestingly, despite being the
mainstay of exports, IR64 only comprises 5.8 percent of the Winter-Spring and 4.9 percent
of the Summer-Autumn crop in the south (see Table 71).

While the above data give an overall picture of cropping patterns in Viet Nam, Table 92
gives a closer look at the 5 main rice production areas in the Mekong River Delta in 1999.
Overall, 78.7 percent of the area is double cropped rather than single cropped, with Tien
Giang and Can Tho provinces having the largest areas of triple cropping. The three main
varieties gown are IR64 (25.4 percent) IR50404 (21.3 percent) and VND95-20 (12
percent). The main message to obtain from a comparison of data from Table 67 to Table
71 and Table 92 is that while IR64 is not the most popular variety across the whole of Viet

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Nam, in the grain basket of the Mekong River Delta it is the most widely grown variety,
with over 25 percent of the area under cropping.

The large number of varieties being grown indicates two conflicting priorities. Firstly, the
large number of varieties being grown means that genetic biodiversity is being maintained,
but that most varieties are being grown on extremely small areas, increasing the risk of
loss. Secondly, the number of varieties in the top 10 which are non-IR or outdated IR
varieties indicates that the adoption of IRRI varieties has been limited.

As Table 85 shows, most farmers either save their own seed (Farmer Saved Seed – FSS)
or exchange/buy seed off other farmers. The limited use of certified seed and the retention
of seed over multiple cropping cycles indicate that the genetic potential of improved
varieties is not being maximized. Thus the problem is not the lack of improved varieties but
the lack of adoption of improved varieties. This is shown by the growth in average yields in
Table 22, where the growth in yield for the Mekong River Delta has only been 1.2 percent
over the 10 years since 1990. In contrast, the growth in yield in the North West region has
been 7.8 percent. This low rate of yield growth in the most productive region of the
country, the Mekong River Delta, and the prevalence of a large number of different
varieties, indicates that adoption of improved varieties has been slow.

Farmers find it less profitable buying formal sector seed at a price of 1.8 to 2.0 times the
grain price than producing their own seed or buying seed from a cooperative at a price of
1.2 to 1.3 times the grain price (ANZDEC 2000). ANZDEC noted that farmer surveys
conducted by DANIDA/MARD indicated that farmers would be prepared to pay up to 25
percent more, equivalent to 2.5 times the price of grain than at present, provided they were
confident that they were buying good quality seed (ANZDEC 2000). The same farmers are
currently buying hybrid seed at a price of up to 5 times the price of the seed of normal
varieties. Private seed companies are now supplying over half of this hybrid seed and
there are clear indications that the farmers have greater confidence in the quality of this
seed than that offered by the local seed agencies (ANZDEC 2000). During the surveys
farmers also indicated that they were aware that higher quality seed brought the benefit of
lower seed rates being required as well as the opportunity for yield increases of over 10
percent because of the greater genetic uniformity. This highlights one of the major
challenges of any attempts to develop the seed sector, namely the need to improve the
quality and trustworthiness of the domestic formal seed sector (ANZDEC 2000) (see Box
4).

The major cause of the lack of adoption of improved varieties has been the ineffectiveness
of Government breeding centers and extension services to offer appropriate varieties to
farmers. It must be stressed that this is not through a lack of effort on the part of
Government agencies, but due to a myriad of constraining factors hampering the effective
extension of appropriate varieties (see Box 5).

New varieties are being produced by the Cuu Long Delta Rice Research Institute
(CLDRRI) and the Southern Seed Company (see Box 6). These centers are involved in
the breeding of new varieties (in the case of CLDRRI) and the screening and multiplication
of imported varieties (both centers). While the breeding system is supposed to follow the
standard breeding pyramid (see Table 74 and Table 75), the Study Team could not obtain
enough information to verify what standards and protocols are actually followed.
Discussions with the Seed Component of ASPS (World Bank Study Team Interview, 5
August 2002) indicated that there are major constraints and failings in the system
preventing an efficient breeding pyramid structure.

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Firstly, while the use of certified seeds is low (see Table 85), the market for seed is
distorted by the use of subsidies for particular varieties of seed.

Secondly, on the breeding side there is a lack of enforceable plant breeder rights which
reduce incentives for breeders to produce new varieties of interest to farmers (thereby
resulting in a reliance on imported varieties which have not been bred for Vietnamese
conditions). In concert with the lack of intellectual property rights for breeders there is
pressure for breeders to release new varieties prematurely (while they can still extract
market rents). This premature release means that varieties have yet to be stabilized and
subsequent multiplication and use will result in selection pressures6. Despite the mandate
for the National Center for Variety Evaluation and Seed Certification (NCVESC) to
implement the national variety performance testing of new varieties there is no legal
requirement for varieties to be nationally tested before being officially recommended for
release to farmers. In fact many varieties are subjected to only limited local
demonstrations prior to being multiplied by provincial agencies and distributed to farmers.
This may be in response to the delay that is experienced before approval of varieties
during the conduct of the formal performance trials. However, the overall effect is to dilute
the value of the formal testing procedures.

Thirdly, poorly controlled seed multiplication systems will result in mixing of seed during
the drying process resulting in heterogeneous certified seed. This is a result of a lack of
clear guidelines within the regulations for the preservation and maintenance of pure stocks
and the inadequate existing procedures for Distinctness, Uniformity and Stability (DUS)
testing. Although there is a requirement that seed imports should be managed
expeditiously there is ample evidence that this is not the case. There have been significant
importations of hybrid seed from China of varieties that have not always been subject to
adequate DUS testing (ANZDEC 2000). Whilst at provincial level the Provincial Seed
Agencies (PSAs) appear to be maintaining adequate standards of packaging there are
concerns about the repackaging by seed dealers (ANZDEC 2000).

Fourthly, commercial pressures on breeding centers results in the sale of breeder seed to
farmers rather than channeling high quality genetic material through the breeding pyramid
system. These commercial pressures also result in a concentration of breeding on
varieties for more profitable areas like the Mekong River Delta and Red River Delta
regions, rather than breeding for mountainous, upland or saline areas.

Fifthly, the early regulation related to the seed sector dating from 1992 introduced the
initial guidelines for national variety testing and procedures for registration of new varieties,
regulations governing the importation of seed and the implementation of effective plant
quarantine measures, and the need for improved quality control in the entire seed chain.
At present the activities within the seed sector are governed mainly by the Regulation
07/CP that was introduced in February 1996. This regulation defines the key terms related
to seed management although the adoption of the term Foundation Seed does not appear
to have occurred (ANZDEC 2000). The seed sectors controlled through this Regulation
include all agencies with responsibilities related to germplasm conservation, varietal
improvement research, variety testing, releasing, commercial seed activities, seed import-
export, seed quality control and seed utilization in Vietnam. The Provincial DARDs are
tasked with the responsibility for licensing the seed dealers in the province. In addition the

6
As an example of this, the use of the Southern Seed Company seed multiplication farm in the south for
varieties ultimately destined for the north will result in selection for southern conditions rather than northern
conditions if the seed variety is not stable.

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government is to designate an organization that maintains a list of agencies that are


certified in this way. Thus, it is clear that there is a legal requirement that all seed dealers
should be registered and non-registered dealers will be liable to prosecution (ANZDEC
2000).

While it can be argued that the regulatory framework is in place, there are in fact lax
standards and unenforced regulations for breeding. For example, provincial and state seed
companies are able to produce breeder seed under maintenance production, but in a
controlled system this should only be done under the control of the breeder. Another
example is that if a farmer purchases breeder or foundation seed then the resulting
production is classified as foundation or certified seed (as appropriate) even though it has
not been under the control of a breeding center and there has been no inspection or
quality control system in place. Thus while the official data shows large amounts of
certified seed available, this is in fact just Farmer Saved Seed. At the moment, breeding
institutions are producing and trading pre-basic, basic and certified seed, while the national
seed companies and Provincial Seed Agencies are partly producing their own basic seed
and certified seed. Some seed as hybrid rice varieties from China and hybrid maize from
foreign companies is produced on imported parent line. By far the majority of hybrid rice
seed used in Vietnam at present is, however, imported from China (ASPS-DANIDA 2001).

Following on from this, the procedures for registration of seed dealers are confused since
this certification can be provided at either national or provincial level. Furthermore there is
little evidence to demonstrate that these certification procedures have been effectively
implemented. Also it is unclear how the provinces maintain their own register of certified
seed dealers. Although non-registered seed dealers are subject to prosecution it appears
to be possible for a registered seed dealer to market non-certified seed without penalty
(ANZDEC 2000).

Official exports of hybrid rice seed was in the order of 13,480 tonnes in 2000 (see Table
73). While it is difficult to get an accurate picture of the volumes of certified seed available,
in a large part due to the large volumes of smuggled seed from China, it is of interest to
estimate the amount of certified seed that would required. Firstly, seeding rates vary
depending on whether transplanting or broadcasting is carried out. Table 83 shows that
around 5 percent of production is retained as seed, at an average of 214kg/ha (2001
production figures). Another 5.4 percent is retained as animal feed. For the majority of
production in the Mekong River Delta seeding rates are around 215kg/ha (ranging 180-
243kg/ha) (see Table 84). These rates are very high and are an over-insurance against
low germination rates and seed borne diseases. Secondly, 85 percent of seed is FSS seed
(either saved by the farmer, or obtained from other farmers) (see Table 85). If these data
are extrapolated to the whole of Viet Nam, then 31.972 million tonnes of production from
7.4846 million hectares in 2001 would have required 1.609million tonnes of seed, of which
242,000 tonnes was certified seed.

As noted above, less than 10 percent of the rice area is planted with seed from the formal
sector. Of the estimated 1.6 million tonnes of rice seed required per year the two national
seed companies National Seed Company Number 1 and Southern Seed Company have
during the last years produced 7000-8000 tonnes of rice seed annually (0.43-0.5 percent).
It is estimated that the Provincial Seed Agencies further meet 6.1 percent of the demand in
the north and 1.2 percent in the south (ASPS-DANIDA 2001).

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5.2.1.3 Fertilizer Inputs

The use of inorganic fertilizer has increased markedly since 1980 (Nielsen 2002). The
introduction of land reform and the Red Book has caused the use of fertilizer in agricultural
production to increase from 57kg/ha in 1983 to 200kg/ha in 1996 (Minot and Goletti 2000).
In part this is due to falling fertilizer/paddy price ratios and the increase in cropping
intensity. The rate of fertilizer application varies between regions, with farmers in the
Mekong River Delta using hardly any manure while producers in the Red River Delta using
up to 9.7 tonnes (see Table 76). The use of inorganic fertilizer ranges between 170-
182kg/ha (Minot and Goletti 2000), while the Mekong River Delta is at the lower end of the
range (see Table 84).

Domestic production of fertilizer only supplies 13 percent of domestic requirements (Goletti


1998), and most raw material has to be imported anyway. There have been restrictions on
fertilizer imports with the Ministry of Trade setting quotas on the types of fertilizer imported
(see Table 77). Quotas are allocated to provinces based on expected production, and
provincial authorities allocate the quotas to the provincial SOEs (Nielsen 2002). The
Government operates a price stabilization fund to monitor and stabilize fertilizer prices.
The volatility in domestic fertilizer prices has been lower than world prices but this has
been at the expense of domestic prices being around 30 percent higher than world prices
(Nielsen 2002). Since quota holders earn rents, an active illegal market for fertilizer quotas
has been established and are around US$3-4/tonne (Goletti 1998; Nielsen 2002).

Official imports of fertilizer are not the only sources of fertilizer. A significant amount of
fertilizer is smuggled in from China. While this fact is widely known, actual estimates vary
widely. Not all imports are destined for domestic consumption, as a significant border trade
with Cambodia occurs7.

As Table 77 shows, 2001 provisional estimates of fertilizer imports are 3.1893million


tonnes. The Study Team was able to obtain documentation listing the shipping manifests
for fertilizer imports during 20018. Between Jan 1 – Dec 31, 352 shipments of fertilizer
totaling 2,853,963 tonnes arrived at various ports in Viet Nam, 1.99million tonnes through
Ho Chi Minh City Port. The number of buyers and sellers of each type of fertilizer is shown
in Table 789. As Table 79 shows, the bulk of official imports are from the CIS, followed by
China and Qatar (22, 14 and 11 percent respectively). Since there is a substantial trade in
smuggled fertilizer from China, it is probably the case the China is the biggest supplier of
fertilizer to Viet Nam.

5.2.1.4 Pesticide Inputs

In 1997 the known pesticide use (herbicides, fungicides and insecticides) was about
42,400 tonnes. (General Statistics Office 2002). Current statistics identify insecticide

7
One Study Team interview was with a researcher who had investigated the provincial demand for fertilizer.
According to his research, the demand for fertilizer in the border provinces of the Mekong River Delta were
far in excess of amounts actually needed for production. This researcher had observed large numbers of
boats crossing the border carrying fertilizer. (World Bank Study Team Interview, July 2002).
8
These also listed the Origin, Destination, Seller and Buyer by type of fertilizer.
9
The discrepancy of 20,000 tonnes is due to the different data sources. For example, Petronas from
Indonesia was listed in the shipping manifests as sending a shipment of 5,400 tonnes of Urea on 31
December 2001, but Petronas does not appear as a supplier in other summary documents.

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imports only by value (see Table 77). In 2001 US$110 million worth of insecticides was
imported, significantly down from previous years’ imports of US$130-140million. Pesticide
use is considered to be much higher than this due to illegal imports of pesticides,
particularly from China. The excessive use of fertilizers and pesticides is commonly
practiced in Viet Nam as farmers strive to get more production from their areas. Rice and
vegetables are the two main lowland crops where excessive use of both fertilizer and
pesticides occurs (see Box 7).

Overuse of pesticides appears to be due to a poor understanding of insect management


with a reliance on zero tolerance for insect attack on the crop. Farmers will often spray too
frequently, with too many chemicals and at above recommended concentrations. Not
surprisingly pesticide resistance has built up in many insects and pesticides are becoming
frequently ineffective.

Actual pesticide used on-farm is difficult to obtain, as farmers use pesticides in a reactive,
rather than proactive way. Farmers cannot afford to purchase large amounts of pesticides,
and the main problem is the lack of appropriate application of the pesticide and the lack of
withholding periods. The Partial Budget data in Table 93 to Table 95 indicate that for
normal farmer practice insecticides comprise approximately 5-7 percent of the total cost of
production, but between 9-13 percent of total cash outlays (see Table 80). When improved
practices are undertaken this can drop insecticide costs down to 3-4 percent of total costs
and 5-9 percent of cash costs.

5.2.1.5 Irrigation Inputs

Viet Nam receives an abundant rainfall. Most of the country receives about 2,000 mm of
rain per year, rising to about 3,300 mm in the Central Highlands. Consequently Viet Nam
has abundant water resources which are estimated at 880 billion m3, (11,647 m3/person)
of which 325 billion m3 come from within the country (see Table 86). The remainder comes
from outside the country in large systems such as the Mekong and Red Rivers. Surface
water is fairly evenly located throughout the country. Present extraction is about 6 percent
of the total water resources, with about 86 percent used for irrigation, 10 percent for
industry and 4 percent for domestic use (ANZDEC 2000).

The volume of water used by the various sectors including agriculture is shown in Table
86. The table shows that agriculture is the main consumer of water and by using 86
percent of the extracted water, agriculture consumes 45.4 billion m3 of water annually.
Table 86 shows water that is extracted by agriculture on a regional basis, which is based
on the irrigation areas. The total area of 5,045,900ha is the area that is irrigated within a
year (double cropped areas are counted twice). The actual installed area on which this is
based is about half this area (ANZDEC 2000). Table 86 also shows the degree of
extraction that occurs within these regions10.

Table 86 only shows the total annual effect and does not show seasonal variation in the
flow which can be quite marked for these rivers. River flows are strongly influenced by the
unevenly distributed rainfall, whereby about 75 percent of runoff may occur in three to four

10
While extraction for agriculture is based on actual irrigation areas, the extractions for industry and urban
areas are based on direct proportioning of the national ratios and applying this to the regions. Thus the
regional distribution of allocations for industry and urban areas will not be correct, but the total amounts will
be correct. The regional figures are shown so that the overall water use requirements can be calculated
(ANZDEC 2000).

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months of the monsoon season. The minimum monthly flow of most rivers is 1 – 2 percent
of the annual runoff, which shows that discharges fall away quickly to their minimum value
in February and March in the north of the country while in the southern part of the country,
minimum flows occur later in April (ANZDEC 2000). As irrigation demand is greatest during
the dry season this also coincides with the lowest seasonal flows in the river systems.
Thus effective seasonal extractions will be much greater than those shown in the table,
conferring even greater environmental stress on the rivers and the downstream
environments.

An environmental conflict arises between the need to provide water for irrigation and the
need to maintain flows in the rivers so as to avoid salinity intrusion into the lower delta
areas. Basins in which both water shortages and salinity intrusion are a concern include
the Dong Nai and the Mekong deltas. This affects irrigation areas by irreversibly salinizing
soils if these are inundated and it also affects the applied water quality by rendering it
unsuitable for crops (see Table 88. Urban water supplies can also be affected where salt
water may intrude upstream to urban water supply intakes. Tidal water penetrates up to 30
–50 km inland in the Red River and 60 – 70 km inland for the Mekong (see Table 89).
Already 1.7 million ha of the Mekong delta are affected by saline soils and it is necessary
to maintain low flows so as to avoid any further upstream movement of saline water into
the irrigation areas (ANZDEC 2000). To control this several water regulating structures
have been built in the lower Mekong in an attempt to exclude saline water from entering
susceptible areas. These function by raising the hydraulic head on the upstream side
thereby preventing saline water from moving up-river (ANZDEC 2000).

Water is a key factor of production in agriculture. Rice in particular depends on irrigated


production. Increasing the efficiency of water use is important both to improve agricultural
productivity and to ensure sustainable use of natural resources.

Lowland irrigation systems involve a complex web of institutions. Large-scale irrigation


systems are funded primarily by the government, with 30-40 percent contribution by
farmers in the form of labor. Irrigation investment comprises 55 percent of total
government expenditure in agriculture (ANZDEC 2000). Irrigation schemes are generally
managed by state-owned Irrigation Management Companies, under supervision from
provincial authorities. Smaller systems are funded locally for the most part, though the
government may contribute pumps and building materials. Water User Organizations,
composed of farmers, are responsible for minor irrigation systems (ANZDEC 2001). The
extent of irrigation systems is shown in Table 87. Overall the growth in irrigation works has
been slowing, as most of the arable land able to be irrigated has been reached. ANZDEC
noted that a further 0.5-1.0 million ha of irrigation land could be developed (ANZDEC
2000).

Despite large investments in irrigation infrastructure, the irrigation system suffers from
inadequate maintenance, low physical efficiency, and a high dependence on fiscal support
from the central government. Due to poor distribution systems, existing irrigation water use
efficiencies are regarded as being quite low. However these vary for each irrigation
project. No reliable figures on irrigation water use efficiency measurements exist due to
complexities in the system, in which water that is used is frequently drained and re-used
again. Poor distribution results in a highly variable water regime within the farmers fields,
leading to gross oversupply while in other areas water shortages may occur (ANZDEC
2000).

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Currently a lot of water is wasted due to improper hydraulic control within the system with
water not being maintained at the correct heights to irrigate fields. Compounding this are
pump drainage rates which are designed to remove 4l/s/ha from the paddy areas where
these are located behind dykes (ANZDEC 2000). In many cases these figures are often
not achieved due to poor design, pump under-capacity, and poor maintenance. Lack of
effective pumped drainage means that crops behind dykes may be flooded for periods
longer than optimum for best growth results (ANZDEC 2000).

5.2.1.6 Labor and Machinery Inputs

Given the dominance of double and triple cropping patterns, most of the labor usage for
rice production is virtually year round. In the upland areas and in parts of the Red River
Delta and North Central Coast regions single cropping patterns means that labor in
underemployed in some parts of the year. Data from Thai Binh province, one of the major
rice producing areas in the North, shows that labor utilization is high during peak cropping
times, but is relatively free for other agricultural activities during the other times (see Figure
21). Figure 22 shows that the labor shortage during peak activity times is acute enough to
warrant labor exchange systems.

The amount of labor used varies between regions, with producers in the Red River Delta
more likely to use family labor rather than hired labor and use less mechanization than in
the Mekong River Delta (see Table 76). Farmers in the Red River Delta use more labor in
every phase of paddy production largely because Red River farmers transplant rice
seedlings rather than broadcasting seed. Similarly, harvesting in the Red River Delta is
three times as labor intensive as in the Mekong because threshing is less mechanized
(Pingali, Xuan et al. 1998).

The use of hired labor in the Mekong River Delta is a function of greater intensification of
land use for cropping and the higher levels of landless laborers than in other regions. In
the IFPRI survey, hired labor represented just 5 percent of total labor use in the Red River
Delta, but 33 to 39 percent in the Mekong River Delta (IFPRI 1996). Exchange labor is
used extensively in the North, especially for peak activity periods (see Figure 22).

Generally the labor division between men and women are unequal, with men usually
tasked with the heavier manual labor of plowing and women undertaking transplanting and
general crop husbandry such as weeding. Men are usually involved in task such as
applying pesticides and fertilizer, while both men and women are involved in harvesting
and post harvest operations.

It is a general facet of smallholder farming systems area that farm labor demand is
seasonal and opportunities for off-farm work usually exist only during times of peak own-
farm demand. In calculating the shadow wage of labor many studies proceed on the basis
that the opportunity cost of labor is zero due to the lack of off-farm opportunities. Under
this situation it is reasonable to investigate the assumption that the opportunity cost of own
household labor is practically zero. Weeding and other maintenance work are usually
carried out during slack periods in the household farming cycle, whether this be slack
periods during the day or on a seasonal basis. However, since labor costs (calculated on
the basis of a full shadow wage) typically make up 50 percent of the total costs of
production, there is a concern that the cost of production will be seriously underestimated
if a shadow wage for household labor is not used. The exact wage value used may be

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subject to debate, but for the purposes of this report the wage rate for hired labor is used
as a proxy.

Land preparation activities are carried out either by hand or machine. There is a greater
prevalence of preparation by machine in the Mekong River Delta region compared to other
regions due to the larger area per person and larger paddy field sizes. PHTI estimates that
90 percent of the land preparation activities are carried out by machinery in the Mekong
River Delta, and 100 percent of the irrigation and threshing activities (PHTI-HCMC 1999,
pg. 78). The extent of mechanical sowing is still low, and while data is not available, Study
Team interviews indicated that the use of seed drillers is now being promoted by various
agencies such as the Seed Component of ASPS-DANIDA, and the Southern Seed
Company (World Bank Study Team Interviews, July-August 2002).

Harvesting is carried out mainly by hand, with the use of harvesting machines still limited
due to the high price, maintenance costs and lack of suitability for Vietnamese paddy field
conditions (see Table 81). In contrast, threshing is almost universally carried out by
machines

Drying is still carried out by hand in most areas, using nylon netting on the ground. The
use of mechanical dryers is limited, although the use of grain dryers is now being
promoted by various agencies such as the Seed Component of ASPS-DANIDA, and the
Southern Seed Company (World Bank Study Team Interviews, July-August 2002). PHTI
estimated that there were 1624 driers in the Mekong River Delta in 1998 (PHTI-HCMC
1999). As Table 90 shows, including State companies, the overall capacity is 27,636
tonnes per day. On a 30 day drying period this equates to 829,080 tonnes, which is
approximately 13 percent of the 6,275,900 tonnes produced for the Summer Autumn crop
in the Mekong River Delta in 1998.

The use of dryers by millers is limited, as most paddy is husked by small millers before the
brown rice is sent to larger millers for further processing. Very few small millers can afford
the expense of dryers while larger millers cannot justify the expense of dryers when the
amount of paddy processed by them is limited. PHTI estimates that the cost of drying is
around Ð42800 per tonne (see Table 91).

5.2.1.7 Costs and Margins

Costs and margins for smallholder rice production have been obtained from various
sources. While actual costs of production vary significantly between provinces and
between data sources, the general conclusion is that rice production is profitable, returning
a profit margin of around 30 percent (see Table 93 to Table 97). The major cost of
production is labor costs, which comprise around 50 percent of total variable costs. On the
basis of limited data it appears that the labor costs for the Summer-Autumn crop may be
slightly lower that that for the Winter-Spring crop. In part this is due to the higher weeding
cost for the Winter-Spring crop.

Table 93 to Table 97 present partial budget data for a range of production systems in the
Mekong River Delta and the North Central Coast regions. The data indicate that gross
margins for rice production are around US$130/ha for Winter-Spring crops and US$63/ha
for Summer-Autumn crops (see Table 98). These are for standard farmer practices and
with improved practices these gross margins could increase to US$180/ha and US$138/ha

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for Winter-Spring and Summer-Autumn crops respectively. When family labor is ignored
then these gross margins will be significantly higher.

As a percentage of the sale price, margins are estimated at around 30 percent. These vary
significantly between data sources, crops and regions (see Table 99). For the Winter-
Spring crop margins are around 25 to 42 percent for farmer practice and improved practice
respectively, while for the Summer-Autumn crop margins are around 16 to 34 percent for
farmer practice and improved practice respectively. There is a difference between regions
with the Mekong River Delta margins being higher than the Northern region margins.
Farmer practices for the Mekong River Delta give a margin of 28 percent for the Winter-
Spring crop. In northern and upland provinces the margins are much lower, around 16.6
percent (see Table 99 and Table 96 and Table 97), but this depends on the amount of
fertilizer applied and the yield. In upland areas improved varieties, which may not be
adapted to the acidic soils, appear to have lower gross margins than traditional varieties.

As Table 130 shows, IFPRI estimated margins of 30.9 percent for the Mekong River Delta
and 18.1 percent for the Red River Delta in 1996 (IFPRI 1996). It appears that margins
have not changed all that much in the intervening period.

5.2.1.8 Constraints

The Study Team identified several constraints to increasing efficiency of producers.

Land Use Constraints

The limited suitability of much of Vietnam’s rice production land for alternative uses, and
the limited long-term sustainability of many alternative uses means that producers are
relatively constrained in their production decisions. Alternative high value cropping
systems such as fruit tree production involve high levels of initial investment and a
significant delay in the achievement of returns on those investments. Reassignment of
land into shrimp production has long term sustainability constraints, particularly if brackish
shrimp production is carried out.

In the past, government policy prohibited the conversion of wetland rice production areas
to alternative uses. While this policy has now been relaxed, institutional factors still have a
strong effect in constraining producers in their production decisions. The highly fragmented
nature and small plot size of land holdings mean that producers have limited access to
sufficient land to carry out many alternative activities efficiently. Combined with the fact
that irrigation is, by necessity, organized on a community basis to facilitate rice production,
this leads to a situation whereby smallholders are constrained in their individual production
decisions.

Seed improvement constraints

Producers are heavily reliant on the use of locally produced farm-saved seed, leading to
problems of decreasing quality of seed and decreasing yields. The reliance on farm-saved
seed is partly due to lack of availability of high quality seed, and partly because of the fact
that producers are not confident of the quality of seed produced by universities, research
institutes, central and provincial seed agencies, and private companies. Limited funding for
pure breeding and a system where certification is carried out by the seed producer has led
to this decline in confidence.

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Significant constraints exist in the seed sector undermining the ability of indigenous seed
breeding capability. Seed is produced by a variety of organizations, including universities,
research institutes, central and provincial seed agencies, and private companies. There is
little division of labor among institutions (ANZDEC 2001).

The maintenance of a breeding pyramid requires significant investment in the top levels of
the breeding pyramid. These top levels could arguably be seen in the context of a “public
good”. Under commercial situations in developed countries breeder rights and standards
enable the cost of maintaining the top levels of the breeding pyramid to be subsidized by
the more profitable lower levels. In the absence of breeder rights and enforceable
standards there are several consequences.

Firstly, commercial pressures on breeding centers results in premature release of


varieties. This results in heterogeneous populations being released, which has implications
for maintenance of pure lines under maintenance breeding and multiplication at lower
levels of the pyramid.

Secondly, commercial profitability mandates imposed on breeding centers does nothing for
incentives to maintain breeding protocols and standards at the higher levels of the
breeding pyramid. Centers will find it more profitable to concentrate on multiplication of
existing varieties, possibly sourced from overseas commercial breeding organizations, and
the screening of existing lines for local adaptation. While these activities are legitimate per
se, there are questions about the use of public funds to subsidize erstwhile commercial
activities.

Commercial profitability mandates imposed on breeding centers also give an incentive for
centers to sell seed directly to farmers. This bypasses the provincial seed companies and
undermines the viability of a commercial seed sector as breeding centers receive
government funding for their operations. Similarly, the central and provincial seed
agencies produce all quality categories of seed. Only limited testing is conducted by
National Center for Variety Evaluation and Seed Certification (NCVESC) (ANZDEC 2001).
Certification is thus carried out by the seed producer, with no external verification.
Repackaging of seed by seed dealers further reduces the confidence of farmers.

The emphases on improved varieties of seed, particularly of the IR and Chinese hybrid
types, are a result of externally driven, top-down extension efforts. There is an extensive
literature on the successes and failures of the green revolution which apparently is not
been considered. While these improved varieties are high yielding and relatively pest
resistant, the lack of widespread adoption of these varieties is not well understood by
breeding centers or extension agencies. Adoption of high yielding varieties is the adoption
of a technology package, not just the adoption of seeds, and the relative performance of
the improved varieties under low levels of technology inputs is not much better (or even
worse) than traditional varieties. As a result of these problems, the use of purchased seed
is small; in the Mekong River Delta, rice yields have stagnated over the past five years in
spite of the supposedly widespread use of hybrid seed (ANZDEC 2001).

Fertilizer and Pesticide Constraints

Fertilizer and pesticide constraints fall under the categories of access constraints and
environmental/health constraints. The access to affordable fertilizer and pesticides is
constrained by infrastructure problems and uncompetitive marketing practices by import

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license holders who are mainly provincial and central level SOEs. While rampant
smuggling of fertilizer and pesticides alleviates some of the oligopoloistic/monopolistic
powers of official suppliers, it does nothing to enhance efficiency of the chemical input
sector or enable a regulatory framework to be put in place and to be enforced. From an
environmental and health perspective, the ability of farmers to purchase highly toxic
chemicals is not conducive to responsible chemical management.

Irrigation Constraints

Irrigation absorbs the largest share (55%) of state budget to agriculture, most (90 percent)
of which are capital expenditures (ANZDEC 2001). The result of huge losses of Irrigation
Management Companies is under-funded operations and maintenance, deterioration of
the current irrigation system, and a drag on state budget (ANZDEC 2001). Water fees are
not based on water use and both their level and collection vary from place to place. Poor
service delivery sometimes results in the unwillingness of farmers to pay for irrigation fees.
Inefficiency results from a fee structure based on irrigation system rather than on use and
on paddy yields rather than on cash (ANZDEC 2001).

Irrigation fees are generally calculated on a community basis. Producers are charged
irrigation fees regardless of the quantity of water that is utilized by the individual producer.
Payment of irrigation fees is made in paddy, rather than in cash, further limiting the ability
of producers to make production decisions on an individual basis.

Research and Extension Constraints

The national extension system was created relatively recently (in 1993) and is not yet
operational throughout the national territory. The system reaches the province and district
level, but does not yet have stations at the commune level. There is a scarcity of staff for a
huge farming population: the farmer-agent ratio is 3000:1 (ANZDEC 2001). Moreover,
there is a lack of generalists and the tendency of identifying extension work with only
technology transfer by specialists. In contrast to research, most of the budget for extension
is provided by the local level (ANZDEC 2001). Extension budget allocations suggest that
low priority is given to marketing, agroindustry, and credit. Training is generally of poor
quality, partly because of poor design (for example the participants are often not the users
of technology) and partly because of limited resources (for example, training is too short
and no training material is available) (ANZDEC 2001).

The low level of funding of the extension system at the national, provincial and grassroots
level, the poor linkages between research and extension services and the top-down nature
of extension services, mean that producers are only exposed to a limited quantity of
extension advice, and the advice that is received may not always be appropriate to the
actual conditions experienced by producers. The lack of relevant and timely information to
producers is a constraint to achieving improvements in productivity through increased
yields, improved management techniques and improved varieties.

Credit Constraints

Access to credit is difficult and many farmers cannot access the concessional interest
rates on offer due to procedural difficulties. Length of loans and repayment schedules,
while commercial, are not conducive to the agricultural situation, particularly in the case of
monthly interest rate repayments on the back of a largely seasonal agricultural production
system. In spite of the expansion of the People’s Credit Funds, many farmers do not have

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access to financial institutions that offer attractive interest rates on savings. Greater
access to rural savings institutions would facilitate “self-insurance” in which farmers save
during times of high prices to cover periods of low prices (ANZDEC 2001). Findings from
other developing countries show that farmers will save much of the windfall of commodity
booms, provided that they understand it is temporary and have access to rural financial
institutions (ANZDEC 2001).

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Box 4 Seed Constraints in Thai Binh Province

Focus Group Discussion on Seed Constraints - Nam Trung Commune

Participants in the focus groups said that the new varieties of rice, with longer growing seasons was a
problem for them, as it was hard to schedule their cultivation Practices with a longer growing season.
Participants in the focus groups also indicated that the supply of rice seed was a problem for them. They said
that the price of seed as too high and the quality was too low. The participants mentioned that the Tap Giao
variety of rice from China, a hybrid variety gives a high yield but the price is increasing.

The participants said that the cooperative in Nam Trung recommends the Thai Binh variety of rice because
the price is low and because the cooperative buys this seed in bulk from the Thai Binh Seed Company.
However, the participants said that the quality of this rice is very low, with a high percentage of damaged
seed. The participants were unsure whether the problem with the poor quality of seed was due to the Thai
Binh variety of seed or whether the problem was poor handling by the Thai Binh Seed Company,
transporters, or with the cooperative. Some participants mentioned that they thought seed bought from the
cooperative was low quality seed, that the yield information on the sacks was not true.

When asked what solutions there were to the problems with rice seed, the focus group participants identified
several possible solutions to the problem of poor quality seed:

• The cooperative or government conducts trials before selling seed to determine yield.
• New varieties have to have seed certification from the government.
• The Thai Binh Seed Company, or other companies selling seed, must guarantee the quality of the
seed.

Focus Group Discussion on Seed Constraints – Doc Lap Commune

Focus group participants said that the varieties of rice available in the commune were Q5, Khang Dan 18,
Kham Duc, Luc Lai (hybrid variety 2 lines, 3 lines from China), Tam Thom, and Sticky rice 97.

The rice varieties Q5 and Khang Dan 18 have been in commune for 4 years and are relatively high yielding
(350 kg/2 crops/sao), but the quality of rice is low and selling price lower than for other varieties. In addition,
the price of seed is very high, at 20,000dong/kg for Q5. Participants complained about the longer growing
season for Q5, reducing the productivity of that variety in comparison with others. Sticky rice 97 has been
grown in the commune for 2 years, has a high yield (200 kg/sao/yield), but is of lower quality compared with
the local varieties Q5 and Khang Dan. In contrast, the Chinese crossbreed rice are new varieties and only a
few farmers are planting these varieties. Farmers are apparently not impressed with these new varieties, and
complain that the pest and disease resistance is very bad, germination rates are low and the price of the
seed is high.

Participants also commented that it is very difficult to use their own paddy rice as seed for subsequent crops.
They said that if they use the seeds of Q5, Khanh Dan 18, and the Chinese crossbred rice the yield of rice
declines over time.

When asked why that they did not choose the other varieties of seeds, the participants said that farmers did
not know which variety was good and farmers just followed the suggestion of the commune leaders.

The cooperative provides seeds and seedlings for different varieties of crops. The cooperative buys Q5,
Khang Dan 18, Kham Duc, and Luc Lai from the Thai Binh rice company, which they then resell to farmers.
Farmers also produce on-farm seed from Q5, Khang Dan 18 and Kham Duc. The cooperative also buys the
seeds from farmers to provide seeds for members of the cooperative. In order to encourage farmers to
provide seeds, they pay a premium of 1.2kg per kg of paddy provided.

Focus group participants said that they prefer to buy from on-farm seed sources because they can see the
quality of the seed and its performance.

(Agrifood Consulting International 2001d, pp. 118, 165)

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Box 5 Constraints Identified by MARD in the Provision of Research and Extension Services

• Lack of clear distinction between the responsibilities of different levels of research and extension
management. Research efforts are scattered, with many institutes and centers undertaking similar or
substantially overlapping research programs. This has led to a general lack of coordination of research
efforts. The decentralized nature of extension services and the many agencies responsible for activities
at the national, provincial and grassroots levels have meant that coordinating extension activities for
maximum effectiveness has been difficult.

• Problems in human resource management. The relatively rigid structure of salaries and bonuses for
core research staff has meant that it has been difficult to adequately reward staff for good research
results. Extension provision at the grassroots level is hampered by the fact that not all communes are
covered by extension workers. Extension workers are generally technical specialists, who have had
limited opportunities to undertake training in extension methodologies.

• Limited cooperation between stakeholders involved in the research and extension process.
Research and extension services in Viet Nam are provided by government at the national, provincial and
grassroots level, universities, NGOs, mass organizations and private organizations and individuals. The
potential for cooperation between these organizations has often not been fully exploited. This lack of
cooperation can lead to duplication of research and extension activities by the various providers and a
consequent lowering of efficiency.

• Difficulties in prioritizing research and extension needs. Research and extension activities tend to
be top-down in focus, with little input from producers and other stakeholders in terms of setting priorities
for research and extension activities.

• Funding constraints. Funding for training of research and extension staff is limited. This has a major
effect on their capacity to conduct good research and extension activities. While the contribution of
research to sectoral growth is important enough to warrant strong budgetary support, the levels of
funding for actual research is below efficient levels. Generally the government has expressed a
willingness to expand the research establishment. However, this willingness has been contingent on
substantial loan or grant assistance. While staffing levels have increased, the financing of research
operations have not kept pace with staff expansion. Consequently the funding per researcher has
declined in most cases, so that effectiveness has suffered and institutional sustainability has become
doubtful. The quality control and monitoring of agricultural research output has also suffered due to
budgetary constraints.

• Research institutes concentrate too much on business and not enough on research. Research
institutes have been commercialized under (Decision 68/1998/QD-TTg 27 March 1998) which allows for
the establishment of State Enterprises within research institutes to manufacture and trade in the
products which are a result of their technological research and application, or products which are closely
related with their functions. This has meant that the focus of activities of many institutes has changed
from basic and applied research to the commercialization of research results and ancillary services. This
is the result of the high cost of research and the low levels of financial returns from basic research.

Adapted from (Agrifood Consulting International 2002a)

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Box 6 The Southern Seed Joint Stock Company

Started in 1976 as a branch of the National Seed Company which was a SOE under MARD. In 1989 it split
into two companies; National Seed Company No1 in Hanoi and Southern Seed Company No2 in Ho Chi
Minh City. In June 2002 it changed from an SOE to a joint stock company. The Government has 20% of the
capital. The main office is in HCMC with a branch office in Hanoi.

They are involved in the breeding and multiplication of seed (vegetable, upland crops and rice) and also
produce and sell equipment for drying, processing and treating seed and grain.

The company has 3 farms in the south for the production of vegetable seeds, upland crops seed and rice
seed. The rice seed production farm is in Can Tho province and comprises 260ha. They have one seed
processing plant for rice in Tinh Nha (2.5tonnes/hr) and each year they produce 2500tonnes of rice seed.

For rice seed production they produce 300tonnes of foundation seed (10 varieties), 1900tonnes of certified
seed (normal varieties) and 300tonnes of hybrid rice seed. They intend to increase the foundation seed and
the hybrid seed production.

The hybrid seed produced is Bac UU903 (foundation seed), Bac UU64 (foundation seed), Nhi UU63 (parent
seed imported), Nhi UU838 (parent seed imported). This hybrid seed is sold to the north as it is not used too
much in the south. Nhi UU varieties are adapted down to the 19th parallel - Nam Dinh. The Nhi UU varieties
from China selected by the research center for hybrid rice in the North.

The Company doesn't usually conduct trials to check the yield-response and IR64 is believed to be adapted
to conditions in the south. After the farmer plants they can see what the response is. The Company has a
demonstration plot system for hybrid rice seed but not for normal rice.

The company sells seed to seed agents at a stable price but the agent sells at the market price. Selling price
for the normal (certified) seed is 3000-3200d/kg. This compares with 2500d/kg for other seed companies.
The Cuu Long Delta Rice Research Institute sells foundation seed for 5000d/kg (subsidized price) but sells
for 1600-1670d/kg to the seed company.

World Bank Study Team Interview, 27 July 2002

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Box 7 Pest and Disease Constraints, Thai Binh and Thanh Hoa Provinces

Focus Group Discussion on Pests and Diseases, Doc Lap Commune, Thai Binh Province

Focus group participants mentioned that the major diseases of rice (70 to 80 per cent of rice variety Q5)
were Blast, Leaf Bacterial Blight and Spot Leaf.

Focus group participants indicated that the major problem with disease and pest control in crops was the
ineffectiveness of current control measures and the high cost of control. Current control methods were
ineffective due to both the quality and application of pesticides and the diagnosis of disease.

Participants said that plant protection services in the commune were not effective, due to the low level of
training afforded the plant protection technicians and, as a result, disease diagnosis was very slow.

Farmers purchase pesticides from the cooperative and from private traders, but the effectiveness of
treatment is not high, with disease being eliminated from only 30 to 40 per cent of the crop. While part of the
problem may be the application of incorrect chemicals and/or dosages, focus group participants blame the
poor quality of available pesticides and suspect product substitution as one of the causes. For example, one
participant said that they used “Bazan” to control yam worms but the worms did not die.

Focus group participants said that rats were the most important problem facing cultivation as they eat a lot of
rice and are difficult to control. Farmers use various control measures for rats; plastic fencing around
individual fields, traps, keeping cats, baiting and poisoning, and killing by hand. None of these methods are
particularly effective. Participants said that there are two types of baits used by the majority of farmers,
Biodat and Dat 2. Biodat sells for 28,000 to 30,000dong/kg and can make 200 baits – suitable for four sao.
Participants commented that they mix Dat 2 with feed and spread it in the fields, but it not favored because
free-ranging livestock (cattle and chickens) can eat the feed and die. Participants said that while baiting and
poisoning are widely used, it is not particularly effective as the poisons only kill 50 per cent of the rats and
the reproduction rate of the surviving rats more than compensates for the reduced population.

While raising cats for rat control is popular, cats are very expensive (50,000dong per cat) and cannot hope to
control anything but a small percentage of the rat population.

Focus group participants suggested several possible solutions to the problem of pests and diseases:
• Firstly, that the government controls the distribution, licensing and the selling of pesticides in the
market in order to maintain the quality of these products.
• Secondly, farmers should keep cats in the household to kill rats, and the commune pays a subsidy
on raising cats of 20,000dong per cat.
• Thirdly, that the commune cooperative provides rat elimination services and pays a bounty of
200dong per tail.

Focus Group Discussion on Pests and Diseases, Thanh Tien Commune, Thanh Hoa Province

Focus group participants were asked to list the most common diseases and pests of their agricultural crops.
the participants said that Blast (Blastobasid fruitborers), Leaf Bacterial Blight, Empty Seed and Rats were the
main problems. Participants said that these occur on all rice varieties and the main trigger is changes in the
weather. Control of blast and bacterial blight is through pesticides, with Fadidaxin and Kitaxin being the most
common used. Participants said that it was very difficult to treat empty seed, and the chemical used is very
expensive (21,000dong/sao). The loss of rice production due to blast, blight and empty seed is difficult to
calculate, but participants thought that around 30-40 per cent of production was lost when these diseases
occurred.

Focus group participants said that the major cause of crop loss was rats, with around 40 per cent of total
crop production (rice, maize, sweetpotato and vegetables) lost due to rat infestation. Participants said that
rats eat so much maize and sweetpotato that farmers cannot cultivate these crops. Control of rats is
attempted through BioRat and other similar poisons. However, other animals such as cats and dogs are
poisoned when they eat the dead rats. Cats are very expensive to purchase, and sell for 80,000dong in the
commune.

(Agrifood Consulting International 2001d, pp. 166-167)

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Box 8 Irrigation Constraints in Thai Binh Province

Focus Group Discussion on Irrigation Constraints – Nam Trung Commune

Focus group participants mentioned that neither the management of the irrigation service nor the quality of
irrigation works was satisfactory.

Participants said that the irrigation fees are too high, with each household having to pay 6.1kg paddy per sao
per year in fees. With the price of paddy rice being 1,500-2,000dong per kg, this means that irrigation fees
are between 9,150 – 12,200dong per sao per year.

In addition, participants mentioned that the quality of the irrigation works was poor. Participants said that the
irrigation works were not designed for farmers planting at different times. The lower fields are flooded while
higher fields are dry. In addition, there is a problem with irrigation works on a district level. Irrigation must be
supplied simultaneously for all fields in a particular region. Given the capacity constraints of the district level
irrigation systems, and the simultaneous demand of farmers from different communes, there are scheduling
conflicts in the demand for water between communes. The participants of the focus group suggested that the
cooperative invest in drainage and canal works to properly irrigate the fields.

Focus Group Discussion on Irrigation Constraints – Doc Lap Commune

Focus group participants said that the commune provides irrigation services from two pumping stations
located within the commune. Provision of drainage services is from a shared facility between Doc Lap, Minh
Tan and Tinh Xuyen communes. The pumping stations in Doc Lap are relatively new, and three electrical
3
pumps provide irrigation water at 500m per pump per hour. The focus group participants said that farmers
were generally satisfied with the service provided by the commune pumping stations, but were dissatisfied
with the service provided by the drainage station and the district pumping station. Participants said that while
the drainage station is modern, the canal system is not large enough to cope with the drainage waters from
Doc Lap fields. Participants said that there are many times when farmers find their fields flooded and the rice
damaged due to inadequate drainage.

Concerns about the canal system and irrigation supply at the district level appear to be the root cause of
irrigation problems. Participants said that because district pumping station must supply all the communes
with water, there is a scheduling conflict between communes and farmers do not get their water when they
need it. In addition, participants said that the canal system is in need of extensive remedial work. There is
only 800meters of brick canal (Grade 1 from the main pump station) that the government helped build by
providing subsidies, while each farmer had to contribute 10,000dong per person in his or her household. The
rest of the canal system is Grade 2 (made from soil banks), which go directly to the fields. Approximately half
of the water is lost through leakage.

Focus group participants said that the main requirements from farmers are a solution to the irrigation
scheduling and distribution problems, and a reduction in the irrigation fee farmers have to pay. While the
government stipulates that the irrigation fee is 12kg paddy/sao, the cooperative adds another 6 kg paddy/sao
for maintenance and expansion of the irrigation station. This cost is an additional burden on an already
expensive production system. One participant said that while his yield is 200kg/sao, his total expenditure is
equivalent to 100kg/sao.

(Agrifood Consulting International 2001d, pp. 120, 167)

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5.2.2 Collectors

In the Mekong River Delta region farmers sell approximately 68 percent of their paddy,
keeping the rest for seed, animal feed and home consumption (see Table 83). In other
regions, with the lower yield and smaller farm sizes, farmers retain more paddy for home
consumption and sell only when they need cash. As Maclean (Maclean 1998, pp. 91-92) notes,
this is not the same as selling paddy as a commercial operation, but rather an exchange of
paddy for cash (see Box 9). Updated data on the regional variation of paddy sales could
not be obtained by the Study Team, but Table 100 presents some data based on the
1992/93 VLSS (General Statistics Office 1993; Minot and Goletti 2000).

As Minot and Goletti (Minot and Goletti 2000) note, the proportion of surplus rice farmers is
highest in the Mekong Delta, where three-quarters of the rice farmers sell part of their
output (see Table 101). The proportion is more than 50 percent in the Red River Delta and
the Southeast, but less than 40 percent in the other regions. High-income rice farmers are
only slightly more likely to generate a marketable surplus than low-income rice farmers.
Because poor rural households are more likely to grow rice than rich households, the
proportion of all rural households that sell rice is actually higher among the poor than the
rich (Minot and Goletti 2000). This has implications for the impact of rice policy on the
poor.

Farmers tend to sell surplus paddy immediately at harvest in order to repay debts. The
majority of farmers sell directly to traders, but the percentage selling to millers has
increased over time (see Table 101 and Table 102). According to the 1996 IFPRI survey of
rice farmers, private assemblers account for 96.5 percent of paddy purchases from
farmers in every region of the country (IFPRI 1996). Current data indicates that this
percentage is much less, and that this has been a function of the development of the
large-scale milling sector, which purchase up to 15 percent of their product as paddy, the
rest being brown rice (World Bank Study Team Interview, July 2002). Table 101 shows
that 86 percent of sales are conducted at the farm gate, indicative of the important role
collectors and assemblers play in the rice trade11.

IFPRI found that assemblers tend to be relatively young, and slightly more than half are
women (IFPRI 1996). They almost always operate in a relatively small area, buying from
farmers within a distance of 10 kilometers, allowing them to acquire and use a knowledge
of the cropping patterns and marketing history of local farmers. IFPRI found that the the
scale of operation is quite small , with assemblers in the northern and central regions using
bicycles and “cyclos” (three-wheeled vehicles, either motorized or pedal-operated) to
collect the paddy and handle 30 to 100 tons per year. In the south, they use carts and
boats, allowing them to move 200 to 1,000 tons per year [IFPRI, 1996 #67.

Farmers sell paddy to collectors who then transport the paddy to small and medium mills
for processing. After the paddy is processed into brown rice the collector will then transport
the brown rice to medium and large mills for further processing into white rice. Large mills

11
According to one informant, SOE mills prefer to manage their costs of production by accepting paddy only
from middlemen with whom they have a business relationship. Purchasing costs for mills are reduced by
arranging localized (spatial and temporal) monopsonies. Specifically, at the start of the harvest season
millers arrange with collectors to collect from remoter regions first, where the price is lower, before collecting
from areas closer to the mill. The increased supply and delayed sale of paddy forces producers to lower their
sale price (World Bank Study Team Interview, July 2002).

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that purchase paddy usually contract with larger collectors or traders who assemble
shipments in bulk. The majority of transport of rice and paddy in the Mekong River Delta
region is via water transport on barges and boats (see Box 10).

5.2.2.1 Costs and Margins

Due to time constraints the Study Team was not able to talk to many collectors. IFPRI
calculated profit margins for collectors at US$8.62/tonne and US$4.99/tonne in the
Mekong River Delta and Red River Delta respectively in 1996 (IFPRI 1996) (see Table
130). This equates to 2.9 percent and 1.6 percent of retail price for the Mekong River Delta
and Red River Delta respectively. In contrast, the collector detailed in Box 10 had a margin
of Ð50/kg, or 2.24 percent of the brown rice sale price to the mill. This equates to 1.88
percent of the export price of rice (Ð2664/kg, US$175/tonne). Despite the fall in margins in
the Mekong River Delta from 2.9 percent in 1996 to 1.88 percent in 2002, there is not
enough data available to determine whether margins have decreased between 1996 and
2001. USDA estimates that the minimum profit margin needed is around Ð20/kg (World
Bank Study Team Interview 25 July, 2002).

5.2.2.2 Constraints

Collectors are small private enterprises operating on small margins. There are definite
economies of scale in collecting activities as well as significant imperfectly competitive
market constraints due to spatial effects. This is despite large numbers of people involved
in the trade. Each collector might have their own particular collection region and there is
scope for asymmetric information effects (see Box 11). Constraints for collectors comprise
credit and capital constraints as well as price and information constraints. Collectors find it
difficult to make enough money to upgrade their boats in order to increase capacity.

Box 9 On-farm use of Rice for Consumption and Cash Needs

Rice is mostly stored as paddy and taken to the mill when needed to be processed and returned to the farm
as edible rice. Processing is usually a cash-free transaction. Paddy is relatively easily stored and the risk of
wastage from damage or theft can be kept to a minimum.

Rice may be interchanged with cash (which is different from being “sold”), in cases when there is excess to
family needs, or when cash is need and rice is the best alternative to sell. An advantage in converting rice to
cash is that it is not “lumpy”. Small or large quantities of rice can be sold. This is in contrast to the sale of
animals which is lumpy – the minimum you can sell is one head.

Payment of rice to pay back cash previously borrowed by the farmer is a form of converting rice to cash.
Payment of rice to pay back hiring of animals is a form of converting rice to energy without cash transaction.
Interchange of rice to protein is not a common practice and it is difficult to find an example.

An important point about rice production is that on farms where all the rice is used for human consumption,
and cash has been spent on the crop (e.g. fertilizer), then rice is a net cash consumer.

In farming systems where rice is produced largely for sale, such as is often the case with dry season rice,
rice should not be considered as an energy source, but rather as a cash source. There is obviously a large
grey area between considering rice as a cash source on the one hand or as an energy source on the other:
this will vary between farmers, years and farming systems. An understanding of this concept is a key point in
understanding a farming system.

Livestock in Cambodian Rice Farming Systems (Maclean 1998, pp. 91-92)

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Box 10 Interview with Paddy Collector, Can Tho Province, Mekong River Delta

Interview with a collector unloading brown rice at a medium size mill in Can Tho Province. The collector
purchased an old boat last year, 11 tonnes capacity. Paid Ð17million in cash for it. Previously was a rice
farmer before moving into collecting paddy.

She purchases paddy from all over Can Tho and neighboring provinces. The location will change depending
on the availability of paddy. She works all year round and cannot estimate how many trips she makes.

She husks the paddy at a small mill near her home before taking the brown rice to the polishing mill.
Currently she is bringing paddy from An Giang Province, Ð1600/kg, and husking it for Ð37/kg before bringing
the brown rice to the mill.

The collection of paddy and final delivery of brown rice takes around 3 days (round trip). The fuel costs
Ð120,000 for the journey. She sells the brown rice for Ð2230/kg (cash) and gets a margin of Ð50/kg after
deducting the transportation cost of paddy to the small mill, husking and transportation of brown rice to the
larger mill.

Labor costs for loading and unloading are Ð7000/tonne, and it does not matter how far the laborers have to
carry the bags. She only has to pay for 3 load/unloads and the large mill pays for the final unload. Despite
this, she has to give an “incentive” fee of Ð2000/tonne to the laborers at the large mill in order to get the
bags unloaded quickly.

(World Bank Study Team Interview 31 July 2002)

Box 11 Rice Trading in Can Tho Province

Last week, we visited 2 rice districts in remote area of Can Tho province adjacent with Hong Dan district of
Bac Lieu: Long My and Vi Thanh. Under hot sunshine, tens of trader boats parked crowded for rice sales to
Station of Can Tho Food Company. Ms Nguyen Thi Hai, from Long Phu, Long My, has trading rice for long
time said, “This occupation is taking laborship for profit.” With 5 tonnes boat, Ms Hai buys grain from farmer’s
field and has it milling, then resell for State Company. The boat has 4 laborers, including Ms Hai and the rest
are loading workers. Deducting for labor cost Ð30,000/day, Ms Hai earns Ð30,000-50,000/day.

Like Ms Hai, many traders in Vi Thanh, Long My said that “lack in weight scaling” is only trick of some from
other provinces, the local people do not make it. Mr Le Van Nam, Vice President of Long My District said,
“Some years ago, some traders had gone to remote areas and made trick in “lack of weighting”. Now this
situation has ceased. The district authority has checked regularly, however, farmers have bought table scale
80kg for “trying to know” the traders and then make decision to sell rice”. Mr Nam confirmed. “When-ever the
rice export points has not organized the direct purchase network from farmers and the farmers have not
enough transports means, the traders take part in rice purchase at farmer’s home.”

Also it needs to add risks with small traders. Before last Tet Holiday, purchase price in Long My reduced
from Ð2,700/kg to Ð2,620/kg, there were near 300 traders, due to lack of information, had born damages for
out-of-date purchased price. One of them said, “Any one closed to milling unit owners can has chance to
catch latest information because they usually have mobile-phone for daily updating prices…”

Almost of farmers buy rice after harvest to fulfill their debts, bank debt, tax… Appr. 5-7% of them has ability
to keep grain. They are rather rice due to profit from agriculture services. This moment, traders consider
farmers as “God” because they have ability to bargain. However, with purchase price from export units, the
traders only buy rice at field with Ð1,500/kg and milling for make a little of profit. With the matter that some
farmers stored up and asked Ð1,700/kg, the traders had to give up.

Rice Trader of West Provinces – Saigon Times Weekly 1-4-99 cited in (PHTI-HCMC 1999, pg. 47)

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5.2.3 Millers

Three types of milling operations are involved in the production of rice in Vietnam:
specialized milling operations (pure millers), specialized polishing operations (polishers),
and integrated milling and polishing operations (miller-polishers) (IFPRI 1996). Pure millers
engage in milling activities, such as the husking of paddy and milling of paddy into raw
white rice, but do not conduct any polishing. Pure millers typically procure paddy from
assemblers or farmers. Most paddy is purchased within the same province or within
100km from the mill, except in the Red River Delta where purchases can occur over longer
distances (IFPRI 1996, pg. 121). Sales by pure millers are made either for subsistence
consumption, domestic retail sales, or sales to wholesalers, polishers, and miller-polishers
for further processing. Most pure millers (80 percent) tend to be small or medium sized,
defined as having a capacity of less than one ton per day (small) or between 1 ton and 10
tons per day (medium) (IFPRI 1996).

Polishers are specialized mills that engage only in polishing activities for domestic
consumption and export. Unlike pure millers, polishers do not procure paddy from farmers
or traders; rather, they purchase raw rice and re-process into polished rice. IFPRI reports
that the average capacity of polishers in its survey was 7 tons per day (IFPRI 1996). The
majority of polishers are located in the Mekong River Delta. Miller-polishers are the most
sophisticated form of milling operation in Viet Nam and have the capability of processing
paddy into polished rice suitable for export markets (IFPRI 1996). The daily milling,
polishing, and storage capacity for each mill type is provided in Table 104.

State-owned enterprises (SOEs) include provincial food companies and parent food
companies VINAFOOD 1 (comprising all food companies north of Thua Thien Hue) and
VINAFOOD 2 (comprising all food companies south of Quam Nam Da Nang) (IFPRI
1996). SOEs play an important role in the export of rice. Despite the opening of exports to
the private sector, only 4 percent of exports are handled by non-state-owned companies
(World Bank Study Team Interview, 2 August 2002). SOEs will negotiate contracts
(typically on a government-to-government basis) with foreign buyers and will then go to the
provincial food companies and millers to supply these contracts. Provincial food
companies will obtain rice from traders and medium to large millers. Government-to-
government contracts are made approximately one year before delivery, with the price risk
associated with price fluctuations absorbed entirely by the food companies and millers;
SOEs extract a 0.5 percent commission on the value of each contract (World Bank Study
Team Interview, 29 July 2002).

While many miller-polishers and provincial food companies have the ability to produce rice
from paddy, a portion of these enterprises choose to procure rice (brown rice or raw white
rice) from other mills and further process it for export. This is particularly common in the
South. IFPRI reports that only 34 percent of total purchases by miller-polishers in the
Mekong River Delta were of paddy; in the North East South (around Ho Chi Minh City),
miller-polishers did not purchase any paddy (see Table 105) (IFPRI 1996). Likewise, as
seen in Table 106, SOEs in the South purchased greater quantities of rice over paddy.
World Bank Study Team interviews of provincial food companies in the Mekong River
Delta suggested that only 15 percent to 20 percent of purchases were of paddy; the
remainder was brown rice. Interestingly, IFPRI reports that in other regions, the proportion
of miller-polishers purchasing paddy was much larger – in the Red River Delta, for

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instance, 76 percent of purchases by miller-polishers were in the form of paddy (IFPRI


1996).

The rationale for purchasing brown rice over paddy is due to the more favorable
economics of brown rice procurement. For the same costs of transportation, the net
quantity of white rice obtained from, for example, 100 kg of brown rice is greater than the
net quantity of white rice from 100 kg of paddy (World Bank Study Team Interview, 29 July
2002). Despite the favorable economics of purchasing brown rice over paddy, there is a
potential loss in quality from such a market channel, given the numerous actors involved in
the system, multiple milling processes and potential for mixing and losses along each step
in the channel.

The capitalization of mills in Viet Nam varies significantly by size. IFPRI notes the value of
assets by small pure millers at US$8,463 in the Mekong River Delta, while millers in the
Red River Delta have assets of just over US$1,000 (see Table 107) (IFPRI 1996). Miller-
processors, by contrast, have assets in the Mekong River Delta of well over $200,000.

Milling recovery rates from IFPRI by the level of technology employed are provided in
Table 108 (IFPRI 1996). According to IFPRI, recovery rates for unimproved mills in the
Red River Delta (60-62 percent) are lower than those in the Mekong River Delta (63-65
percent) (IFPRI 1996). These recovery rates are consistent with those encountered by
limited World Bank Study Team interviews with millers and food companies in the Mekong
River Delta.

5.2.3.1 Costs and Margins

Most costs for millers consist of paddy or brown rice purchases. In Table 110, a
representative budget for a miller in Can Tho province is provided. The miller makes a net
profit of about 9 percent, though it should be noted that the margin is buttressed by sales
of by-products, notably bran and broken rice. Rice sales in themselves are not profitable
according to this analysis, though these results are tentative and highly dependent on the
purchase and sales prices of paddy and rice.

Detailed milling costs were provided to the Study Team by a provincial level SOE miller in
the Mekong River Delta. These are presented in Table 111 and Table 112. The costs of
processing 25 percent broken brown rice to 25 percent broken polished rice are
Ð83,600/tonne (US$5.46/tonne), and from paddy is Ð143,600/tonne (US$9.39/tonne).

Extensive information on the cost of milling could not be obtained in the time available, but
IFPRI estimated that the cost of milling averaged US$5.66/tonne in 1996 (see Table 120).
As a comparison, the miller detailed in Table 110 has a cost of milling of US$4.70/tonne12.
Given that the exchange rate was Ð11,032/US$ in 1996, compared with Ð15,300/US$ in
2002, the Dong equivalent cost of the IFPRI estimate is Ð62,441/tonne (1996 costs)
compared with Ð71,910/tonne (2002 costs). The 2002 costs are 15 percent higher than
the 1996 costs, which is almost identical to the difference in the CPI index (14.8 percent)
between 1996 and 2001. As a result, it appears that the cost of production has not
changed all that much since 1996 (at least in the case of the representative miller detailed
in Table 110).

12
When depreciation is calculated on a per tonne basis.

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Table 130 shows marketing margins calculated by IFPRI in 1996, and their equivalent
prices in 2002. Medium size millers had a calculated cost of production of US$6.29/tonne
in 1996, or US$5.21/tonne in 2002 prices. World Bank Study Team interviews indicated
costs of processing from brown rice to polished rice at Ð70-80/kg (US$5.23/tonne) for a
large miller in Can Tho Province (World Bank Study Team Interview 31 July 2002).

Margins for both millers and SOEs are relatively low. World Bank Study Team interviews
with both entities revealed net profits of millers of between 20 Dong to 50 Dong per kg.
State-owned provincial food companies noted that, for this year, export sales yielded a net
profit of US$1-2 per ton, while domestic sales provided a margin of US$4-5 per ton. High
domestic paddy prices contribute to the low margins experienced in 2002. Contracted
commitments to VINAFOOD, for instance, prevent many provincial food companies from
taking advantage of higher prices in domestic markets. Not all state-owned food
companies are making a profit on rice sales for 2002. One provincial food company
interviewed by the World Bank study team revealed its profit margin depended critically on
the purchase price of paddy and the contracted export price for its rice exports. In the best-
case scenario, this company made just US$54,000 on 200,000 tons of rice exports. In the
worst-case scenario, it incurred losses of nearly US$1.6 million (see Table 121). Moreover,
this company borrowed nearly $500,000 to finance its rice exports, implying that the
company is facing a potential double loss in sales and interest repayments (World Bank
Study Team Interview, July 2002).

5.2.3.2 Constraints

Millers and SOEs face numerous constraints in their operations. The most important
shared constraint for both millers and SOEs relates to issues of quality, stemming from
inefficiencies in marketing channels. Presently, most rice is “double-milled”, with large
private millers and provincial food companies purchasing brown rice for milling rather than
paddy. The current marketing system (from farmers to traders to small mills for dehusking
to traders and export mills) prevents adequate quality control and standardization in
varieties milled because of the numerous actors involved in the chain. This decentralized
structure of the industry has been due to the evolution of the industry from a few large
SOE exporting mills and a large domestic milling sector. With the liberalization of the
export quota and export license system there are many medium size mills who are now
involved in exporting. Due to their capacity constraints they prefer to obtain brown rice
from smaller millers to cut down transportation costs and milling times.

The current system will make it much more difficult for Viet Nam to reach its goals of
exporting more high-quality rice as a means to add value to the sector. However, this
inefficiency needs to be weighed against the rural employment effects generated from
having a multitude of small, specialized mills in rural areas.

Proposals made by the Government to increase the area of high-quality, pure rice varieties
to 1 million ha will have little impact on raising export quality. Even if farmers are able to
maintain quality in the field, there is no guarantee that assemblers, traders, or small millers
will not mix varieties purchased from farmers. Greater integration between millers, SOEs,
and farmers will be required to ensure higher quality of exported rice. However, the
dismantling of the present system will have significant employment effects, particularly for
small mills and traders that need to be considered. There is also a significant cost
component to such a system – a current Danida project financing two integrated mills with
a capacity of 27,000 tons per year has a cost of 80 billion Dong. Further research is

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required to assess the relative efficiency of the current system vis-à-vis an integrated
channel and the impacts of integration on the rural milling sector.

A second important constraint facing SOEs in particular is the system of government-to-


government contracts negotiated by VINAFOOD. Currently, VINAFOOD negotiates such
contracts approximately one year in advance at a pre-determined fixed price and
mandates provincial food companies to supply rice to fulfill these contracts. While
VINAFOOD makes a 0.5 percent commission on these sales, the provincial food
companies incur all of the price risk, many of whom are taking losses on these sales. This
has had significant ramifications this year, as domestic paddy prices have increased due
to drought and reduced supplies on account of crop diversification, while export prices
remain low.

Provincial food companies are further affected by this situation as a result of the system of
credit allocation by banks in Viet Nam. Provincial food companies are provided credit on
the basis on export targets established by People’s Committees and are loaned 100
percent of the amount required to fill export contracts. Thus, provincial food companies
face the potential for losses from export sales and the burden of interest payments on
these sales.

Despite improvements in quality for exported rice, Viet Nam still mainly exports low-quality
rice. One informant interview revealed that Viet Nam still has a poor reputation for
delivering the specifications of rice ordered by foreign suppliers, despite improvements in
milling technology (World Bank Study Team Interview, 25 July 2002). Viet Nam has relied
primarily on government-to-government contracts and sales to African, Asian, and Middle
Eastern markets, without diversifying elsewhere. In addition, Viet Nam has relied on only a
limited number of foreign distributors for its rice who are not purchasing additional volumes
of Vietnamese rice (World Bank Study Team Interview, 29 July 2002). This lack of
diversification of suppliers limits the ability of Viet Nam to expand, and possibly maintain,
current volumes of exports.

Credit constraints are an issue for private millers and exporters. Limited working capital
prevents millers from purchasing adequate paddy from farmers (World Bank Study Team
Interview, 29 July 2002). Private exporters are also at a significant disadvantage relative to
state-owned enterprise, as the former are limited to borrowing up to 70 percent of their
collateral while the latter can receive a loan for the entire value of the contracted shipment
of rice. Some exporters are able to overcome these constraints, depending on their
relationships with banks. One miller noted he was able to borrow more than the value of
his collateral due to the relationship his company had with the bank, but such relationships
are likely the exception rather than the rule (World Bank Study Team Interview, 26 July
2002).

Additional constraints in the sector are mainly related to infrastructure and marketing.
Millers, particularly small millers, are constrained by limited quantities of storage (World
Bank Study Team Interview, 25 July 2002). Some SOEs are also constrained by limited
storage capacity, which prevents them from purchasing paddy when prices are more
favorable (World Bank Study Team Interview, 31 July 2002). Electricity is a problem for
some millers and SOEs. One miller remarked that he could increase capacity to two 8-
hour shifts if he had enough electricity for operations; currently, he is forced to run one 8-
hour shift at night (World Bank Study Team Interview, 29 July 2002). Moisture content
remains a problem as well, as most farmers do not have adequate on-farm drying or
storage capabilities for paddy, resulting in greater milling losses (World Bank Study Team

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Interviews, 31 July 2002 and 1 August 2002). There is also a lack of marketing knowledge
and promotion skills among SOEs, which are becoming more problematic as private
exporters become more involved in the sector (World Bank Study Team Interviews, 29 and
31 July 2002).

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5.2.4 Traders

Traders of rice are usually are involved in the trade of other goods and services, and also
may be involved in other parts of the marketing chain as farmer/collectors, farmer/retailers,
miller/collector/wholesalers or wholesalers/retailers (see Figure 30 and Section 5.4).
Margins are small for traders and market opportunities are quickly taken. In addition to
established traders who may operate in a specific market or commodity, there are many
small-scale opportunistic traders who buy and sell whenever an arbitrage opportunity
(spatial or temporal) arises. The distributed nature of the marketing chain and the many
actors involved results in many inter-linkages between different parts of the chain.

Table 116 shows the characteristics of different types of traders surveyed by IFPRI in
1996. The majority of traders were specialist traders who devoted 87 percent of their time
to the rice trade, and were 70 percent female. Most traders in the Mekong River Delta who
transport rice to Saigon Port and beyond are also engaged in backhauling trade.

Most of the paddy and rice in the Mekong River Delta region is transported by boat, with
transportation in other areas by road. Closer to urban centers and away from the canal
and river system many 10 and 20 tonne trucks carrying rice can be seen.

5.2.4.1 Trade Flows

Rice and paddy trade flows depend on the supply and demand conditions in each district
and province and on the prices in neighboring provinces. Trade flows are predicated not
only on surpluses and shortfalls in each region but also demand for specific varieties and
qualities.

As noted in Section 5.2.3 and Section 5.4, millers sell their products to wholesalers and
traders, who then distribute milled rice to other wholesalers, retailers and end-users (see
Table 114). Apart from the Mekong River Delta and to a certain extent the Red River Delta
region most rice is consumed within the province it is produced. Medium and large size
millers in the Mekong River Delta sell rice to traders and SOEs with distribution networks
outside the province.

There is a large trade in rice from the South to the North of Viet Nam to alleviate provincial
rice deficits. No information on this trade could be obtained by the Study Team, but the
food balance for 2000-2001 indicates that some 2.3million tonnes of rice needs to be
shipped from the Mekong River Delta Region to other provinces in order to clear the deficit
(see Table 41).

Exports of rice are through SOEs and large private millers, and is detailed in Section 5.2.6.
Exports are through Saigon Port, and to a lesser extent through some ports in the North
like Hai Phong. VINAFOOD 1 is responsible for food distribution and exports in the North,
and has responsibility for Government-to-Government sales to Africa, Americas and the
Middle-East. Most of the rice destined for those markets are actually sourced from the
Mekong River Delta and processed by the Provincial Food Companies in the local
provinces.

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Imports of Thai Jasmine are known to occur on an official level, purportedly for sales
during Tet. However, these amounts are generally small and do not equate to the level of
Thai Jasmine stocks seen in the retail markets in Ho Chi Minh City. While imports of rice
attract an import duty of 40 percent, imports of paddy do not attract duties as it is classed
as seed.

There are significant quantities of rice and paddy being shipped across from Cambodia.
Most, if not all of the Thai Jasmine is transited through Cambodia and there are some
shipments of Cambodian rice also made (see (Agrifood Consulting International 2002b) for
an overview of the trade in Cambodian rice and paddy).

While the quantities of Thai Jasmine and Cambodian rice imported into Viet Nam are
extremely difficult to estimate, Cambodian sources indicate that between 4-500,000 tonnes
per year of Cambodian paddy have been shipped over for at least the past few years.
Indeed, even during the Cambodian rice deficit years of the 1980-1990s there was a
significant trade in Cambodian paddy into Viet Nam from the border provinces (World
Bank Study Team Interview, Cambodia, July 2002).

JICA noted that there are large areas of land on the Cambodian side of the Cambodian-
Vietnamese border that are leased to Vietnamese farmers who sell their paddy to
Vietnamese paddy collectors (Japan International Cooperation Agency 2001). According
to Decision 24/1999/QÐ-BTM, (June 1999) the Vietnamese government allows
Vietnamese and Cambodian people residing permanently in border areas to trade goods
free of charge (up to a value of Ð0.5million per day) across the border if they have a
border pass issued by the relevant authority. While imports of rice are banned, the import
of paddy is legal provided an import tax is paid. Traders interviewed by the World Bank
study team noted that this tax did not have to be paid if other unofficial fees were paid
instead (see Table 128 and Table 129).

Most of the paddy exported to Viet Nam is dry season rice of the IR variety. The amount of
paddy exported depends almost solely on the differential in the paddy price between Viet
Nam and Cambodia. Millers interviewed by the World Bank study team in the southern
provinces of Cambodia said that the ex-mill paddy price in Cambodia followed the paddy
price in Viet Nam, and if millers were unwilling to pay those rates they could not purchase
any paddy.

The JICA study of rice milling in Cambodia noted that Vietnamese traders come up the
main and sub streams of the Bassac and Mekong Rivers and in Takeo Province,
Cambodia several ports along the rivers and the NR2 highway are used as loading places.
In Kandal province, paddy is loaded along the banks of the Bassac River. In Viet Nam,
paddy and rice are moved by barge through a dense network of irrigation and waterway
canals and large-scale export factories are located only 30-40km across the border (see
Box 13 and Table 127).

The World Bank study team was unable to confirm the cross-border trade in Cambodian
rice within Viet Nam. Despite a general acknowledgement that “some” trade would be
occurring, given that there is a cross-border trade in fertilizer13, and a large trade in
smuggled cigarettes and brandy, no informant in Viet Nam was aware of any large

13
One informant said that research he had conducted on fertilizer use on a provincial basis showed that the
border provinces with Cambodia (Long An, Dong Thap and An Giang) had fertilizer use far above that
actually required for agricultural production. He had witnessed lots of boats crossing the border carrying
fertilizer, but could not say what the boats carried on the return trips.

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volumes of paddy crossing the border14. One miller in An Giang Province, Viet Nam, did
say that he had purchased 3,000-4,000 tonnes of Cambodian brown rice in January-
February 2002. From his description it appeared to be wet season rice (round grains rather
than long grains), which he had purchased for Ð2700/kg. Given an estimated ex-border
price of Ð2264/kg (see Table 128), this gives a margin of Ð437/kg for the small miller who
husked the paddy on the Vietnamese side of the border and his/her associated
intermediaries. Estimated costs for husking are Ð80/kg, which gives a hefty US$23/tonne
margin for the intermediaries at an exchange rate of Ð15,300/US$15. The miller
interviewed estimated that not less than 50,000 tonnes of brown rice (78,000 tonnes
paddy) from Cambodia was coming into Viet Nam, and that most was being shipped to
Central Viet Nam (Da Nang) and Northern Viet Nam (Hai Phong). This was unable to be
confirmed with any informant, and the shipping costs would make this trade marginal at
best.

5.2.4.2 Institutional Purchases

Institutional purchases of rice is an important component of the rice trade. For example,
purchases for the defense forces and for strategic stocks are carried out by VINAFOOD 1
and VINAFOOD 2. No information could be obtained by the Study Team on these
purchases as they are considered to be restricted.

5.2.4.3 Storage

Unlike the storage of paddy, storage of rice is difficult, particularly for IR varieties. These
need to be bought and consumed relatively quickly. Storage of brown rice for long periods
of time is problematic since the bran oil deteriorates the quality of the grain when exposed
to air (see Table 113). As a consequence, most storage is done by small millers because
they must husk the paddy before selling the brown rice onto larger mills for processing.
Small millers have storage capacity less than 1000 tonnes.

PHTI reports that in November 1997 the storage capacity in the Mekong River Delta region
was 1,195,500 tonnes16, comprised of 971,000 tonnes in warehouses, 184,500 tonnes in
semi-permanent warehouses, and 40,000 tonnes in temporary warehouses (PHTI-HCMC
1999, pg. 87). Most of this is poorly maintained and utilization rates are low.

The Study Team was not able to investigate the issue of storage. Therefore current levels
of storage capacity and the costs of storage could not be obtained. PHTI in survey of 150
households in Long An Province found that costs of storage (for home consumption and
seed retention) averaged Ð54,000/tonne (PHTI-HCMC 2002).

14
Despite this trade being common knowledge in Cambodia, and a full page article on the trade in the
Phnom Penh Post (Vol 12, February 15-28, 2002) (Phnom Penh Post 2002), news of this trade came as a
complete surprise to almost every single informant interviewed by the World Bank study team.
15
This is particularly surprising, given that normal margins on IR64 rice is around US$4-6/tonne.
16
It is unclear whether this only covers storage owned by SOEs or includes private companies and
households as well.

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5.2.4.4 Costs and Margins

Cost of transportation is standard and well known. For road transport over short distances
the cost is around Ð3/kg/km and for boat transportation the cost varies according to
distance and carrying capacity of the boat. The cost for river transport in the Mekong River
Delta varies between Ð30-70/kg for a 50-200 tonne barge. This is the cost for a one-way
trip and backloading will reduce the charges. For trips between Ho Chi Minh City and the
border districts of An Giang and Long An, the cost is around Ð70/kg. For trips to Can Tho
it is Ð50/kg, and Ð30-40/kg for Dong Thap (World Bank Study Team Interview 26 July
2002). One transporter interviewed indicated that his charges for the Can Tho to Saigon
Port trip were Ð40/kg (see Box 12).

For the transporter interviewed in Box 12, his charge of Ð35,000/tonne (plus Ð5,000/tonne
commission to the middleman, resulted in a margin of Ð3million per trip. This equates to a
Ð14,000/tonne profit margin, or a 0.52 percent margin on a FOB Saigon Port price of
US$175/tonne. IFPRI did not detail the margins obtained by different types of traders in
their 1996 study but their trader margins are detailed in Table 130.

5.2.4.5 Constraints

The biggest identified barrier to the expansion of rice and other food crops is the lack of
markets. Perversely, once export markets have been found, exporters find it extremely
difficult to find the quantities and quality required to fill those orders. Unless export
opportunities are developed, expansion and intensification of these cropping systems will
put downward pressure on prices in a near saturated domestic market. Lower prices
present a severe disincentive to greater investment and efforts to improve farm
productivity. With underdeveloped post-harvest, transportation and communication
facilities, exporting carries very high marketing costs and risks.

For domestic market sales the biggest constraint is transportation costs. Based on the
road transport rates of Ð3/kg/km the current cost per tonne-km is US$0.20 for short
distance haulage. For boat transport rates fees are Ð70/kg from An Giang to Saigon Port,
a distance of 200km. This equates to a cost per tonne-km of US$0.029. This compares
with 1999 United States long haul rates (Iowa to Seattle) of US$0.03/mile/short ton – or
US$0.02/tonne/km. If improvements were made in the Viet Nam transportation system it is
conceivable that rates could drop 30 percent down to the (arguably efficient) US long haul
rates, but there is no reason to expect reduction in costs below this level.

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Box 12 Interview with Rice Transporter, Can Tho Province

Interview with a rice trader loading his boat at a rice mill in Can Tho, shipping rice down to Saigon Port
destined for Cuba. The smaller boats do the paddy and husk trade because the distance is shorter. They
bring the brown rice to the large mill for milling while he takes the polished rice down to the port.

There are 4 people working on the boat, the boat owner, his wife, one of his sons and another laborer. The
salary for the laborer is 1million dong/month.

He has a 210 tonne boat (sometimes he loads more than this), which is 2.5 years old and he built it himself.
The cost is 650million, including the engine and fittings if they had to buy it. They have been in the trade for
19 years, first starting out with a 30 tonne boat, then a 60 tonne and then finally a 160 tonne boat before this
one. They sold the 160 tonne boat for 160million dong and so they did not have to get credit to build the
current boat.

He cannot estimate how many trips they do each year down to Saigon Port, but they consider themselves
lucky if they manage to get 35-45 round trips per year. The round trip takes 6-7 days, because he has to wait
for another load when he comes back from Saigon. The shipping fee from Can Tho to Saigon Port is
35,000d/tonne. He cannot make a contract directly with the Food Company of Can Tho and he must use a
middleman who charges about 5,000d/tonne. He thinks that the food company pays 40,000d/tonne.

With the return trip Can Tho - Saigon - Can Tho he can make a 3million dong margin after deduction for the
boat depreciation and fuel.

The loading of the rice from the mill to the boat is paid by the company, but the boats give a 2d/kg bonus to
the workers so they load quicker. He also gives a 2d/kg bonus to the workers at Saigon port for the same
reason (the unloading fee is paid by the company in Saigon, but the boats must pay the bonus to get the
workers to unload faster.)

World Bank Study Team Interview 31 July 2002

Box 13 Routes for Cambodian Paddy Trade with Viet Nam

At Angkor Borei port in Takeav, a Cambodian paddy trader is stationed to purchase paddy and he waits for
prices to rise in Vietnam. The trader carries paddy by boat to a place near the Bak Day border gate where he
meets Vietnamese traders without preliminary contact. Vietnam’s paddy prices are obtained from boats
coming to Angkor Borei from Vietnam. Paddy trade at Angkor Borei begins in April and continues to
November, with the peak times in June/July.

Several large-scale paddy traders are located at Neak Loeang (ferry station) in Prey Veaeng province. A
trader estimates his annual trade at 10,000 tonnes of paddy, of which 60% is sold to Vietnam. This trader
sells paddy to Viet Nam traders through several Cambodian boarder traders. Vietnamese buyers come up to
Neak Loeang in 30 – 50 tonnes boats together with a Cambodian boarder trader. The fee to pass through
the border is estimated at 50 – 70 VND/kg including commission to the Cambodian boarder trader.

Other Cambodian border traders who deal with bean, maize and tobacco are stationed at Neak Loeang.
They have regular contact with several Vietnamese traders and buy commodities after receiving orders from
them.

Along the Viet Nam border in Takeav province and Prey Veang province, there are local markets at opposite
side of border (at opposite side of channel) but facilities are in poor condition. It should be noted that most of
Viet Nam border areas are inundated about three months every year.

Source: (Japan International Cooperation Agency 2001, pp. E17-18)

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5.2.5 Retailers and End Users

Limited information was gathered by the World Bank study team on the retail sector in Viet
Nam. IFPRI groups retailers in the rural sector as traders, who typically purchase rice from
wholesalers to sell for final consumption (IFPRI 1996). Retailers predominantly handle rice
rather than paddy. Table 116 indicates that most retailers are women, and devote the
majority of their time to rice based activities. IFPRI found that in all provinces except the
Central Highlands and Mekong River Delta, over 90 percent of total sales were of rice (see
Table 115) (IFPRI 1996). In the Central Highlands, retailers do not sell any paddy, but 27
percent of their sales were other items, presumably other food or consumer items. A
similar trend was found the Mekong River Delta. However, retailers do purchase non-trivial
amounts of paddy in the Northern regions (IFPRI 1996).

Table 117 and Table 118 show the channels of distribution and sales by retailers (IFPRI
1996). Most retailers, particularly in the North, purchase paddy directly from farmers. As
one goes further South, the diversity of purchases increases. For instance, in the North
Central Coast and South Central Coast, wholesales and assemblers are the source of
some purchases, while in the Central Highlands, wholesalers are the exclusive source of
paddy purchases (see Table 117). Assemblers predominate as a source for paddy in the
North East South, with farmers the main source in the Mekong River Delta (see Table
117). Wholesalers, and to a lesser extent, assemblers, dominate the sourcing of rice to
retailers, though in the Mekong River Delta, assemblers are the main source of rice (39
percent), followed by wholesalers (30 percent), and direct sales from millers (27 percent)
(see Table 117). Paddy sales are exclusively sold to millers in the Red River Delta,
whereas in the Northern Mountainous Regions, South Central Coast, and Mekong River
Delta, paddy is sold directly to consumers (see Table 118). Most rice sales (85-90 percent)
are predictably sold directly to consumers, though a small portion are sold to other retailers
(see Table 118).

Interviews by the World Bank study team in Ho Chi Minh City reveal significant diversity of
the types of rice sold by urban rice retailers. No fewer than 20 varieties were sold by
retailers in urban markets and included numerous varieties of imported (mainly Thai) rice.
A listing of the varieties and costs is provided in Table 119.

5.2.5.1 Costs and Margins

Retailers purchase rice from wholesalers when required. The quantity purchased depends
on the size of the shop and the turnover of business. Retailers interviewed by the Study
Team could not estimate sales or turnover. One retailer in the Ho Chi Minh markets said
that she purchases rice on a regular basis, at least once a week, and the previous time (4
days previously) had purchased 200kgs. It is very difficult to obtain margins for the retail
level of the marketing chain, as the margin depends on the negotiating ability of the buyer
and the prevalence of nearby competitors. Most retailers attempt to differentiate product by
selling different varieties, and even separate grades of the same variety. These grades are
not standardized but reflect differences in quality (percent broken, degree of milling, color,
foreign matter, smell and texture).

As mentioned above, margins differ depending on the negotiating ability of the buyer and
retailer. Margins also vary depending on the price of the rice (which reflects quality

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differences). Higher quality rice usually attracts higher margins. Two retailers interviewed
by the Study Team were willing to divulge their margins, which were 5 percent for one
retailer, and between 7.5-10 percent for the other retailer. The second retailer also
indicated that on high valued rice, (Gao Thom Nang Huong and Nep Lao Than, see Table
119) the margin could be as much as 10-20 percent (Ð1000-2000/kg).

Because retailers also sell other goods besides rice, it is difficult to apportion overheads
between rice and non-rice sales in the absence of data on income and cost of other goods.
Only one retailer in the Ho Chi Minh Markets interviewed by the Study Team was willing
(or able) to identify her overhead costs, which was Ð200,000 per month for the rent of the
stall.

5.2.5.2 Constraints

Limited information is available on constraints in the retail sector. One of the issues faced
by retailers is related to competition and distribution. Retailers, particularly in remote
areas, are hampered by poor infrastructure and fragmented distribution systems that
impede the ability of retailers to procure rice. Retailers are also constrained by a
distribution system that is relatively concentrated among a minority of traders and
wholesalers. Combined with significant competition in the retail sector, these result in low
margins for retailers.

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5.2.6 Exporters

Exports of rice from Viet Nam have increased in the period since 1990. Between 1990 and
1999, exports increased from 1.48 million tons per year to a record level of 4.6 million tons.
Exports of rice declined in 2000 to 3.37 million tons, and increased again in 2001 to 3.56
million tons (see Table 48 and Table 122).

While production growth has been relatively steady over this period, the variable nature of
export levels means that the proportion of production that was exported has varied
between 9.5 percent (in 1991) and 26.74 percent (in 1999). As discussed in the section on
production, the majority of these exports come from rice production in the Mekong River
Delta region (see Table 125).

Section 3.1 and Section 4.7 provide more details on exports from Viet Nam. Vietnam
exported 1.80 million tonnes in the first seven months of 2002, down 31 percent in volume
and 11 percent in value compared with the same period of last year. Rice was shipped
mainly under Government to Government contracts to Iraq, Indonesia, Cuba, Malaysia,
and various African countries (Bui Thi Huong and Truong Minh Dao 2002). According to a
revised MOT estimate, Vietnam will only ship about 2.8-2.9 million tonnes of rice in 2002,
including 950,000 tonnes of signed contracts (68 percent Government to Government) to
be delivered in the last months of 2002 (Bui Thi Huong and Truong Minh Dao 2002).

5.2.6.1 Costs and Margins

Margins for both millers and SOEs are relatively low. State-owned provincial food
companies noted that, for this year, export sales yielded a net profit of US$1-2 per ton,
while domestic sales provided a margin of US$4-5 per ton. High domestic paddy prices
contribute to the low margins experienced in 2002. Contracted commitments to
VINAFOOD, for instance, prevent many provincial food companies from taking advantage
of higher prices in domestic markets. Not all state-owned food companies are making a
profit on rice sales for 2002. One provincial food company interviewed by the World Bank
study team revealed its profit margin depended critically on the purchase price of paddy
and the contracted export price for its rice exports. In the best-case scenario, this company
made just US$54,000 on 200,000 tons of rice exports. In the worst-case scenario, it
incurred losses of nearly US$1.6 million (see Table 121). Moreover, this company
borrowed nearly $500,000 to finance its rice exports, implying that the company is facing a
potential double loss in sales and interest repayments (World Bank Study Team Interview,
July 2002).

5.2.6.2 Constraints

One of the more significant constraints to exports is the disadvantage private exporters
have compared with SOE exporters. Most exports are government-to-government
contracts given to VINAFOOD 1 and 2. Unless private exporters can access these sales
on a sub-contracted basis there is limited opportunity for private exporters to find markets.
Despite the removal of restrictions on private companies obtaining an export license, very
few private enterprises are involved in the export trade. Private exporters are usually

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medium-large mills and most single mill enterprises do not have the quantity of rice
needed to fill an export shipment of 10-20,000 tonnes.

Private exporters are also at a significant disadvantage relative to state-owned exporters,


as the former are limited to borrowing up to 70 percent of their collateral while the latter
can receive a loan for the entire value of the contracted shipment of rice.

In common with millers producing for the domestic market, export mills also face problems
with quality of supply. With the liberalization of the export quota and export license system
there are many medium size mills who are now involved in exporting. Due to their capacity
constraints they prefer to obtain brown rice from smaller millers to cut down transportation
costs and milling times. The presence of many actors in the value chain leads to a lower
level of quality assurance related to brown rice purchases.

PHTI indicates that the management of exports and allocation of orders from VINAFOOD
to the provincial food companies is less than efficient (PHTI-HCMC 1999, pp. 68-70). The
export companies have a lack of working capital, storage facilities, maintained and modern
equipment, and poor management structures.

PHTI notes that the scheduling of exports is not matched with domestic supply and
demand conditions and exports during the beginning of the year are lower than exports
towards the end of the year as stocks are withheld from export sale until domestic demand
and supply conditions are fully realized. An analysis of exports of rice by IFPRI in 1996
appears to add some credence to this view (IFPRI 1996, pp 242-243). IFPRI noted that
while the coefficient of variation was 0.5, indicating a 50 percent deviation from the mean
monthly exports, the pattern of exports followed the pattern of production, with the
February trough in exports corresponding to the trough in the Winter-Spring crop, and the
October trough in exports corresponding to the Summer-Autumn crop trough. Thus the
exports of rice follow the seasonal availability of rice, rather than matching global market
conditions. IFPRI noted that the peak in Bangkok prices occurred in February, indicating
that extended storage and good management practices could enable Viet Nam to export in
February to capture the higher world price.

The allocation of government to government contracts to VINAFOOD prevents other


companies from competing with VINAFOOD for export orders, relegating them to a sub-
contracting role. Provincial food companies and private millers are allocated a quota of the
export contract to fill. It is unclear whether these companies enter into agreements with
VINAFOOD on a commercial basis, as companies interviewed by the Study Team usually
referred to the arrangement as “an obligation to VINAFOOD”. One private miller indicated
that it was always advisable to accept the allocation from VINAFOOD in order to keep a
good relationship into the future, even if it was not commercially viable to do so.

Since 1997 the distribution of rice has been under the control of the Provincial People’s
Committees (PHTI-HCMC 1999, pg. 69). This results in Provincial food companies
receiving their production and sales targets from the People’s Committees, who may not
have access to all the information to make informed commercial decisions.

Domestic price management is carried out by the Government Price Commission which
bases floor and ceiling prices on the cost of production in order to ensure a fair price for
both farmers and consumers (PHTI-HCMC 1999, pg. 71). However, export price
management is carried out by the Ministry of Trade, which bases floor prices on the world
market price and restricts the issuing of export licenses (PHTI-HCMC 1999, pg. 71). In

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order for companies to obtain an export license they must have their export price above
the floor price. Because domestic and export prices are managed by different agencies,
there are cases where the domestic price may be higher than the export price (one such
situation is occurring in 2002). The rigidity of the pricing structure makes it difficult for
companies involved in the export market. When the market price is lower than the MOT
floor price companies cannot sign contracts because they will not be able to obtain an
export permit. In contrast, when the market price is above the floor price they have
difficulties in obtaining an export permit (PHTI-HCMC 1999, pg. 71).

Due to limited experience in the international market, Vietnamese export companies


complain that when international buyers believe that the price is going to rise, they quickly
lock in contracts and urge quick delivery, but when they believe that the price will fall they
delay the signing of the contract and issuing Letters of Credit in the hope of renegotiating
the contract if the price should fall (PHTI-HCMC 1999, pg. 71).

The Government plays a central role in the management of the rice export industry. The
Government not only conducts a regulatory role, issuing ordinances and decrees, but also
signs contracts with other Governments and private international buyers and assigns
SOEs to supply the rice. The argument for pursuing these export arrangements is the
stability of price and high price, but the majority of the Government to Government
contracts are for low quality food-aid rice with a commensurate price discount to the
prevailing world price. The signing of these long term contracts also has an added factor of
risk, as Viet Nam does not undertake hedging arrangements on the international market
nor assure supplies of paddy to the SOE millers. Currently, VINAFOOD negotiates such
contracts approximately one year in advance at a pre-determined fixed price and
mandates provincial food companies to supply rice to fulfill these contracts. The provincial
food companies are exposed to significant price risks under this arrangement. As occurred
in August 2002, the contract price of US$172-175/tonne (15 percent broken) was below
the spot price of US$178-180 (Viet Nam and Thailand 15 percent broken respectively, see
Table 126). For one miller in Can Tho the cost of getting the rice to FOB Saigon was
US$174.74 (US$173.86 plus the 0.5 percent commission paid to VINAFOOD 2), giving at
most a US$0.26/tonne margin to the miller (or a US$2.72/tonne loss if he sold at
US$172/tonne).

The lack of diversification of markets for export rice limits the ability of Viet Nam to expand,
and possibly maintain, current volumes of exports. Despite improvements in quality of
exported rice, Viet Nam still mainly exports low-quality rice. Viet Nam has relied primarily
on government-to-government contracts and sales to African, Asian, and Middle Eastern
markets, without diversifying elsewhere. In addition, Viet Nam has relied on only a limited
number of foreign distributors for its rice.

PHTI notes that the Viet Nam Food Export Association, which was established in 1990 to
coordinate export efforts, provides market information services for exports and advises the
Government on export contracts and quota distribution (PHTI-HCMC 1999, pg. 72). PHTI
also notes that the Association takes a passive role in promoting international market
access and an industry advocacy role. It also prefers to distribute the quota allocation
equally between its members, rather than basing the allocation on the ability of companies
to provide large quantities of rice, whether they have contacts with overseas clients, or
whether they can obtain the best price.

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Box 14 Management of Rice Exports and Quotas 1989-1997

Most of the surplus in Viet Nam is produced in the Mekong River Delta region with smaller surpluses in the
Red River Delta region. The rest of the country is either in food deficit or marginally self-sufficient. As a
consequence, the first priority of the rice export policy has been to guarantee domestic consumption and
export the remaining surplus. This food security priority is the main justification offered for only allowing
SOEs to export rice through a system of export quota permits.

In the first years of rice surplus (1989-1991) the government did not limit exports as most households had
stocks of rice for their own consumption and the marketed surplus was available to be exported. Since export
quotas were not allocated on a company basis but were issued on a commodity basis, any company with a
general import-export license was able to export rice, irrespective of their core business. Stiff competition
between companies resulted in a decline in the export price and, combined with an eagerness to sign
contracts, many SOEs found themselves in a position of not being able to deliver to contract specifications.

The open system of rice exports was difficult to control and between 1992 and 1995 the Government issued
quotas on a company basis. However, the number of companies with an export license was still numerous.
In 1992 40 companies (mostly in the South) had export permits, with up to 60 companies involved in exports
of rice during peak periods. Between 1994 and 1995 the number of companies with export licenses was
reduced further, and the yearly quota was approved by the Government. The Ministry of Trade allocated 70
percent of the quota to the main SOE exporters, with the remaining 30 percent allocated amongst those
companies which were seen to be able to open new markets and contact foreign customers. Provincial food
companies in provinces with a total rice output of over 200,000 tonnes were eligible for export permits, while
provinces producing more than 600,000 tonnes could have two food companies with permission to export. In
July 1995 the VINAFOODs (1 and 2) were established to oversee the operations of the provincial food
companies.

During this period the allocation of the quota was based on the previous year’s exports, rather than the
quantity of rice held by that company in the current quota period. This resulted in companies which did not
have enough rice to meet their license provisions selling their quotas to other companies in order to maintain
their export quantities and enable them to receive a quota license the following year. The quota licenses
were issued every quarter, and the Government refrained from approving large quantities of exports during
the first part of the year until the domestic demand conditions became more certain. The issuing of quota
licenses every quarter prevented companies from signing long term contracts with overseas buyers, as they
could not ensure continuity of supply. This resulted in large export quotas in the last few months of each
year, and relatively smaller amounts over the rest of the year. During the last few months of the year
companies were struggling to find customers, complete contracts, and ship large quantities of rice.

From 1996 the Government rearranged the quota distribution to take into account production of rice in each
region and the ability of companies to export. The quota was on a yearly basis, but still suffered from a lack
of information of the quantity of rice available for export – resulting in a large variability in exports in the later
months of the year. Companies involved in exporting did not take into consideration changing global market
conditions and continued to sign export contracts regardless of the change in the world price. At the same
time the Government lowered the rice export taxes to 1 percent (5 and 10 percent broken), and waived
export taxes for 15-35 percent broken rice.

There were 15 companies with export licenses in 1996, 10 of whom were based in the Mekong River Delta.
In 1996 the Government assigned 80 percent of the quota rights to VINAFOOD 2, for redistribution among its
provincial food companies. This caused significant problems, with some companies complaining that the
awarding of sole rights to VINAFOOD 2 resulting in market prices being manipulated to the disadvantage of
farmers. In response to widespread dissatisfaction with the process of quota distribution, the Government
changed the system of distribution in 1997, giving control to the Provincial People’s Committees.

By 1999 there were 42 companies with export licenses (see Table 124).

Adapted from (IFPRI 1996, pp. 234-236; PHTI-HCMC 1999, pp. 68-70)

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5.3 Marketing Margins

Costs of production and marketing margins are estimated for each level of the marketing
chain and detailed in the appropriate sections. Due to the multitude of marketing channels
it is extremely difficult to calculate a definitive set of margins. Table 130 shows the IFPRI
estimated marketing margins and profits at each level of the marketing chain for 1996
(IFPRI 1996). Table 130 also shows the comparable margins in 2002 based on current
exchange rates and inflation.

The Study Team calculated margins on the basis of information received during the field
visits, and are presented in Table 131. The profit margins correspond with the margins
calculated by IFPRI in 1996 in the case of farmers and collectors, but the margins for
millers in 2002 are significantly reduced compared with those calculated in 1996. The
major reason for this is the current difficulties faced by exporters. The failure to hedge
contracts on the world market and secure domestic supplies of paddy and brown rice at
low prices has resulted in losses being made by millers. The estimated margins
correspond to impressions of key informants; that millers and exporters are either
breakeven or making losses on the export market. This situation is undoubtedly a
temporary one, as millers and exporters have reduced export sales to compensate. This
reduction in export sales has prompted the Government to reduce export targets to 2.8
million tonnes down from 4 million tonnes. Given normal conditions, the Study Team
believes that USDA-FAS estimates of the marketing margins presented in Figure 24 are
reflective of the true situation.

From Table 131, farmers have the largest profit margins, of around 37 percent. The
estimated margins are higher than the 30 percent indicated in Section 5.2.1.7, due to the
higher paddy prices received. Millers have a profit margin of 4.9 percent. This profit is
solely due to the sale of husk and bran by-products as the sale price of white rice
(Ð2600/kg) is less than the purchase price of brown rice (Ð2230/kg) on a paddy equivalent
basis. On the basis of the 1996 IFPRI study in Table 130, retailers have the third highest
margins of 5.2-5.6 percent. Ignoring the current difficulties exporters are facing, collectors
and transporters have the lowest margins.

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5.4 Marketing Chain

The marketing chain for rice in Viet Nam is quite complex. PHTI identified five separate
channels of distribution for rice in the Mekong River Delta alone (PHTI-HCMC 1999). The
first channel identified by PHTI is a subsistence or localized channel whereby farmers
bring paddy to a local miller (or mobile miller) for processing. The milled rice is either sold
locally in the market or returned to the farmer for subsistence needs (see Figure 25).

In the second channel (see Figure 26), the farmer interacts (directly or indirectly) with
provincial food companies. The farmer will either sell paddy directly to an agent of the food
company or to a private trader, who will sell the paddy to the agent. The agent will store
the paddy and sell the to the provincial food company for processing. The provincial food
company will produce whole rice, broken rice, and bran for two separate channels – the
export market and domestic markets. Rice destined for export markets is sent to other
provincial food companies, VINAFOOD 1 or 2, or directly to overseas markets, depending
on market conditions and contractual obligations. Rice sold in domestic markets is sold to
private wholesalers, who sell to consumers and to other processing units, which use rice in
food and feed purposes. By-products, such as bran and husk are sold to feed
manufacturers and brick and sugar enterprises, respectively. PHTI notes that this channel
is primarily oriented towards exported rice (PHTI-HCMC 1999).

The third channel is a variation of the second channel, in terms of the interaction between
traders and provincial food companies and the role of private food companies and is
shown in Figure 27. Here, farmers sell to private traders or wholesalers instead of
provincial food company agents, who then sell directly to the provincial food companies
themselves or to private companies for export. The distribution of rice by private and state
companies into export is similar to that in the second channel. This third channel involves
greater interaction with private entities throughout the chain (traders, wholesalers, and
private millers).

The fourth channel is also a variation of the second and third channels (see Figure 28).
Paddy is sold by farmers to private wholesalers and traders, who then sell to other traders
for processing into brown and/or raw white rice. This rice is then sold to provincial
companies and food companies in Ho Chi Minh City for further re-processing for export, or
in some cases, for domestic consumption. The channel for by-products is similar to the
second channel.

The final marketing channel is what PHTI refers to as the inland circulation channel, which
is primarily for domestically-consumed rice (PHTI-HCMC 1999). As Figure 29 shows,
farmers sell paddy to traders, who sell to wholesale traders. Wholesale traders sell paddy
to millers that produce brown rice and raw white rice for food consumption and further re-
processing by wholesalers and other food companies. This channel is completely
privatized, with little interaction with the state-owned provincial food companies or
VINAFOOD (PHTI-HCMC 1999).

A streamlined picture of the flows of paddy and rice in the Mekong River Delta is provided
in Figure 30. There are three main channels of distribution for paddy and rice in Viet Nam:
subsistence production, domestic retail consumption, and exports. The private sector is
involved mainly in the first two channels, while rice exports are dominated by SOEs.

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Subsistence consumption accounts for about 36 percent of rice consumption in Viet Nam
(Minot and Goletti 2000). There is significant regional variation, however, as farmers in the
Mekong River Delta consume only 28 percent of rice on-farm; the rest is marketed. In the
subsistence chain, farmers will deliver paddy to a small local mill or to a “mobile mill” for
processing. A fee of 2000-2500 VND per 20 kg of paddy is charged by mobile millers for
processing (World Bank Study Team Interview, 29 July 2002). Paddy collectors are not
generally involved in this channel as the processed rice is for home consumption.

According to Minot and Goletti, roughly 64 percent of rice in Viet Nam is marketed for retail
sales (Minot and Goletti 2000). The overwhelming majority of rice for both domestic retail
consumption and exports is sold to local assemblers and collectors, who contract with
local mills for processing. Direct sales from farmers to millers are relatively small.
Assemblers typically collect paddy from local farmers that are reasonable close to the
assemblers (within 10 km) (Minot and Goletti 2000). There are regional differences in the
sales made by assemblers. In the North, assemblers will have the paddy milled into rice,
which is then sold to wholesalers, while in the South, assemblers sell paddy directly to
medium and large millers (Minot and Goletti 2000). Study Team interviews in the Mekong
River Delta suggest that there are two stages of milling of rice in the South. In the first
stage, assemblers sell paddy to medium and large millers, who process rice into brown
rice. Brown rice is then sold to larger mills and state food companies via wholesalers, who
process the brown rice into white rice and polished rice for export.

Direct purchases of paddy by large millers and food companies are relatively low (15
percent to 20 percent), as most large mills prefer to mill brown rice instead of paddy. The
main reasons for this are twofold. First, since the transportation costs for shipping paddy
and brown rice are the same, there is more incentive to purchase brown rice, since the net
quantity of white rice obtained from, for example, 100 kg of brown rice is greater than the
net quantity of white rice from 100 kg of paddy (World Bank Study Team Interview, 29 July
2002). Second, large millers interviewed by the Study Team remarked that the purchasing
and maintaining of machinery to process paddy directly is expensive. In essence, the
system has evolved whereby small mills have specialized in husking paddy, while larger
mills and food companies specialize in the further processing of brown rice. Small
numbers of large mills and provincial food companies combined with large numbers of
disperse small millers, assemblers, and farmers perpetuate the system.

It should be noted that the complexity and specialization in the current system represents
a potential constraint in the ability of Viet Nam to increase the level of quality and reduce
post-harvest losses. One of the disadvantages of the present system is the number of
actors involved in the system, with potential for losses and quality reductions along each
step of the channel. PHTI notes that the present system lends to higher levels of broken
rice and greater levels of losses (PHTI-HCMC 1999). PHTI estimates that a more
integrated system could lead to full rice (i.e., whole grain) rates of over 40 percent, while
the current system achieves full rice rates of approximately 30 percent (PHTI-HCMC
1999). Moreover, the ability to ensure varietal quality and consistency of grain is reduced
in the present system, as it is difficult to control the mixing of varieties along the marketing
chain.

Milled rice is distributed through a number of different channels for retail sales. For the
domestic market, millers will sell rice to wholesalers who will, in turn, sell to retailers.
Retailers will market locally-produced rice or distribute to other regions via traders.

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6 Competitiveness and Comparative Advantage of Vietnamese


Rice
One of the major issues confronting the rice sector in Vietnamese is in understanding its
competitiveness relative to regional and international suppliers. Viet Nam has been
acknowledged as having significant comparative advantage in rice. Using the revealed
comparative advantage (RCA) measure of Balassa17, Fukase and Martin found that Viet
Nam find that had a RCA measure (using 1997 figures) that exceeded that of Thailand
(Fukase and Martin 2001). However, it remains a question for research as to whether Viet
Nam has retained that comparative advantage, the quality areas in which Viet Nam has
that advantage, and the types of protection afforded the sector.

In order to measure the relative competitiveness and degree of comparative advantage for
Vietnamese rice, nominal protection coefficients (NPCs) and domestic resource costs
(DRCs) can be computed. NPCs relate prices in the domestic market to a reference
border, or world price (Tsakok 1990) to examine the level of price distortion in the
economy. An NPC that is greater than 1 means that positive protection is afforded to
producers and, consequently, consumers are taxed. An NPC that is less than 1 implies
that producers are taxed at the expense of consumers. An NPC exactly equal to 1 means
that price policy is neutral and does not adversely impact producers or consumers.

The border price is typically calculated at the official exchange rate, although when this is
not at equilibrium, a shadow exchange rate should be used to capture the effects of an
overvalued or undervalued exchange rate on the production present in an economy
(Sadoulet and de Janvry 1995). The border price is also adjusted to take into account
whether the product of interest is an import or export. If the product is an import, the c.i.f.
import price should be adjusted by adding handling and transport costs from the border to
market and subtracting marketing margins and transport costs from the farm level to the
market (Tsakok 1990). If the product is an export, the f.o.b. export price should be
adjusted by subtracting handling costs, marketing margins, and transportation costs from
the port to the farm (Tsakok 1990).

In Viet Nam, the official exchange rate is nominally a floating exchange rate and is
generally free of policy distortions. Thus, the exchange rate is not a source of protection on
rice production. However, Viet Nam does protect the rice sector against imports with a 30
percent tariff.

Calculations for NPC and DRCs are presented in Table 132 to Table 136. NPCs for
Vietnamese rice are provided in Table 135. In Table 135, the reference border prices are
the prices for Thai rice, fob Bangkok, for 15 percent and 5 percent broken; most
indications from World Bank study team interviews would suggest that Vietnamese rice is
competitive with 15 percent broken rice. In all cases, the NPCs are just over 1, implying
some protection for producers. Much of this protection, however, is perpetuated by the
tariff on rice imports.

The DRC is an indicator of comparative advantage, measuring the ratio of value added
from domestic, non-traded activities to the foreign exchange earned or saved from

17
The revealed comparative advantage measure is the ratio of a country’s exports of a commodity to the
world’s exports of that commodity divided by the ratio of a country’s total exports to the world’s total exports.

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domestic production (Sadoulet and de Janvry 1995). The numerator of the measure is the
sum of value added from domestic activities valued at market or shadow prices, while the
denominator is the difference of the border price less value added from tradable inputs. A
DRC with a value greater than 1 implies that production is inefficient and that foreign
exchange would be better saved by importing the product rather than producing the
product domestically, while a DRC less than 1 suggests comparative advantage and
efficiency in production (Tsakok 1990).

DRCs for Viet Nam, using the price and input costs from the Mekong River Delta, are
calculated in Table 136. Four different DRCs are computed depending on the season
(Winter-Spring and Summer-Autumn) and the production practice (traditional or improved).
The border price for 15 percent broken rice was used in all instances. As revealed in Table
136, the DRCs for Vietnamese rice range from 0.42 for improved Summer-Autumn rice to
0.66 for traditional Winter-Spring rice. In all cases, Viet Nam has a comparative advantage
in rice, with the table showing significant gains in efficiency from improvements in farming
practices.

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7 Policy Simulations and Analysis


In order to quantitatively analyze the effects of alternate policies and investment priorities
on the rice sector in Viet Nam, a multi-market model constructed for the Vietnamese
agricultural sector was used. Multi-market models have been used extensively in the
analysis of sectoral agricultural policies in developing countries. In many ways,
multimarket models are a compromise between partial equilibrium models, which typically
focus on the dynamics in a single sector, and more sophisticated general equilibrium (e.g.,
CGE) models (Goletti and Rich 1998). Multimarket models are especially useful in their
ability to analyze the impact of changes in public policy at a sectoral level, while being less
data-intensive and providing readily interpretable results.

For the following analysis, this report employs VILASEM (Viet Nam Livestock Spatial-
Equilibrium Model), which was originally designed to model issues related to livestock (see
(Agrifood Consulting International 2001e)). Past models, notably VASEM (designed by
IFPRI (IFPRI 1996; Minot and Goletti 2000)), have been designed to explicitly look at the
rice sector. However, the data and relationship used for the rice sector in VILASEM are
entirely appropriate for conducting meaningful policy analysis on rice. Moreover, VILASEM
is presently the most up-to-date (1999) multi-market model that has been constructed for
Viet Nam.

VILASEM consists of a set of equations and inequalities that are solved using GAMS
(General Algebraic Modeling System) that model the Vietnamese agricultural sector.
VILASEM is a multi-market spatial-equilibrium model. It is a multi- market model in that it
simulates the markets for several related commodities. In particular, the model simulates
the market for 13 commodities, including food and feed uses of rice, maize, sweet
potatoes, cassava, soybeans, and groundnuts, high quality feeds, pigs, and poultry. It is
also a spatial-equilibrium model in that it takes into account regional differences in
production and consumption patterns, as well as the costs of transporting goods from one
region to another. The model simulates markets in all eight regions of Viet Nam: Red River
Delta (RRD), North West (NW), North East (NE), North Central Coast (NCC), South
Central Coast (SCC), Central Highlands (CH), Northeast South (NES), and Mekong River
Delta (MRD).

Data for VILASEM include information on food production, income, prices, marketing
margins, consumption, and international trade in Viet Nam from a variety of sources
including the Ministry of Agriculture and Rural Development, other Vietnamese Ministries,
and the FAO. The data was supplemented by the analysis of data from the IFPRI-MARD
Viet Nam livestock surveys (IFPRI 2000; Agrifood Consulting International 2001e), and
the Viet Nam Living Standards Survey of 1998 (General Statistics Office 1998). The
sources of data are further detailed within the VILASEM model, and the Interim and Final
Reports of the IFPRI-MARD Viet Nam Livestock project, funded by the Royal Embassy of
Denmark (Agrifood Consulting International 2001e).

Parameters related to income elasticities of demand, price elasticities of demand, and


supply elasticities were estimated using the cross-sectional sample of households in the
VLSS, as well as secondary information (derived from such studies as Bautista, 1995
#148], (Dorosh and Haggblade 1993) and (Hazell and Roell 1983)).

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VILASEM is calibrated to 1999 production, price, income, and trade data. As such, any
policy analysis will implicitly assume conditions present at that time. In the case of rice, it
is acknowledge that certain conditions have changed. For instance, world rice prices for
2001 have declined since their levels in 1999 and exports are slightly lower. This does not
preclude the use of VILASEM for policy analysis, however. Indeed, one of the benefits of
VILASEM is to understand the effects of these changes in conditions on prices and
production. Simulations that examine the effect on lower world prices, for instance,

The next sections briefly describe the dynamics of the model and specify the relationships
and equations that solve the model. A list of simulations and results follow.

7.1 General Characteristics of VILASEM

The model uses a set of equations to represent supply, demand, international trade, and
internal flows among the regions of Viet Nam. We provide the initial assumptions by
setting the values of the exogenous variables (variables whose values are fixed). The
exogenous variables include international prices, the export quota, taxes, transportation
costs, non-farm income, and marketing margins. The model solves for the values of the
endogenous variables that represent the market equilibrium associated with those
assumptions. The endogenous variables include food production, food consumption,
income, prices, exports, imports, and inter-regional flows for the various commodities.

The model is solved using the Mixed Complementarity Programming (MCP) solver in
GAMS. MCP takes advantage of the fact that any constrained maximization problem can
be restated as a series of equalities and inequalities known as Kuhn-Tucker conditions
(Kuhn and Tucker 1951). The Kuhn-Tucker conditions involve a set of Lagrange
multipliers, each of which reflects the marginal effect of one inequality constraint on the
objective function. The multiplier associated with the constraint on regional balances is
the price of the commodity in that region.

When solving mixed complementary programming problems with GAMS, no objective


function needs to be specified. The objective function is implicitly specified through the
first order conditions that the modeler needs to specify. As the objective function does not
need to be specified, it is not necessary to analytically derive the sum of producer and
consumer surplus. This allows the modeler to use any functional form to the supply and
demand functions.

With MCP problems, the modeler needs to specify:

1. The first-order conditions for unconstrained maximization of the objective function as


equations,

2. The constraints, and

3. Associate the constraints with the relevant Lagrangian multiplier.

The constraints are specified as inequalities. GAMS then assembles the Kuhn-Tucker
conditions that correspond to the constrained maximization problem and solves the
system. (For additional information on MILES and MCP see (Rutherford 1997), and for
the Kuhn-Tucker conditions see (Kuhn and Tucker 1951)).

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With MCP problems, the modeler specifies an equal number of equations and variables.
In addition, each inequality of the form f ( x ) ≥ 0 is explicitly linked to a complementary
variable λ , such that λ f ( x ) = 0 . Intuitively, when an inequality becomes binding, it
effectively increase the number of equations in the system. So that the number of
equations and the number of endogenous variables are the same, a new variable must
also enter the system by becoming positive. For example, in the import parity price
equation, when the import price plus transport costs is equal to the domestic price (i.e. the
relationship becomes binding), an equation for imports enters the system, thus allowing
for external trade.

7.2 Overview of the Equations in VILASEM

The model consists of several equations in the supply and demand side; a world rice
market equation, income equations, inflow and outflow balancing equations, and price
parity equations both for domestic and international trade.

1. The supply equations define the production of each commodity in each region as a
function of production.

2. The demand equations determine the consumption of each commodity in each region
as a function of the real income in that region and buying prices in that region.

3. Inflow equations state that shipments into each region (including imports) must be large
enough to satisfy regional demand.

4. Outflow equations ensure that regional production is sufficient to cover the shipments
from the region (including exports).

5. The income equations define household income in each of the eight regions. Income is
comprised of non-agricultural income, crop and livestock production income, lower and
higher quality feed industry income, and other agricultural income.

6. Price index equations define the price level in each region as a function of the prices of
the commodities in the model. The price indexes are used to calculate real income,
which helps determine demand.

7. The domestic trade equations ensure that the buying price in a region will not exceed
the selling price in another region by more than the costs of marketing and
transportation between the two regions.

8. A set of import equations define the relationship between domestic prices and world
CIF prices. In particular, domestic buying prices minus the marketing margin cannot be
higher than international CIF prices plus the costs of transportation and import
restrictions.

9. A set of export equations define the relationship between domestic prices and world
FOB prices. The domestic selling price cannot be lower than the international FOB
price minus the cost of transportation and export restrictions.

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7.3 Overview of Equation Symbols

Above, the VILASEM model was described as modeling the market for 13 commodities
including two livestock species (pigs and poultry), four types of feed (complete and
concentrated pig and poultry feeds), six agricultural commodities (rice, maize, sweet
potatoes, cassava, groundnuts, and soybeans), and fishmeal (a feed crop from the sea).
Although it is true that there are six agricultural commodities in the model, because of the
way the model is constructed, there are actually twelve commodities in the model, as we
treat as being separate each of the crops that are for human food or animal feed. Thus,
other than for crop production, the model models 12 crops, such that the VILASEM model
actually models the markets for a total of 19 commodities. In the VILASEM model, the
commodities are referenced by a series of indices. These indices are listed in Table 137.

The model has 19 types of endogenous variables. The number of endogenous variables in
each type depends on the level of disaggregation. For example, supply is specified for
each commodity and each region. Given that there are 19 commodities in the model and
eight regions, there are 152 supply variables. These are split into 16 livestock supply
variables, 40 high quality feed supply variables, 48 feed crop supply variables, and 48 food
crop supply variables.

Table 138 provides a list of the 19 types of endogenous variables in the VILASEM model,
along with the number of variables in each category.

7.4 Equations in VILASEM

The core of the model can be described by 19 blocks of equations. Of these 19 blocks of
equations, 12 are specified as equalities and seven are specified as inequalities. The
GAMS MCP solver constructs the Kuhn-Tucker conditions that correspond to the model.

7.4.1 Supply Equations

The quantity of each commodity supplied is specified as a semi-log function with buying
and selling prices of various food and feed commodities. Although this is a simple
representation of supply, it allows for substitution among commodities and responses to
price changes. The semi-log specification is of the form:

S kif ,r = α kif , rr ' + β kif ,rr ' × log ( Pkif ,rr ' ) + γ kif ,rr ' × log (Yr )

Parameter estimates from a semi-log model can be used to derive estimates for income
and own and cross price elasticities. In the supply equations used in VILASEM income is
not included as an exogenous variable.

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γ kif ,r
ηkif ,r = ( Income elasticity )
Qkif ,r
− β kif ,r
ε kif ,r = ( Own-price elasticity )
Qkif ,r
β kif ',r
ε kifkif ',r = ( Cross-price elasticity )
Qkif ,r

Crop supply

Crop supply is specified as a function of the selling price of the crop fc, and all other crops
fc′.

(
fc , r = α fc , r + S fc , r × ∑ SPE fc , fc ', r × ln ( PS fc ', r ) )
7
S crop crop 0 crop

fc '=1

Where:

( ( ))
7

fc , r = S fc , r − S fc , r × ∑ SPE fc , fc ', r × ln PS fc ', r


α crop 0 0 crop 0

fc '=1

Feed Supply

Feed supply is specified as a function of the selling price of feed and the buying price of
crops.

( ) (
, r = α k , r + S k , r × ∑ SPEkk ' r × ln ( PS k ', r ) + S k , r × ∑ SPEk , fc ', r × ln ( PB fc ', r ) )
7 7
Skfeed feed 0 feed 0 feed

k '=1 fc '=1

Where

( ( )) + S ( ( ))
7 7

, r = S k , r − S k , r × ∑ SPEkk ', r × ln PS k ', r


α kfeed × ∑ SPEkfeed
, fc ', r × ln PB fc ', r
0 0 feed 0 0 0
k ,r
k '=1 fc '=1

High Quality Feed Supply

High quality feed supply is specified as a function of the selling price of high quality feed
and the buying price of crops.

( ) (
ff ', r × ln ( PS f ', r ) + S f , r × ∑ SPE f , fc ', r × ln ( PB fc ', r ) )
4 7
S hqfeed
f ,r = α hqfeed
f ,r + S 0f ,r × ∑ SPE hqfeed 0 hqfeed

f '=1 fc '=1

Where:

( ( )) + S ( ( ))
4 7
α hqfeed
f ,r = S 0f ,r − S 0f ,r × ∑ SPE hqfeed
ff ', r × ln PS f ', r
0 0
f ,r × ∑ SPE hqfeed
f , fc ', r × ln PB fc ', r
0

f '=1 fc '=1

Livestock Supply

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Livestock Supply is specified as a function of the selling price of liveweight and the buying
price of low quality feed and the buying price of high quality feed.

( ) ( )
2 7

, r = α i , r + Si , r × ∑ SPEi ,i ', r × ln ( PSi ', r ) + Si , r × ∑ SPEik ', r × ln ( PBk ', r )


Silwt lwt 0 lwt 0 lwt

i '=1 k '=1

(
+ Si0,r × ∑ SPEiflwt',r × ln ( PB f ',r ) )
4

f '=1

Where:

( ( ) ) + S × ∑ ( SPE ( ))
2 7

, r = Si , r − Si , r × ∑ SPEii ', r × ln PS i ', r


α ilwt × ln PBk0',r
0 0 lwt 0 0 lwt
i ,r ik ', r
i '=1 k '=1

( ( ))
4
+ Si0,r × ∑ SPEiflwt',r × ln PB 0f ' r
f '=1

7.4.2 Demand Equations

Food demand is specified based on the Linear Approximation of the Almost Ideal Demand
System (LA-AIDS) (Deaton and Muellbauer 1980). The LA-AIDS model expresses
demand for a commodity in terms of its budget share. The budget share is defined as a
function of price levels and real expenditure.

Y 
BSi = αi + ∑γ ij log pi + βi log  
i  P

Where BSi is the budget share of the ith commodity, pi are prices of commodities, Y is total
expenditure for all commodities, and P is the index of prices of the commodities.
The price index, P, is a function of commodity prices.

1
log P = α i + ∑ α i log pi + ∑∑ γ ij log pi log p j
i 2 i j

This price index introduces non-linearity into the model. The LA-AIDS model introduces an
approximation of the price index as suggested by Stone (Stone 1953).

log P ' = ∑ BSi log pi


i

where P’ is used in place of P in the LA-AIDS model. The index is a geometric weighted
average of the buying prices for food and livestock products, where the weights are the
budget shares of the respective commodities.

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The parameter estimates from the LA-AIDS model can be used to derive elasticity
estimates using the procedure outlined by Green and Alston (Green and Alston 1990).

βi
ηe = 1 + ( expenditure elasticity )
BSi
γ ii
ε ii = −1 + − βi ( own-price elasticity )
BSi
γ ij BS j
ε ij = − βi × ( cross-price elasticity )
BSi BSi

where the BSi and BSj terms are the aggregated budget shares (weights) for the
respective commodities consumed.

Consumer Demand for Food

The demand for food crops and meat by consumers is computed in a two step process.
First, an LA-AIDS function specification is used to relate the budget shares for each food
commodity in each region to buying price and real income, then food demand is computed
using the budget share and real income. Producer and industry demand for low and high
quality feed are estimated, like the supply of these commodities, as semi-log functions.
The food demand equations are shown below.

 Y 
∑ (β )
× ln ( PB fci ', r ) +  δ fci , r × ln r 
8
BS fcifood,r = α fci ,r + fci , fci ', r
fci '=1  Pr 
Yr
D fcifood, r = BS fcifood,r ×
′ ,r
Pfci

Producer Demand for Low Quality Feed

Producer demand for feed is a function of the buying price of feed, the buying price of high
quality feed and the selling price of livestock.

( ) ( )
2 7

, r = φk , r + Dk , r × ∑ DPEk ,i ', r × ln ( PS i ', r ) + Dk , r × ∑ DPEk , k ', r × ln ( PBk ', r )


Dkfeed feed 0 feed 0 feed

i '=1 k '=1

(
, f ', r × ln ( PB f ', r ) )
4
+ D × ∑ DPEkfeed
0
k ,r
f '=1

Where:

( ( )) + D ( ( ))
2 7

, r = Dk , r − Dk , r × ∑ DPEk ,i ', r × ln PSi ', r


φkfeed × ∑ DPEkkfeed
', r × ln PBk ', r
0 0 feed 0 0 0
k ,r
i '=1 k '=1

( ( ))
4
+ Dk0,r × ∑ DPEkfeed
, f ', r × ln PB f ', r
0

f '=1

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Low Quality Feed Industry Demand for Crops

Feed industry demand for crops is a function of the selling price of feed and the buying
price of crops.

( ) (
, k ', r × ln ( PS k ', r ) + D fc , r × ∑ DPE fc , fc ', r × ln ( PB fc ', r ) )
7 7
D fcficrop
,r = φ fcficrop
,r + D 0fc , r × ∑ DPE fcficrop 0 ficrop

k '=1 fc '=1

Where:

( ( )) + D ( ( ))
7 7
φ fcficrop
,r = D 0fc ,r − D 0fc ,r × ∑ DPE fcficrop
, k ', r × ln PS k ', r
0 0
fc , r × ∑ DPE fcficrop
, fc ', r × ln PB fc ', r
0

k '=1 fc '=1

High Quality Feed Industry Demand for Crops

The high quality feed industry demand for crops is a function of the selling price of high
quality feed and the buying price of crops.

( ) (
fc , fc ', r × ln ( PS f ', r ) + D fc , r × ∑ DPE fc , fc ', r × ln ( PB fc ', r ) )
7 7
D hqcrop
fc , r = φ fchqcrop
,r + D 0fc ,r × ∑ DPE hqcrop 0 hqcrop

k '=1 fc '=1

Where:

( ( )) + D ( ( ))
7 7
φ fchqcrop
,r = D 0fc ,r − D 0fc ,r × ∑ DPE hqcrop
fc , fc ', r × ln PS f ', r
0 0
fc , r × ∑ DPE hqcrop
fc , fc ', r × ln PB fc ', r
0

k '=1 fc '=1

Producer Demand for High Quality Feed

High quality feed demand by producers is a function of the selling price of liveweight, the
buying price of high quality feed and the buying price of general quality feed.

( ) ( )
2 7
D hqfeed = φ hqfeed f ,i ', r × ln ( PS i ', r ) + D f , r × ∑ DPE f , k ', r × ln ( PBk ', r )
+ D 0f ,r × ∑ DPE hqfeed 0 hqfeed
f ,r f ,r
i '=1 k '=1

(
f , f ', r × ln ( PB f ', r ) )
4
+ D 0f ,r × ∑ DPE hqfeed
f '=1

Where:

( ( )) ( ( ))
2 7
φ fhqfeed
,r = D 0f ,r − D 0f ,r × ∑ DPE hqfeed
f ,i ', r × ln PS i ', r
0
+ D 0f ,r × ∑ DPE hqfeed
f , k ', r × ln PBk ', r
0

i '=1 k '=1

( ( ))
4
+ D 0f ,r × ∑ DPE hqfeed
f , f ', r × ln PB f ', r
0

f '=1

7.4.3 Quantity Transported Between Regions

In a multi-market, spatial equilibrium model, such as VILASEM, supply and demand are
nor necessarily the same in each region because of shipments of the commodities
between regions. The sum of shipments of a commodity into each region from the other

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regions in the country (TQ) plus imports into the region from the rest of the world must be
greater than or equal to the quantity of the commodity demanded (D) within the region.
Note that the quantity shipped (TQ) includes shipments from producers of the commodity
within a region to consumers of the commodity in the same region. Similarly, the supply
(S) of each commodity in each region must be greater or equal to the sum of the
shipments from the region to the other regions in the country (TQ) and exports from the
region to markets in the rest of the world. The equations relating the quantity shipped to
demand and supply for each type of commodity are shown below.

Food crops

For the inflows of food crops, the quantity of crops fc shipped into region r for regions r’
plus imports of crops fc into region r is a function of the demand for crops fc in region r for
food, and low and high quality feed. Conversely, for outflows, the supply of crops fc in
region r, is a function of the quantity of crops fc shipped from region r to regions r’ plus
exports from region r to the world.

∑ TQ
r'
crops
fc , r ', r + M crops
fc , r ≥ D fc , r + D fc , r + D fc , r
food feed hqcrop

fc , r ≥ ∑ TQ fc , rr ' + X fc , r
S crops crops crops

r'

Low quality feed

For inflows, the quantity of feed crops, k , shipped into region r from regions r’ plus imports
of feed crops into region r is a function of the demand for feed crops in region r.
Conversely, for outflows, the supply of low quality feeds in region r is a function of the
quantity of each feed shipped from region r to region r’ plus exports from region r to the
world.

∑ TQ
r'
feed
kr ', r + M krfeed ≥ Dkfeed
,r

, r ≥ ∑ TQk , rr ' + X k , r
Skfeed feed feed

r'

High quality feed

For inflows, the quantity of high quality feed, f, shipped into region r from region r’, plus
imports of high quality feed into region r is a function of the demand for high quality feed in
region r. Conversely, for outflows, the supply of high quality feed in region r is a function of
the quantity of high quality feed shipped from region r to regions r’ plus exports from region
r to the world.

∑ TQ
r'
hqfeed
f ,r ' r + M hqfeed
f ,r ≥ D hqfeed
f ,r

S hqfeed
f ,r ≥ ∑ TQ hqfeed
f , rr ' + X f , r
hqfeed

r'

Meat

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For inflows, the quantity of meat, i, shipped into region r from region r’ plus imports of meat
into region r is a function of the demand for meat in region r. Conversely, for outflows, the
supply of liveweight in region r is a function of the quantity of meat shipped from region r to
regions r’ plus exports from region r to the world.

∑ TQ
r'
meat
i,r 'r + M imeat
,r ≥ Di ,food
r

, r ≥ ∑ TQi , rr ' + X i , r
Silwt meat meat

r'

7.4.4 Domestic Prices

The prices of a particular commodity in different regions are defined by the domestic trade
equations. In the block of domestic trade equations the selling price (PS) of crops, low and
high quality feed, and liveweight plus various other costs in each region are related to the
buying price (PB) for the respective commodity in each region. These various other costs
include transportation costs between regions (TP), processing and marketing costs (MKT),
and the implicit tax on transporting goods between regions (ITT). The selling price plus
these various costs is greater than or equal to the buying price for each commodity and
each region. This equation ensures that the difference in prices is not greater than the cost
of transport and marketing, broadly defined to include implicit taxes associated with
government restrictions on domestic trade. The domestic price inequality equations for
each type of commodity are shown below.

Crop domestic price equations:

PS fc ,r + TPfccrops
, rr ' + MKT fc , r + ITT fc , rr ' ≥ PB fc , r '
crops crops

Low quality feed domestic price equations:

PSk ,r + TPk feed


, rr ' + MKTk , r
feed
+ ITTk feed
, rr ' ≥ PBk , r '

High quality feed domestic price equations:

PS f ,r + TPfhqfeed
, rr ' + MKT f , r
hqfeed
+ ITT fhqfeed
, rr ' ≥ PB f ,r '

Animal liveweight domestic price equations:

PSi ,r + TPi ,lwt


rr ' + MKTi ,r + ITTi , rr ' ≥ PBi , r '
lwt lwt

7.4.5 International Prices

As with the domestic price equations, equations are needed to show the relationship
between international price and domestic prices for a particular commodity in each region.
The equations ensure that the difference between the domestic price and the international
price in the local currency does not exceed the cost of transportation plus any implicit
taxes associated with restrictions on international trade.

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The import parity price equation defines the relationship between the domestic price and
the CIF import price and various other costs. These other costs include the cost of
transport and marketing to region r, any implicit tax associated with transport restrictions to
region r, and the effect of any import tariffs. The import parity price equations for each type
of commodity are shown below.

Import parity crop equations:

PI fc + TPW fccrops
, r + ITM fc , r ≥ PB fc , r
crops

Import parity low quality feed equations:

PI k + TPWk feed
,r + ITM kfeed
, r ≥ PBk , r

Import parity high quality feed equations:

PI f + TPW fhqfeed
,r + ITM hqfeed
f ,r ≥ PB f ,r

Import parity animal liveweight equations:

PI i + TPWi ,lwt
r + ITM i , r ≥ PBi , r
lwt

Similarly, export parity price equations define the relationship between the domestic price
and the FOB export price and various other costs. The export parity price equations for
each type of commodity are shown below:

Export parity crop equations:

PS fc ,r + TPW fccrops
, r + ITX fc , r ≥ PX fc
crops crops

Export parity low quality feed equations:

PSk ,r + TPWk feed


,r + ITX kfeed
, r ≥ PX k
crops

Export parity high quality feed equations:

PS f ,r + TPW fhqfeed
,r + ITX hqfeed
f ,r ≥ PX hqfeed
f

Export parity animal liveweight equations:

PSi ,r + TPWi ,lwt


r + ITX i , r ≥ PX i
lwt lwt

Since Viet Nam accounts for between 10 and 20 per cent of world rice exports, the small
country assumption does not hold very well. Rather, it is preferable to treat it as a large
country in international rice markets. Consequently, world rice prices are made a function
of Vietnamese rice exports. The equation for Vietnamese rice prices is shown below.

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∑X
r =1
rice
r = α wrice + β wrice × PX rice

where
DPEwrice × X rice
0
βw = 0
PX rice
α w = X rice
0
− β w × PX rice
0

7.4.6 Income

Income depends on income from the production from all commodities in the model. As
shown below, income in each region is the sum of all non-agricultural income, food crop
production income, livestock production income, income from the low quality feed industry,
income from the high quality feed industry, and all other agricultural related income.

I r = I rnf + I rcrops + I rlwt + I rfeed + I rhqfeed + I rother

Income from food crop sales

Income from the sale of food crops is computed as the sum across commodities the
proportion of the value of crop production above production costs.

(
I rcrop = ∑ PS fc ,r × S crop )
fc , r × γ fc , r
fc

where γ fc ,r is proportion of production value above production costs.

Income from livestock production

Income from livestock production is computed as the value of livestock production less the
cost of lower and higher quality feed. Although not all costs are accounted for, feed costs
account for well over 70 per cent of the average producers production costs.

(
I rlwt = ∑ PSi , r × Silwt
,r ) (
− ∑ PBk ,r × Dkfeed
,r )
− ∑ PB f ,r × D hqfeed
f ,r ( )
i k f

Income from lower quality feed industry

Income from low quality feed production is computed as the value of feed production less
the cost of crops.

(
I rfeed = ∑ PSk ,r × Skfeed
,r ) (
− ∑ PB fc , r × D fcficrop
,r )
k fc

Income of high quality feed industry

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Similarly, income from high quality feed production is computed as the value of feed
production less the cost of crops.

( )
I rhqfeed = ∑ PS f , r × S hqfeed
f ,r (
− ∑ PB fc ,r × D hqcrop
fc , r )
f fc

7.5 Simulations

Eight simulations were conducted with VILASEM to analyze the potential effects of
changes in policy, technical parameters and external factors on the rice sector in Viet
Nam. The simulations conducted are based on a number of conditions and priorities for
the rice industry, based on from research and study team interviews. The simulations are
the following:

1. A 20 percent reduction in the export price for rice, with no change in domestic prices.

2. A 20 percent reduction in world prices for rice (as in simulation 1), but with fixed
exports of rice of 3.5 million tonnes and reduced margins for imports. This is to
simulate the behavior of producers and firms in an environment of low world prices
combined with the need of enterprises to fill export orders made one year in advance.

3. A 20 percent increase in the productivity of paddy production, assumed to come from


either increased fertilizer usage, increased cropping intensity or utilization of improved
or hybrid rice varieties.

4. A 10 percent reduction in paddy production in the Red River Delta to simulate the
effects of crop diversification policies.

5. A reduction in post-harvest losses of rice from 10 percent to 7.5 percent.

6. An improvement in milling recovery rates from 65 percent to 68 percent.

7. A 5 percent reduction in paddy production in the Mekong River Delta to simulate the
effects of crop diversification policies.

8. A combination of simulations (4) and (7) to look at the impact of crop diversification in
aggregate.

Numerous other simulations can be considered with VILASEM, though would require
additional research and modification.

7.5.1 Simulation 1: Reduction in World Prices

The first simulation examined the effects of a reduction in the world price of rice. . As noted
in earlier sections, Viet Nam relies primarily on government-to-government contracts for its
export sales. Such exports are contracted up to one year in advance at a price determined
at the time the contract is issued. Thus, exporters can potentially incur significant price risk
if domestic prices changes.

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Such a situation occurred in Viet Nam in 2002. World prices remained depressed due to
strong supplies in world markets, while internal prices in Viet Nam strengthened due to
drought situations in Southern production areas. This put pressure on Vietnamese
exporters to obtain low priced paddy to fill orders made one year in advance for exports.

The simulation looked at the impact of a 20 percent reduction in the export price from the
base level with domestic prices remaining at the base level18. The results of the simulation
are presented in Table 139 to Table 143. As expected, production and exports fall
significantly from their base values. Production of food paddy declines by 4 percent (see
Table 139), with the largest declines found in the Mekong River Delta region (-4.25
percent). However, the drop in regional paddy production is relatively consistent across
regions. Exports of rice drop precipitously as a result of the 20 percent drop in world
prices, falling by 56 percent, all of which occur in the Mekong River Delta region (see
Table 140).

While imports of rice remain zero, imports of other commodities are affected by the price
shock, most notably livestock imports and associated livestock feed (see Table 140). Much
of the decline in exports of rice translates into an increase in domestic consumption of rice,
which rises by nearly 15.8 percent (see Table 139). The largest gains in rice consumption
are in the Northeast South (19.8 percent increase), South Central Coast (18.9 percent),
and the Central Highlands regions (17.8 percent), spurred on by consumer rice price
decreases of 14 percent.

The drop in paddy production and exports leads to a 17 percent drop in producer prices
nationwide that is most felt in the Mekong River Delta region. Given that the Mekong River
Delta region is the only region in the model that exports rice, regional exports and income
are noticeably impacted by the fall in world prices (see Table 141, Table 142 and Table
143). Income in the Mekong River Delta region declines by 7.25 percent whilst the national
income level declines by 2.61 percent.

7.5.2 Simulation 2: Reduction in World Prices, Combined with Export


Orders and Cheaper Imports

The second simulation is similar to the first simulation, as it considers the impact of a 20
percent reduction in export prices. However, two additional assumptions are made in the
simulation, to more closely mirror actual conditions. First, it is assumed that Viet Nam must
deliver at least 3.5 million tons of rice to world markets to fulfill export commitments. This
figure is consistent with the target level of exports for 2002. This assumption is designed to
simulate the behavior of Vietnamese exporters seeking to fill export orders, despite facing
low prices for export and high domestic prices.

Second, the margin between export and import prices is relaxed to consider the possibility
of imports into Viet Nam. Study Team interviews from Cambodia suggested that up to 4-
500,000 tons of paddy have been imported into Viet Nam as a result of surplus production
in Cambodia and limited domestic milling capacity. The purpose of these imports, whether
for food stocks, domestic consumption, or re-export, is unknown. Nonetheless, certain
18
Since VILASEM was calibrated in a year with relatively high export prices (US$216/tonne), the following
simulation looked at the impact of a 20 percent reduction in the export price (to US$173/tonne,
commensurate with current contracted world prices for 15 percent broken rice) with domestic prices
remaining at the calibrated 1999 level.

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varieties of Cambodian rice are price competitive with Vietnamese rice in the South. For
instance, the fob price at the Vietnamese border of Cambodia dry season rice is 1,664
VND/kg, consistent with prices found in the Mekong River Delta (see Table 128).

In order to simulate the possibility of imports, the margin between the export price and
import price is lowered to 30 USD per ton (from 110 USD per ton). According to Table 128,
the difference between ex-farm paddy in Cambodia and paddy fob HCM is roughly 12-25
USD per ton of paddy, or in rice equivalent, 18-38 USD per ton of rice. The 30 USD per
ton margin assumed here is thus in the range from the calculations made in Table 128.
The results from simulation 2 can be found in Table 144 to Table 148.

Production of paddy falls by just under 3.3 percent nationally, with the decline in
production occurring consistently across each region (see Table 144). Exports fall roughly
30 percent from the base levels and are fixed at 3.5 million tons (see Table 145).
Interestingly, this scenario results in imports of just over 800,000 tons, all of which are
imported into Ho Chi Minh City for internal consumption (North East South region) (see
Table 145). As a result of these imports, trade of rice from the Mekong River Delta into the
North East South decline by over 51 percent, while internal trade of rice in the Mekong
River Delta increases slightly (8.5 percent) (see Table 147 and Table 148).

Rice consumption increases by almost 13 percent (see Table 144), with the strongest
increases found in the North East South (16 percent increase), where consumption of
domestically produced rice is supplemented by consumption of imported rice. Interestingly,
while prices of rice fall by 11.7 percent nationally (see Table 144), the percent decline in
the North East South is 11 percent and lower than, for instance, the Mekong River Delta (-
13 percent). Producer prices also fall by 14 percent nationally and result in declines in per
capita income of between -0.76 percent (North East South) to -6.1 percent (Mekong River
Delta) (see Table 146).

7.5.3 Simulation 3: Increase in Agricultural Productivity

The next two simulations look at changes in paddy supply. In simulation 3, agricultural
productivity is increased by 20 percent. This could occur through a number of means,
included increased fertilizer usage, increased cropping intensity or the use of improved or
hybrid varieties of rice. Given the high (250-400 kg/ha) usage of fertilizer already in Viet
Nam, it is likely that additional increases in fertilizer will only have marginal effects on
supply. Thus, this scenario could be viewed as considering the impact of improved
varieties, increased intensity or reductions in production losses.

The results of simulation 3 are presented in Table 149 to Table 153. As expected,
production of paddy increases significantly, by 18.2 percent nationally and by 19 percent in
the Central Highlands, North East South, and Mekong River Delta (see Table 149). The
impact on the production of other agricultural products is marginal, except for livestock,
which increases by slightly over 1 percent as a result of rice productivity increases.

Exports approach nearly 7 million tons, an increase of 39 percent (see Table 150), all of
which continues to come from the Mekong River Delta. Imports of maize decline, as
domestic rice is substituted for imported maize for both food and feed uses (see Table
150). Consumption of all cereals increases, led by an increase of rice consumption of over
12.5 percent (see Table 149).

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Consumer prices for rice fall, but only by 6.9 percent nationally, while falling between 3
percent in the South to 9 percent in the North and 12 percent in the North Central Coast.
Producer prices for paddy also fall by 7 percent, with the greatest declines found in the
North Central Coast (-13.9 percent). As a result of this policy, income per capita rises
marginally, by less than 1 percent in all regions except the Mekong River Delta, where
incomes rise by over 4 percent (see Table 151).

7.5.4 Simulation 4: Reduction in Paddy Production in the Red River


Delta

The next simulation looked at the effects of a decline in paddy production in the Red River
Delta. One of the priorities of the Vietnamese government in agriculture is to diversify out
of paddy production in certain areas into high-value crops such as vegetables and
aquaculture (World Bank Study Team Interview, 2 August 2002). This policy has begun to
take effect in the Red River Delta. This simulation looks at the effects of such a policy, by
examining the effects of a 10 percent reduction in paddy supply in the Red River Delta.

The main impacts from this reduction in paddy production in the Red River Delta are on
domestic production and internal trade. The results are summarized in Table 154 to Table
158. National crop production naturally declines under such a scenario, with a national
decline of just under 2 percent (see Table 154). Production falls by 10 percent in the Red
River Delta, with only marginal (0.1 percent) increases in production elsewhere.
Production changes in other crops are negligible.

Exports of rice decline slightly (5 percent) in response to the reduction in production (see
Table 155). Imports fall slightly (5 percent) for pigs, but marginally for all other products
(see Table 155). Rice consumption falls by less than 1 percent nationally but declines by
double this figure in the Red River Delta; consumption of other cereals, such as maize,
also fall by 1 percent in the Red River Delta (see Table 154).

Rice prices increase both nationally and regionally, but by less than 1 percent (see Table
154). Incomes only fall in the Red River Delta (-1.2 percent), but do not change elsewhere
(see Table 156). In terms of regional flows, the main effect is a reduction in flows from the
Red River Delta to neighboring regions. For instance, rice flows from the Red River Delta
to the North East fall by 30 percent, while flows from the Red River Delta to the North West
cease altogether (see Table 157 and Table 158). However, there is no evidence from the
simulation of any imports from the South to the Red River Delta.

7.5.5 Simulation 5: Improvement in Milling Technology

The next two simulations look at the effects of changes in technology on the rice sector.
The first of these simulations looks at the impact of raising recovery rates for Vietnamese
rice mills from 65 percent to 68 percent (see Table 159 to Table 163). The impact of this
technical improvement is relatively marginal. Paddy production only increases by 0.5
percent, with gains mainly in the Central Highlands, North East South, and Mekong River
Delta (see Table 159).

Exports increase by 12 percent, however, stimulated by an increase in exports from the


Mekong River Delta (see Table 160). Rice consumption increases by 3 percent, fueled by
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a roughly 2 percent decline in prices (see Table 159). Despite the increase in exports,
income gains overall are small (less than 0.5 percent) in all regions except the Mekong
River Delta (+1.2 percent) (see Table 161).

7.5.6 Simulation 6: Reduction in Post-Harvest Losses

This simulation examines the impact of improving post-harvest technology. The state of
post-harvest technology, particularly with respect to on-farm drying technology and storage
was mentioned by numerous informant interviews as a key constraint in the sector (World
Bank Study Team Interviews, 29-31 July 2002; 1-2 Aug. 2002). The simulation looked at a
reduction in post-harvest losses from 10 percent to 7.5 percent.

The simulation results (see Table 164 to Table 168) show much greater production gains
from such improvements than from improving milling technology. Paddy production
increases by over 1 percent nationally and regionally (see Table 164). However, rice
exports increase by only 3 percent, compared to 12 percent in the previous simulation (see
Table 165). Prices change by a negligible amount. Income marginally increases as well,
with gains ranging from zero to 0.3 percent (see Table 166).

7.5.7 Simulation 7: Reduction in Paddy Production in the Mekong River


Delta

Similar to Simulation 4, this simulation looks at the impact of crop diversification in the
Mekong River Delta. Recent statistics show a decline in paddy production in the Mekong
River Delta of at least 5 percent, much of which is being diverted into aquaculture. Such
crop diversification into aquaculture, particularly saltwater shrimp production, has major
implications on paddy production as such land may not have the capacity to be re-
converted into paddy land, rendering the switch out of rice as a permanent development.

The results from the simulation are presented in Table 169 to Table 173. A 5 percent
reduction in production in the Mekong River Delta leads to a decline in national production
of just over 2.5 percent (see Table 169). Production in other regions increases in response
to the decline in the Mekong River Delta (see Table 169), but the increases are marginal
(less than 0.2 percent). Rice exports fall by nearly 7 percent in such a scenario (see Table
170). The fall in production leads to an increase of less than 1 percent of producer and
consumer prices and leads to a 1 percent decline in national rice consumption (see Table
169). Incomes fall by over 1 percent in the Mekong River Delta, while in other regions
there is no noticeable change in incomes (see Table 171).

As in simulation 4, the greatest change from such a policy is in domestic trade flows
between regions. Trade between the Mekong River Delta and northern regions,
particularly the Northwest and South Central Coast regions, declines substantially (see
Table 172 and Table 173). Trade in food rice between the Mekong River Delta and the
North West Region declines by over 45 percent from such a policy, while trade between
the Mekong River Delta and the North Central Coast falls by over 12 percent. Marginal
declines in food rice trade between the Central Highlands and Mekong River Delta and the
North East South and Mekong River Delta also occur. The decline in trade between the
Northern regions and the Mekong River Delta is partially made up by increased trade
between the Red River Delta and the North West (see Table 172 and Table 173), but in
the South Central Coast, such reduced trade flows simply lead to reduced consumption.
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There is also a decline in the flow of feed-grade rice from the Mekong River Delta to the
Red River Delta, North West, North Central Coast, and South Central Coast of between 5
to 7 percent.

7.5.8 Simulation 8: Reduction in Paddy Production in the Mekong and


Red River Deltas

This simulation combines the effects from simulations 4 and 7 to examine the total impact
of crop diversification on the rice sector. Thus, this simulation looks at the combined
effects of a 10 percent drop in rice production in the Red River Delta and a 5 percent drop
in the Mekong River Delta; results are found in Table 174 to Table 178.

The combined effects of a crop diversification policy in the Mekong River Delta and Red
River Delta lead to a 4 percent decline in rice production nationally and a 12 percent drop
in exports (see Table 174 and Table 175). Rice consumption falls by 2 percent nationally,
led by a decline of 3 percent in both the Mekong River Delta and Red River Delta (see
Table 174); declines in consumption in other regions are roughly 1 percent. Producer and
consumer prices increase by about 1 percent (see Table 174), while incomes only fall (by
1 percent) in the Red River Delta and Mekong River Delta (see Table 176).

The impact on regional flows from such a policy is more pronounced. Trade from the Red
River Delta to the North East, for instance, falls by almost 27 percent (see Table 177 and
Table 178). However, much of this decline is met by the commencement of trade between
the Mekong River Delta and the North East – the Mekong River Delta exports almost
141,000 tons to the North East as a result. Similarly, the Red River Delta ceases exports
with the North West, while the Mekong River Delta more than doubles its exports to that
region (see Table 177 and Table 178). However, the Mekong River Delta reduces its
exports to the South Central Coast by 21 percent and to the Central Highlands and the
North East South by 2 percent in each region.

7.5.9 Simulation Conclusions

The results of the first two simulations showed that exogenous changes in world prices
can have significant impacts on Viet Nam’s exports. The combination of low contracted
prices for exports and high paddy prices can conceivably lead to situations where exports
decline or, where orders are fixed in advance and must be filled, to situations where
Vietnamese millers and traders seek alternative sources for paddy. This is possibly the
motivation for reportedly high levels of unofficial imports of Cambodian paddy into Viet
Nam.

The implication of the first two scenarios are thus to emphasize the need for policymakers
to develop ways for millers and SOEs to diversify the price risk involved in making
contracts up to one year in advance. Because sophisticated futures markets do not exist
for rice and given the impact the current situation will have on local financial markets, it is
imperative that greater emphasis on storage and access to working capital be facilitated
for millers and SOEs. In this way, such actors will have better means to accommodate
these large contracts. It is suggested, however, that alternative arrangements in procuring
rice for foreign producers be considered.

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The simulation on productivity improvements demonstrated that there may be production


benefits from improvements in rice technology, increases in intensity from greater fertilizer
use or improved seed technology. Improvements in productivity resulted in an increase in
paddy production of 18 percent and increases in exports of 39 percent. Caution should be
given to these results, however, as strong productivity gains from increased fertilizer use
should not be expected, given high usage (250-400 kg of fertilizer per ha) already present
in Viet Nam. Even with improved varieties and greater production, export markets for such
a surplus would need to be found. This requires greater work in export promotion as well
as increased diversity in suppliers and export markets.

The impact of crop diversification in the Red River Delta and Mekong River Delta was
relatively mild, with the main effect being reduced exports of rice by the Red River Delta to
neighboring provinces and by the Mekong River Delta to Northern provinces. The
simulations modeling the combined effect of diversification in the Red River Delta and
Mekong River Delta resulted in a reallocation of trade flows, whereby there was less trade
from the Red River Delta and more trade to the North by the Mekong River Delta. The
implication of these is potentially reduced food security in these Northern regions, as these
regions become more reliant on food supplies from the South. The implication is that
policies that promote crop diversification need to recognize the need to improve and
facilitate market linkages between regions to ensure the flow of rice domestically.

The impact on improving milling technology appeared to be greatest in increasing exports


from Viet Nam, while lower post-harvest losses had only small effects on production or
trade. This is not to say that reducing post-harvest losses should not be a priority of the
government, however. Rather, the effects may be more subtle than those analyzed in this
model. Further research will be necessarily to fine-tune the multi-market model to trace the
effects of improved efficiency in the rice sector.

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8 Major Constraints and Recommendations


Farm Sector

Constraint Nature of Constraint(s) Policy Recommendations

1. Land Use Institutional and sustainability 1. Further research into the policy and economic implications of alternative land use options.
Constraints difficulties with conversion of 2. Further research into alternative land use practices including economic analysis of different options.
rice land to alternative uses. Dissemination of research findings to farmers through extension and advisory services.

2. Credit Difficult borrowing 1. Give the Viet Nam Bank for Agriculture and Rural Development more flexibility in setting interest rates,
Constraints procedures and unsuitable allowing VBARD to profitably lend to an expanded set of borrowers.
repayment schedules limit 2. Discontinue practice of preferentially directing loans to state-owned enterprises.
access to appropriate credit 3. Facilitate the sustainable expansion of People’s Credit Funds.
4. Encourage the use of commercial lending practices that do not discriminate on the basis of the type of
borrower (private vs SOE) but rather on the basis of the level of risk of the proposed loan.
5. The appropriateness and feasibility of developing capacity building of farmers in financial management by
agricultural extension and advisory services needs to be investigated.

3. Seed Availability of high grade 1. Research institutes and universities should focus on basic research, varietal development, and foundation
Constraints seed is limited. Low quality seed production, while seed companies focus on multiplication and sales of certified seed to distributors and
assurance and a lack of farmers.
standardized specifications 2. Research institutes should gradually phase out seed production activities as the level of funding increases.
of seed inputs have led to a 3. Seed certification should be carried out by a public institution with no involvement in seed production. Seed
lack of producer confidence. certification should be voluntary, but the reputation of the certification agency ensures that seed companies
are willing to pay for the service.

4. Irrigation Producers are charged 1. Improvements in the organization of water user groups.
Constraints irrigation fees regardless of 2. The relationship between the provincial authorities and the Irrigation Management Committees should be
the quantity of water that is clarified and formalized, with a specific division of labor between the two.
utilized by the individual 3. Irrigation user fees should be sufficient to cover both capital costs and operations and maintenance, reducing
producer. Payment options the Irrigation Management Committees dependence on the government.
restrict producer choice in 4. Irrigation fees would be set on the basis of metered water use rather than simply the area irrigated. Even if this
cropping activities. Poor is not feasible at the farm-level, it should be possible for small groups of farmers. This would increase
service delivery constrains incentives for farm-level conservation and canal maintenance.
the effectiveness of the 5. New irrigation schemes should only be approved on the basis of economic viability and financial sustainability.
irrigation system Research into the use of small scale irrigation schemes as a replacement for large scale irrigation works
should be promoted.

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Milling Sector

Constraint Nature of Constraint(s) Policy Recommendations

1. Quality The quality of rice is hampered by the fragmented 1. Encouragement of private sector interaction with farmers and collectors, in
Constraints structure of the marketing chain. terms of seed and input provision, to create incentives for supply of higher
quality paddy.
Millers and exporters have difficulty in accessing high 2. Rationalization of the marketing chain, particularly in the milling sector. This
quality and consistent inputs due to the structure of should be weighed carefully against the structural adjustment and employment
distribution and presence of multiple layers between effects of such policies.
producers and millers/exporters.

2. Credit Credit constraints limit the ability of millers to purchase 1. Reduction in costs of capital economy-wide.
Constraints sufficient paddy to fulfill orders. 2. The appropriateness and feasibility of developing capacity building of millers in
financial management by advisory services needs to be investigated.
3. Promote conditions that allow greater private involvement in the export of rice,
such as comparable credit arrangements between state-owned enterprises and
private enterprises.

3. Infrastructure Millers, particularly small millers, are constrained by 1. Improvements of storage facilities to allow exporters to better manage price risk
Constraints limited quantities of storage. Availability of electricity is from government-to-government contracts.
a problem for some millers. 2. Expanded access to credit for infrastructure and technology upgrades
3. Increased Government expenditure on general infrastructure services such as
transportation and energy.

4. Lack of Market A reliance on a small number of markets increases the 1. Government programs to assist traders and exporters deal with fluctuations in
Access and risk of adverse economic conditions and increases prices should be structured as self-financing insurance schemes and should not
Volatility price instability. receive state subsidies.
Constraints 2. Increased market promotion activities in overseas markets to diversify sales
away from government-to-government contracts and towards working with a
greater variety of overseas distributors.

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Retailing Sector

Constraint Nature of Constraint(s) Policy Recommendations

1. Poor Marketing In areas outside of the Mekong River Delta the distribution of rice is hampered by Improvements in physical infrastructure in areas
and Distribution inadequate infrastructure and distribution networks. This hampers the ability of outside the Mekong River Delta. Particularly in
Systems retailers to obtain rice, particularly in remote provinces. remote and mountainous regions.

2. Low Margins in Retailers receive low margins on rice sales, due to significant competition among Strengthening of the Market Information System
Retail Sector rice retailers and limited competition among SOE distributors.

Export Sector

Constraint Nature of Constraint(s) Policy Recommendations

1. Market Structure Millers and exporters have difficulty in accessing high quality Eventual equitization of SOEs will assist the rationalization of the industry.
and consistent inputs due to the structure of distribution and This must be done in a way that takes into consideration the structural
presence of multiple layers between producers and adjustment and employment effects of such a rationalization.
millers/exporters
2. Lack of Risk Government to Government export contracts negotiated by 1. Financial accountability for SOEs and the removal of government
Management VINAFOOD may expose provincial food companies to underwriting of activities will enhance management’s role in negotiating
significant price risks. contracts.
2. Equitization will increase incentives for greater financial accountability.

3. Reliance on a Rice exports from Viet Nam are relatively non-diversified, with 1. Development of overseas trade promotion activities.
Small Number of a concentration on exports of low quality rice through a small 2. Encourage the development of alternative outlets for exports.
Export Markets number of distributors and the majority of sales being made
through Government to Government contracts. This lack of
diversification means that the export sector has a high degree
of vulnerability

Private exporters are also at a significant disadvantage 1. Removal of preferential credit arrangements for SOEs.
4. Credit relative to state-owned exporters, as the former are limited to 2. Loans to be based on financial viability of business plans
Constraints borrowing up to 70 percent of their collateral while the latter 3. Allow SOEs to borrow money based on actual borrowing needs rather
can receive a loan for the entire value of the contracted than through targets set by People's Committees.
shipment of rice.

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9 Conclusions
The future role for the rice industry in Viet Nam is one that is subject to considerable
debate. Two major themes emerge from the preceding analysis. First, there is clearly a
need to enhance the productivity of the rice sector. As noted in the report, average rice
yields country-wide remain low, averaging 4.3 tonnes per hectare; while yields in the Red
River Delta average 5.4 tonnes per hectare. In some of the best growing conditions in the
Mekong River Delta some farmers are achieving 10-12 tonnes per hectare, illustrating the
yield gap between different parts of the country. This is especially important from the
standpoint of poverty alleviation, as 60 percent of farmers produce rice for subsistence
needs, many of whom are food deficit for one or two months per year. Such an approach
clearly relies on the development of improved seed varieties, increased access to inputs
(credit, fertilizer, pesticides and irrigation) and agricultural extension. Unfortunately, access
to high-quality seeds, inputs, and agricultural extension services are limited to nonexistent
for the vast majority of farmers in remote and mountainous areas, as farmers lack the
credit and access to markets and institutions to effectively improve production and food
security.

Second, it is clear from the analysis that Viet Nam has the potential to be a major exporter
of niche and high-quality varieties of rice. In 2001 over 25 percent of exports from Viet
Nam were of 5 percent broken rice. However, the bulk of the exports have been low quality
35 percent broken rice under Government-to-Government contracts. Exports of high
quality rice have been due to efforts by private companies and SOEs to integrate
themselves into the global economy. While the development of export markets based on
low quality rice exports has been a major achievement, by boosting export revenues and
producer incomes, such a strategy will only continue to be successful for a limited time. It
is a feature of international markets that world prices for agricultural commodities will
continue to fall. Thus revenues can only be maintained by increasing productivity and
reducing costs in the absence of any product differentiation and quality improvements.

While a high quality approach only involves a limited number of farmers on a small amount
of the total rice area, it has the potential to involve more farmers, particularly those in
areas suitable for the production of high-quality varieties. For those farmers involved in
such a niche market enterprise, average paddy prices could be up to twice the value of
improved varieties of the IR and Chinese hybrid varieties. However, the private sector is
currently limited in its ability to integrate with farmers and improve post-harvest technology
and milling capacity, due to constraints related to credit, infrastructure, and institutions.

It is argued that the underlying nexus between these two themes is that the major
constraint in the rice sector in Viet Nam is a fundamental lack of an enabling environment,
in terms of infrastructure and institutions, needed to facilitate the development of the rice
sector in Viet Nam to improve food security, rural poverty, and export generation.
The conceptualization of this idea is provided in Figure 31. As shown in the diagram, the
role of an enabling environment has an overarching impact on the major constraints in the
rice sector. For example, lower transaction costs are argued to impact credit markets by
reducing the costs of credit, which will have the effect of stimulating investment in the farm
and milling sectors and serve to raise productivity and the use of better inputs. Greater
public investment in infrastructure will have positive effects on market access, while

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increased transparency and stronger government institutions will lead to lower transactions
costs.

A major debate in the establishment of this “enabling environment” involves what role
needs to be played by the public sector in the development of the rice sector. There is a
view that the private sector and public sector approaches are somehow incompatible, and
that policy choices need to be made between them. However, Viet Nam is currently, and
successfully, following these two approaches simultaneously. The role of the public sector
should not be in providing support to SOEs which have no incentives to modernize or
become efficient. As noted, private investment in high-quality rice mills has occurred over
the last few years and encountered some success both with farmers and in terms of
exports. This has been a result of the relaxing of the export quota and licensing system,
enabling private firms to invest in export enterprises. A major constraint to this has been
the institutional and transactional constraints enabling private companies to successfully
complete export contracts. In particular, the export paperwork and procedures and the
difficulty in single mills filling a large export order inhibit efficient functioning of the system.

Economies of scale in the milling and exporting sector indicate that rationalization will
eventually occur (and will need to occur). This will be facilitated by an eventual equitization
of SOEs and the imposition of financial discipline as a result of increased privatization. The
role of the Government should be to smooth this structural adjustment path and put in
place mechanisms to assist vulnerable groups within this adjustment process. This
suggests that underlying this goal of establishing an “enabling environment” is the need to
develop synergies between public and private actors. Indeed, from a policy and poverty
reduction standpoint, it is argued that these two approaches could be followed
simultaneously, and that policy instruments are broad enough to encourage (on the one
hand) private investment in rice production and processing, and (on the other hand) allow
the majority of poor farmers to share in the benefits from globalization.

Consider first the issue of productivity. Vietnamese rice farmers have extremely high yields
of rice and have the highest productivity per hectare in the world. High levels of fertilizer
application, access to irrigation and good improved varieties of seed are the major reasons
for this high productivity. In some areas in the Mekong River Delta farmers are obtaining
10-12 tonnes per hectare. Accordingly, there are serious technical questions to be asked
about the feasibility of improving per hectare yields even further. However, on a country-
wide basis, average yields for 2001 were only 4.27 tonnes per hectare (General Statistics
Office 2002). There are significant regional and provincial differences which need to be
addressed. Further efforts to improve yields should concentrate on remote and
mountainous regions rather than on areas within the Mekong and Red River Delta regions.

In all but the provision of irrigation there is a definite role for the private sector and the role
of the public sector should be relegated to an enabling function. In terms of the public
sector’s role in provision of irrigation works, there are serious questions as to the economic
rationale and viability of large scale irrigation schemes (as opposed to micro-level
schemes, tube wells and portable pumps)19. This is a question which is not unique to Viet
Nam. The poor internal rates of return for large scale irrigation works in neighboring
countries, and problems in implementing and managing a complex scheduling of water
use, demonstrate the weakness in relying on these large scale irrigation schemes as a
panacea for constraints in agricultural production. As the experience in neighboring

19
Flood and drought prevention is a separate issue and should not be used as a justification for irrigation
infrastructure investment.

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countries has shown, significant investment in irrigation has not resulted in the increases in
production or yield expected from an economically viable project.

When the question of irrigation is separated out from other agricultural inputs, it is clear
that the private sector can provide these inputs just as well, if not better than the public
sector. The role of the public sector in this case is one of providing an enabling
environment, both through the provision of legislation as well as providing services which
are not necessarily unique to agriculture. As an example, the provision of fertilizer and
pesticide inputs ideally should be the role of the private sector. However, the cost and
availability of these inputs are constrained mainly by the cost of transportation and to a
second degree by government regulations governing official imports. Import substitution
policies for intermediate goods do not engender an efficient industry; merely raise the cost
of production of goods further downstream. The Government needs to carefully determine
its priorities in this area.

The issue of credit is a major impediment to improvements in agricultural productivity. The


problem of credit in Viet Nam is not entirely an issue of high interest rates or constraining
collateral requirements (although these are always mentioned as the number one
complaints), but rather the lack of access to affordable and viable credit (in terms of
administrative procedures). Again, this suggests the role for the public sector in creating
an environment that can reduce the costs of credit to the rural sector. The existence of
moneylenders charging 20-40 percent per month for cash loans and 100 percent for rice
loans illustrates that, firstly, credit providers (however usury) do exist, and that demand for
credit is high. However, it should be emphasized that the cost of providing credit remains
high. The high cost of servicing small loans increases the burden on both banks and
borrowers. Moreover, credit providers (official and otherwise) face exceedingly high
administrative costs, due to a lack of infrastructure and human resources, which raise the
effective costs of borrowing to the agricultural sector. Public policies that aim to reduce
these institutional costs to the provision of credit would likely have significant, positive
effects in the rice sector and throughout the economy. It is not suggested, however, that
the public sector attempt to subsidize and distort credit markets for rice and agriculture.
The recent difficulties faced in the banking sector in Viet Nam on agricultural loans, for
instance, should serve as a warning for public involvement and guidance in the
administration and provision of capital to agriculture.

The last input that needs to be considered in the context of increasing both quantities
produced and yield is the provision of the appropriate varieties of seeds. The adoption of
improved varieties of rice, particularly IR and Chinese varieties, has been instrumental in
the adoption and expansion of rice production in the Mekong and Red River Delta
Regions. The area under improved varieties has grown significantly over the last decade
and has contributed greatly to the rice surplus and export market.

While the majority of farmers (and consumers) prefer traditional rice for domestic
consumption purposes, improved varieties of paddy (particularly IR varieties) have been a
major source of exports. Therefore it could be argued that an export strategy should have
a basis, or emphasis, on improved variety production rather than traditional production.
This goes to the heart of the debate between a niche market export and development
strategy versus a broad-based export of average quality rice and development strategy. It
should be noted that while the adoption of improved varieties has been extensive, there is
limited adoption of improved traditional (non-IR or Chinese hybrid) varieties outside the
main delta regions.

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Part of the problem is that research into improved varieties within remote regions in Viet
Nam is still in its infancy and there are even more limited amounts of seed available for
farmers even if they wanted to try them. Within the development community there is a
fierce and heartfelt debate about the pros and cons of a development strategy based on
the extension of IRRI-styled varieties vis-à-vis the use of traditional varieties. The concern
is that the adoption of high yielding varieties is the adoption of a technology package, not
just the adoption of seeds, and the relative performance of the improved varieties under
low levels of technology inputs is not much better (or even worse) than traditional varieties.

While improved varieties of rice have enabled Vietnamese farmers in the Mekong and Red
River Deltas to extend rice production into multiple crop seasons and to improve yields,
this has been for export sale rather than for domestic consumption, and while the volume
of exports remain small relative to domestic consumption, the adoption of improved
varieties in other regions in Viet Nam will continue to be constrained. This has major
implications for the role of poverty alleviation in areas outside the main rice production
zones of the Mekong and Red River Deltas.

This leads into a debate about an emphasis on niche market exports of high quality rice
versus exports of low quality rice. This approach sees a major role for the private sector in
determining which markets are profitable and which technologies (seeds, production
practices, milling processes) are needed in order to exploit these markets. The role of the
public sector is again relegated to one of facilitation and the creation of an enabling
environment20. While it is tempting to identify roles for the public sector in providing
subsidized credit and other inputs, the thrust of this approach is a commercial one, and
thus if a particular niche market is unprofitable without government subsidies, then there is
a question of whether commercial enterprises should be investing in this market to begin
with. The provision of inputs and seeds is necessarily the role of the private sector in this
development approach. It is interesting to note that existing models of niche market
development in the Cambodian and Thai rice sectors concentrate on the export of high
quality rice, rather than IR rice. This demonstrates the divergence of approaches between
the private sector niche market development and the public sector broad-scale
development of an export market based on average quality rice.

With respect to the second theme, the injection of private sector capital into the rice sector
in Viet Nam has tentatively proved to be a possible strategy for adding value and
enhancing exports. However, such private sector involvement has been limited to date to
large milling companies with significant private financing that have limited reliance on
commercial sources of capital. The ability of medium and large mills to enter these
markets has been fundamentally constrained by a lack of working capital that prevents the
improvement of milling technology and limits the ability of millers to purchase paddy from
farmers. The credit constraint also prevents many millers from working with farmers to
supply mills with a consistent level of quality required to enter export markets. The

20
As noted above, while it may seem that the two approaches are divergent, the linking theme is the
provision of services by the private sector and the role of the public sector in providing appropriate
legislation, investments in infrastructure, and liquidity in the financial markets. These are not agriculture-
specific policy instruments, but are part of the broad fiscal and monetary policy instruments and policies
required for good governance. Even if an interventionist approach with massive public investment in
irrigation, seed improvement or agricultural extension were undertaken it is doubtful whether the underlying
goal of poverty alleviation and development through rice production would be achieved. Fundamentally,
while both approaches work on the farmer level of the rice industry, the export of average quality rice
strategy plays only a limited role on downstream actors in the marketing chain. In contrast, the niche market
strategy relies heavily on promotion of the processing and distribution side of the industry. Thus while the
average quality strategy is supply driven, the niche market strategy is demand driven.

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organization of Government-to-Government contracts also severely limits the ability of


private companies to play a role in developing export markets.

The idea of developing a credit guarantee fund will enable millers to reduce their credit
costs by giving millers greater access to affordable credit at wholesale rates. However, it
needs to be emphasized that the low value of mill assets (particularly of small mills) will
prevent millers from obtaining the capital required to expand and develop into export
markets. This suggests that there will need to be a fundamental rationalization of the
milling sector in the medium-term, particularly among mills that target commercial and
export markets.

The role of the government in the development of the private sector should be limited to
fostering the environment in which the private sector can operate. The provision of
artificially cheap credit is not recommended. Rather, the public sector can take steps to
help reduce the costs faced in the marketing and export of rice in Viet Nam. This includes
assistance in the improvement of infrastructure and taking steps to reduce the high
transactions costs, in the form of unofficial costs and non-transparent port and clearance
measures, which reduce the competitiveness of Vietnamese rice exports.

It has been suggested that the government play a role in the development of grades and
standards to assist in the improvement of quality in Viet Nam. However, with respect to
export-quality rice, international standards already exist in the market for general varieties
of rice. At the same time, there is a role for the private sector, particularly in the form of
milling and farm associations, to work with the public sector to develop programs, brands
and certification schemes that communicate the attainment of such standards (Reardon,
Codron et al. 1999). Where niche markets are being targeted, the development of
appropriate standards should be the purview of the private sector in conjunction with
demands and specifications made by foreign buyers. Indeed, for high-quality and niche
products, public standards do not often exist and necessitate the role of the private sector
to develop these standards (Reardon, Codron et al. 1999).

Currently margins in the rice sector are low for all actors other than farmers. While this
might indicate that the benefits of trade liberalization and increasing exports are accruing
to producers, it must be understood that low margins for large mills and exporters is a
temporary phenomenon due to poor economic and financial management of the exporting
side of the industry and a transitional industry structure due to the relaxing of the export
quota and licensing system. The failure to hedge against world price movements and the
failure to secure domestic supplies of paddy have forced exporters to reduce profit
margins and sometimes take a loss in order to fulfil export contracts. The structure of the
industry is such that there are clear economies of scale in the milling and exporting sector
and that margins should be higher than they are presently. The large number of small and
medium size mills which are arguably competitive is a historical artifact of a previously
regulated industry. Under the export quota only selected SOE mills could obtain an export
license, which resulted in two industry structures evolving. On the one hand a large
number of provincial, district and commune level mills evolved to provide milling services
for the domestic sector, while on the other a few large SOE mills evolved to service the
export market and the large inter-regional trade in rice between the Mekong River Delta
and other regions.

As a consequence of bad financial management over the last few years, and an evolving
industry structure, rationalization of the industry will continue and margins for the milling
sector will increase.

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It should be noted that middlemen perform a necessary function in a market matching


buyers and sellers. In competitive commodity markets middlemen typically perform a value
adding service by transforming raw commodities into finished consumer products tailored
to consumer needs. Whenever there is an interface between a (arguably competitive)
farming sector with constant or decreasing returns to scale and an (arguably
oligopolistic/oligopsonistic) industrial processing sector with increasing returns to scale
then benefits from trade will accrue firstly to the processing sector. Whether there are
benefits flowing to the input market (paddy) will depend specifically on whether there is an
increase in production under trade liberalization – the pro-competitive effects of trade.

In an industry with increasing marketing margins a necessary and policy relevant question
is whether the increase in margins are due to middlemen providing marketing services, or
whether a component of that increase is due to the capture of rent by oligopsonistic and/or
oligopolistic middlemen. In the case of oligopsonistic and/or oligopolistic middlemen who
exert market power, the question is then whether such market power affects gains from
trade21.

The private sector should be encouraged to develop high valued niche markets, which will
benefit those farmers who are supplying high quality varieties of paddy. Simultaneously
there needs to be efforts to encourage an increase in quantity and yield of the bulk of the
remaining rice crop. Again, the role of the public sector is an enabling role, rather than to
provide subsidized inputs or research.

Links between export-led growth and poverty alleviation are often tenuous. The key to
understanding the link between export led growth and poverty reduction for the rice
growing rural household is that the poor do not benefit directly from export led growth
since they grow paddy whereas rice is the actual export commodity22.

However, for the majority of Vietnamese farmers, rice is still cultivated for subsistence
reasons. Even with the better cultivars and methods of cultivation, income from rice is
likely to be only between $100 and $200 per hectare. Unless farmers have extensive
amount of land, rice cultivation is unlikely to be the main source of poverty reduction in Viet
Nam.

This leads to the final issue that needs to be addressed, and is one that requires further
exploration and research. The question that needs to be raised is to determine the overall
competitiveness of Viet Nam in rice production vis-à-vis its regional competitors. Viet Nam
has succeeded in capturing a market for low-quality rice exports. It is less certain whether
Viet Nam would have a comparative advantage in higher quality rice. A strategy based on
the export of cheap rice with a high percentage of broken grains to less discerning markets

21
At the heart of this question is whether the presence of middlemen affects the neo-classical analysis of
Walrasian general equilibrium (Hahn 1971; Jouini and Kallal 1995; Spulber 1999). After all, two of the crucial
behavioral assumptions underlying neo-classical theory is that, firstly, firms take market prices as given; so
that they do not recognize the effects of their decisions on prices and thus do not engage in activities that
influence the price, and, secondly, they choose input-output vectors in their production-possibilities set to
maximize profit (Spulber 1999, p. 85). In the case of a monopsonistic/monopolistic middleman, the
middleman sets prices, resulting in a departure from Pareto optimality as the marginal rate of substitution is
less than the marginal rate of transformation. This results in a non-tangency of the consumer's indifference
curve with the production possibility frontier which is due to the exertion of market power (Spulber 1999, p.
81-113). This results in a violation of the tangency condition in the gains-from-trade theorem.
22
Perversely, the poor benefit more from the unofficial export in paddy than they do from the official export in
processed rice because the marketing chain is shorter.

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is risky and is based on the assumption that even though the price of paddy would be
lower than average prices, the higher yield might still partly compensate farmers for the
lower price and higher investment in inputs.

The latter point is an important issue if productivity gains are to be realized, as without an
outlet for exports, the resulting surplus will lead to significantly depressed prices within Viet
Nam. Transportation costs in remote and mountainous areas are also quite high and could
be reduced significantly if transport infrastructure were improved. This cautiously implies
that the lower-end of the rice sector may have the potential in the medium-to-long-term to
be competitive.

Most efficiency gains are to be realized from reforming the domestic production,
processing and trade systems, rather than from reforms at the border. Resulting
reductions in transaction costs would benefit both producers and consumers.

In localized areas where there are currently no opportunities to access other domestic and
international markets, increased trade opportunities would result in an increase in local rice
prices. This would benefit those with adequate resources to produce surplus rice, but
would increase costs of purchasing rice for those who lack the resources to produce all
household rice requirements. On the other hand, improved access to trade and higher
farm gate prices would provide improved incentives for increased investment in production
and this would generate increased employment.

While it is possible that some of the poor (for example. those that are net consumers of
rice) could suffer welfare losses from increased rice trade, proposed improvements are
expected to have a major positive net contribution to reducing poverty.

However, it should be strongly emphasized that the potential competitiveness of rice be


weighed against the competitiveness of other products, such as maize, livestock, or
aquaculture, in the development of medium-term agricultural strategies. While
improvements in rice productivity will benefit the poor and improve food security, in the end
policies that promote rice production may need to be combined with policies aimed at
achieve crop diversification in order to alleviate rural poverty.

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10 Tables

Table 1 World Production of Rice, 1997/98-2001/02


Area Paddy Milled Rice Ending
Harvested Yield Production Production Exports Stocks
(Million (Million (Million (Million
Year (Million Ha) (Tonnes/Ha) Tonnes) Tonnes) Tonnes) Tonnes)
1997/98 151.3 3.8 574.2 386.8 27.7 126.3
1998/99 152.3 3.8 585.6 394.1 24.9 133.0
1999/2000 154.9 3.9 607.3 408.3 22.9 142.8
2000/2001 152.2 3.9 589.2 395.9 23.0 137.5
2001/02* 151.3 3.9 585.8 393.3 23.0 126.2
*Preliminary estimate, Nov. 2001
Source: (USDA-ERS 2001)

Table 2 World Production of Rice, Selected Countries, 1997/98-2001/02


Production 1997/98 1998/99 1999/2000 2000/2001 2001/2002*
Australia 1.3 1.4 1.1 1.8 1.5
Bangladesh 28.3 29.8 34.6 36.5 34.5
Brazil 8.6 11.6 11.4 10.4 10.9
Burma 15.3 16.0 17.0 17.0 17.0
China 200.7 198.7 198.5 187.9 181.0
Egypt 5.4 4.2 5.8 6.0 5.3
European Union 2.7 2.7 2.7 2.4 2.4
India 123.8 129.0 134.2 129.5 133.5
Indonesia 49.2 50.4 52.9 50.6 51.4
Japan 12.5 11.2 11.5 11.9 11.3
Pakistan 6.5 7.0 7.7 7.1 6.8
Philippines 10.0 10.3 12.0 12.5 13.7
South Korea 7.4 6.8 7.1 7.2 7.5
Taiwan 2.0 1.9 2.0 1.9 2.0
Thailand 23.5 23.6 25.0 25.5 25.5
United States 8.3 8.4 9.3 8.7 9.5
Viet Nam 28.9 30.5 31.7 31.0 31.2
Others 39.8 42.1 42.8 41.3 40.8
Total 574.2 585.6 607.3 589.2 585.8
(Paddy Basis, Million Tonnes)
*Preliminary Estimate, Nov. 2001
Source: (USDA-ERS 2001)

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Table 3 World Rice Trade, Selected Countries, 1997/98-2001/02


Country 1998 1999 2000 2001* 2002*
Exports
Argentina 599 654 473 275 250
Australia 547 662 617 600 700
Burma 94 57 159 500 500
China 3,734 2,708 2,951 1,800 2,000
Egypt 426 320 500 550 650
EU 346 348 308 350 350
Guyana 249 252 167 175 150
India 4,666 2,752 1,449 1,600 1,500
Pakistan 1,994 1,838 2,026 1,900 1,900
Taiwan 55 113 120 90 90
Thailand 6,367 6,679 6,549 7,000 7,000
USA 3,156 2,648 2,756 2,650 2,700
Uruguay 628 681 642 700 650
Vietnam 3,776 4,555 3,370 3,600 4,000
Other 1,033 658 809 1,240 524
World Total 27,670 24,925 22,896 23,030 22,964
Imports
Bangladesh 2,520 1,220 638 475 500
Brazil 1,555 781 700 500 500
Canada 245 248 280 260 265
China 261 178 278 300 310
Cuba 336 431 415 450 455
Eastern Europe 334 361 343 352 357
EU 787 784 852 800 800
Hong Kong 312 326 274 315 320
Indonesia 5,765 3,729 1,500 1,300 1,600
Iran 844 1,313 1,100 800 1,250
Iraq 630 779 1,274 1,000 1,000
Ivory Coast 520 600 550 650 650
Japan 468 633 656 700 700
Malaysia 630 617 596 600 600
Mexico 295 342 415 425 425
Nigeria 900 950 1,200 1,600 1,200
North Korea 250 159 400 550 450
Peru 236 116 86 150 100
Philippines 2,185 1,000 900 950 800
Russia 224 580 400 350 350
Saudi Arabia 775 750 992 950 875
Senegal 600 700 637 750 750
South Africa 529 514 525 550 550
Sri Lanka 168 205 18 30 30
Syria 160 200 150 150 150
Turkey 276 321 350 300 350
UAE 75 75 75 75 80
United 300 357 308 315 325
Yemen 111 217 210 215 225
Other 4,075 4,941 5,497 6,075 5,904
Unaccounted 1,304 1,498 1,277 1,093 1,093
World Total 27,670 24,925 22,896 23,030 22,964
(Milled Basis, Thousand Tonnes)
*Estimate as of Nov. 2001
Source: (USDA-ERS 2001)

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Table 4 Comparison of Thailand and Viet Nam Prices for High-Quality Rice
Thailand Viet Nam Viet Nam Price Thailand Viet Nam Viet Nam Price
Year (5% Broken) (5% Broken) (% of Thai Price) (15% Broken) (15% Broken) (% of Thai Price)
1997/98 $293 $269 91.8% $275 $254 92.4%
1998/99 $276 $257 93.1% $261 $244 93.5%
1999/2000 $222 $203 91.4% $208 $191 91.8%
2000/01 $178 $165 92.7% $167 $155 92.8%
2001/02* $173 $182 105.2% $166 $172 103.6%
US Dollars per Tonne
*Preliminary estimate, Aug.-Dec. 2001
Source: (USDA-ERS 2001)

Table 5 Percentage of High-Quality Rice Exported by Viet Nam, 1994-1998


Quality standard 1994 1995 1996 1997 1998
5-10% broken 70.4 55.1 45.5 41 53
15-25% broken 20.8 40.8 11.0 9.0 11.0
35% broken and up 8.8 4.1 43.5 50 36
Source: (PHTI-HCMC 1999)

Table 6 Destinations for U.S. Exports of Rice, 2000 - 2001


Country Exports
Mexico 403.5
Japan 339
Canada 183.9
Haiti 174.9
Saudi Arabia 148.4
Turkey 138
United Kingdom 104.8
Philippines 104.7
Ghana 80.8
Honduras 69.6
Other 885.8
Total 2633.4
(Thousand Tonnes)
Source: (USDA-ERS 2001)

Table 7 Value of Exports


Sector 1995 1998 1999 2000 2001
Million US$
Heavy Industrial Products and Minerals 1377.7 2609 3609.5 5382.1 4600
Light Industrial and Handicraft Goods 1549.8 3427.6 4243.2 4903.1 5400
Agricultural Products 1745.8 2274.3 2545.9 2563.3 3063
Forest Products 153.9 191.4 169.2 155.7 186
Aquatic Products 621.4 858 973.6 1478.5 1778
Others 0.3
Total 5448.9 9360.3 11541.4 14482.7 15027
Percent
Heavy Industrial Products and Minerals 25.3% 27.9% 31.3% 37.2% 30.6%
Light Industrial and Handicraft Goods 28.4% 36.6% 36.8% 33.9% 35.9%
Agricultural Products 32.0% 24.3% 22.1% 17.7% 20.4%
Forest Products 2.8% 2.0% 1.5% 1.1% 1.2%
Aquatic Products 11.4% 9.2% 8.4% 10.2% 11.8%
Others 0.01% 0.0% 0.0% 0.0% 0.0%
Source: (General Statistics Office 2002)

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Table 8 Total Harvested Area of Rice by Region


Region Harvested Area (ha) Proportion of Total Harvested Area
Red River Delta 1,202,500 16.07%
North East 558,600 7.46%
North West 139,800 1.87%
North Central Coast 700,000 9.35%
South Central Coast 413,500 5.52%
Central Highlands 181,100 2.42%
North East South 508,100 6.79%
Mekong River Delta 3,781,000 50.52%
Total 7,484,600 100.00%
Source: (General Statistics Office 2002)

Table 9 Urban and Rural Population by Region (1999)


Region Urban Population (000) Rural Population (000) Percentage of Rural
RRD 3117 11683.1 78.9
NE 1736.9 9123.7 84
NW 289.5 1938.2 87
NCC 1231.8 8775.4 87.7
SCC 1738.9 4787 73.4
CH 698.4 2363.8 77.2
NES 6351.8 6359.1 50
MRD 2753.9 13379.4 82.9
Source: (General Statistics Office 2002)

Table 10 Agricultural Land per Capita


Rural Population Agricultural Land Agr. Land per rur. Pop.
Region ('000) (000 ha) ha/capita
Red River Delta 11610.4 672 0.06
North East 9050.3 909 0.1
North West 1909.4 316 0.17
North Central Coast 8714.8 681 0.08
South Central Coast 4748.5 437 0.09
Viet Nam 57989 7843 0.14
Central Highlands 2287.7 668 0.29
North East South 6351.3 1526 0.24
Mekong River Delta 13316.6 2632 0.2
Source: (General Statistics Office 2002)

Table 11 Contribution of Agriculture to 1999 GDP


Sector Share of 1999 GDP (Percent)
Crops 16.46
Livestock 3.41
Agriculture
Forestry 0.99
Total 23.76
Industry 34.36
Services 41.88
Total 100
Source: (General Statistics Office 2002)

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Table 12 Estimated Magnitude and Incidence of Poverty, 2000


Percentage of Total Households
Number of poor households
Regional Basis Viet Nam
Rural mountainous areas 785000 31.3% 28.0%
Rural Rural plain areas 1,750,000 16.9% 62.5%
Total 2,535,000 19.7% 90.5%
Urban 265000 7.8% 9.5%
Total 2,800,000 17.2% 100.0%
Northwest region 146000 34% 5.2%
Northeast region 511000 22% 18.3%
Red River Delta 337000 10% 12.0%
North Central region 554000 26% 19.8%
Region Central Coastal region 389000 22% 13.9%
Central Highlands 190000 25% 6.8%
Southeast region 183000 9% 6.5%
Mekong River Delta 490000 14% 17.5%
Total 2,800,000 17% 100.0%
Source: (Government of Viet Nam 2002, pg. 19)

Table 13 Trends in Poverty Rates


Poverty rate Percent
Household group 1993 1998 change
Urban 25 9 -64%
Location Rural 66 45 -32%
Northern Uplands 79 59 -25%
Red River Delta 63 29 -54%
North Central Coast 75 48 -36%
South Central Coast 50 35 -30%
Central Highlands 70 52 -26%
South East 33 8 -76%
Mekong River Delta 47 37 -21%
Region Viet Nam 58 37 -36%
Source: (ANZDEC 2000).

Table 14 Trends in Household Income


Growth in per capita consumption expenditure over 1993-1998
Region Urban Rural Overall
Northern Uplands 66% 27% 31%
Red River Delta 47% 51% 55%
North Central Coast 86% 37% 46%
South Central Coast 39% 26% 29%
Central Highlands 70% 25% 25%
Southeast 78% 59% 78%
Mekong River Delta 36% 11% 18%
Viet Nam 60% 30% 41%
Source: (ANZDEC 2000)

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Table 15 Trends in Income Distribution


Indicator of inequality 1993 1998
Urban 0.187 0.197
Theil L index of inequality Rural 0.128 0.126
Viet Nam 0.177 0.201
Urban vs Rural 1.8 2.2
Ratio of per capita expenditure Rich vs Poor Quintal 4.9 5.5
Rich vs Poor Region 1.9 2.6
Source: (ANZDEC 2000)
Note: A higher Theil index means more inequality. A quintile is 20 percent of the population.

Table 16 Landlessness by Region (1994)


Percent of Farming Households
Region No Agricultural Land No Annual Crop Land
Northern Uplands 0.8 1.4
Red River Delta 0.8 1.0
North Central Coast 2.3 2.7
South Central Coast 1.4 2.2
Central Highlands 0.8 13.6
South East 1.7 22.0
Mekong River Delta 0.7 8.4
Total 1.5 4.4
Source: (ANZDEC 2000)

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Table 17 Expenditures, Incomes, and Savings in Viet Nam by Quintile


Total 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile
Household size 4.7 5.6 5.1 4.6 4.3 4.1
Share of households with non zero savings 90.46 77.46 90.27 93.51 93.41 97.65
Household expenditure 13870 6826 9083 10525 13493 26101
Household income 17709 7755 11147 13019 17920 42097
Household savings 4413 699 1451 1964 3229 13573
Household savings as a percentage of income 24.9% 9.0% 13.0% 15.1% 18.0% 32.2%
Months of expenditures afforded by savings 3.8 1.2 1.9 2.2 2.9 6.2
Source: (ANZDEC 2000)

Table 18 Social Indicators of Selected Southeast Asian Countries, 1997


Combined Real GDP Infant mortality
Life expectancy Adult literacy Maternal mortality rate
Country (rank) HDI value Gross School per capita rate(per 1,000
(years) rate (%) (per 100,000 live births)
Enrollment (%) (PPP$) live births)
Cambodia (137) 0.514 53.4 66.0 61 1,290 106 900
Indonesia (105) 0.681 65.1 85.0 64 3,490 45 650
Lao PDR (140) 0.491 53.2 58.6 55 1,300 99 650
Malaysia (56) 0.768 72.0 85.7 65 8,140 10 80
Myanmar (128) 0.580 60.1 83.6 55 1,199 81 580
Philippines (77) 0.740 68.3 94.6 82 3,520 32 280
Thailand (67) 0.753 68.8 94.7 59 6,690 31 200
Viet Nam (110) 0.664 67.4 91.9 62 1,630 32 160
Source: (Asian Development Bank 2000)

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Table 19 Trends in Social Indicators


Indicator 1993 1998 Percent change
Female 87 91 5%
Net primary enrollment
Male 86 92 7%
Female 29 62 114%
Net lower secondary enrollment
Male 31 61 97%
Female 51 33 -35%
Moderate stunting among 0-5 yr-olds
Male 50 35 -30%
Female 32 30 -6%
Adult malnutrition
Male 32 25 -22%
% households with electricity 48 77 60%
% rural household with clean water 17 29 71%
% households owning a radio 40 47 18%
Source: (ANZDEC 2000)

Table 20 Paddy Productivity


Value of Harvest
Yield Paddy Cultivation Expenses
Quintile Industrial Crops Fruit Crops Livestock
Quintal/ha Kg/capita 000 Dong/ha 000 Dong/ha 000 Dong 000 Dong/ha
1st quintile 33.7 303 11478 17893 2142 1349
2nd quintile 38.4 516 13666 14146 2341 1894
3rd quintile 39.2 698 14386 22544 2246
4th quintile 40.9 804 12731 42503 2367 2636
5th quintile 41.1 10565 12222 15380 2566 4959
Source. (ANZDEC 2000)

Table 21 Land and Land Quality, by Quintile


Land Bad land Irrigated
Quintile m2/capita Percent Percent
1st quintile 1131 41.25 58.22
2nd quintile 1413 33.65 70.7
3rd quintile 1411 32.92 69.62
4th quintile 2457 31.44 76.03
5th quintile 2033 28.58 82.36
Source. (ANZDEC 2000)

Table 22 Growth in Yield, Harvested Area and Paddy Production (1990-1999)


Region Yield Harvested Area Production
Red River Delta 5.3% -0.1% 5.2%
North East 5.0% 0.7% 5.7%
North West 7.8% 3.5% 11.2%
North Central Coast 5.5% 0.0% 5.5%
South Central Coast 2.1% 0.6% 2.7%
Central Highlands 3.2% -0.2% 3.0%
North East South 1.6% 3.1% 4.6%
Mekong River Delta 1.2% 5.0% 6.2%
Viet Nam 2.8% 2.7% 5.6%
(percent growth)
Source: (General Statistics Office 2002)

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Table 23 Harvested Area, Average Yield and Paddy Production by Region (2001)
Harvested Area Average Yield Production of paddy
Region (hectares) (tones/hectare) (tonnes)
Red River Delta 1,202,500 5.35 6,430,400
North East 558,600 3.99 2,226,800
North West 139,800 3.11 434,500
North Central Coast 700,000 4.19 2,934,600
South Central Coast 413,500 4.13 1,708,500
Central Highlands 181,100 3.4 615,200
North East South 508,100 3.25 1,650,100
Mekong River Delta 3,781,000 4.22 15,970,100
Total 7,484,600 4.27 31,970,200
Source: (General Statistics Office 2002)

Table 24 Regional Yields for Seasonal Rice Plantings


Winter-Spring Summer-Autumn Winter
Region Dong Xuan He Thu Lua Mua Average
Red River Delta 5.79 na 4.91 5.35
North East 4.46 na 3.7 3.99
North West 4.83 na 2.61 3.11
North Central Coast 4.95 4.02 3.11 4.19
South Central Coast 4.49 4.67 3.24 4.13
Central Highlands 4.96 2.77 2.79 3.4
North East South 3.94 3.43 2.82 3.25
Mekong River Delta 5.04 3.71 3.48 4.22
Viet Nam 5.06 3.76 3.69 4.27
(tonnes/hectare)
Source: (General Statistics Office 2002)

Table 25 Post Harvest Losses in Rice Production, 1992-1994


Stage Low High
Harvesting 1.3% 1.7%
Threshing 1.4% 1.8%
Drying and Purifying 1.9% 2.1%
Transportation 1.2% 1.5%
Preservation 3.2% 3.9%
Milling 4.0% 5.0%
Total 13.0% 16.0%
Source: Untitled Document PHTI-HCM 2002 (World Bank Study Team Interview 1 August 2002)

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Table 26 Harvest and Post Harvest Losses, Long An Province, Mekong River Delta
Winter-Spring Summer-Autumn Lua Mua
Stage 2000 Average
1998-1999 1999 2000 2000
High Low
Cutting and
21032 2.20% 21868 2.00% 27335 2.50% 21426.45 4.15% 11507.6 2.60% 572 2.20% 17290.18 2.5%
Gathering
Seed Variety 8747.2 0.80% 10934 1.00% 5753.8 1.30% 572 2.20% 6501.75 0.9%
Bad Weather 4373.6 0.40% 5467 0.50% 5753.8 1.30% 286 1.10% 3970.1 0.6%
Threshing 25334 2.65% 26241.6 2.40% 32802 3.00% 14353.14 2.78% 17261.4 3.90% 858 3.30% 19475.02 2.8%
Drying 19406.8 2.03% 8747.2 0.80% 10934 1.00% 14043.36 2.72% 11507.6 2.60% 514.8 1.98% 10858.96 1.6%
Milling 24473.6 2.56% 13785.21 2.67% 19129.41 2.8%
Transportation 17494.4 1.60% 21868 2.00% 5753.8 1.30% 57.2 0.22% 11293.35 1.6%
Storage 19215.6 2.01% 10377.63 2.01% 14796.62 2.2%
Total Loss 109748.8 11.48% 87472 8.00% 109340 10.00% 74037.42 14.34% 57538 13.00% 2860 11.00% 73499.37 10.7%
Total Production 956000 1093400 1093400 516300 442600 26000 687950
Source: (PHTI-HCMC 2002)

Table 27 Production, Consumption and Food Balance for Rice, 2001


VLSS Estimates FAO Estimates
Region Production Loss* Net Paddy Rice Production Food Requirement Food Balance Food Requirement Balance
Red River Delta 6.43 1.093 5.337 3.523 2.603 0.92 3.101 0.421
North East 2.227 0.379 1.848 1.22 1.371 -0.151 1.633 -0.414
North West 0.435 0.074 0.361 0.238 0.356 -0.118 0.424 -0.186
North Central Coast 2.935 0.499 2.436 1.608 1.567 0.041 1.867 -0.26
South Central Coast 1.709 0.29 1.418 0.936 0.991 -0.055 1.181 -0.245
Central Highlands 0.615 0.105 0.511 0.337 0.643 -0.306 0.766 -0.429
North East South 1.65 0.281 1.37 0.904 1.714 -0.81 2.042 -1.138
Mekong River Delta 15.97 2.715 13.255 8.748 2.51 6.239 2.991 5.758
Total 31.97 5.435 26.535 17.513 11.754 5.76 14.005 3.508
(million tonnes)
*: Loss includes farm saved seed, animal feed use and post-harvest loss
Source: (General Statistics Office 2002)

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Table 28 Food Balance for Rice Production, 1990-2001


Percent
Change
(1996-
Units 1990 1992 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
2001 /
(1990-
1995)
Winter
ha 2073600 2160600 2,279,000 2,323,600 2,381,400 2,421,300 2,541,100 2,682,700 2,783,200 2,888,900 3,113,200 3,056,900 20.1%
Spring
Cultivated Summer
ha 1215700 1382100 1,448,600 1,549,100 1,586,100 1,742,400 1,984,200 1,885,200 2,140,600 2,341,200 2,292,800 2,179,800 30.4%
Area Autumn
Lua Mua ha 2753500 2760100 2,747,700 2,686,700 2,631,100 2,601,900 2,478,500 2,531,800 2,438,800 2,423,500 2,360,300 2,247,900 -11.7%
Total ha 6,042,800 6,302,800 6,475,300 6,559,400 6,598,600 6,765,600 7,003,800 7,099,700 7,362,600 7,653,600 7,766,300 7,484,600 12.7%
Winter
ha
Spring
Destroyed Summer
ha
Area Autumn
Lua Mua ha
Total ha - - - - - - - - - - - -
Winter
t/ha 3.793 3.142 4.018 3.889 4.413 4.434 4.805 4.962 4.872 4.882 5.002 5.062 19.9%
Spring
Summer
Yield t/ha 3.365 3.412 3.388 3.636 3.581 3.731 3.467 3.521 3.514 3.741 3.762 3.757 3.0%
Autumn
Lua Mua t/ha 2.640 2.941 2.739 3.040 2.790 2.969 2.949 2.992 3.306 3.521 3.531 3.694 14.4%
Total t/ha 3.181 3.113 3.334 3.481 3.566 3.690 3.769 3.877 3.959 4.102 4.189 4.271 15.7%
Winter Spring ha 2,073,600 2,160,600 2,279,000 2,323,600 2,381,400 2,421,300 2,541,100 2,682,700 2,783,200 2,888,900 3,113,200 3,056,900 20.1%
Summer
Harvested ha 1,215,700 1,382,100 1,448,600 1,549,100 1,586,100 1,742,400 1,984,200 1,885,200 2,140,600 2,341,200 2,292,800 2,179,800 30.4%
Autumn
Area
Lua Mua ha 2,753,500 2,760,100 2,747,700 2,686,700 2,631,100 2,601,900 2,478,500 2,531,800 2,438,800 2,423,500 2,360,300 2,247,900 -11.7%
Total ha 6,042,800 6,302,800 6,475,300 6,559,400 6,598,600 6,765,600 7,003,800 7,099,700 7,362,600 7,653,600 7,766,300 7,484,600 12.7%
Winter
tonnes 7865600 6788300 9,156,300 9,035,600 10,508,500 10,736,600 12,209,500 13,310,300 13,559,500 14,103,000 15,571,200 15,475,100 35.8%
Spring
Summer
Production tonnes 4090500 4715800 4,907,200 5,633,100 5,679,400 6,500,800 6,878,500 6,637,800 7,522,600 8,758,300 8,625,000 8,190,300 32.4%
Autumn
Lua Mua tonnes 7269000 8117800 7,526,900 8,167,800 7,340,300 7,726,300 7,308,700 7,575,800 8,063,400 8,532,500 8,333,300 8,304,800 4.1%
Total tonnes 19,225,100 19,621,900 21,590,400 22,836,500 23,528,200 24,963,700 26,396,700 27,523,900 29,145,500 31,393,800 32,529,500 31,970,200 26.4%
Post Harvest
Conversion Percent 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 17% 0.0%
Factor
Post-Harvest
tonnes 3,268,267 3,335,723 3,670,368 3,882,205 3,999,794 4,243,829 4,487,439 4,679,063 4,954,735 5,336,946 5,530,015 5,434,934 26.4%
Losses
Supply
Paddy tonnes 15,956,833 16,286,177 17,920,032 18,954,295 19,528,406 20,719,871 21,909,261 22,844,837 24,190,765 26,056,854 26,999,485 26,535,266 26.4%
Milling
Conversion Percent 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 0.0%
Factor
Rice tonnes 10,531,510 10,748,877 11,827,221 12,509,835 12,888,748 13,675,115 14,460,112 15,077,592 15,965,905 17,197,524 17,819,660 17,513,276 26.4%
Consumption Population Person 66,016,700 67,242,400 68,450,100 69,644,500 70,824,500 71,995,500 73,156,700 74,306,900 75,456,300 76,596,700 77,635,400 78,685,800 9.1%
Per Capita
Tonnes/
Food Food 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.178 0.0%
hd/yr
Requirement Requirement
Rice tonnes 11,750,973 11,969,147 12,184,118 12,396,721 12,606,761 12,815,199 13,021,893 13,226,628 13,431,221 13,634,213 13,819,101 14,006,072 9.1%
Rice tonnes - 1,219,463 - 1,220,270 - 356,897 113,114 281,987 859,916 1,438,220 1,850,964 2,534,684 3,563,311 4,000,559 3,507,203 109.1%
Surplus
Paddy tonnes - 1,847,671 - 1,848,895 - 540,753 171,384 427,253 1,302,903 2,179,121 2,804,491 3,840,430 5,398,956 6,061,453 5,313,944 109.1%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 29 Per Capita Consumption of Rice on an Exported Residual Basis


Domestic Consumption Per Capital
Production Exports Population Residual Consumption
Tonnes Tonnes Number Tonnes Kg/person
1990 10531510 1478000 66016700 9053510 137.14
1991 10748877 1017000 67242400 9731877 144.73
1992 11827221 1954000 68450100 9873221 144.24
1993 12509835 1649000 69644500 10860835 155.95
1994 12888748 1962000 70824500 10926748 154.28
1995 13675115 2052000 71995500 11623115 161.44
1996 14460112 3048000 73156700 11412112 156.00
1997 15077592 3680000 74306900 11397592 153.39
1998 15965905 3798000 75456300 12167905 161.26
1999 17197524 4508300 76596700 12689224 165.66
2000 17819660 3476700 77635400 14342960 184.75
2001 17513276 3510000 78685800 14003275.6 177.964456
Source: Based on data from (General Statistics Office 2002), PHTI (1999), pp. 59-64, IFPRI (1996), pp. 241-244

Table 30 Sown Area, Harvested Area and Maximum Physical Area of Paddy 1990-2001
Total Maximum
Winter Summer
Lua Mua Harvested Physical
Spring Autumn
Area Area
1990 2073600 1215700 2753500 6042800 2753500
1992 2160600 1382100 2760100 6302800 2760100
1992 2279000 1448600 2747700 6475300 2747700
1993 2323600 1549100 2686700 6559400 2686700
1994 2381400 1586100 2631100 6598600 2631100
1995 2421300 1742400 2601900 6765600 2601900
1996 2541100 1984200 2478500 7003800 2541100
1997 2682700 1885200 2531800 7099700 2682700
1998 2783200 2140600 2438800 7362600 2783200
1999 2888900 2341200 2423500 7653600 2888900
2000 3113200 2292800 2360300 7766300 3113200
2001 3056900 2179800 2247900 7484600 3056900
% change
47.42% 79.30% -18.36% 23.86% 11.02%
1990-2001
Source: (General Statistics Office 2002)

Table 31 Planted Area of Winter - Spring Paddy by Region


2000-2001
Region 1995 1998 1999 2000 2001 change
Red River Delta 588300 593200 591400 599700 599100 -600
North East 182300 193200 186800 202200 210200 8000
North West 27800 27400 26600 29900 31500 1600
North Central Coast 319300 326700 316400 330600 335600 5000
South Central Coast 164300 166900 167700 168100 172100 4000
Central Highlands 30100 36600 40800 44800 50400 5600
North East South 73500 90300 110700 117300 120400 3100
Mekong River Delta 1035700 1349000 1448500 1520600 1537600 17000
Vietnam 2421300 2783300 2888900 3013200 3056900 43700
(hectares)
Source: (General Statistics Office 2002)

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Table 32 Planted Area of Summer-Autumn Paddy by Region


2000-2001
Region 1995 1998 1999 2000 2001 change
Red River Delta 0
North East 0
North West 0
North Central Coast 127200 133900 140900 146900 153700 6800
South Central Coast 116500 113500 121000 115200 107500 -7700
Central Highlands 5200 5600 5900 5200 -700
North East South 101100 112000 134000 143200 132900 -10300
Mekong River Delta 1397600 1776000 1939700 1881600 1780500 -101100
Vietnam 1742400 2140600 2341200 2292800 2179800 -113000
(hectares)
Source: (General Statistics Office 2002)

Table 33 Planted Area of Winter Paddy by Region


2000-2001
Region 1995 1998 1999 2000 2001 change
Red River Delta 604700 609900 611400 612900 603400 -9500
North East 340000 345600 348400 348100 348400 300
North West 106700 101200 106300 106900 108300 1400
North Central Coast 235700 216900 220600 217500 210700 -6800
South Central Coast 141700 144200 146100 139200 133900 -5300
Central Highlands 143100 122900 119600 126100 125500 -600
North East South 272700 262500 274100 266000 254800 -11200
Mekong River Delta 757300 635600 597000 543600 462900 -80700
Vietnam 2601900 2438800 2423500 2360300 2247900 -112400
(hectares)
Source: (General Statistics Office 2002)

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Table 34 Rice Crop Assessment for Food Balance 1999-2000 – Planted and Harvested
Area Planted Area Harvested

Winter Summer Winter- Summer-


Location Population Lua Mua
Spring Autumn Total Spring Autumn Lua Mua Total
Region Province Urban Rural Total Hectares Hectares Hectares Hectares Hectares Hectares Hectares Hectares
Hanoi 1586500 1152700 2739200 25500 28700 54200 25500 0 28700 54200
Hai Phong 593200 1101200 1694400 46500 49400 95900 46500 0 49400 95900
Vinh Puc 118700 987200 1105900 38000 36800 74800 38000 0 36800 74800
Red River Delta

Ha Tay 193200 2220900 2414100 83100 85700 168800 83100 0 85700 168800
Bac Ninh 90500 858300 948800 41500 42500 84000 41500 0 42500 84000
Hai Duong 234800 1428300 1663100 74200 73300 147500 74200 0 73300 147500
Hung Yen 101400 979100 1080500 43300 46400 89700 43300 0 46400 89700
Ha Nam 63600 731900 795500 37300 38100 75400 37300 0 38100 75400
Nam Dinh 241400 1662700 1904100 82400 83800 166200 82400 0 83800 166200
Thai Binh 104500 1699300 1803800 85500 87600 173100 85500 0 87600 173100
Ninh Binh 116900 772900 889800 42400 40600 83000 42400 0 40600 83000
Total 3444700 13594500 17039200 599700 0 612900 1212600 599700 0 612900 1212600
Ha Giang 65100 551500 616600 7500 23700 31200 7500 0 23700 31200
Cao Bang 65200 431300 496500 3400 25300 28700 3400 0 25300 28700
Lao Cai 103800 503300 607100 8700 27700 36400 8700 0 27700 36400
Bac Kan 40500 239600 280100 5300 13500 18800 5300 0 13500 18800
North East

Lang Son 134700 577600 712300 13000 34100 47100 13000 0 34100 47100
Tuyen Quang 64000 620000 684000 17900 26600 44500 17900 0 26600 44500
Yen Bai 137900 552800 690700 15200 24800 40000 15200 0 24800 40000
Thai Nguyen 237500 817000 1054500 25900 42700 68600 25900 0 42700 68600
Phu Tho 184400 1090200 1274600 36300 35300 71600 36300 0 35300 71600
Bac Giang 122500 1387900 1510400 50700 64300 115000 50700 0 64300 115000
Quang Ninh 478500 537500 1016000 18300 30100 48400 18300 0 30100 48400
Total 1634100 7308700 8942800 202200 0 348100 550300 202200 0 348100 550300
Lai Chau 73500 530800 604300 6700 45200 51900 6700 0 45200 51900
North
West

Son La 113100 792800 905900 6700 34800 41500 6700 0 34800 41500
Hoa Binh 106300 661500 767800 16500 26900 43400 16500 0 26900 43400
Total 292900 1985100 2278000 29900 0 106900 136800 29900 0 106900 136800
Thanh Hoa 327600 3166400 3494000 118900 138600 257500 118900 0 138600 257500
North Central

Nghe An 300100 2587000 2887100 82100 51300 53400 186800 82100 51300 53400 186800
Ha Tinh 116500 1158500 1275000 55200 36200 15900 107300 55200 36200 15900 107300
Coast

Quang Binh 100500 701100 801600 25900 17300 3000 46200 25900 17300 3000 46200
Quang Tri 139500 441100 580600 22000 18000 5900 45900 22000 18000 5900 45900
Thua Thien - Hue 318700 744800 1063500 26500 24100 700 51300 26500 24100 700 51300
Total 1302900 8798900 10101800 330600 146900 217500 695000 330600 146900 217500 695000
Da Nang 566000 137500 703500 5500 700 5000 11200 5500 700 5000 11200
South Central

Quang Nam 206900 1182500 1389400 41200 8200 45100 94500 41200 8200 45100 94500
Quang Ngai 141900 1058200 1200100 33900 24600 28000 86500 33900 24600 28000 86500
Coast

Binh Dinh 362600 1118400 1481000 46500 40900 39500 126900 46500 40900 39500 126900
Phu Yen 153300 647400 800700 24500 23000 10200 57700 24500 23000 10200 57700
Khanh Hoa 391400 659300 1050700 16500 17800 11400 45700 16500 17800 11400 45700
Total 1822100 4803300 6625400 168100 115200 139200 422500 168100 115200 139200 422500
Kon Tum 104100 220700 324800 4000 16900 20900 4000 0 16900 20900
Highlands
Central

Gia Lai 253800 763200 1017000 14200 45000 59200 14200 0 45000 59200
Dak Lak 375800 1485100 1860900 18800 45200 64000 18800 0 45200 64000
Lam Dong 401300 632700 1034000 7800 5900 19000 32700 7800 5900 19000 32700
Total 1135000 3101700 4236700 44800 5900 126100 176800 44800 5900 126100 176800
Ho Chi Minh 4380700 845400 5226100 13600 14700 47600 75900 13600 14700 47600 75900
Ninh Thuam 123700 391100 514800 11400 10700 11900 34000 11400 10700 11900 34000
North East South

Binh Phuoc 105200 579400 684600 2000 13900 15900 2000 0 13900 15900
Tay Ninh 137000 839300 976300 44700 51500 77800 174000 44700 51500 77800 174000
Binh Duong 243100 494600 737700 6100 4100 14700 24900 6100 4100 14700 24900
Dong Nai 627500 1411900 2039400 15300 26400 40200 81900 15300 26400 40200 81900
Binh Thuan 324300 741600 1065900 19400 30000 43700 93100 19400 30000 43700 93100
Ba Ria - Vung Tau 346400 475600 822000 4800 5800 16200 26800 4800 5800 16200 26800
Total 6287900 5778900 12066800 117300 143200 266000 526500 117300 143200 266000 526500
Long An 220700 1109600 1330300 255300 171800 26000 453100 255300 171800 26000 453100
Dong Thap 234000 1344200 1578200 203700 204700 408400 203700 204700 0 408400
An Giang 444800 1632200 2077000 220400 232800 11200 464400 220400 232800 11200 464400
Mekong River Delta

Tien Giang 217900 1405100 1623000 94700 184900 2800 282400 94700 184900 2800 282400
Vinh Long 149600 868100 1017700 76000 128800 3800 208600 76000 128800 3800 208600
Ben Tre 116800 1188600 1305400 23200 29500 48900 101600 23200 29500 48900 101600
Kien Giang 343000 1181000 1524000 232600 266900 41500 541000 232600 266900 41500 541000
Can Tho 408900 1427300 1836200 180300 233100 413400 180300 233100 0 413400
Tra Vinh 128800 849500 978300 53000 87000 97000 237000 53000 87000 97000 237000
Soc Trang 217600 973400 1191000 132000 171300 67100 370400 132000 171300 67100 370400
Bac Lieu 187100 557200 744300 34400 84600 98300 217300 34400 84600 98300 217300
Ca Mau 216500 922800 1139300 15000 86200 147000 248200 15000 86200 147000 248200
Total 2885700 13459000 16344700 1520600 1881600 543600 3945800 1520600 1881600 543600 3945800
Total 18805300 58830100 77635400 3013200 2292800 2360300 7666300 3013200 2292800 2360300 7666300
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 35 Rice Crop Assessment for Food Balance 1999-2000 – Yield and Production

Average Yield Production


Winter Summer Winter Summer
Location Spring Autumn Lua Mua Total Spring Autumn Lua Mua Total
Region Province Tonnes Tonnes Tonnes Tonnes/Ha Tonnes Tonnes Tonnes Tonnes
Hanoi 4.455 3.868 4.144 113600 111000 224600
Hai Phong 5.518 4.731 5.113 256600 233700 490300
Vinh Puc 4.629 4.106 4.372 175900 151100 327000
Red River Delta

Ha Tay 5.580 5.341 5.459 463700 457700 921400


Bac Ninh 5.573 4.944 5.255 231300 210100 441400
Hai Duong 5.907 5.255 5.583 438300 385200 823500
Hung Yen 6.132 5.700 5.909 265500 264500 530000
Ha Nam 5.378 4.856 5.114 200600 185000 385600
Nam Dinh 6.734 4.901 5.810 554900 410700 965600
Thai Binh 6.636 5.516 6.069 567400 483200 1050600
Ninh Binh 5.752 4.500 5.140 243900 182700 426600
Total 5.856 5.017 5.432 3511700 0 3074900 6586600
Ha Giang 4.200 3.793 3.891 31500 89900 121400
Cao Bang 4.824 2.830 3.066 16400 71600 88000
Lao Cai 4.368 2.708 3.104 38000 75000 113000
Bac Kan 4.113 3.296 3.527 21800 44500 66300
North East

Lang Son 4.477 2.537 3.072 58200 86500 144700


Tuyen Quang 4.816 3.695 4.146 86200 98300 184500
Yen Bai 4.658 3.214 3.763 70800 79700 150500
Thai Nguyen 4.193 3.674 3.870 108600 156900 265500
Phu Tho 4.264 3.612 3.943 154800 127500 282300
Bac Giang 4.308 3.956 4.111 218400 254400 472800
Quang Ninh 3.978 3.429 3.636 72800 103200 176000
Total 4.340 3.411 3.752 877500 0 1187500 2065000
Lai Chau 5.388 2.113 2.536 36100 95500 131600
North
West

Son La 5.194 2.106 2.605 34800 73300 108100


Hoa Binh 4.285 3.465 3.776 70700 93200 163900
Total 4.736 2.451 2.950 141600 0 262000 403600
Thanh Hoa 5.315 3.347 4.256 631900 463900 1095800
North Central

Nghe An 5.158 4.062 2.279 4.034 423500 208400 121700 753600


Ha Tinh 4.263 3.685 1.698 3.688 235300 133400 27000 395700
Coast

Quang Binh 4.602 3.983 1.000 4.136 119200 68900 3000 191100
Quang Tri 4.650 4.533 1.254 4.168 102300 81600 7400 191300
Thua Thien - Hue 4.219 3.485 1.000 3.830 111800 84000 700 196500
Total 4.912 3.923 2.868 4.063 1624000 576300 623700 2824000
Da Nang 4.764 4.429 4.580 4.661 26200 3100 22900 52200
South Central

Quang Nam 3.573 3.805 3.359 3.491 147200 31200 151500 329900
Quang Ngai 4.047 4.183 2.557 3.603 137200 102900 71600 311700
Coast

Binh Dinh 4.677 4.259 3.324 4.121 217500 174200 131300 523000
Phu Yen 5.224 5.604 2.029 4.811 128000 128900 20700 277600
Khanh Hoa 4.703 4.691 2.289 4.096 77600 83500 26100 187200
Total 4.365 4.547 3.047 3.980 733700 523800 424100 1681600
Kon Tum 4.075 2.101 2.478 16300 35500 51800
Highlands
Central

Gia Lai 5.070 2.291 2.958 72000 103100 175100


Dak Lak 5.112 3.577 4.028 96100 161700 257800
Lam Dong 3.859 2.881 2.895 3.122 30100 17000 55000 102100
Total 4.788 2.881 2.818 3.319 214500 17000 355300 586800
Ho Chi Minh 3.551 3.503 2.847 3.100 48300 51500 135500 235300
Ninh Thuam 5.509 4.804 2.647 4.285 62800 51400 31500 145700
North East South

Binh Phuoc 2.800 1.727 1.862 5600 24000 29600


Tay Ninh 3.872 3.179 2.487 3.048 173100 163700 193500 530300
Binh Duong 3.311 3.049 2.306 2.675 20200 12500 33900 66600
Dong Nai 4.013 3.360 2.990 3.300 61400 88700 120200 270300
Binh Thuan 3.881 3.923 2.941 3.453 75300 117700 128500 321500
Ba Ria - Vung Tau 3.708 3.086 2.728 2.981 17800 17900 44200 79900
Total 3.960 3.515 2.674 3.189 464500 503400 711300 1679200
Long An 4.283 2.576 1.435 3.472 1093400 442600 37300 1573300
Dong Thap 5.873 3.333 4.600 1196300 682200 1878500
An Giang 6.102 3.466 2.304 4.689 1344900 807000 25800 2177700
Mekong River Delta

Tien Giang 5.680 4.081 3.107 4.607 537900 754500 8700 1301100
Vinh Long 5.713 3.821 3.842 4.511 434200 492200 14600 941000
Ben Tre 4.849 3.902 2.652 3.517 112500 115100 129700 357300
Kien Giang 4.958 3.868 2.376 4.222 1153200 1032500 98600 2284300
Can Tho 5.708 3.662 4.554 1029100 853700 1882800
Tra Vinh 4.942 4.176 3.294 3.986 261900 363300 319500 944700
Soc Trang 4.853 4.302 3.583 4.368 640600 737000 240400 1618000
Bac Lieu 4.203 4.293 3.924 4.112 144600 363200 385700 893500
Ca Mau 3.673 4.190 2.954 3.427 55100 361200 434200 850500
Total 5.264 3.723 3.117 4.233 8003700 7004500 1694500 16702700
Total 5.168 3.762 3.531 4.243 15571200 8625000 8333300 32529500
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 36 Rice Crop Assessment for Food Balance 1999-2000 – Losses and Availability

Post Harvest Loss Available Paddy


Winter Summer Winter Summer
Location Spring Autumn Lua Mua Total Spring Autumn Lua Mua Total
Region Province Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes
Hanoi 19312 0 18870 38182 94288 0 92130 186418
Hai Phong 43622 0 39729 83351 212978 0 193971 406949
Vinh Puc 29903 0 25687 55590 145997 0 125413 271410
Red River Delta

Ha Tay 78829 0 77809 156638 384871 0 379891 764762


Bac Ninh 39321 0 35717 75038 191979 0 174383 366362
Hai Duong 74511 0 65484 139995 363789 0 319716 683505
Hung Yen 45135 0 44965 90100 220365 0 219535 439900
Ha Nam 34102 0 31450 65552 166498 0 153550 320048
Nam Dinh 94333 0 69819 164152 460567 0 340881 801448
Thai Binh 96458 0 82144 178602 470942 0 401056 871998
Ninh Binh 41463 0 31059 72522 202437 0 151641 354078
Total 596989 0 522733 1119722 2914711 0 2552167 5466878
Ha Giang 5355 0 15283 20638 26145 0 74617 100762
Cao Bang 2788 0 12172 14960 13612 0 59428 73040
Lao Cai 6460 0 12750 19210 31540 0 62250 93790
Bac Kan 3706 0 7565 11271 18094 0 36935 55029
North East

Lang Son 9894 0 14705 24599 48306 0 71795 120101


Tuyen Quang 14654 0 16711 31365 71546 0 81589 153135
Yen Bai 12036 0 13549 25585 58764 0 66151 124915
Thai Nguyen 18462 0 26673 45135 90138 0 130227 220365
Phu Tho 26316 0 21675 47991 128484 0 105825 234309
Bac Giang 37128 0 43248 80376 181272 0 211152 392424
Quang Ninh 12376 0 17544 29920 60424 0 85656 146080
Total 149175 0 201875 351050 728325 0 985625 1713950
Lai Chau 6137 0 16235 22372 29963 0 79265 109228
North
West

Son La 5916 0 12461 18377 28884 0 60839 89723


Hoa Binh 12019 0 15844 27863 58681 0 77356 136037
Total 24072 0 44540 68612 117528 0 217460 334988
Thanh Hoa 107423 0 78863 186286 524477 0 385037 909514
North Central

Nghe An 71995 35428 20689 128112 351505 172972 101011 625488


Ha Tinh 40001 22678 4590 67269 195299 110722 22410 328431
Coast

Quang Binh 20264 11713 510 32487 98936 57187 2490 158613
Quang Tri 17391 13872 1258 32521 84909 67728 6142 158779
Thua Thien - Hue 19006 14280 119 33405 92794 69720 581 163095
Total 276080 97971 106029 480080 1347920 478329 517671 2343920
Da Nang 4454 527 3893 8874 21746 2573 19007 43326
South Central

Quang Nam 25024 5304 25755 56083 122176 25896 125745 273817
Quang Ngai 23324 17493 12172 52989 113876 85407 59428 258711
Coast

Binh Dinh 36975 29614 22321 88910 180525 144586 108979 434090
Phu Yen 21760 21913 3519 47192 106240 106987 17181 230408
Khanh Hoa 13192 14195 4437 31824 64408 69305 21663 155376
Total 124729 89046 72097 285872 608971 434754 352003 1395728
Kon Tum 2771 0 6035 8806 13529 0 29465 42994
Highlands
Central

Gia Lai 12240 0 17527 29767 59760 0 85573 145333


Dak Lak 16337 0 27489 43826 79763 0 134211 213974
Lam Dong 5117 2890 9350 17357 24983 14110 45650 84743
Total 36465 2890 60401 99756 178035 14110 294899 487044
Ho Chi Minh 8211 8755 23035 40001 40089 42745 112465 195299
Ninh Thuam 10676 8738 5355 24769 52124 42662 26145 120931
North East South

Binh Phuoc 952 0 4080 5032 4648 0 19920 24568


Tay Ninh 29427 27829 32895 90151 143673 135871 160605 440149
Binh Duong 3434 2125 5763 11322 16766 10375 28137 55278
Dong Nai 10438 15079 20434 45951 50962 73621 99766 224349
Binh Thuan 12801 20009 21845 54655 62499 97691 106655 266845
Ba Ria - Vung Tau 3026 3043 7514 13583 14774 14857 36686 66317
Total 78965 85578 120921 285464 385535 417822 590379 1393736
Long An 185878 75242 6341 267461 907522 367358 30959 1305839
Dong Thap 203371 115974 0 319345 992929 566226 0 1559155
An Giang 228633 137190 4386 370209 1116267 669810 21414 1807491
Mekong River Delta

Tien Giang 91443 128265 1479 221187 446457 626235 7221 1079913
Vinh Long 73814 83674 2482 159970 360386 408526 12118 781030
Ben Tre 19125 19567 22049 60741 93375 95533 107651 296559
Kien Giang 196044 175525 16762 388331 957156 856975 81838 1895969
Can Tho 174947 145129 0 320076 854153 708571 0 1562724
Tra Vinh 44523 61761 54315 160599 217377 301539 265185 784101
Soc Trang 108902 125290 40868 275060 531698 611710 199532 1342940
Bac Lieu 24582 61744 65569 151895 120018 301456 320131 741605
Ca Mau 9367 61404 73814 144585 45733 299796 360386 705915
Total 1360629 1190765 288065 2839459 6643071 5813735 1406435 13863241
Total 2647104 1466250 1416661 5530015 12924096 7158750 6916639 26999485
Remarks Post Harvest Loss 17%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 37 Rice Crop Assessment for Food Balance 1999-2000 – Requirements and Balance

Available Rice Food Requirement Food Balance


Winter Summer
Location Spring Autumn Lua Mua Total Urban Rural Total Total
Region Province Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes
Hanoi 62230 0 60806 123036 282397 205181 487578 -364542
Hai Phong 140565 0 128021 268586 105590 196014 301603 -33017
Vinh Puc 96358 0 82773 179131 21129 175722 196850 -17720
Red River Delta

Ha Tay 254015 0 250728 504743 34390 395320 429710 75033


Bac Ninh 126706 0 115093 241799 16109 152777 168886 72913
Hai Duong 240101 0 211013 451113 41794 254237 296032 155082
Hung Yen 145441 0 144893 290334 18049 174280 192329 98005
Ha Nam 109889 0 101343 211232 11321 130278 141599 69633
Nam Dinh 303974 0 224981 528956 42969 295961 338930 190026
Thai Binh 310822 0 264697 575519 18601 302475 321076 254442
Ninh Binh 133608 0 100083 233691 20808 137576 158384 75307
Total 1923709 0 1684430 3608139 613157 2419821 3032978 575162
Ha Giang 17256 0 49247 66503 11588 98167 109755 -43252
Cao Bang 8984 0 39222 48206 11606 76771 88377 -40171
Lao Cai 20816 0 41085 61901 18476 89587 108064 -46162
Bac Kan 11942 0 24377 36319 7209 42649 49858 -13539
North East

Lang Son 31882 0 47385 79267 23977 102813 126789 -47523


Tuyen Quang 47220 0 53849 101069 11392 110360 121752 -20683
Yen Bai 38784 0 43660 82444 24546 98398 122945 -40501
Thai Nguyen 59491 0 85950 145441 42275 145426 187701 -42260
Phu Tho 84799 0 69845 154644 32823 194056 226879 -72235
Bac Giang 119640 0 139360 259000 21805 247046 268851 -9851
Quang Ninh 39880 0 56533 96413 85173 95675 180848 -84435
Total 480695 0 650513 1131207 290870 1300949 1591818 -460611
Lai Chau 19776 0 52315 72090 13083 94482 107565 -35475
North
West

Son La 19063 0 40154 59217 20132 141118 161250 -102033


Hoa Binh 38729 0 51055 89784 18921 117747 136668 -46884
Total 77568 0 143524 221092 52136 353348 405484 -184392
Thanh Hoa 346155 0 254124 600279 58313 563619 621932 -21653
North Central

Nghe An 231993 114162 66667 412822 53418 460486 513904 -101082


Ha Tinh 128897 73077 14791 216764 20737 206213 226950 -10186
Coast

Quang Binh 65298 37743 1643 104685 17889 124796 142685 -38000
Quang Tri 56040 44700 4054 104794 24831 78516 103347 1447
Thua Thien - Hue 61244 46015 383 107643 56729 132574 189303 -81660
Total 889627 315697 341663 1546987 231916 1566204 1798120 -251133
Da Nang 14352 1698 12545 28595 100748 24475 125223 -96628
South Central

Quang Nam 80636 17091 82992 180719 36828 210485 247313 -66594
Quang Ngai 75158 56369 39222 170749 25258 188360 213618 -42869
Coast

Binh Dinh 119147 95427 71926 286499 64543 199075 263618 22881
Phu Yen 70118 70611 11339 152069 27287 115237 142525 9545
Khanh Hoa 42509 45741 14298 102548 69669 117355 187025 -84476
Total 401921 286938 232322 921180 324334 854987 1179321 -258141
Kon Tum 8929 0 19447 28376 18530 39285 57814 -29438
Highlands
Central

Gia Lai 39442 0 56478 95920 45176 135850 181026 -85106


Dak Lak 52644 0 88579 141223 66892 264348 331240 -190017
Lam Dong 16489 9313 30129 55930 71431 112621 184052 -128122
Total 117503 9313 194633 321449 202030 552103 754133 -432684
Ho Chi Minh 26459 28212 74227 128897 779765 150481 930246 -801348
Ninh Thuam 34402 28157 17256 79814 22019 69616 91634 -11820
North East South

Binh Phuoc 3068 0 13147 16215 18726 103133 121859 -105644


Tay Ninh 94824 89675 105999 290498 24386 149395 173781 116717
Binh Duong 11066 6848 18570 36483 43272 88039 131311 -94827
Dong Nai 33635 48590 65846 148070 111695 251318 363013 -214943
Binh Thuan 41249 64476 70392 176118 57725 132005 189730 -13613
Ba Ria - Vung Tau 9751 9806 24213 43769 61659 84657 146316 -102547
Total 254453 275763 389650 919866 1119246 1028644 2147890 -1228025
Long An 598965 242456 20433 861854 39285 197509 236793 625060
Dong Thap 655333 373709 0 1029042 41652 239268 280920 748123
An Giang 736736 442075 14133 1192944 79174 290532 369706 823238
Mekong River Delta

Tien Giang 294662 413315 4766 712743 38786 250108 288894 423849
Vinh Long 237855 269627 7998 515480 26629 154522 181151 334329
Ben Tre 61628 63052 71050 195729 20790 211571 232361 -36632
Kien Giang 631723 565604 54013 1251340 61054 210218 271272 980068
Can Tho 563741 467657 0 1031398 72784 254059 326844 704554
Tra Vinh 143469 199016 175022 517507 22926 151211 174137 343369
Soc Trang 350921 403729 131691 886340 38733 173265 211998 674342
Bac Lieu 79212 198961 211286 489459 33304 99182 132485 356974
Ca Mau 30184 197865 237855 465904 38537 164258 202795 263109
Total 4384427 3837065 928247 9149739 513655 2395702 2909357 6240382
Total 8529903 4724775 4564982 17819660 3347343 10471758 13819101 4000559
Conversion 66% 178 178
Remarks VLSS 120.48 158.88 kg/hd/yr
FAO 178 178
Source (General Statistics Office 2002) Updated Conversion Factors

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Rice Value Chain Study – Viet Nam

Table 38 Rice Crop Assessment for Food Balance 2000 - 2001 Planted and Harvested
Area Planted Area Harvested
Winter Summer Winter- Summer-
Location Population Lua Mua
Spring Autumn Total Spring Autumn Lua Mua Total
Region Province Urban Rural Number Hectares Hectares Hectares Hectares Hectares Hectares Hectares Hectares
Hanoi 1643600 1198100 2841700 25500 26800 52300 25500 0 26800 52300
Hai Phong 614500 1096600 1711100 46500 48900 95400 46500 0 48900 95400
Vinh Phuc 122900 992800 1115700 37400 33200 70600 37400 0 33200 70600
Red River Delta

Ha Tay 200200 2231800 2432000 83400 85100 168500 83400 0 85100 168500
Bac Ninh 93800 863900 957700 41800 42200 84000 41800 0 42200 84000
Hai Duong 243200 1427600 1670800 73000 72000 145000 73000 0 72000 145000
Hung Yen 105000 986000 1091000 43300 46000 89300 43300 0 46000 89300
Ha Nam 65900 734500 800400 37500 38100 75600 37500 0 38100 75600
Nam Dinh 250100 1666300 1916400 82100 83200 165300 82100 0 83200 165300
Thai Binh 108200 1706500 1814700 85900 87400 173300 85900 0 87400 173300
Ninh Binh 121100 770700 891800 42700 40500 83200 42700 0 40500 83200
Total 3568500 13674800 17243300 599100 0 603400 1202500 599100 0 603400 1202500
Ha Giang 67500 558200 625700 8000 24000 32000 8000 0 24000 32000
Cao Bang 67500 434300 501800 3400 25800 29200 3400 0 25800 29200
Lao Cai 107500 509000 616500 9300 27400 36700 9300 0 27400 36700
Bac Kan 42000 241000 283000 5900 13700 19600 5900 0 13700 19600
North East

Lang Son 139600 575700 715300 14500 34000 48500 14500 0 34000 48500
Tuyen Quang 66300 626200 692500 19100 27200 46300 19100 0 27200 46300
Yen Bai 142800 557100 699900 15500 25000 40500 15500 0 25000 40500
Thai Nguyen 246000 815700 1061700 26800 42700 69500 26800 0 42700 69500
Phu Tho 191000 1097400 1288400 36900 34300 71200 36900 0 34300 71200
Bac Giang 126900 1395100 1522000 52100 64200 116300 52100 0 64200 116300
Quang Ninh 495700 534200 1029900 18700 30100 48800 18700 0 30100 48800
Total 1692800 7343900 9036700 210200 0 348400 558600 210200 0 348400 558600
Lai Chau 76100 540200 616300 7400 47500 54900 7400 0 47500 54900
North
West

Son La 117200 805000 922200 7300 33300 40600 7300 0 33300 40600
Hoa Binh 110100 664000 774100 16800 27500 44300 16800 0 27500 44300
Total 303400 2009200 2312600 31500 0 108300 139800 31500 0 108300 139800
Thanh Hoa 339400 3170200 3509600 120000 137600 257600 120000 0 137600 257600
North Central

Nghe An 310900 2602900 2913800 84400 52900 50600 187900 84400 52900 50600 187900
Ha Tinh 120700 1164200 1284900 55700 38900 13700 108300 55700 38900 13700 108300
Coast

Quang Binh 104100 708500 812600 26400 19000 2300 47700 26400 19000 2300 47700
Quang Tri 144500 444100 588600 22500 18600 5800 46900 22500 18600 5800 46900
Thua Thien - Hue 330100 748800 1078900 26600 24300 700 51600 26600 24300 700 51600
Total 1349700 8838700 10188400 335600 153700 210700 700000 335600 153700 210700 700000
Da Nang 586300 128700 715000 5400 400 5300 11100 5400 400 5300 11100
South Central

Quang Nam 214300 1188400 1402700 42100 1100 45800 89000 42100 1100 45800 89000
Quang Ngai 147000 1059400 1206400 35500 23700 20200 79400 35500 23700 20200 79400
Coast

Binh Dinh 375600 1116700 1492300 47300 41000 40500 128800 47300 41000 40500 128800
Phu Yen 158800 652200 811000 25300 23400 10400 59100 25300 23400 10400 59100
Khanh Hoa 405500 660800 1066300 16500 17900 11700 46100 16500 17900 11700 46100
Total 1887500 4806200 6693700 172100 107500 133900 413500 172100 107500 133900 413500
Kon Tum 107900 222800 330700 4800 16500 21300 4800 0 16500 21300
Highlands
Central

Gia Lai 263000 785000 1048000 15300 45900 61200 15300 0 45900 61200
Dak Lak 389300 1512100 1901400 21600 43400 65000 21600 0 43400 65000
Lam Dong 415700 634200 1049900 8700 5200 19700 33600 8700 5200 19700 33600
Total 1175900 3154100 4330000 50400 5200 125500 181100 50400 5200 125500 181100
Ho Chi Minh 4538100 840000 5378100 13600 12400 41000 67000 13600 12400 41000 67000
Ninh Thuam 128200 403500 531700 11400 8900 11800 32100 11400 8900 11800 32100
North East South

Binh Phuoc 108900 599200 708100 2700 11400 14100 2700 0 11400 14100
Tay Ninh 142000 847800 989800 47000 45100 78000 170100 47000 45100 78000 170100
Binh Duong 251800 516300 768100 6200 4200 13900 24300 6200 4200 13900 24300
Dong Nai 650000 1417200 2067200 16200 26000 38000 80200 16200 26000 38000 80200
Binh Thuan 336000 743700 1079700 18600 30100 44300 93000 18600 30100 44300 93000
Ba Ria - Vung Tau 358800 480200 839000 4700 6200 16400 27300 4700 6200 16400 27300
Total 6513800 5847900 12361700 120400 132900 254800 508100 120400 132900 254800 508100
Long An 228600 1119400 1348000 261400 155300 24200 440900 261400 155300 24200 440900
Dong Thap 242400 1350200 1592600 206000 178900 384900 206000 178900 0 384900
An Giang 460800 1638600 2099400 221700 223100 11500 456300 221700 223100 11500 456300
Mekong River Delta

Tien Giang 225800 1409900 1635700 94200 178200 2300 274700 94200 178200 2300 274700
Vinh Long 155000 868400 1023400 75900 137900 2500 216300 75900 137900 2500 216300
Ben Tre 121000 1187200 1308200 23800 30000 47000 100800 23800 30000 47000 100800
Kien Giang 355300 1187500 1542800 249700 268300 32600 550600 249700 268300 32600 550600
Can Tho 423500 1428600 1852100 181900 259200 441100 181900 259200 0 441100
Tra Vinh 133400 855600 989000 54300 87600 96500 238400 54300 87600 96500 238400
Soc Trang 225400 988000 1213400 134600 156200 54600 345400 134600 156200 54600 345400
Bac Lieu 193900 562900 756800 25700 72900 84100 182700 25700 72900 84100 182700
Ca Mau 224300 933700 1158000 8400 32900 107600 148900 8400 32900 107600 148900
Total 2989400 13530000 16519400 1537600 1780500 462900 3781000 1537600 1780500 462900 3781000
Total 19481000 59204800 78685800 3056900 2179800 2247900 7484600 3056900 2179800 2247900 7484600
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 39 Rice Crop Assessment for Food Balance 2000 - 2001 - Yield and Production
Average Yield Production
Winter Summer Winter Summer
Location Spring Autumn Lua Mua Total Spring Autumn Lua Mua Total
Region Province Tonnes Tonnes Tonnes Tonnes/Ha Tonnes Tonnes Tonnes Tonnes
Hanoi 4.075 3.425 3.742 103900 91800 195700
Hai Phong 5.400 4.879 5.133 251100 238600 489700
Vinh Phuc 4.561 3.822 4.214 170600 126900 297500
Red River Delta

Ha Tay 5.736 5.001 5.365 478400 425600 904000


Bac Ninh 5.244 5.171 5.207 219200 218200 437400
Hai Duong 5.851 5.131 5.493 427100 369400 796500
Hung Yen 5.912 5.402 5.649 256000 248500 504500
Ha Nam 5.504 4.995 5.247 206400 190300 396700
Nam Dinh 6.741 5.016 5.872 553400 417300 970700
Thai Binh 6.470 5.013 5.735 555800 438100 993900
Ninh Binh 5.789 4.854 5.334 247200 196600 443800
Total 5.791 4.908 5.348 3469100 0 2961300 6430400
Ha Giang 4.400 3.979 4.084 35200 95500 130700
Cao Bang 4.588 3.058 3.236 15600 78900 94500
Lao Cai 4.516 2.964 3.357 42000 81200 123200
Bac Kan 4.136 3.723 3.847 24400 51000 75400
North East

Lang Son 4.779 2.921 3.476 69300 99300 168600


Tuyen Quang 5.073 4.544 4.762 96900 123600 220500
Yen Bai 4.697 3.312 3.842 72800 82800 155600
Thai Nguyen 4.485 3.801 4.065 120200 162300 282500
Phu Tho 4.526 4.146 4.343 167000 142200 309200
Bac Giang 4.265 4.100 4.174 222200 263200 485400
Quang Ninh 3.834 3.638 3.713 71700 109500 181200
Total 4.459 3.701 3.986 937300 0 1289500 2226800
Lai Chau 4.946 2.067 2.455 36600 98200 134800
North
West

Son La 5.260 2.171 2.727 38400 72300 110700


Hoa Binh 4.589 4.069 4.266 77100 111900 189000
Total 4.829 2.608 3.108 152100 0 282400 434500
Thanh Hoa 5.507 3.744 4.565 660800 515200 1176000
North Central

Nghe An 5.364 3.949 1.998 4.059 452700 208900 101100 762700


Ha Tinh 4.165 4.010 1.956 3.830 232000 156000 26800 414800
Coast

Quang Binh 4.417 3.779 1.435 4.019 116600 71800 3300 191700
Quang Tri 4.369 4.231 1.310 3.936 98300 78700 7600 184600
Thua Thien - Hue 3.846 4.189 1.000 3.969 102300 101800 700 204800
Total 4.954 4.016 3.107 4.192 1662700 617200 654700 2934600
Da Nang 4.574 4.250 4.868 4.703 24700 1700 25800 52200
South Central

Quang Nam 3.855 3.727 3.511 3.676 162300 4100 160800 327200
Quang Ngai 4.138 4.262 2.851 3.848 146900 101000 57600 305500
Coast

Binh Dinh 4.814 4.307 3.427 4.217 227700 176600 138800 543100
Phu Yen 5.123 5.765 2.317 4.883 129600 134900 24100 288600
Khanh Hoa 4.921 4.687 2.291 4.163 81200 83900 26800 191900
Total 4.488 4.672 3.240 4.132 772400 502200 433900 1708500
Kon Tum 4.125 2.212 2.643 19800 36500 56300
Highlands
Central

Gia Lai 5.065 2.222 2.933 77500 102000 179500


Dak Lak 5.458 3.373 4.066 117900 146400 264300
Lam Dong 4.023 2.769 3.335 3.426 35000 14400 65700 115100
Total 4.964 2.769 2.794 3.397 250200 14400 350600 615200
Ho Chi Minh 3.537 3.363 2.951 3.146 48100 41700 121000 210800
Ninh Thuam 5.123 4.494 3.119 4.212 58400 40000 36800 135200
North East South

Binh Phuoc 2.741 2.263 2.355 7400 25800 33200


Tay Ninh 3.806 3.102 2.558 3.047 178900 139900 199500 518300
Binh Duong 3.371 3.048 2.360 2.737 20900 12800 32800 66500
Dong Nai 4.080 3.158 3.003 3.271 66100 82100 114100 262300
Binh Thuan 4.156 4.017 3.237 3.673 77300 120900 143400 341600
Ba Ria - Vung Tau 3.766 3.016 2.793 3.011 17700 18700 45800 82200
Total 3.944 3.432 2.823 3.248 474800 456100 719200 1650100
Long An 4.355 2.802 2.178 3.688 1138300 435200 52700 1626200
Dong Thap 5.997 3.686 4.923 1235300 659400 1894700
An Giang 5.556 3.686 2.800 4.572 1231800 822400 32200 2086400
Mekong River Delta

Tien Giang 5.722 4.113 3.304 4.658 539000 733000 7600 1279600
Vinh Long 5.315 3.553 4.120 4.178 403400 489900 10300 903600
Ben Tre 4.634 3.787 3.315 3.767 110300 113600 155800 379700
Kien Giang 4.498 3.645 2.666 3.974 1123200 977900 86900 2188000
Can Tho 5.601 3.591 4.420 1018800 930800 1949600
Tra Vinh 3.985 3.729 3.989 3.893 216400 326700 384900 928000
Soc Trang 4.475 4.375 3.993 4.354 602300 683400 218000 1503700
Bac Lieu 4.062 4.273 3.653 3.958 104400 311500 307200 723100
Ca Mau 3.964 3.544 3.323 3.408 33300 116600 357600 507500
Total 5.045 3.707 3.485 4.224 7756500 6600400 1613200 15970100
Total 5.062 3.757 3.694 4.271 15475100 8190300 8304800 31970200
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 40 Rice Crop Assessment for Food Balance 2000 - 2001 - Losses and Availability
Post Harvest Loss Available Paddy
Winter Summer Winter Summer
Location Spring Autumn Lua Mua Total Spring Autumn Lua Mua Total
Region Province Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes
Hanoi 17663 0 15606 33269 86237 0 76194 162431
Hai Phong 42687 0 40562 83249 208413 0 198038 406451
Vinh Phuc 29002 0 21573 50575 141598 0 105327 246925
Red River Delta

Ha Tay 81328 0 72352 153680 397072 0 353248 750320


Bac Ninh 37264 0 37094 74358 181936 0 181106 363042
Hai Duong 72607 0 62798 135405 354493 0 306602 661095
Hung Yen 43520 0 42245 85765 212480 0 206255 418735
Ha Nam 35088 0 32351 67439 171312 0 157949 329261
Nam Dinh 94078 0 70941 165019 459322 0 346359 805681
Thai Binh 94486 0 74477 168963 461314 0 363623 824937
Ninh Binh 42024 0 33422 75446 205176 0 163178 368354
Total 589747 0 503421 1093168 2879353 0 2457879 5337232
Ha Giang 5984 0 16235 22219 29216 0 79265 108481
Cao Bang 2652 0 13413 16065 12948 0 65487 78435
Lao Cai 7140 0 13804 20944 34860 0 67396 102256
Bac Kan 4148 0 8670 12818 20252 0 42330 62582
North East

Lang Son 11781 0 16881 28662 57519 0 82419 139938


Tuyen Quang 16473 0 21012 37485 80427 0 102588 183015
Yen Bai 12376 0 14076 26452 60424 0 68724 129148
Thai Nguyen 20434 0 27591 48025 99766 0 134709 234475
Phu Tho 28390 0 24174 52564 138610 0 118026 256636
Bac Giang 37774 0 44744 82518 184426 0 218456 402882
Quang Ninh 12189 0 18615 30804 59511 0 90885 150396
Total 159341 0 219215 378556 777959 0 1070285 1848244
Lai Chau 6222 0 16694 22916 30378 0 81506 111884
North
West

Son La 6528 0 12291 18819 31872 0 60009 91881


Hoa Binh 13107 0 19023 32130 63993 0 92877 156870
Total 25857 0 48008 73865 126243 0 234392 360635
Thanh Hoa 112336 0 87584 199920 548464 0 427616 976080
North Central

Nghe An 76959 35513 17187 129659 375741 173387 83913 633041


Ha Tinh 39440 26520 4556 70516 192560 129480 22244 344284
Coast

Quang Binh 19822 12206 561 32589 96778 59594 2739 159111
Quang Tri 16711 13379 1292 31382 81589 65321 6308 153218
Thua Thien - Hue 17391 17306 119 34816 84909 84494 581 169984
Total 282659 104924 111299 498882 1380041 512276 543401 2435718
Da Nang 4199 289 4386 8874 20501 1411 21414 43326
South Central

Quang Nam 27591 697 27336 55624 134709 3403 133464 271576
Quang Ngai 24973 17170 9792 51935 121927 83830 47808 253565
Coast

Binh Dinh 38709 30022 23596 92327 188991 146578 115204 450773
Phu Yen 22032 22933 4097 49062 107568 111967 20003 239538
Khanh Hoa 13804 14263 4556 32623 67396 69637 22244 159277
Total 131308 85374 73763 290445 641092 416826 360137 1418055
Kon Tum 3366 0 6205 9571 16434 0 30295 46729
Highlands
Central

Gia Lai 13175 0 17340 30515 64325 0 84660 148985


Dak Lak 20043 0 24888 44931 97857 0 121512 219369
Lam Dong 5950 2448 11169 19567 29050 11952 54531 95533
Total 42534 2448 59602 104584 207666 11952 290998 510616
Ho Chi Minh 8177 7089 20570 35836 39923 34611 100430 174964
Ninh Thuam 9928 6800 6256 22984 48472 33200 30544 112216
North East South

Binh Phuoc 1258 0 4386 5644 6142 0 21414 27556


Tay Ninh 30413 23783 33915 88111 148487 116117 165585 430189
Binh Duong 3553 2176 5576 11305 17347 10624 27224 55195
Dong Nai 11237 13957 19397 44591 54863 68143 94703 217709
Binh Thuan 13141 20553 24378 58072 64159 100347 119022 283528
Ba Ria - Vung Tau 3009 3179 7786 13974 14691 15521 38014 68226
Total 80716 77537 122264 280517 394084 378563 596936 1369583
Long An 193511 73984 8959 276454 944789 361216 43741 1349746
Dong Thap 210001 112098 0 322099 1025299 547302 0 1572601
An Giang 209406 139808 5474 354688 1022394 682592 26726 1731712
Mekong River Delta

Tien Giang 91630 124610 1292 217532 447370 608390 6308 1062068
Vinh Long 68578 83283 1751 153612 334822 406617 8549 749988
Ben Tre 18751 19312 26486 64549 91549 94288 129314 315151
Kien Giang 190944 166243 14773 371960 932256 811657 72127 1816040
Can Tho 173196 158236 0 331432 845604 772564 0 1618168
Tra Vinh 36788 55539 65433 157760 179612 271161 319467 770240
Soc Trang 102391 116178 37060 255629 499909 567222 180940 1248071
Bac Lieu 17748 52955 52224 122927 86652 258545 254976 600173
Ca Mau 5661 19822 60792 86275 27639 96778 296808 421225
Total 1318605 1122068 274244 2714917 6437895 5478332 1338956 13255183
Total 2630767 1392351 1411816 5434934 12844333 6797949 6892984 26535266
Remarks Post Harvest Loss 17%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 41 Rice Crop Assessment for Food Balance 2000 - 2001 - Requirements and Balance
Available Rice Food Requirement Food Balance
Winter Summer
Location Spring Autumn Lua Mua Total Urban Rural Total Total
Region Province Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes Tonnes
Hanoi 56916 0 50288 107204 292561 213262 505823 -398618
Hai Phong 137553 0 130705 268258 109381 195195 304576 -36318
Vinh Phuc 93455 0 69516 162971 21876 176718 198595 -35624
Red River Delta

Ha Tay 262068 0 233144 495211 35636 397260 432896 62315


Bac Ninh 120078 0 119530 239608 16696 153774 170471 69137
Hai Duong 233965 0 202357 436323 43290 254113 297402 138920
Hung Yen 140237 0 136128 276365 18690 175508 194198 82167
Ha Nam 113066 0 104246 217312 11730 130741 142471 74841
Nam Dinh 303153 0 228597 531749 44518 296601 341119 190630
Thai Binh 304467 0 239991 544458 19260 303757 323017 221442
Ninh Binh 135416 0 107697 243114 21556 137185 158740 84373
Total 1900372.98 0 1622200.14 3522573.12 635193 2434114.4 3069307.4 453265.72
Ha Giang 19283 0 52315 71597 12015 99360 111375 -39777
Cao Bang 8546 0 43221 51767 12015 77305 89320 -37553
Lao Cai 23008 0 44481 67489 19135 90602 109737 -42248
Bac Kan 13366 0 27938 41304 7476 42898 50374 -9070
North East

Lang Son 37963 0 54397 92359 24849 102475 127323 -34964


Tuyen Quang 53082 0 67708 120790 11801 111464 123265 -2475
Yen Bai 39880 0 45358 85238 25418 99164 124582 -39345
Thai Nguyen 65846 0 88908 154754 43788 145195 188983 -34229
Phu Tho 91483 0 77897 169380 33998 195337 229335 -59955
Bac Giang 121721 0 144181 265902 22588 248328 270916 -5014
Quang Ninh 39277 0 59984 99261 88235 95088 183322 -84061
Total 513452.94 0 706388.1 1219841.04 301318.4 1307214.2 1608532.6 -388691.56
Lai Chau 20049 0 53794 73843 13546 96156 109701 -35858
North
West

Son La 21036 0 39606 60641 20862 143290 164152 -103510


Hoa Binh 42235 0 61299 103534 19598 118192 137790 -34256
Total 83320.38 0 154698.72 238019.1 54005.2 357637.6 411642.8 -173623.7
Thanh Hoa 361986 0 282227 644213 60413 564296 624709 19504
North Central

Nghe An 247989 114435 55383 417807 55340 463316 518656 -100849


Ha Tinh 127090 85457 14681 227227 21485 207228 228712 -1485
Coast

Quang Binh 63873 39332 1808 105013 18530 126113 144643 -39630
Quang Tri 53849 43112 4163 101124 25721 79050 104771 -3647
Thua Thien - Hue 56040 55766 383 112189 58758 133286 192044 -79855
Total 910827.06 338102.16 358644.66 1607573.88 240246.6 1573288.6 1813535.2 -205961.32
Da Nang 13531 931 14133 28595 104361 22909 127270 -98675
South Central

Quang Nam 88908 2246 88086 179240 38145 211535 249681 -70440
Quang Ngai 80472 55328 31553 167353 26166 188573 214739 -47386
Coast

Binh Dinh 124734 96741 76035 297510 66857 198773 265629 31881
Phu Yen 70995 73898 13202 158095 28266 116092 144358 13737
Khanh Hoa 44481 45960 14681 105123 72179 117622 189801 -84679
Total 423120.72 275105.16 237690.42 935916.3 335975 855503.6 1191478.6 -255562.3
Kon Tum 10846 0 19995 30841 19206 39658 58865 -28023
Highlands
Central

Gia Lai 42455 0 55876 98330 46814 139730 186544 -88214


Dak Lak 64586 0 80198 144784 69295 269154 338449 -193666
Lam Dong 19173 7888 35990 63052 73995 112888 186882 -123830
Total 137060 7888 192059 337007 209310 561430 770740 -433733
Ho Chi Minh 26349 22843 66284 115476 807782 149520 957302 -841826
Ninh Thuam 31992 21912 20159 74063 22820 71823 94643 -20580
North East South

Binh Phuoc 4054 0 14133 18187 19384 106658 126042 -107855


Tay Ninh 98001 76637 109286 283925 25276 150908 176184 107740
Binh Duong 11449 7012 17968 36429 44820 91901 136722 -100293
Dong Nai 36210 44974 62504 143688 115700 252262 367962 -224274
Binh Thuan 42345 66229 78555 187128 59808 132379 192187 -5058
Ba Ria - Vung Tau 9696 10244 25089 45029 63866 85476 149342 -104313
Total 260095.44 249851.58 393977.76 903924.78 1159456.4 1040926.2 2200382.6 -1296457.82
Long An 623561 238403 28869 890832 40691 199253 239944 650888
Dong Thap 676697 361219 0 1037917 43147 240336 283483 754434
An Giang 674780 450511 17639 1142930 82022 291671 373693 769237
Mekong River Delta

Tien Giang 295264 401537 4163 700965 40192 250962 291155 409810
Vinh Long 220983 268367 5642 494992 27590 154575 182165 312827
Ben Tre 60422 62230 85347 208000 21538 211322 232860 -24860
Kien Giang 615289 535694 47604 1198586 63243 211375 274618 923968
Can Tho 558099 509892 0 1067991 75383 254291 329674 738317
Tra Vinh 118544 178966 210848 508358 23745 152297 176042 332316
Soc Trang 329940 374367 119420 823727 40121 175864 215985 607742
Bac Lieu 57190 170640 168284 396114 34514 100196 134710 261404
Ca Mau 18242 63873 195893 278009 39925 166199 206124 71885
Total 4249010.7 3615699.12 883710.96 8748420.78 532113.2 2408340 2940453.2 5807967.58
Total 8477259.78 4486646.34 4549369.44 17513275.56 3467618 10538454.4 14006072.4 3507203.16
Conversion 66% 178 178
Remarks VLSS 120.48 158.88 kg/hd/yr
FAO 178 178
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 42 Area of Land for Aquaculture by Region


Region 1995 1998 1999 2000 2001
Red River Delta 58753.5 63013 66811.5 68349.8 71333
North East 23031.1 30696.3 28791.9 29847.3 31088.5
North West 3089 3199.8 3486.7 3505.4 3820.9
North Central Coast 26710.7 29505.9 31728.6 30641.5 32716.4
South Central Coast 13632 17807.8 19059.4 17299.4 19061.6
Central Highlands 4203 4789.9 4665.7 5115.9 5643
North East South 34773 33640.6 37151.3 41960.6 44409.1
Mekong River Delta 289390.5 341847.6 332923.6 445154.2 547105.1
Viet Nam 453582.8 524500.9 524618.7 641874.1 755177.6
(hectares)
Source: (General Statistics Office 2002)

Table 43 Area of Harvested Paddy by Region


1999-2001
Region 1995 1998 1999 2000 2001 change
Red River Delta 1193000 1203100 1202800 1212600 1202500 -10100
North East 522300 538800 535200 550300 558600 8300
North West 134500 128600 132900 136800 139800 3000
North Central Coast 682200 677500 677900 695000 700000 5000
South Central Coast 422500 424600 434800 422500 413500 -9000
Central Highlands 173200 164700 166000 176800 181100 4300
North East South 447300 464800 518800 526500 508100 -18400
Mekong River Delta 3190600 3760600 3985200 3945800 3781000 -164800
Viet Nam 6765600 7362700 7653600 7666300 7484600 -181700
(hectares)
Source: (General Statistics Office 2002)

Table 44 Change in Harvested and Planted Rice Area and aquaculture Land 2000-2001
Region Harvested Rice Area Approximate Rice Land* Aquaculture Land
Red River Delta -10100 -5068 2983
South Central Coast -9000 -3746 1762
North East South -18400 -9227 2449
Mekong River Delta -164800 -67018 101951
(hectares)
*Approximate rice land is calculated as either the area planted to Dong Xuan or Lua Mua rice crop, whichever is the greater.
Source: (General Statistics Office 2002)

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Table 45 Area of Water for Fishery Cultivation


Location Hectares Yearly Percentage Change
Region Province 1995 1998 1999 2000 2001 1995-2001 1998 1999 2000 2001
Hanoi 2646 2899.4 3091.2 3373 3389 20.5% 4.6% 3.2% 4.4% 0.2%
Hai Phong 12458 13199.2 13342.1 13076.9 13608.8 6.8% 2.9% 0.5% -1.0% 2.0%
Vinh Phuc 1918 2391.3 3335.3 3625.8 3893.6 72.7% 11.0% 16.5% 4.2% 3.6%
Red River Delta

Ha Tay 8067 7042 7137 7216 7404 -10.8% -6.8% 0.7% 0.6% 1.3%
Bac Ninh 2862 2811 2582 2538 2656 -7.5% -0.9% -4.2% -0.9% 2.3%
Hai Duong 2765 5781.4 6349.1 6747.3 7304 136.7% 35.3% 4.7% 3.0% 4.0%
Hung Yen 1953 3268 3018 3070 3577 65.6% 25.2% -4.0% 0.9% 7.6%
Ha Nam 3786 3815.7 3756 3930.4 3653 0.1% 0.4% -0.8% 2.3% -3.7%
Nam Dinh 9533 9910 11017 11592 12268 17.5% 1.9% 5.3% 2.5% 2.8%
Thai Binh 9122 8234 9500 9460 9631 0.9% -5.1% 7.1% -0.2% 0.9%
Ninh Binh 3643.5 3661 3683.8 3720.4 3948.6 3.0% 0.2% 0.3% 0.5% 3.0%
Total 58753.5 63013 66811.5 68349.8 71333 14.7% 3.5% 2.9% 1.1% 2.1%
Ha Giang 780.8 898 934.6 950.9 969 20.1% 7.0% 2.0% 0.9% 0.9%
Cao Bang 152.7 183.3 262.8 311.6 302.6 73.6% 9.1% 17.8% 8.5% -1.5%
Lao Cai 650 662 822 868 955 27.2% 0.9% 10.8% 2.7% 4.8%
Bac Kan 311 369 400 486 323 26.8% 8.5% 4.0% 9.7% -20.1%
North East

Lang Son 92.4 623.1 631.6 910.7 969.9 748.3% 74.2% 0.7% 18.1% 3.1%
Tuyen Quang 1260 1067.3 1226.6 1280.8 1394.1 -1.4% -8.3% 6.9% 2.2% 4.2%
Yen Bai 1624 1670 1748.3 1758.1 1895.5 8.9% 1.4% 2.3% 0.3% 3.8%
Thai Nguyen 3559 4495 2041 2285 2285 -22.0% 11.6% -37.5% 5.6% 0.0%
Phu Tho 2752.2 3447 3926.8 4706.5 4720 52.6% 11.2% 6.5% 9.0% 0.1%
Bac Giang 3574 3538 2951 2967 3004 -12.8% -0.5% -9.0% 0.3% 0.6%
Quang Ninh 8275 13743.6 13847.2 13322.7 14270.4 66.7% 24.8% 0.4% -1.9% 3.4%
Total 23031.1 30696.3 28791.9 29847.3 31088.5 30.7% 14.3% -3.2% 1.8% 2.0%
Lai Chau 900 968.6 1220.8 1188.6 1408.8 33.0% 3.7% 11.5% -1.3% 8.5%
North
West

Son La 855 936 946 991.5 990 13.0% 4.5% 0.5% 2.3% -0.1%
Hoa Binh 1334 1295.2 1319.9 1325.3 1422.1 0.5% -1.5% 0.9% 0.2% 3.5%
Total 3089 3199.8 3486.7 3505.4 3820.9 13.4% 1.8% 4.3% 0.3% 4.3%
Thanh Hoa 16871 13510 14620 10609 10287.6 -27.4% -11.1% 3.9% -15.9% -1.5%
North Central

Nghe An 5016 9553.8 10203.5 12245.1 13183.5 125.2% 31.1% 3.3% 9.1% 3.7%
Ha Tinh 2038 2543 2466 2792 2967 32.1% 11.0% -1.5% 6.2% 3.0%
Coast

Quang Binh 600.2 1211.8 1270.6 1413.7 1648.7 131.0% 33.8% 2.4% 5.3% 7.7%
Quang Tri 688 698.3 849.5 930.7 1063.6 28.7% 0.7% 9.8% 4.6% 6.7%
Thua Thien- Hue 1497.5 1989 2319 2651 3566 75.7% 14.1% 7.7% 6.7% 14.7%
Total 26710.7 29505.9 31728.6 30641.5 32716.4 16.6% 5.0% 3.6% -1.7% 3.3%
Da Nang 500 671.6 486.8 696.6 723.8 28.9% 14.6% -16.0% 17.7% 1.9%
South Central

Quang Nam 4267 4502 4695 4928 5192 13.2% 2.7% 2.1% 2.4% 2.6%
Quang Ngai 430 493.1 547.5 544.6 775.5 37.3% 6.8% 5.2% -0.3% 17.5%
Coast

Binh Dinh 3800 3246.1 3491.6 3695 4184.1 -3.8% -7.9% 3.6% 2.8% 6.2%
Phu Yen 935 2240 2605.5 2799.2 3092.2 187.1% 41.1% 7.5% 3.6% 5.0%
Khanh Hoa 3700 6655 7233 4636 5094 59.6% 28.5% 4.2% -21.9% 4.7%
Total 13632 17807.8 19059.4 17299.4 19061.6 34.3% 13.3% 3.4% -4.8% 4.8%
Kon Tum 398 418 188.5 266.3 284.3 -27.3% 2.5% -37.8% 17.1% 3.3%
Highlands
Central

Gia Lai 100 82.5 89.6 93 97 -9.5% -9.6% 4.1% 1.9% 2.1%
Dak Lak 2905 3095.4 3275.6 3378.6 3852.7 17.1% 3.2% 2.8% 1.5% 6.6%
Lam Dong 800 1194 1112 1378 1409 59.2% 19.8% -3.6% 10.7% 1.1%
Total 4203 4789.9 4665.7 5115.9 5643 20.2% 6.5% -1.3% 4.6% 4.9%
Ho Chi Minh 3368 3051 4225 4235 5449 25.9% -4.9% 16.1% 0.1% 12.5%
Ninh Thuam 620 442 589.1 665 1078.4 11.9% -16.8% 14.3% 6.1% 23.7%
North East South

Binh Phuoc 255 338.9 442.8 591.4 818.8 114.9% 14.1% 13.3% 14.4% 16.1%
Tay Ninh 131 500 462 537 515 284.4% 58.5% -4.0% 7.5% -2.1%
Binh Duong 171 199 203 205 224 21.5% 7.6% 1.0% 0.5% 4.4%
Dong Nai 26904 26085 27872.1 30499 29609.7 6.0% -1.5% 3.3% 4.5% -1.5%
Binh Thuan 227 546 616 1076 1757 340.0% 41.3% 6.0% 27.2% 24.0%
Ba Ria- Vung Tau 3097 2478.7 2741.3 4152.2 4957.2 15.7% -11.1% 5.0% 20.5% 8.8%
Total 34773 33640.6 37151.3 41960.6 44409.1 13.0% -1.7% 5.0% 6.1% 2.8%
Long An 1812 3100 2936.6 3382.5 6596.5 121.0% 26.2% -2.7% 7.1% 32.2%
Dong Thap 3201 1687 1757 1928.6 2225.2 -40.7% -31.0% 2.0% 4.7% 7.1%
An Giang 964.5 930 1225 1255.8 1252 20.9% -1.8% 13.7% 1.2% -0.2%
Mekong River Delta

Tien Giang 9588.5 9148.4 9754.4 8411.2 8776.6 -5.9% -2.3% 3.2% -7.4% 2.1%
Vinh Long 1155 1151 1164.8 1353.1 1303.3 7.6% -0.2% 0.6% 7.5% -1.9%
Ben Tre 24730 23408.2 27931.4 29253 25577.5 7.3% -2.7% 8.8% 2.3% -6.7%
Kien Giang 12538 27163 29345 34628 42589 166.6% 36.8% 3.9% 8.3% 10.3%
Can Tho 8263.5 12507 11908 12572 13574 53.0% 20.4% -2.5% 2.7% 3.8%
Tra Vinh 22634 35000 36000 52590 54788 97.0% 21.5% 1.4% 18.7% 2.0%
Soc Trang 3000 25841 30532 41382 53245 1158.3% 79.2% 8.3% 15.1% 12.5%
Bac Lieu 41446 40314 38908.4 54017 82981 30.4% -1.4% -1.8% 16.3% 21.1%
Ca Mau 160058 161598 141461 204381 254197 19.0% 0.5% -6.6% 18.2% 10.9%
Total 289390.5 341847.6 332923.6 445154.2 547105.1 44.0% 8.3% -1.3% 14.4% 10.3%
Total 453582.8 524500.9 524618.7 641874.1 755177.6 34.8% 7.3% 0.0% 10.1% 8.1%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 46 Gross Output of Shrimp Culture


Location Tonnes Yearly Percentage Change
Region Province 1995 1998 1999 2000 2001 1995-2001 1998 1999 2000 2001
Hanoi - - 0.4 2 34 - - - 66.7% 88.9%
Hai Phong 478 823.6 967 1303.3 1532.7 142.0% 26.6% 8.0% 14.8% 8.1%
Vinh Phuc - - 4.2 - - - - - - -
Red River Delta

Ha Tay - - - - 1 - - - - -
Bac Ninh - 391 335 342 360 - - -7.7% 1.0% 2.6%
Hai Duong - - - - - - - - - -
Hung Yen - - 25 38 82 - - - 20.6% 36.7%
Ha Nam 79 - - 35 48 -47.5% - - - 15.7%
Nam Dinh 394 721 796 1039 1284 143.7% 29.3% 4.9% 13.2% 10.5%
Thai Binh 350 423 396 616 1357 99.4% 9.4% -3.3% 21.7% 37.6%
Ninh Binh 30 86.5 125 221 351.2 553.1% 48.5% 18.2% 27.7% 22.8%
Total 1331 2445.1 2648.6 3596.3 5049.9 158.1% 29.5% 4.0% 15.2% 16.8%
Ha Giang - 1.2 1.3 2 2.5 - - 4.0% 21.2% 11.1%
Cao Bang - - - - - - - - - -
Lao Cai - - - - - - - - - -
Bac Kan 3 4 4 3 1 0.0% 14.3% 0.0% -14.3% -50.0%
North East

Lang Son - - - 0.8 - - - - - -


Tuyen Quang - 8 11 13 11 - - 15.8% 8.3% -8.3%
Yen Bai - - - 6.2 - - - - - -
Thai Nguyen 27 33 32 36 35 25.9% 10.0% -1.5% 5.9% -1.4%
Phu Tho - 4 1.9 - - - - -35.6% - -
Bac Giang - - - - - - - - - -
Quang Ninh 518 526.1 693.5 854 902.7 43.6% 0.8% 13.7% 10.4% 2.8%
Total 548 576.3 743.7 915 952.2 45.4% 2.5% 12.7% 10.3% 2.0%
Lai Chau - - 1.2 0.7 0.8 - - - -26.3% 6.7%
North
West

Son La - 2 - - - - - - - -
Hoa Binh - - 2.1 6.7 5.9 - - - 52.3% -6.3%
Total 0 2 3.3 7.4 6.7 - 100.0% 24.5% 38.3% -5.0%
Thanh Hoa 180 592 619 705.7 1015 307.2% 53.4% 2.2% 6.5% 18.0%
North Central

Nghe An 330 125 68.3 149.1 409 -43.1% -45.1% -29.3% 37.2% 46.6%
Ha Tinh 116 86 94 346 301 78.2% -14.9% 4.4% 57.3% -7.0%
Coast

Quang Binh 124 121 136.2 176.6 227.1 33.2% -1.2% 5.9% 12.9% 12.5%
Quang Tri 39 22 35.6 53.3 240.9 125.5% -27.9% 23.6% 19.9% 63.8%
Thua Thien/Hue 99 258 365 649 1697 649.7% 44.5% 17.2% 28.0% 44.7%
Total 888 1204 1318.1 2079.7 3890 139.1% 15.1% 4.5% 22.4% 30.3%
Da Nang 23 80 152 185.5 286.3 665.0% 55.3% 31.0% 9.9% 21.4%
South Central

Quang Nam 282 424.3 632.4 1613.4 2350 345.0% 20.1% 19.7% 43.7% 18.6%
Quang Ngai 250 448 585.5 765.5 901.9 170.1% 28.4% 13.3% 13.3% 8.2%
Coast

Binh Dinh 481 635 828.3 1558.5 1681.5 144.5% 13.8% 13.2% 30.6% 3.8%
Phu Yen 899 1862 1733.6 2585.6 2523 142.1% 34.9% -3.6% 19.7% -1.2%
Khanh Hoa 1923 3848 3808 6928 8200 196.2% 33.4% -0.5% 29.1% 8.4%
Total 3858 7297.3 7739.8 13636.5 15942.7 189.1% 30.8% 2.9% 27.6% 7.8%
Kon Tum - - - - - - - - - -
Highlands
Central

Gia Lai - - - - - - - - - -
Dak Lak - 32.6 53 18 52 - - 23.8% -49.3% 48.6%
Lam Dong - - - - - - - - - -
Total 0 32.6 53 18 52 - 100.0% 23.8% -49.3% 48.6%
Ho Chi Minh 291 838 734 697 2909 344.8% 48.4% -6.6% -2.6% 61.3%
Ninh Thuam 600 1122 1357.5 1820 3858 239.9% 30.3% 9.5% 14.6% 35.9%
North East South

Binh Phuoc - - - - - - - - - -
Tay Ninh - - - - - - - - - -
Binh Duong - - - - - - - - - -
Dong Nai 151 408 625 635.2 891.3 323.8% 46.0% 21.0% 0.8% 16.8%
Binh Thuan 320 1044 480 650 1900 218.3% 53.1% -37.0% 15.0% 49.0%
Ba Ria/Vung Tau 208 535 348.8 453.5 1026.8 184.1% 44.0% -21.1% 13.0% 38.7%
Total 1570 3947 3545.3 4255.7 10585.1 255.6% 43.1% -5.4% 9.1% 42.6%
Long An 51 142 373.8 595 1725 1290.1% 47.2% 44.9% 22.8% 48.7%
Dong Thap 48 127 145 316 396.4 412.7% 45.1% 6.6% 37.1% 11.3%
An Giang 639 3 2.8 5.4 178 -92.6% -99.1% -3.4% 31.7% 94.1%
Mekong River Delta

Tien Giang 350 805 1115 1173.8 1405 221.3% 39.4% 16.1% 2.6% 9.0%
Vinh Long 57 60.1 61.2 63.5 71.2 12.3% 2.6% 0.9% 1.8% 5.7%
Ben Tre 5300 4603 5167.4 5826.6 8023.8 11.4% -7.0% 5.8% 6.0% 15.9%
Kien Giang 1861 1122 1062 1764 4800 17.5% -24.8% -2.7% 24.8% 46.3%
Can Tho 142 117 17 17 65 -62.0% -9.7% -74.6% 0.0% 58.5%
Tra Vinh 3909 3500 4590 2310 4391 -5.4% -5.5% 13.5% -33.0% 31.1%
Soc Trang 3534 5109 3210 11143 13700 134.6% 18.2% -22.8% 55.3% 10.3%
Bac Lieu 7214 6977 5936 10403.2 28347 79.0% -1.7% -8.1% 27.3% 46.3%
Ca Mau 24016 16817 19720 35377 55330 32.5% -17.6% 7.9% 28.4% 22.0%
Total 47121 39382.1 41400.2 68994.5 118432.4 42.3% -8.9% 2.5% 25.0% 26.4%
Total 55316 54886.4 57452 93503.1 154911 63.0% -0.4% 2.3% 23.9% 24.7%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 47 Gross Output of Fish Culture


Location Tonnes Yearly Percentage Change
Region Province 1995 1998 1999 2000 2001 1995-2001 1998 1999 2000 2001
Hanoi 4985 6492 6917 7744 8688 49.7% 13.1% 3.2% 5.6% 5.7%
Hai Phong 7702 10566 10907 11819 12291 48.0% 15.7% 1.6% 4.0% 2.0%
Vinh Phuc 3810 3338 3514 3907 4371 -0.7% -6.6% 2.6% 5.3% 5.6%
Red River Delta

Ha Tay 6450 7469 8480 8722 9755 33.4% 7.3% 6.3% 1.4% 5.6%
Bac Ninh 845 4514 4948 5201 6783 534.5% 68.5% 4.6% 2.5% 13.2%
Hai Duong 4351 9205 10457 11651 13050 154.9% 35.8% 6.4% 5.4% 5.7%
Hung Yen 1414 3212 5223 5534 5822 249.9% 38.9% 23.8% 2.9% 2.5%
Ha Nam 2254 4100 3590 4056 5553 91.9% 29.1% -6.6% 6.1% 15.6%
Nam Dinh 6488 9594 10392 10088 11260 59.3% 19.3% 4.0% -1.5% 5.5%
Thai Binh 8121 7964 9486 10695 12727 25.8% -1.0% 8.7% 6.0% 8.7%
Ninh Binh 1820 3499 4226 4976 4888 141.6% 31.6% 9.4% 8.2% -0.9%
Total 48240 69953 78140 84393 95188 69.8% 18.4% 5.5% 3.8% 6.0%
Ha Giang 627 794 835 856 883 34.3% 11.8% 2.5% 1.2% 1.6%
Cao Bang 85 134 191 197 201 112.6% 22.4% 17.5% 1.5% 1.0%
Lao Cai 394 462 480 512 590 29.7% 7.9% 1.9% 3.2% 7.1%
Bac Kan 184 223 12 245 205 -6.9% 9.6% -89.8% 90.7% -8.9%
North East

Lang Son 75 314 306 391 629 446.7% 61.4% -1.3% 12.2% 23.3%
Tuyen Quang 957 1091 1187 1296 1272 26.6% 6.5% 4.2% 4.4% -0.9%
Yen Bai 38 475 644 876 1196 1999.3% 85.2% 15.1% 15.3% 15.4%
Thai Nguyen 1179 2752 2564 2897 2811 133.8% 40.0% -3.5% 6.1% -1.5%
Phu Tho 2990 3568 4813 6263 6430 76.2% 8.8% 14.9% 13.1% 1.3%
Bac Giang 2121 2882 2897 2964 3109 39.7% 15.2% 0.3% 1.1% 2.4%
Quang Ninh 1436 1583 1700 2279 2669 43.3% 4.9% 3.6% 14.6% 7.9%
Total 10086 14278 15629 18776 19995 70.2% 17.2% 4.5% 9.1% 3.1%
Lai Chau 275 198 235 328 448 9.9% -16.3% 8.5% 16.5% 15.5%
North
West

Son La 1050 1476 1578 1638 1713 52.5% 16.9% 3.3% 1.9% 2.2%
Hoa Binh 600 986 973 931 1290 74.2% 24.3% -0.7% -2.2% 16.2%
Total 1925 2660 2786 2897 3451 53.2% 16.0% 2.3% 2.0% 8.7%
Thanh Hoa 6178 5568 5820 7472 7540 6.8% -5.2% 2.2% 12.4% 0.5%
North Central

Nghe An 3250 7373 7332 8185 8800 143.8% 38.8% -0.3% 5.5% 3.6%
Ha Tinh 976 1367 1701 2097 2542 97.4% 16.7% 10.9% 10.4% 9.6%
Coast

Quang Binh 554 980 1242 1422 1798 145.6% 27.8% 11.8% 6.8% 11.7%
Quang Tri 551 537 547 690 968 24.4% -1.3% 0.9% 11.6% 16.8%
Thua Thien - Hue 211 584 515 657 764 198.6% 46.9% -6.3% 12.1% 7.5%
Total 11720 16409 17157 20523 22412 63.2% 16.7% 2.2% 8.9% 4.4%
Da Nang 241 247 167 459 450 37.2% 1.2% -19.3% 46.6% -1.0%
South Central

Quang Nam 1339 951 1027 1088 1159 -21.1% -16.9% 3.8% 2.9% 3.2%
Quang Ngai 15 16 20 3 137 193.3% 3.2% 11.1% -73.9% 95.7%
Coast

Binh Dinh 682 840 881 751 746 18.0% 10.4% 2.4% -8.0% -0.3%
Phu Yen 29 79 120 120 138 294.0% 46.3% 20.6% 0.0% 7.0%
Khanh Hoa 387 146 66 129 131 -69.5% -45.2% -37.7% 32.3% 0.8%
Total 2693 2279 2281 2550 2761 -8.4% -8.3% 0.0% 5.6% 4.0%
Kon Tum 150 226 423 593 588 205.0% 20.2% 30.4% 16.7% -0.4%
Highlands
Central

Gia Lai 56 71 76 79 84 38.4% 11.8% 3.4% 1.9% 3.1%


Dak Lak 1335 2598 3815 4466 4417 186.4% 32.1% 19.0% 7.9% -0.6%
Lam Dong 2872 1792 1894 2046 2374 -29.4% -23.2% 2.8% 3.9% 7.4%
Total 4413 4687 6208 7184 7463 44.7% 3.0% 14.0% 7.3% 1.9%
Ho Chi Minh 2799 2914 2971 3403 3079 10.5% 2.0% 1.0% 6.8% -5.0%
Ninh Thuam 15 28 28 28 55 131.7% 30.2% 0.0% 0.0% 32.5%
North East South

Binh Phuoc 200 914 1332 1175 1650 533.9% 64.1% 18.6% -6.3% 16.8%
Tay Ninh 538 1271 1155 1379 1716 156.6% 40.5% -4.8% 8.8% 10.9%
Binh Duong 194 225 229 232 246 20.1% 7.4% 0.9% 0.7% 2.9%
Dong Nai 5980 5254 7656 11757 11958 53.1% -6.5% 18.6% 21.1% 0.8%
Binh Thuan 50 0 726 1048 1105 1339.5% -100.0% 100.0% 18.2% 2.6%
Ba Ria - Vung Tau 814 682 967 955 1473 25.2% -8.8% 17.3% -0.6% 21.3%
Total 10590 11288 15064 19977 21282 59.6% 3.2% 14.3% 14.0% 3.2%
Long An 3838 7872 9146 7974 9533 124.9% 34.4% 7.5% -6.8% 8.9%
Dong Thap 24461 31643 36709 34395 35388 41.2% 12.8% 7.4% -3.3% 1.4%
An Giang 34421 40728 60742 80032 83335 92.4% 8.4% 19.7% 13.7% 2.0%
Mekong River Delta

Tien Giang 13281 15465 15112 15238 19976 23.8% 7.6% -1.2% 0.4% 13.5%
Vinh Long 6093 6144 6503 6907 8159 13.7% 0.4% 2.8% 3.0% 8.3%
Ben Tre 5200 5215 5675 7331 9313 32.4% 0.1% 4.2% 12.7% 11.9%
Kien Giang 1560 3115 4673 5477 6700 220.0% 33.3% 20.0% 7.9% 10.0%
Can Tho 6263 7043 11342 12963 15057 85.2% 5.9% 23.4% 6.7% 7.5%
Tra Vinh 8523 15400 15100 17863 19091 97.9% 28.7% -1.0% 8.4% 3.3%
Soc Trang 2676 2121 2520 3173 3800 8.5% -11.6% 8.6% 11.5% 9.0%
Bac Lieu 891 4463 7397 11805 9167 821.2% 66.7% 24.7% 23.0% -12.6%
Ca Mau 12268 24863 23795 31597 28949 122.5% 33.9% -2.2% 14.1% -4.4%
Total 119475 164072 198714 234755 248468 77.0% 15.7% 9.5% 8.3% 2.8%
Total 209142 285626 335979 391055 421020 71.4% 15.5% 8.1% 7.6% 3.7%
Source (General Statistics Office 2002) Updated Conversion Factors

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Table 48 Production and Exports of Rice 1990-2001


Rice Production Exports
Year
(million tonnes) (million tonnes) %
1990 10.53 1.48 14.06
1991 10.75 1.02 9.49
1992 11.83 1.95 16.48
1993 12.51 1.65 13.19
1994 12.89 1.96 15.21
1995 13.68 2.05 14.99
1996 14.46 3.05 21.09
1997 15.08 3.68 24.4
1998 15.97 3.8 23.79
1999 17.2 4.6 26.74
2000 17.82 3.37 18.91
2001 17.51 3.56 20.33
Source: (General Statistics Office 2002)

Table 49 Export of Rice by Grade, 2001


Exports % of Total Exports
Rice Grade
Tonnes %
5% broken 898,212 25.23
10% broken 456,593 12.83
15% broken 506,112 14.22
25% broken 1,128,146 31.69
100% broken 190,668 5.36
Par-boiled 14,210 0.4
Glutinous 5,160 0.14
Other 360,910 10.14
Total 3,560,011 100
Source: USDA

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Table 50 Export of Rice by Destination, 2001


Exports
Destination
Tonnes %
Iraq 535,519 15.04
Indonesia 532,048 14.95
Philippines 556,159 15.62
Malaysia 153,004 4.3
Cambodia 5,000 0.14
Singapore 58,034 1.63
Palau 10,760 0.3
ASIA
Middle East 10,900 0.31
Yemen 9,970 0.28
Japan 10,874 0.31
Laos 1,550 0.04
Hong Kong 900 0.03
North Korea 5,500 0.15
Total 1,890,758 53.11
West Africa 823,016 23.12
Tanzania 15,638 0.44
AFRICA
Ivory Coast 13,000 0.37
Total 851,654 23.92
Poland 69,644 1.96
Russia 106,932 3
EUROPE Ukraine 1,500 0.04
Other EU 58,670 1.65
Total 236,746 6.65
AMERICA Cuba 286,928 8.06
OCEANIA Australia 9,005 0.25
OTHERS 284,920 8
TOTAL 3,560,011 100
Source: USDA

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Table 51 Export of Various Quality Rice by Destination, 2001


Percent Broken
Destination
5% 10% 15% 25% 100%
Iraq 44.86 29.04 0 0 0
Indonesia 4.52 15.7 38.73 11.3 3.25
Philippines 2.08 1.14 5.54 42.92 0
Malaysia 10.34 3.53 2.75 2.63 0
Cambodia 0 0 0 0 0
Singapore 1.16 1.74 4.46 1.33 0.51
Palau 0.38 0.24 0.69 0.24 0
Middle East 1.21 0 0 0 0
Yemen 0.29 0 0.52 0 0
Japan 0.65 1.1 0 0 0
Laos 0.04 0 0 0 0
Hong Kong 0.1 0 0 0 0
North Korea 0 1.2 0 0 0
West Africa 25.63 13.51 34.75 15.25 96.08
Tanzania 0 1.8 1.47 0 0
Ivory Coast 0 0 0 0 0
Poland 1.15 7.86 3.45 0.53 0
Russia 4.01 10.27 4.45 0.13 0
Ukraine 0.17 0 0 0 0
EU 1.85 6.85 2.07 0 0.16
Cuba 0.05 5.48 0 23.18 0
Australia 0.7 0 0 0 0
Other 0.75 0.55 1.13 2.48 0
TOTAL 100 100 100 100 100
Source: USDA

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Table 52 Sources of Rural Finance in the Mekong River Delta (1999)


Financial Overview of services Location of Interest rate charged
service branches per month
• Loans primarily to small business Large provincial
Business Banks 1.05
towns
• Loans made by associates who
research potential borrowers, pending
approval of village authorities.
Policy Bank Village level 1.05
• Land ownership certificate required as
collateral
• Maximum loan 4 million Dong
• Mainly household lending 1.05 (due at harvest);
Agricultural • Borrowers confirmed by local 1.2 charged in some
District
Development authorities based on crop and season provinces for 4-month
headquarters
Bank • Loans range from 3-6 million Dong, loans. Overdue rate is
depending on area 1.8 percent per month
• Targeted mainly at poor groups
• Borrowers must be approved by
Bank for the Women’s Association or Peasant 0.8 (lowered to 0.7 as of
All provinces
Poor Association 01/9/1999)
• Maximum loan 2 million Dong per
year
• Targeted at poor
• Borrowers require approval of local
Rural
authorities Mekong River
Development 0.6
Fund • Donor funded (2 million USD in donor Delta
funds plus 2 million USD in funds
from East Asia Bank)
Sidse • Loans come from savings 3, plus 5,000 Dong fee
organization organization to members in times of and weekly interest
loans difficulties payments
• Microfinance institution funded by
Belgian Fund for Development and
Southern Agriculture Technique
Test credit Science Institute, based on Grameen
2-2.5
funds Bank of Bangladesh
• Loans based on reputation (50, 75,
100 USD loans)
• Monthly payment required
Source: (PHTI-HCMC 1999)

Table 53 Summary of VBARD Operations FY1995-1999


Audited Av. Growth
1999-2000
FY ending 31 December 1996 1997 1998 1999 2000 %
Total Resources 22,251 25,106 32,134 35,617 51,398 44
Loan Portfolio 17,689 20,607 24,338 28,736 39,393 37
Deposits with SBV & banks 2,836 3,207 6,305 2,662 4,484 68
Deposits from customers 13,479 17,850 21,510 19,472 24,216 24
Borrowings from SBV & banks 6,143 4,922 6,524 4,519 12,530 177
Borrowings from international agencies 848 1,216 2,273 2,504 2,808 12
(Dong billion)
Source: Viet Nam Bank for Agriculture and Rural Development

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Table 54 VBARD, Portfolio Details, December 2001


Outstanding Loans Households & State Owned
Non-SOE Total As % of Total
Cooperatives Enterprises
Agriculture 22963 4083 208 27254 50.4
Forestry 68 222 33 323 0.5
Fishing Aquaculture & Salt 3009 506 64 3579 6.6
Industry 657 2881 736 4274 7.9
Sector and
Trading and Services 3188 1780 796 5764 10.7
Borrower Type
Other, Including
8184 3459 1226 12869 23.8
Foreign Currency Loans
Total 38070 12931 3063 54064 100
As % of Loan Portfolio 70.4 23.9 5.7 100
Maturity and Short Term 18846 7973 2015 28834 53
Borrower Type Medium- and Long Term 19223 4958 1048 25229 47
(Dong billion)
Source: Viet Nam Bank for Agriculture and Rural Development.

Table 55 Source of Farmer Funds


Total Share Village Agricultural
Region of Users Relatives Friends Millers Traders Lenders Bank Other
NMM 26% 11% 2% 87%
RRD 20% 14% 12% 11% 5% 43% 14%
NCC 36% 4% 19% 7% 44% 26%
SCC 30% 7% 43% 50%
CH 20% 10% 90%
NES 46% 97% 3%
MRD 55% 2% 2% 92% 3%
Viet Nam 38% 3% 4% 1% 1% 82% 8%
Source: (IFPRI 1996, pg. 315 Table 8.18)

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Table 56 Credit Usage and Provision for Fruit and Vegetable Producers: Regional Basis

Use Credit Enough Credit Total Credit Requirement Maximum Interest Rate Credit Given to Other People Amount Lent
Location Region Province Percent of Respondents Percent of Respondents ('000 Dong) Acceptable (% per month) Percent of Respondents ('000 Dong)
Yes No Total Yes No Total No Respondents Mean SD Mean SD Yes No Total No Respondents Mean SD
NCC Nghe An 48.00 52.00 50 41.67 58.33 24 14 14485.71 10989.99 0.65 0.2312175 10.00 90.00 50 5 6600 4979.96
Bac Giang 54.90 45.10 51 67.86 32.14 28 9 58444.44 68277.21 0.8388889 0.223296 1.96 98.04 51 1 15000
Bac Ninh 34.00 66.00 100 61.76 38.24 34 13 9153.846 5096.505 0.9923077 0.1846688 100.00 100 0
Ha Giang 40.00 60.00 50 30.00 70.00 20 14 13857.43 9062.193 0.7714286 0.2267787 100.00 50 0
NE
Phu Tho 16.00 84.00 50 62.50 37.50 8 3 17666.67 19655.36 0.7666667 0.2516611 100.00 50 0
Quang Ninh 64.00 36.00 50 59.38 40.63 32 13 16538.46 7467.88 0.8307692 0.2097006 100.00 50 0
Total 40.53 59.47 301 57.38 42.62 122 52 21288.54 33006.39 0.8528846 0.2217164 0.33 99.67 301 1 15000
North
NW Son La 30.77 69.23 52 43.75 56.25 16 9 23333.33 15206.91 1.2 0.1936492 1.92 98.08 52 1 4500
Ha Noi
44.00 56.00 50 72.73 27.27 22 6 8166.667 6242.329 0.8666667 0.4546061 8.00 92.00 50 4 5625 8280.248
Hai Duong 29.65 70.35 199 57.63 42.37 59 25 8560.52 6896.369 0.76 0.2081666 7.04 92.96 199 14 9642.857 17556.97
RRD Hung Yen 44.55 55.45 101 44.44 55.56 45 25 26280.4 27918.42 0.808 0.2271563 3.96 96.04 101 4 9250 5377.422
Ninh Binh 73.08 26.92 52 73.68 26.32 38 10 24400 44380.18 0.78 0.1686548 3.85 96.15 52 2 5500 3535.534
Total 40.80 59.20 402 59.76 40.24 164 66 17636.71 25628.1 0.7909091 0.2364658 5.97 94.03 402 24 8562.5 13805.57
Total Total 40.50 59.50 805 56.75 43.25 326 141 19034.23 27061.01 0.8258865 0.2528129 3.85 96.15 805 31 8322.581 12326.49
Ben Tre 6.00 94.00 50 100.00 0.00 3 100.00 50
Can Tho 0.00 100.00 50 100.00 50
Dong Thap 0.00 100.00 50 100.00 50
MRD Kien Giang 46.00 54.00 50 95.65 4.35 23 1 20000 5 100.00 50
Soc Trang 2.00 98.00 50 100.00 0.00 1 100.00 50
Tien Giang 6.50 93.50 200 100.00 0.00 13 100.00 200
South
Total 8.89 91.11 450 97.50 2.50 40 1 20000 5 100.00 450
Binh Thuan 32.00 68.00 50 100.00 0.00 16 100.00 50
Dong Nai 0.00 100.00 50 100.00 50
NES
Lam Dong 0.67 99.33 150 100.00 0.00 1 100.00 150
Total 6.80 93.20 250 100.00 0.00 17 100.00 250
Total Total 8.14 91.86 700 98.25 1.75 57 1 20000 5 100.00 700
Total Total Total 25.45 74.55 1505 62.92 37.08 383 142 19041.04 26965 0.8552817 0.4314625 2.06 97.94 1505 31 8322.581 12326.49
Source: (Agrifood Consulting International 2001c, pg 220 Table 180)
Rice Value Chain Study – Viet Nam

Table 57 Details of Loans – Loan Amounts, Interest Rates and Type of Collateral: By Source of Loan for Fruit and Vegetable Producers

Loan Amounts and Interest Rates Type of Collateral Used for Loan
Amount Borrowed ('000Dong) Interest Rate (per Month) Length of Loan (Months) House Land Building Equipment Livestock Social Capital Not Required
Source No Obs Mean SD Mean SD Mean SD Percentage of Respondents
Agricultural Bank 330 7031.321 10024.53 0.9749697 0.1908711 19.14848 12.53854 32.42 40.30 3.03 0.30 1.21 17.58 5.15
Commercial Bank 3 30000 10000 0.85 0.15 20 13.85641 66.67 33.33
Friends and Relatives 14 9143.357 6802.637 0.55 0.6047886 30.35714 18.1006 7.14 71.43 21.43
Farmers 1 2000 2 6 . 100.00
Foreign Bank 1 10000 1.5 24 . 100.00
Money Lender 8 4812.5 3721.919 2.3375 1.668136 24.375 22.70266 12.50 25.00 62.50
Other Credit Institutions 62 6483.871 6517.925 1.128548 0.2971275 13.37097 7.965569 53.23 11.29 1.61 14.52 19.35
Other Enterprises 12 5341.667 3875.907 1.025 0.3250874 12 0 100.00
Other 77 3044 2128.077 0.7176 0.3317881 23.22667 13.10516 25.97 7.79 1.30 19.48 45.45
Traders 4 9175 9827.979 1.375 1.25 26.25 26.96139 100.00
Total 512 6542.857 8883.776 0.9741797 0.4007118 19.2832 12.90762 32.23 28.71 2.15 0.20 0.98 18.36 17.38
Source: (Agrifood Consulting International 2001c, pg 221 Table 181)

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Table 58 Loans for Smallholder Livestock Producers in Thanh Hoa and Thai Binh Provinces
Source of Loans
Loan Provider Thai Binh Province Thanh Hoa Province
Dong Kinh Nam Trung Doc Lap Quang Cat Hop Thanh Thanh Tien Hoi Xuan
Farmer 11.11% 3.57% 5.26% 6.90%
Relatives and
14.81% 17.86% 35.00% 15.79% 20.00% 13.79% 3.23%
Friends
Traders 2.63% 4.00%
Money Lenders 3.57% 10.00% 5.26% 4.00% 6.90%
Commercial Bank 5.00% 10.53%
Foreign Bank 3.70% 10.71% 2.63% 3.45%
Agricultural Bank 37.04% 53.57% 20.00% 44.74% 68.00% 41.38% 41.94%
Other Credit
22.22% 7.14% 15.00% 7.89% 4.00% 24.14% 41.94%
Institution
Other 11.11% 3.57% 15.00% 5.26% 3.45% 12.90%
Total 100.00% 100.00%
100.00% 100.00% 100.00% 100.00% 100.00%
Interest Rate
Loan Provider Thai Binh Province Thanh Hoa Province
Dong Kinh Nam Trung Doc Lap Quang Cat Hop Thanh Thanh Tien Hoi Xuan
Farmer 1.23% 1.20% 2.00% 2.25%
Relatives and
0.50% 1.38% 0.33% 0.83% 0.60% 0.88%
Friends
Traders 2.00% 5.00%
Money Lenders 4.00% 1.50% 4.50% 5.00% 1.15%
Commercial Bank 1.00% 0.94%
Foreign Bank 0.50% 1.07% 1.20% 1.50%
Agricultural Bank 0.87% 1.12% 1.13% 0.96% 1.52% 0.83% 0.89%
Other Credit
2.75% 0.85% 0.80% 0.93% 1.00% 0.70% 0.68%
Institution
Other 0.50% 0.70% 0.83% 2.10% 1.50% 0.63%
Source: (Agrifood Consulting International 2001a, b)

Table 59 Sources of Credit for Traders, Millers and SOEs


Friends/
relatives/ Money Commercial Agricultural Foreign Other
Group own sources Lenders Traders Banks Banks Banks sources
Traders 37 17 4 11 26 0 5
Millers 19 5 1 30 37 0 9
SOEs 7 0 0 60 27 1 6
Percent of Loans
Source: (IFPRI 1996)

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Table 60 Sources of Credit for Millers by Type of Mill and Region


Friends/
relatives/ Money Commercial Agricultural Foreign Other
Miller category Region own sources Lenders Traders Banks Banks Banks sources
NMM 29 0 0 0 71 0 0
RRD 38 8 3 2 47 0 3
NCC 29 9 0 0 62 0 0
Small miller SCC 16 16 0 40 14 0 13
CH 13 13 0 0 75 0 0
NES 100 0 0 0 0 0 0
MRD 36 8 2 8 38 0 8
RRD 0 0 0 0 67 0 33
Medium miller NES 0 0 0 20 80 0 0
MRD 17 4 2 51 26 0 0
NES 25 0 0 38 38 0 0
Large miller
MRD 0 0 0 68 26 0 6
NES 0 0 0 0 0 0 100
Polishers
MRD 7 0 0 80 9 0 4
RRD 0 0 0 0 100 0 0
NCC 0 0 0 0 100 0 0
Miller-polishers SCC 100 0 0 0 0 0 0
NES 0 0 0 0 0 0 100
MRD 1 0 0 68 25 0 0
Percentage of Dong Loans
Source: (IFPRI 1996)

Table 61 Sources of Credit for SOEs by Region


Own Money Commercial Agricultural Foreign Other
Region sources Lenders Traders Banks Banks Banks sources
NMM 25 0 0 27 8 0 40
RRD 26 0 0 7 67 0 0
NCC 0 0 0 100 0 0 0
SCC 0 0 0 0 100 0 0
CH 0 0 0 0 100 0 0
NES 0 0 0 86 12 0 2
MRD 0 0 0 81 13 2 2
Percentage of Dong Loans
Source: (IFPRI 1996)

Table 62 Credit Constraints of Traders, Millers, and SOEs


Total Total credit Ratio of required Average Average
Willingness to pay
borrowed required credit to amount Interest rate Length of loan
(interest rate/month)
Group (USD) (USD) borrowed per month (months)
Traders 1,861 31,149 16.74 3.61 4.25 1.76
Millers 25,153 571,639 22.73 2.68 6.24 1.73
SOEs 2,891,773 9,680,157 3.35 1.43 2.86 1.25
Source: (IFPRI 1996)

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Table 63 Credit Constraints for Millers by Region


Total amount Total credit Ratio of required credit to
Miller category Region borrowed (USD) required (USD) amount borrowed
NMM 438 1829 4.18
RRD 425 3465 8.15
NCC 444 2535 5.71
Small miller SCC 1992 8017 4.02
CH 662 7570 11.44
NES 0 7625 na
MRD 2117 8265 3.90
RRD 571 3810 6.67
Medium miller NES 2133 14206 6.66
MRD 4873 25360 5.20
NES 4107 26726 6.51
Large miller
MRD 9385 35815 3.82
NES 952 36790476 38645.46
Polishers
MRD 23628 390655 16.53
RRD 0 76190 na
NCC 1905 2857 1.50
Miller-polishers SCC 152381 0 na
NES 465087 2619048 5.63
MRD 75765 1107339 14.62
Source: (IFPRI 1996)

Table 64 Sources of Credit for Traders by Type and Region


Friends/
relatives/ Money Commercial Agricultural Foreign Other
Type of trader Region own sources Lenders Traders Banks Banks Banks sources
NMM 44 0 0 0 56 0 0
RRD 71 0 0 0 14 0 14
NCC 36 0 0 0 64 0 0
Retailers
SCC 40 20 0 0 0 0 40
NES 60 20 0 20 0 0 0
MRD 24 51 9 6 11 0 0
NMM 0 0 0 14 86 0 0
RRD 57 18 5 5 14 0 0
NCC 50 0 0 0 50 0 0
Wholesalers SCC 0 9 0 36 18 0 36
CH 0 17 0 0 67 0 17
NES 35 15 0 0 25 0 25
MRD 39 21 2 25 12 0 0
NMM 67 0 0 0 33 0 0
RRD 14 27 22 0 37 0 0
Assemblers NCC 35 0 0 0 64 0 1
NES 67 0 0 0 33 0 0
MRD 43 13 0 15 21 0 7
Percent of Loans
Source: (IFPRI 1996)

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Table 65 Credit Constraints for Traders by Type and Region


Total amount Total credit Ratio of required credit
Type of trader Region borrowed (USD) required (USD) to amount borrowed
NMM 667 1212 1.82
RRD 413 1587 3.84
NCC 259 1830 7.07
Retailers
SCC 429 1037 2.42
NES 825 1698 2.06
MRD 259 6374 24.61
NMM 2000 5000 2.50
RRD 2102 6556 3.12
NCC 1905 7381 3.87
Wholesalers SCC 1758 10529 5.99
CH 5079 13788 2.71
NES 1810 262202 144.86
MRD 4014 18143 4.52
NMM 254 384 1.51
RRD 426 1272 2.99
Assemblers NCC 392 600 1.53
NES 540 5248 9.72
MRD 1562 7241 4.64
Source: (IFPRI 1996)

Table 66 Land Fragmentation, 1995


Number of plots per households Percentage of households
<3 7.8
3-5 24.6
6-8 34.1
9-12 25.0
>12 8.5
Source. (ANZDEC 2000)

Table 67 Area of Paddy Planted to Different Varieties, Northern Provinces, 2000


Total Area Upland Glutinous Chinese Open Hybrid Two-Line
Other (nes)
of Rice Area Rice Pollination Rice Rice Hybrid Rice
Number of
Provinces 31 15 31 31 31 20
Surveyed
1179078 21569 49275 426918 227615 13985 439716
Winter Spring
46% 2% 4% 36% 19% 1% 37%
1395889 81032 89249 557536 207893 40395 419784
Winter
54% 6% 6% 40% 15% 3% 30%
Total 2574977 102601 138524 984454 435508 54380 859510
Source: (Ministry of Agriculture and Rural Development 2002)

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Table 68 Rice Varieties Planted, Northern Provinces 2000


Winter-Spring Crop Winter Crop
Number Number
Variety Hectares Percent Variety Hectares Percent
of Provinces of Provinces
Khang Dan 18 175316 14.9% 29 Khang Dan 18 252722 18.1% 30
Q5 143709 12.2% 19 Q5 195301 14.0% 19
San uu 63 119978 10.2% 25 Bao Thai 123869 8.9% 24
IR17494 61961 5.3% 10 CR203 112160 8.0% 30
X21 54553 4.6% 22 Bac uu 64 55401 4.0% 17
Nhi uu 63 54174 4.6% 6 Nep IRi352 47681 3.4% 24
Xi23 52539 4.5% 21 Boi tap son thanh 36742 2.6% 17
C70 44389 3.8% 24 Xi23 35468 2.5% 14
DT10 43896 3.7% 14 San uu 63 34859 2.5% 14
CR202 40385 3.4% 29 Nhi uu 838 33435 2.4% 10
Sub-Total 790900 67.1% Sub-Total 927638 66.5%
Total 1179078 31 Total 1395900 31
203 Varieties planted 236 Varieties planted
Source: (Ministry of Agriculture and Rural Development 2002)

Table 69 Area of Paddy Planted to Different Varieties, Central Provinces, 2000


Total Area Upland Glutinous Chinese Open
Hybrid Rice Other (nes)
of Rice Area Rice Pollination Rice
Number of Provinces
9 6 9 9 9
Surveyed
215267 3805 37372 3098 170993
Winter Spring
44% 2% 17% 1% 79%
275978 54911 24674 8724 187668
Summer-Autumn
56% 20% 9% 3% 68%
Total 491245 58716 62046 11822 358661
Source: (Ministry of Agriculture and Rural Development 2002)

Table 70 Rice Varieties Planted, Central Provinces 2000


Winter-Spring Crop Summer Autumn Crop
Number of Number of
Variety Hectares Percent Variety Hectares Percent
Provinces Provinces
IR17494 45209 21.0% 9 IR17494 32055 12.5% 8
Khang Dan 18 27108 12.6% 8 Lua Ray 23540 9.2% 2
IR64 12911 6.0% 4 Khang Dan 18 21088 8.2% 9
TH85 12453 5.8% 5 IR64 18029 7.0% 4
Ai32 10222 4.7% 6 ML48 18015 7.0% 3
OM576 9944 4.6% 2 TH85 9661 3.8% 6
TH330 8246 3.8% 2 OMCS96 9541 3.7% 4
OMCS96 5590 2.6% 3 Lua can 6630 2.6% 2
TH28 5373 2.5% 2 ML49 5473 2.1% 3
TH48 4674 2.2% 1 TH330 4502 1.8% 2
Sub-Total 141730 65.8% Sub-Total 148534 58.1%
Total 215267 9 Total 255857 9
131 Varieties planted 172 Varieties planted
Source: (Ministry of Agriculture and Rural Development 2002)

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Table 71 Rice Varieties Planted, Southern Provinces 2000


Winter-Spring Crop Summer Autumn Crop
Number of Number of
Variety Hectares Percent Variety Hectares Percent
Provinces Provinces
IR50404 219001 13.4% 17 OM1490 208152 12.9% 20
OM 1490 206803 12.7% 20 IR50404 161428 10.0% 17
VND95-20 160536 9.8% 20 OM576 141629 8.8% 8
IR64 95344 5.8% 19 OMCS2000 127573 7.9% 14
OMCS2000 79432 4.9% 12 VND95-20 120316 7.5% 20
OM576 75608 4.6% 8 IR64 78701 4.9% 19
OM2031 52683 3.2% 15 AS996 63762 4.0% 16
MTL250 42655 2.6% 13 MTL250 41873 2.6% 14
Tai Nguyen 31788 1.9% 4 OM2031 41067 2.6% 15
AS996 29904 1.8% 14 Jasmine 85 26719 1.7% 6
Sub-Total 993754 60.8% Sub-Total 1011220 62.9%
Total 1634210 21 Total 1608937 21
195 Varieties planted 211 Varieties planted
Source: (Ministry of Agriculture and Rural Development 2002)

Table 72 Area under Hybrid Rice Cultivation in Northern Provinces in the 2000 Spring Crop Season
Region Province Hybrid Total Percent
Ha Giang 3705 7410 50%
Tuyen Quang 8091 17900 45%
Cao Bang 620 3406 18%
Lang Son 1778 12978 14%
Lai Chau 2262 6813 33%
Lao Cai 4504 8562 53%
Yen Bai 9362 15174 62%
Northern Mountain and Midlands Bac Can 1596 5284 30%
Thai Nguyen 932 25889 4%
Son La 2358 26196 9%
Hoa Binh 2830 16548 17%
Quang Ninh 1800 18184 10%
Phu Tho 10923 35931 30%
Bac Giang 506 50569 1%
Total: 66,094 248,844 27%
Bac Ninh 1368 41451 3%
Vinh Phuc 1290 37955 3%
Ha Noi 955 25137 4%
Ha Tay 3830 83271 5%
Hai Duong 814 73972 1%
Hai Phong (?) 46536
Red River Delta
Hung Yen 1778 43377 4%
Thai Binh 10694 85548 13%
Ha Nam 8641 37249 23%
Nam Dinh 47180 82052 58%
Ninh Binh 20774 42483 49%
Total: 88,684 599,031 15%
Thanh Hoa 36770 117475 31%
Nghe An 27337 82093 33%
Ha Tinh 1717 55396 3%
North Central Coast Quang Binh 103 25681 0%
Quang Tri (?) 21858
Thua Thien – Hue 643 28700 2%
Total: 66,570 331,203 20%
Total 221,348 1,179,078 19%
Hectares
Source: National Center for Varieties Evaluation and Seed Certification (Nguyen Cong Thuat and Nguyen Khac Quynh 2001)

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Table 73 Imported Hybrid Seed and Domestic Seed Production, 1998 - 2000.
Year Imported Hybrid Seed Domestic Produced Hybrid Seed Total Hybrid Seed Percent Domestic
1998 4,106 750 4,856 18%
1999 8,157 773 8,930 9%
2000 13,482 1,426 14,908 11%
Total 25,745 2,949 28,694 11%
Tonnes
Source: (Nguyen Cong Thuat and Nguyen Khac Quynh 2001)

Table 74 Seed Classification Systems


Nucleus Seed (NS) Original seed that provides the start of the seed production program. Generally this
seed is produced and maintained by breeders.
Breeder Seed (BS) Produced by plant breeders using NS in a single panicle progeny selection
approach. Uniformity within progenies is strictly required. Uniform and true-typed
progenies are harvested and bulked for seed production in the next generations.
Progenies that exhibit variation, even minor, from others will be discarded.
Foundation Seed (FS) Produced by using BS in a row planting with single seed/seedling per hill. Seed of
true-typed plants are harvested and bulked for registered seed production.
Registered Seed (RS) Produced by using FS in a larger scale. Similar planting and all cultural practices to
FS are applied. Seed of true-typed plants are harvested and bulked.
Certified Seed (CS) Produced by using RS. Seed of true-typed plants are harvested and bulked.
Graded Seed (GS) Produced by using RS in row planting with more than one seedling per hill
Source: (Sarom, Chaudhary et al. 2001)

Table 75 OECD Seed Classification Systems


Type Designation
Breeder Seed BS
Pre-Basic Seed (Foundation Seed No1) PB (FS1)
Basic Seed (Foundation Seed No2) BA (FS2)
Certified Seed CS
Farm Saved Seed FSS
Grain Grain
Seed Component ASPS, DANIDA (World Bank Study Team Interview, 5 August 2002)

Table 76 Farmer Input Use


Super Labor
Season Region Urea NPK Potash DAP Manure Seeds
Phosphate Own Hired
RRD 200 35 274 30 0 9704 109 239 13
Winter-Spring MRD 165 91 5 7 100 1 212 54 35
Country 176 87 66 17 75 1304 201 87 29
RRD
Summer-Autumn MRD 166 92 9 6 97 15 209 54 35
Country 171 95 49 14 80 301 208 66 31
RRD 170 30 196 30 0 9548 96 239 13
Lua Mua MRD 131 88 34 14 40 0 145 62 30
Country 129 56 96 17 19 2875 108 119 15
kg fertilizer, labor days
Source: (IFPRI 1996, pg. 306 Table 8.11)

Table 77 Imports of Fertilizer and Pesticides


Imports Units 1995 1996 1997 1998 1999 2000 2001
Urea Tonnes 1356200 1467200 1479700 1944000 1893000 2108300 1605300
Kalium Tonnes 107000 201800 152900
Fertilizer Tonnes 2316900 2630200 2526700 3448000 3702800 3971300 3189300
Insecticides US$million 100.4 88.9 129.8 126.3 133.1 143.5 110
Source: (General Statistics Office 2000, 2002)

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Table 78 Imports of Fertilizer by Firm and Type, 2001


Item Total Urea NPK DAP SA MOP
Importing 49 33 13 30 18 24
Number of Firms Supplying 48 22 6 21 16 13
Quantities Tonnes 2833907 1517321 135439 475657 309624 395866
HCMC Imports Tonnes 1989159 968517 114439 456222 207255 242726
Source: (World Bank Study Team Interview, July 2002)

Table 79 Imports of Fertilizer by Origin and Type, 2001


Country Urea NPK DAP SA MOP Total Percent
Australia 0 0 56000 0 0 56000 2.0%
Bangladesh 21000 0 0 0 0 21000 0.7%
Canada 0 0 0 0 51716 51716 1.8%
China 229443 0 116057 8810 41326 395636 14.0%
CIS 232414 0 57850 112775 209124 612163 21.6%
Germany 0 0 0 10000 0 10000 0.4%
Indonesia 307234 0 0 0 0 307234 10.8%
Israel 0 0 0 0 72500 72500 2.6%
Japan 0 0 0 162430 0 162430 5.7%
Jordan 0 0 0 0 12000 12000 0.4%
Korea 0 34700 100250 6000 0 140950 5.0%
Kuwait 177142 0 0 0 0 177142 6.3%
Malaysia 60000 0 0 0 0 60000 2.1%
Pakistan 5000 0 0 0 0 5000 0.2%
Philippines 0 100739 0 0 0 100739 3.6%
Qatar 306948 0 0 0 0 306948 10.8%
Russia 38000 0 0 0 0 38000 1.3%
Saudi Arabia 53200 0 0 0 0 53200 1.9%
Taiwan 0 0 0 9609 0 9609 0.3%
Tunisia 0 0 20500 0 0 20500 0.7%
UAE 51130 0 0 0 0 51130 1.8%
USA 0 0 125000 0 0 125000 4.4%
ZZZZ 35810 0 0 0 9200 45010 1.6%
Total 1517321 135439 475657 309624 395866 2833907 100%
Source: (World Bank Study Team Interview, July 2002)

Table 80 Cost of Insecticide Use


Percentage of Total Cost Percentage of Cash Costs
Region Crop Farmer Practice Improved Practice Farmer Practice Improved Practice
Can Tho Province Summer-Autumn 6.70% 4.40% 12.94% 8.91%
Can Tho Province Winter-Spring 6.47% 4.18% 12.50% 8.62%
MRD Summer-Autumn 5.04% 2.99% 9.03% 4.98%
MRD Winter-Spring 6.33% 3.99% 11.78% 7.06%

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Table 81 Harvesting Machines Made in Viet Nam


Power Estimated
Manufacturer Type of Machine Brand 2
(m /hr) Quantity
An Giang Mechanics Factor Harvest Scratters GX 1200 2000 420
Thai Binh Mechanics Company Harvest Scratters GRH 1.2 2400-3000 30
Liconno Mechanics Factory Harvest Scratters 2000 50
Long An Mechanics Factory Harvest Scratters 2000 150
Thu Duc Agricultural Harvest Scratters 2000 34
Mechanics Factory A74 Conjugated Machine GDLH 0.2 2000-2500 16
Application Center for Agricultural
Harvest Scratters RH 1.2 2000 3
Electric Mechanical
Private Manufacturers Harvest Scratters 1200-2000 40
Dong Thap Mechanics Factory Conjugated Machine GL 0.2 2000-2500 10
Institute of Agricultural Electric
Conjugated Machine GLH 0.2 2000 3
Mechanical
Imported Conjugated Machine 2000-3000 30
Source: PHTI (1999), pp. 76-77

Table 82 Manufacture of Machinery in Viet Nam


1995 1998 1999 2000 2001
State 330 2403 1106 723 750
Agricultural Pumps Private 679 1925 2773 2500
Total 330 3082 3031 3496 3250
State 12263 3556 5196 3837 4000
Hydraulic Pumps Private 1640 637 650
Total 13903 3556 5196 4474 4650
State 256 388 34 75 60
Threshing Machines - Machine Private 1226 7494 10364 11802 11000
Total 1482 7882 10398 11877 11060
State 2493 300 680 400 500
Threshing Machines - Without Motor Private 32423 8300 7012 6661 6500
Total 34916 8600 7692 7061 7000
State 105 13909 12136 12444 12500
Rice Mills Private 1938 40 40
Total 2043 13909 12136 12484 12540
Source: (General Statistics Office 2002)

Table 83 Paddy Retention in the Mekong River Delta Region


Long An Tien Giang Dong Thap Can Tho An Giang Average
Seed Retention 5.85% 4.50% 4.84% 5.48% 4.11% 4.95%
Home Consumption 21.11% 24.41% 22.12% 22.48% 18.54% 21.73%
Animal Use 5.59% 6.25% 5.40% 5.33% 4.34% 5.38%
Sale 67.45% 64.84% 67.64% 66.71% 73.05% 67.94%
Source: (PHTI-HCMC 1999, pg. 17)

Table 84 Seeding Rate and Fertilizer Application, Mekong River Delta, 1999
Long An Tien Giang Dong Thap Can Tho An Giang Average
Seed Sowing Density 210 180 214 243 230 215.4
Nitrogen 90.78 111.52 78.93 97.82 115.8 98.97
Phosphate 56.79 69.33 45.26 29.7 62.4 52.696
Fertilizer
Potassium 13.78 11.56 17.13 10.8 26.2 15.894
Total 161.35 192.41 141.32 138.32 204.4 167.56
kg/hectare
Source: (PHTI-HCMC 1999, pg. 29)

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Table 85 Source of Seed and Seed Retention, Mekong River Delta, 1999
Long An Tien Giang Dong Thap Can Tho An Giang Average
Government 18.2% 0.0% 18.5% 11.1% 24.2% 14.4%
Farmer Saved Seed 31.8% 59.4% 26.9% 33.3% 36.4% 37.6%
Seed
Purchase or Exchange
Source 50.0% 40.6% 43.6% 55.6% 39.4% 45.8%
with other Farmers
Other 0.0% 0.0% 11.0% 0.0% 0.0% 2.2%
1 crop 24.2% 3.2% 11.1% 22.2% 3.3% 12.8%
Seed 2 crops 51.5% 29.0% 14.8% 33.3% 36.7% 33.1%
Turnover 3 crops 12.1% 16.2% 33.3% 33.3% 16.7% 22.3%
Other 87.8% 48.4% 59.2% 88.8% 56.7% 68.2%
Source: (PHTI-HCMC 1999, pg. 21)

Table 86 Regional Water Use and Extraction by Sectors.


Region Total Irrigated Water Use Total Flow
3
Runoff Area (bill m ) Extracted Extracted
3 3
(bill m ) (ha) Agriculture Industry Urban (bill m ) (%)
North Midland Mountain 101.1 716,200 5.7 0.7 0.3 6.6 6.5
Red River Delta 19.7 882,200 6.7 0.8 0.3 7.8 39.6
North Central Coast 71.8 564,600 4.7 0.5 0.2 5.4 7.5
South Central Coast 34.3 439,200 4.6 0.5 0.2 5.4 15.7
Central Highlands 53.1 84,700 2.2 0.3 0.1 2.5 4.7
Mekong Delta 572 2,107,900 17.8 2.1 0.8 20.8 3.6
South East 28.1 251,100 3.7 0.4 0.2 4.3 15.3
Total 880 5,045,900 45.4 5.3 2.1 52.8 6.0
Total Extracted is the total of agriculture (86%); industry (10%) and urban use (4%)
Source: (ANZDEC 2000) adjusted to 6.0% extraction.

Table 87 Irrigation Works


Electronic Pumping Stations (Number) Irrigation System (ha)
Region Growth Growth
1996 1997 1998 1996 1997 1998
1996-1997 1997-1998 1996-1997 1997-1998
Red River Delta 841 844 864 0.4% 2.4% 142455314195971483943 -0.3% 4.5%
North East 741 742 782 0.1% 5.4% 319278 321701 338143 0.8% 5.1%
North West 23 23 23 0.0% 0.0% 16455 16455 21875 0.0% 32.9%
North Central Coast 817 836 847 2.3% 1.3% 729645 745276 665048 2.1% -10.8%
South Central Coast 254 266 254 4.7% -4.5% 160767 164842 173676 2.5% 5.4%
Central Highlands 14 14 14 0.0% 0.0% 62519 65268 67683 4.4% 3.7%
North East South 57 64 59 12.3% -7.8% 277995 276532 196971 -0.5% -28.8%
Mekong River Delta 149 152 157 2.0% 3.3% 581218 715722 756826 23.1% 5.7%
Total 2896 2941 3000 1.6% 2.0% 357243037253933704165 4.3% -0.6%
Source: (General Statistics Office 1999)

Table 88 Problem Soils in Rice Production Areas


Soil Type Mekong River Delta Red River Delta
Area (ha) Percent Area (ha) Percent
Acid Sulphate 1600000 40.80% 110000 5.95%
Salinity 740000 18.90% 90000 5.23%
Peat Soils 20000 20.00% 2000 0.10%
Grey Soils 130000 3.40% 150000 8.02%
Source: (Buu 2002)

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Table 89 Salinity in the Mekong River Delta Region


Distance Inland Salt Concentration
River System km gm/liter
Hau Giang River 33 4
Balai River 200 19
Moc Hoa District 100 3
Source: (PHTI-HCMC 1999, pg. 15)

Table 90 Number of Dryers in the Mekong River Delta Region, 1998


Capacity (tonnes) Estimated
Province Number per machine per 8 hr cycle per day Percent of Harvest Dried
Soc Trang 550 4.08 2244 6600 35-40%
Kien Giang 360 4.8 1728 5184 15-20%
Can Tho 297 4.79798 1425 4275 8-10%
An Giang 129 4.79845 619 1857 4%
Dong Thap 8 4 32 96 1%
Other 280 5.757143 1612 4836 1-3%
Total 1624 4.756158 7724 23172 10%
State Company 1488 4464
Source: (PHTI-HCMC 1999, pg. 80)

Table 91 Expense of Flat Bed Dyers, Mekong River Delta Region, 1998
Item VND/kg Dried Grain
Depreciation and Maintenance 13.2
Interest 2.5
Diesel Fuel 6.8
Fire Material (Coal, Husk) 5
Labor 14.4
Land Rental 0.9
Total 42.8
(PHTI-HCMC 1999, pg. 81)

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Table 92 Cropping Patterns in the Mekong River Delta, 1999


Long An Tien Giang Dong Thap Can Tho An Giang Total
Area Percent Area Percent Area Percent Area Percent Area Percent Area Percent
Double Cropping 404618.3 89.3% 406358 99.5% 316251 76.5% 464400 100.0% 1591627.3 78.7%
Crop Triple Cropping 48481.7 10.7% 282400 100.0% 2042 0.5% 97149 23.5% 430072.7 21.3%
Rotation 1999-2000 453100 100.0% 282400 100.0% 408400 100.0% 413400 100.0% 464400 100.0% 2021700 100.0%
IR50404 107876.8 38.2% 131913.2 32.3% 191332.8 41.2% 431122.8 21.3%
OM1720 68202.8 16.7% 68202.8 3.4%
Tai Nguyen Mutant 29369.6 10.4% 52683.6 12.9% 31418.4 7.6% 26935.2 5.8% 140406.8 6.9%
OMMCs97-25 36347.6 8.9% 36347.6 1.8%
CK6 31446.8 7.7% 31446.8 1.6%
IR64 137289.3 30.3% 110983.2 39.3% 21236.8 5.2% 138075.6 33.4% 105418.8 22.7% 513003.7 25.4%
IR56279 46216.2 10.2% 21236.8 5.2% 67453 3.3%
VND95-20 227003.1 50.1% 3106.4 1.1% 13477.2 3.3% 243586.7 12.0%
OMCs94 12990.4 4.6% 13068.8 3.2% 131874.6 31.9% 5572.8 1.2% 163506.6 8.1%
IR62063 11843.6 2.9% 20898 4.5% 32741.6 1.6%
Varieties
IR59656 6942.8 1.7% 6942.8 0.3%
Jasmine 30650.4 6.6% 30650.4 1.5%
OM1723 20898 4.5% 20898 1.0%
OMCs97-6B 17647.2 3.8% 17647.2 0.9%
OM1490 5374.2 1.3% 22291.2 4.8% 27665.4 1.4%
IR59606 42591.4 9.4% 42993.6 10.4% 22755.6 4.9% 108340.6 5.4%
IR19219 18073.6 6.4% 18073.6 0.9%
Ham Chau 32245.2 7.8% 32245.2 1.6%
MTL141 31418.4 7.6% 31418.4 1.6%
Total 453100 100.0% 282400 100.0% 408400 100.0% 413400 100.0% 464400 100.0% 2021700 100.0%
Source: (PHTI-HCMC 1999, pp. 19-20)

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Table 93 Farmer Partial Budget for Winter Spring Crop, Mekong River Delta, 1998-1999
Long An Tien Giang Dong Thap Can Tho An Giang Average
VND Percent VND Percent VND Percent VND Percent VND Percent VND Percent
Seed 447200 7.89% 367800 6.43% 480950 8.60% 437880 7.75% 472000 8.22% 441166 7.77%
Fertilizer 910820 16.07% 1097850 19.19% 823320 14.72% 967780 17.13% 1001290 17.43% 960212 16.92%
Land Preparation 187000 3.30% 286200 5.00% 244800 4.38% 150330 2.66% 182600 3.18% 210186 3.70%
Herbicide 120900 2.13% 147560 2.58% 116480 2.08% 160150 2.83% 113400 1.97% 131698 2.32%
Water 139520 2.46% 58400 1.02% 64540 1.15% 171370 3.03% 139970 2.44% 114760 2.02%
Insecticide 333680 5.89% 288460 5.04% 296760 5.31% 260870 4.62% 253890 4.42% 286732 5.05%
Cash
Harvest 392140 6.92% 347690 6.08% 374940 6.70% 343600 6.08% 332180 5.78% 358110 6.31%
Cost
Threshing 369430 6.52% 362180 6.33% 392570 7.02% 391040 6.92% 393310 6.85% 381706 6.73%
Transport 34100 0.60% 12500 0.22% 44000 0.79% 45700 0.81% 101650 1.77% 47590 0.84%
Labor (Hired) 643150 11.34% 856800 14.98% 655130 11.71% 901450 15.95% 643440 11.20% 739994 13.04%
Irrigation Fee 8400 0.15% 21000 0.37% 9100 0.16% 4200 0.07% 22400 0.39% 13020 0.23%
Tax 326180 5.75% 330680 5.78% 345100 6.17% 317380 5.62% 331800 5.78% 330228 5.82%
Total 3912520 69.01% 4177120 73.02% 3847690 68.80% 4151750 73.48% 3987930 69.42% 4015402 70.75%
Family Labor 1756850 30.99% 1543200 26.98% 1744870 31.20% 1498550 26.52% 1756560 30.58% 1660006 29.25%
Cost
Total 5669370 5720320 5592560 5650300 5744490 5675408
Provincial Yield (kg/ha) 4390 5462 5821 5814 6160 5529.4
Revenue Price 1500 1500 1500 1500 1500 1500
Revenue 6585000 8193000 8731500 8721000 9240000 8294100
Gross Margin 915630 13.9% 2472680 30.2% 3138940 35.9% 3070700 35.2% 3495510 37.8% 2618692 31.6%
Assuming Average Provincial Yields, D1500/kg paddy price, and 120 days of total labor per hectare
Source: Adapted from (PHTI-HCMC 1999, pg. 30)

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Table 94 Farmer Partial Budgets, Can Tho Province 2001 Cropping Year
Summer-Autumn Crop - IR64, Can Tho Province, 2001 Winter - Spring Crop, Can Tho Province, 2001
Input Units Farmer Practice Improved Practice Farmer Practice Improved Practice
Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount
Seed Kg 200 2,000 400,000 100 2,000 200,000 200 2,200 440,000 100 2,200 220,000
Urea Kg 150 2,200 330,000 100 2,200 220,000 175 2,200 385,000 125 2,200 275,000
Fertilizer DAP Kg 100 3,000 300,000 100 3,000 300,000 100 3,000 300,000 100 3,000 300,000
Phosphorous Kg 50 2,300 115,000 50 2,300 115,000 50 2,300 115,000 50 2,300 115,000
Insecticide VND 1 350,000 350,000 1 200,000 200,000 1 350,000 350,000 1 200,000 200,000
Diesel Liter 60 5,500 330,000 60 5,500 330,000 60 5,500 330,000 60 5,500 330,000
Fuel
Lubricant Liter 3 10,000 30,000 3 10,000 30,000 3 10,000 30,000 3 10,000 30,000
Irrigation VND 1 50,000 50,000 1 50,000 50,000 1 50,000 50,000 1 50,000 50,000
Soil Work VND 1 320,000 320,000 1 320,000 320,000 1 320,000 320,000 1 320,000 320,000
Threshing VND 1 320,000 320,000 1 320,000 320,000 1 320,000 320,000 1 320,000 320,000
Other Facilities VND 1 160,000 160,000 1 160,000 160,000 1 160,000 160,000 1 160,000 160,000
Cleaning Field Person 10 20,000 200,000 10 20,000 200,000 10 20,000 200,000 10 20,000 200,000
Sowing Person 5 20,000 100,000 5 20,000 100,000 5 20,000 100,000 5 20,000 100,000
Weeding Person 30 20,000 600,000 25 20,000 500,000 30 20,000 600,000 25 20,000 500,000
Labor Fertilizing Person 6 20,000 120,000 5 20,000 100,000 6 20,000 120,000 5 20,000 100,000
Spraying
Insecticide Person 6 20,000 120,000 4 20,000 80,000 6 20,000 120,000 4 20,000 80,000
Pumping Water Person 13 20,000 260,000 13 20,000 260,000 13 20,000 260,000 13 20,000 260,000
Cutting Person 18 20,000 360,000 18 20,000 360,000 20 20,000 400,000 20 20,000 400,000
Harvesting Transporting Person 8 20,000 160,000 9 20,000 180,000 8 20,000 160,000 10 20,000 200,000
Drying Person 8 20,000 160,000 8 20,000 160,000 10 20,000 200,000 10 20,000 200,000
Other Labor Person 12 20,000 240,000 12 20,000 240,000 12 20,000 240,000 12 20,000 240,000
Credit 1% @ 4 months VND 4 50,250 201,000 4 29,250 117,000 4 52,000 208,000 4 46,000 184,000
Materials VND 2,705,000 2,245,000 2,800,000 2,320,000
Total Cost Labor VND 2,320,000 2,180,000 2,400,000 2,280,000
Total VND 5,226,000 4,542,000 5,408,000 4,784,000
Yield Kg 3900 1,350 5,265,000 4000 1,400 5,600,000 5800 1,250 7,250,000 6090 1,300 7,917,000
Cost VND/kg 1,340 1,136 932 786
Gross Margin VND/ha 39,000 1,058,000 1,842,000 3,133,000
Percent Profit 0.74% 18.89% 25.41% 39.57%
Source: Data provided by USDA FAS – HCMC, Authorship unknown. (World Bank Study Team Interview 25 July 2002)

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Table 95 Farmer Partial Budgets, 2001 Cropping Year


Summer-Autumn Crop, 2001 Winter - Spring Crop, 2001
Input Farmer Practice Improved Practice Farmer Practice Improved Practice
Units Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount Quantity Unit Price Amount
Seed Kg 220 1,500 330,000 100 2,500 250,000 200 2,200 440,000 140 3,500 490,000
Urea Kg 150 2,400 360,000 150 2,400 360,000 200 2,400 480,000 117 2,400 280,800
Fertilizer DAP Kg 100 3,500 350,000 100 3,500 350,000 70 3,500 245,000 78 3,500 273,000
Phosphorous Kg 50 2,500 125,000 40 2,500 100,000 50 2,500 125,000 100 2,500 250,000
Insecticide VND 1 200,000 200,000 0.5 200,000 100,000 1 350,000 350,000 1 200,000 200,000
Diesel Liter 0 5,500 - 0 5,500 - 60 5,500 330,000 60 5,500 330,000
Fuel
Lubricant Liter 0 5,500 - 0 5,500 - 3 10,000 30,000 3 10,000 30,000
Irrigation VND 1 50,000 50,000 1 50,000 50,000 1 50,000 50,000 1 50,000 50,000
Soil Work VND 1 450,000 450,000 1 450,000 450,000 1 450,000 450,000 1 450,000 450,000
Threshing VND 1 300,000 300,000 1 300,000 300,000 1 320,000 320,000 1 320,000 320,000
Other Facilities VND 1 50,000 50,000 1 50,000 50,000 1 150,000 150,000 1 160,000 160,000
Cleaning Field Person 5 20,000 100,000 5 20,000 100,000 10 20,000 200,000 10 20,000 200,000
Sowing Person 2 30,000 60,000 2 30,000 60,000 1 30,000 30,000 1 30,000 30,000
Weeding Person 20 20,000 400,000 10 20,000 200,000 30 20,000 600,000 20 20,000 400,000
Labor
Fertilizing Person 4 30,000 120,000 4 30,000 120,000 4 30,000 120,000 4 30,000 120,000
Spraying Insecticide Person 5 30,000 150,000 2 30,000 60,000 10 30,000 300,000 4 30,000 120,000
Pumping Water Person 0 20,000 - 0 20,000 - 13 30,000 390,000 13 30,000 390,000
Cutting Person 15 20,000 300,000 15 20,000 300,000 15 20,000 300,000 15 20,000 300,000
Harvesting Transporting Person 8 20,000 160,000 8 20,000 160,000 8 20,000 160,000 8 20,000 160,000
Drying Person 10 20,000 200,000 10 20,000 200,000 10 20,000 200,000 10 20,000 200,000
Other Labor Person 10 20,000 200,000 4 20,000 80,000 10 20,000 200,000 10 20,000 200,000
Credit 1% @ 4 months VND 4 15,000 60,000 4 15,000 60,000 4 15,000 60,000 4 15,000 60,000
Materials VND 2,215,000 2,010,000 2,970,000 2,833,800
Total Cost Labor VND 1,690,000 1,280,000 2,500,000 2,120,000
Total VND 3,965,000 3,350,000 5,530,000 5,013,800
Yield Kg 4500 1,300 5,850,000 5000 1,300 6,500,000 5300 1,300 6,890,000 6000 1,500 9,000,000
Cost VND/kg 881 670 1,043 836
Gross Margin VND/ha 1,885,000 3,150,000 1,360,000 3,986,200
Percent Profit 32.22% 48.46% 19.74% 44.29%
Source: Data provided by USDA FAS – HCMC, Authorship cited as Nhau, November 2001. (World Bank Study Team Interview 25 July 2002)

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Table 96 Partial Budget for Rice Production, Quang Cat Commune, Thanh Hoa Province
Inputs Unit Price Unit Low Middle High
dong/kg kg/sao dong/sao dong/sao dong/sao
Rice Seed 30,000 1.5 45,000 45,000 45,000
Urea 2,500 10-15 25,000 26,250 27,500
Super Phosphate 1,100 20 22,000 22,000 22,000
Potassium Chloride 2,500 5-7 12,500 15,000 17,500
o
Insecticide (N sprays) 1-2 15,000 20,000 25,000
23 24
Labor Inputs 10,000-15,000 26 days 260,000 325,000 390,000
Total 379,500 453,250 527,000
Harvest 1,400-2,500 250 350,000 487,500 625,000
Non Labor Gross Margin 230,500 359,250 488,000
Non Labor Input Cost (%) 34% 26% 22%
Gross Margin -29,500 34,250 98,000
Gross Margin per hectare -295,000 342,500 980,000
Percent Profit -8.43% 7% 15.7%
Source: (Agrifood Consulting International 2001d, pg. 222)

Table 97 Partial budgets for Rice Varieties in Thanh Tien Commune, Thanh Hoa Province
Inputs Nhi Uu 838 and 63 Variety (New) 13/2 Variety (Old)
Unit Unit Cost Total Unit Unit Cost Total
Per sao (‘000dong) (‘000dong) Per sao (‘000dong) (‘000dong)
25
Seed 2kg 28.5 57 5kg 4.5 22.5
26
Manure 500kg 0.1 50 300kg 0.1 30
Urea 10-15kg 2.5 25-37.5 6-10kg 2.5 15-25
Super Phosphate 35kg 1.1 38.5 20-30kg 1.1 22–33
Potassium Chloride
7kg 2.5-2.6 17.5-18.2 4-5kg 2.5-2.6 10 –13
(60%)
Lime 20kg 2.5 50 10kg 2.5 25
Insecticide
2-3 sprays 15 30-45 2-3 sprays 15 30-45
(Volfatox and Matzon)
Total Non Labor Cost 268-296.2 154.5-193.5
23
Labor 26days 10-15 260-390 26 days 10-15 260-390
Total Cost 528-686.2 414.5-583.5
Harvest 350-400kg 1.8 -2 630-800 350-400kg 1.8-2 630-800
Gross Margin 102-113.8 215.5-216.5
16.2-14.2% 34-27%
Difference in
47-53
Gross Margin (%)
Source: (Agrifood Consulting International 2001d, pg. 265)

23
Representative labor inputs taken from a series of case studies carried out in M’Drak, Dac Lac Province
and represent the number of days of labor needed for rice cultivation after initial land preparation for a
2
1000m paddy field.
24
Shadow price of labor.
25
Cost of Nhi Uu 838 purchased on credit.
26
Shadow price for manure, 100,000dong/tonne.

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Table 98 Gross Margins for Rice Production


Farmer Practice Improved Practice
Region/Province Source Crop VND/ha US$/ha VND/ha US$/ha
Can Tho Province Table 94 Summer-Autumn 39000 $2.55 1058000 $69.15
Can Tho Province Table 94 Winter-Spring 1842000 $120.39 3133000 $204.77
Mekong River Delta Table 95 Summer-Autumn 1885000 $123.20 3150000 $205.88
Mekong River Delta Table 95 Winter-Spring 1360000 $88.89 3986200 $260.54
Long An Province Table 93 Winter-Spring 915630 $59.85
Tien Giang Province Table 93 Winter-Spring 2472680 $161.61
Dong Thap Province Table 93 Winter-Spring 3138940 $205.16
Can Tho Province Table 93 Winter-Spring 3070700 $200.70
An Giang Province Table 93 Winter-Spring 3495510 $228.46
Thanh Hoa Province Table 96 Winter-Spring 342500 $22.39
Thanh Hoa Province Table 96 Winter-Spring 980000 $64.05
Thanh Hoa Province Table 97 Winter-Spring 2160000 $141.18 1140000 $74.51
Winter-Spring 1977796 $129.27 2753067 $179.94
Average Summer-Autumn 962000 $62.88 2104000 $137.52
VND/US$=15300

Table 99 Profit Margins for Rice Production


Percent Profit
Region/Province Source Crop Farmer Practice Improved Practice
Can Tho Province Table 94 Summer-Autumn 0.74% 18.89%
Can Tho Province Table 94 Winter-Spring 25.41% 39.57%
MRD Table 95 Summer-Autumn 32.22% 48.46%
MRD Table 95 Winter-Spring 19.74% 44.29%
Long An Province Table 93 Winter-Spring 13.90%
Tien Giang Province Table 93 Winter-Spring 30.20%
Dong Thap Province Table 93 Winter-Spring 35.90%
Can Tho Province Table 93 Winter-Spring 35.20%
An Giang Province Table 93 Winter-Spring 37.80%
Thanh Hoa Province Table 96 Winter-Spring 7.00%
Thanh Hoa Province Table 96 Winter-Spring 15.70%
Thanh Hoa Province Table 97 Winter-Spring 27%
Winter-Spring 25% 42%
Average Summer-Autumn 16% 34%

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Table 100 Rural Households Growing and Selling Rice by Region and Income Level
Region Rural Households Rice Farmers Selling Rice
Growing rice Selling Rice
Northern Uplands 94.1% 31.6% 33.6%
Red River Delta 95.0% 57.3% 60.4%
North Central Coast 88.0% 35.9% 40.8%
South Central Coast 82.4% 27.4% 33.3%
Central Highlands 80.9% 11.9% 14.7%
Southeast 57.4% 33.6% 58.5%
Mekong River Delta 73.9% 55.8% 75.5%
Viet Nam 84.5% 42.8% 50.7%
Expenditure Category by Quintile
Poorest 91.2% 45.7% 50.1%
2 87.3% 40.2% 46.1%
3 85.6% 43.7% 51.0%
4 82.8% 44.2% 53.4%
Richest 69.5% 39.1% 56.2%
Viet Nam 84.5% 42.8% 50.7%
Note: Expenditure refers to per capita consumption expenditure (including the value of home-produced food).
Source: (General Statistics Office 1993; Minot and Goletti 2000, pp. 23-24)

Table 101 Sales of Paddy by Farmers in the Mekong River Delta, 1999
Type of Sale Percent
Local Trader 47%
Purchaser Visiting Trader 39%
Factory, Processing Unit 14%
Home or Drying Location 86%
Location of Sale Factory, Processing Unit 6.60%
Collection Station 7.40%
Source: (PHTI-HCMC 1999, pg. 46)

Table 102 Marketing Channels for Farmers, 1996


Percentage of Total Paddy Sold By Farmers
Season
Millers Traders Others
Winter-Spring 1.2% 96.9% 1.9%
Summer-Autumn 1.1% 96.9% 2.0%
Mua Lua 8.2% 90.7% 1.1%
Total 1.6% 96.5% 1.9%
Source: (IFPRI 1996, pg. 79 Table 4.11)

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Table 103 Market Prices for Paddy, Can Tho Market


Month 1996 1997 1998 Average
Jan 1925 1655 1750 1776.667
Feb 2023 1630 1650 1767.667
Mar 1727 1475 1700 1634
Apr 1666 1280 2050 1665.333
May 1586 1300 2150 1678.667
Jun 1586 1450 1850 1628.667
Jul 1543 1568 2250 1787
Aug 1361 1550 2200 1703.667
Sep 1263 1565 2200 1676
Oct 1307 1683 2200 1730
Nov 1494 1665 1900 1686.333
Dec 1620 1819 1800 1746.333
Mean 1591.75 1553.333 1975 1706.694
Std. Dev 228.8386 157.2897 223.098 277.7623
CV 14.67605 10.33691 11.53144 16.38789
VND/kg
Source: (PHTI-HCMC 1999, pg. 67)

Table 104 Characteristics of Millers


Type of Miller Milling Polishing Storage
Small 0.7 0.0 7.6
Medium 5.9 0.0 123.9
Large 24.1 0.0 476.5
Miller-polisher 34.2 38.0 5,650.0
Polisher 0.0 7.5 2,055.60
Capacity - Tonnes per Day
Source: (Minot and Goletti 2000)

Table 105 Channels of Distribution and Sales for Millers


Paddy Purchases
Region Type of miller (% of total purchases) (% of domestic sales)
NMM Small pure miller 65 100
Small pure miller 72 100
RRD Medium pure miller 100 100
Miller-polisher 76 100
Small pure miller 100 100
NCC
Miller-polisher 100 100
Small pure miller 96 100
SCC
Miller-polisher 96 100
Small pure miller 80 100
Medium pure miller 0 100
CH
Polisher 0 100
Miller-polisher 84 100
Small pure miller 17 100
Medium pure miller 100 100
NES Large pure miller 100 100
Polisher 0 41
Miller-polisher 0 5
Small pure miller 50 94
Medium pure miller 95 100
MRD Large pure miller 97 97
Polisher 0 28
Miller-polisher 34 49
Viet Nam 64 83
Source: (IFPRI 1996)

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Table 106 Purchases of Paddy and Rice by SOEs by Region


Paddy purchases Rice purchases
Region Tonnes % of Total Tonnes % of Total
NMM 225 45.09% 274 54.91%
RRD 1990.6 61.35% 1254 38.65%
NCC 600 100.00% 0 0.00%
SCC 9505 69.01% 4268 30.99%
CH 1358 84.03% 258 15.97%
NES 1809.52 3.53% 49496.6 96.47%
MRD 838.64 2.44% 33561 97.56%
Tonnes
Source: (IFPRI 1996)

Table 107 Main Assets of Millers


Region Type of mill Transportation Storage Equipment Other Total
NMM Small pure miller 121 218 595 0 935
Small pure miller 5 372 619 6 1,002
Medium pure miller 0 479 275 32 786
RRD Miller-polisher 103,810 8,571 5,238 0 117,619
Small pure miller 2 186 558 0 746
NCC Miller-polisher 76 952 876 0 1,905
Small pure miller 0 991 930 0 1,921
SCC Miller-polisher 15,714 63,079 277,893 0 356,686
Small pure miller 164 976 881 6 2,027
Medium pure miller 0 0 2,257 0 2,257
Polisher 0 0 381 0 381
CH Miller-polisher 0 53,143 53,143 0 106,286
Small pure miller 0 9,021 1,405 0 10,426
Medium pure miller 515 4,082 5,795 335 10,727
Large pure miller 0 8,627 11,247 333 20,208
Polisher 0 96,825 101,125 0 197,950
NES Miller-polisher 26,418 192,297 1,377,381 14,965 1,611,062
Small pure miller 609 2,061 5,736 56 8,463
Medium pure miller 356 9,279 8,057 652 18,344
Large pure miller 2,606 28,622 10,222 948 32,399
Polisher 399 73,138 23,446 84 97,067
MRD Miller-polisher 815 152,255 55,160 9,924 218,155
Viet Nam 595 15,588 14,165 679 31,028
US Dollars
Source: (IFPRI 1996)

Table 108 Recovery Rates by Types of Milling Machines


Type of machine Recovery rate Head rice
Steel-roller machine 69 45
Rubber-roller machine 72 55
Manual mil 71 50
Percentage
Source (IFPRI 1996)

Table 109 Milling Recovery from Village Level Mills


Rice (25% Broken 64%
Small Broken Rice 6%
Bran 8%
Husk 20%
Loss 2%
Source (PHTI-HCMC 1999, pg. 38)

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Table 110 Partial Budget for Miller in Can Tho Province


Price Per Unit
Item Quantity Unit (Dong) (USD) Value (USD) Notes
Paddy purchases 3,600 Tonnes 1,450,000 95 341,176 1
Handling fees 3,600 Tonnes 5,000 0.33 1,176
Borrowing costs 3,600 Tonne 2,500 0.16 588
Electricity 3,600 Tonne 30,000 1.96 7,059
Costs Service fees 3,600 Tonne 15,000 0.98 3,529
Taxes 3,600 Tonne 10,000 0.65 2,353
Depreciation n.a. Dollars 5,000,000 326.80 327
Transport costs 3,600 Tonne 8,000 0.52 1,882
Total 358,092
White rice sales 2,160 Tonnes 2,300,000 150 324,706 2
Broken rice 360 Tonnes 1,800,000 118 42,353
Revenues Bran sales 288 Tonnes 1,300,000 85 24,471 3
Husk sales 720 Tonnes 5,000 0.33 235 4
Total 391,765
Net 33,673
Gross Margin (% of total revenues) 8.60%
Notes: 1 Based on 20 tons per day capacity for 6 months; 2 Assumes a 60 percent recovery rate for whole rice;
3 Assumes an 8 percent bran recovery rate; 4 Assumes a 20 percent husk recovery rate
Source: World Bank Study Team Interview, 31 July 2002

Table 111 Cost Standards for Milling, Provincial Food Company Mekong River Delta
Brown Rice 25% Broken Brown Rice 15% Broken
5% Broken 25% Broken 5% Broken 25% Broken
Cost - Brown Rice to Polished Rice Polished Rice Polished Rice Polished Rice
Final Polished Rice Fixed Variable Fixed Variable Fixed Variable Fixed Variable
Electricity 28,000 22,000 38,000 25,000
Handling Cost 20,000 12,000 20,000 15,000
Bags 6,000 6,000 6,000 6,000
Maintenance (Major) 4,000 2,000 4,000 2,000
Maintenance (Minor) 1,000 500 1,000 1,000
CCDC (?) 7,000 5,000 7,000 7,000
Salary and Insurance 13,000 13,000 13,000 13,000
Depreciation 20,000 20,000 20,000 20,000
Fuel 500 400 1,000 1,000
Thread 1,500 1,500 1,500 1,500
Spare Parts 1,500 800 1,800 1,500
Other Expense 500 400 500 500
Total 33,000 70,000 33,000 50,600 33,000 80,800 33,000 60,500
Dong costs per tonne polished rice
Husking Paddy to Brown Rice (25% Broken) add 60,000VND/tonne, Fixed costs per tonne calculated on a yearly tonnage basis
Source: Provincial Food Company, Mekong River Delta. World Bank Study Team Interview July 2002

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Table 112 Management costs - Provincial Food Company, Mekong River Delta
Dong per Tonne Polished Rice Total (Dong)
Salary and Insurance 5,000 12,500,000
Land Depreciation 1,500 3,750,000
Fuel and Traveling 2,000 5,000,000
Stationary 1,000 2,500,000
Taxes and Fees 800 2,000,000
Electricity and Water 800 2,000,000
Telephone and Fax 1,200 3,000,000
Maintenance (Minor) 1,000 2,500,000
Công cu, d? dùng (stool??) 1,000 2,500,000
Conferences and Reception Fees 1,200 3,000,000
Newspapers and documents 600 1,500,000
Training 500 1,250,000
Insurance 800 2,000,000
Other Expenses 600 1,500,000
Total 18,000 45,000,000
Source: Provincial Food Company, Mekong River Delta. World Bank Study Team Interview July 2002

Table 113 Storage Losses - Provincial Food Company, Mekong River Delta
Type Storage Period Percent Loss
less than 3 months 0.10%
up to 6 months 0.20%
Paddy
up to 9 months 0.30%
9-12 months 0.30%
less than 1 month 0.10%
up to 3 months 0.15%
White Rice
3-6 months 0.25%
over 6 months 0.30%
less than 3 months 0.20%
Broken Rice
over 3 months 0.30%
less than 3 months 0.25%
Bran
over 3 months 0.35%
Uncertain whether this is actual or theoretical storage losses - Documentation was designated "Loss Standard in Storage"
Source: Provincial Food Company, Mekong River Delta. World Bank Study Team Interview July 2002

Table 114 Purchases of Paddy and Sales of Rice, Mekong River Delta, 1999
Marketing Chain Organization
Retail Trader Rice Retailer Milling Factory Food Company
Farmer 59.55% 40.93% 94.17% 12.77% 48.18%
Retail Trade 1.93%
Wholesale 24.27% 32.51% 3.96% 18.62% 8.22%
Paddy Seller
Rice Retailer 26.46% 1.87% 66.67% 5.08%
Factory 16.18% 0.10% 6.42%
Others 32.09%
Consumer 89.50% 2.02% 2.10% 0.39%
Retail Trade 2.86% 14.04% 24.81% 2.98% 0.01%
Wholesaler 7.64% 27.83% 46.32% 10.91% 1.85%
Rice Purchaser
Rice Retail 3.77%
Factory 14.80% 0.84%
Food Company 40.51% 25.94% 81.98% 98.14%
Source: (PHTI-HCMC 1999, pp. 55-56)

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Table 115 Specialization of Sales by Retailers


Share of Total Sales
Region Paddy Rice Other
NMM 0.17% 96.98% 2.60%
RRD 3.61% 92.46% 3.87%
NCC 1.72% 96.21% 2.07%
SCC 1.04% 95.69% 3.31%
CH 0.00% 72.30% 27.30%
NES 0.75% 92.55% 6.75%
MRD 0.85% 79.78% 19.38%
Source: (IFPRI 1996)

Table 116 Characteristics of Traders


Percentage of Time Gender
Region Type of Trader Years of Experience Devoted to Rice Trade Age Male Female
Retailer 6.64 88% 36% 30% 70%
NMM Wholesaler 5.25 98% 38% 67% 33%
Collector 7.88 77% 37% 35% 65%
Retailer 6.82 85% 43% 24% 76%
RRD Wholesaler 6.17 96% 36% 67% 33%
Collector 7.15 75% 33% 15% 85%
Retailer 5.79 90% 47% 10% 90%
NCC Wholesaler 8 93% 45% 75% 25%
Collector 7.33 79% 37% 6% 94%
Retailer 3.46 91% 42% 27% 73%
SCC Wholesaler 4.53 97% 41% 33% 67%
Collector 4.33 54% 38% 56% 44%
Retailer 6.9 94% 42% 15% 85%
CH Wholesaler 5.6 92% 38% 50% 50%
Collector 4.3 78% 33% 0% 100%
Retailer 11.7 91% 40% 28% 72%
NES Wholesaler 10.98 89% 40% 30% 70%
Collector 10.85 86% 40% 15% 85%
Retailer 9.52 92% 38% 2% 98%
MRD Wholesaler 8.59 89% 37% 39% 61%
Collector 7.9 81% 35% 51% 49%
Viet Nam 7.61 87% 38% 30% 70%
Source: (IFPRI 1996, pg. 62 Table 4.3)

Table 117 Distribution of Purchases by Retailers


Region Purchases Farmers Retailers Wholesalers Assemblers Millers Other
Paddy 96.89% 0.00% 3.11% 0.00% 0.00% 0.00%
NMM Rice 12.70% 0.56% 75.60% 2.06% 8.74% 0.34%
Paddy 87.62% 0.08% 0.00% 12.30% 0.00% 0.00%
RRD Rice 4.05% 0.13% 50.68% 30.78% 14.36% 0.00%
Paddy 84.57% 0.00% 15.43% 0.00% 0.00% 0.00%
NCC Rice 27.90% 0.00% 52.40% 19.70% 0.00% 0.00%
Paddy 53.37% 0.00% 12.50% 34.13% 0.00% 0.00%
SCC Rice 0.00% 0.00% 52.10% 23.09% 24.82% 0.00%
Paddy 0.00% 0.00% 100.00% 0.00% 0.00% 0.00%
CH Rice 0.00% 0.00% 93.49% 2.36% 4.15% 0.00%
Paddy 24.68% 0.00% 4.35% 70.97% 0.00% 0.00%
NES Rice 0.22% 0.11% 95.44% 4.23% 0.00% 0.00%
Paddy 59.55% 0.00% 24.27% 0.00% 16.18% 0.00%
MRD Rice 3.51% 0.05% 30.23% 38.97% 26.89% 0.35%
Source: (IFPRI 1996)

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Table 118 Distribution of Sales by Retailers


Region Purchases Consumers Retailers Wholesalers Assemblers Millers Other
Paddy 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
NMM Rice 88.67% 10.06% 1.27% 0.00% 0.00% 0.00%
Paddy 8.88% 0.00% 4.56% 0.00% 86.56% 0.00%
RRD Rice 74.91% 19.88% 5.11% 0.10% 0.00% 0.00%
Paddy 0.00% 0.00% 100.00% 0.00% 0.00% 0.00%
NCC Rice 82.90% 10.21% 6.89% 0.00% 0.00% 0.00%
Paddy 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
SCC Rice 94.51% 5.49% 0.00% 0.00% 0.00% 0.00%
Paddy - - - - - -
CH Rice 81.99% 18.01% 0.00% 0.00% 0.00% 0.00%
Paddy 0.00% 100.00% 0.00% 0.00% 0.00% 0.00%
NES Rice 83.10% 16.90% 0.00% 0.00% 0.00% 0.00%
Paddy 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
MRD Rice 89.50% 2.48% 7.64% 0.00% 0.00% 0.38%
Source: (IFPRI 1996)

Table 119 Distribution of Rice Varieties and Prices


Reseller A
Price
Variety (VND/kg) US$/kg
Gao Deo 5000 0.327
Gao Bui No 5000 0.327
Gao Bui Deo 5500 0.359
Gao No 4000 0.261
Gao Bui Xop 5500 0.359
Gao Deo Thom Dai Loan 8500 0.556
Gao Deo 4500 0.294
Gao Deo Thom Huong Lai 8000 0.523
Gao Thom Nang Huong 10000 0.654
Gao Thom My 8500 0.556
Gao Deo Tam Thom Ha Noi 9000 0.588
Gao Deo Thom That 6000 0.392
Nep Lao Than 10000 0.654
Nep Ngong 9000 0.588
Thai Jasmine (Tong Seng Produce PTY LTD) 12000 0.784
Source : World Bank Study Team Interviews Ho Chi Minh City Central Markets, 25/07/2002

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Table 120 Miller Operating Costs


Region Type Transport Labor Communication Energy Storage Rent Taxes Repairs Bags Depreciation Other Total
NMM Small 0.06 0.01 0 2.4 0 0.02 0.08 0.66 0.06 0.25 0.01 3.55
Small 0.68 0.09 0.09 2.15 0 0.02 0.16 0.68 0.07 0.18 0.03 4.15
RRD Medium 0 0 0 2.5 0 0 0.01 0.52 0 0.2 0.02 3.25
Millers and Polishers 2.05 3.42 0.31 0.85 0 0.34 0.14 0.51 0.2 0.34 0.06 8.22
Small 0 0.02 0 2.59 0 0.05 0.42 0.93 0.05 0.48 0 4.54
NCC
Millers and Polishers 0.16 0.73 0 2.1 0 0.06 0.26 2.16 0.12 0.57 0 6.16
Small 0.14 0.27 0.05 1.66 0 0.04 0.87 0.65 0.1 0.62 0.25 4.65
SCC
Millers and Polishers 14.64 1.67 0.58 2.28 0 0 7.61 4.82 2.58 3.3 5.89 43.37
Polishers 0 0 0.15 0.77 0 0 0.69 0.06 0 0 0.05 1.72
Small 0.23 0.24 0.05 2.32 0 0 0.5 0.88 0.02 0.16 0.05 4.45
CH
Medium 0.22 0.13 0 1.36 0 0 0.16 0.6 0.06 0 0 2.53
Millers and Polishers 0 2.39 0 1.67 0 0 0.5 0 0 0 0 4.56
Polishers 4.69 3.16 0.21 2.68 0.86 0.26 0.72 0.14 0.09 0.34 0.07 13.22
Small 0.45 0.71 0.08 2.35 0.24 0.01 0.81 1.18 0.04 0.9 0.15 6.92
NES Medium 0.03 0.98 0.08 2.39 0.06 0 1.09 0.8 0 0.02 0.01 5.46
Large 0.14 1.22 0.09 2.57 0 0 0.56 0.56 0.01 0.03 0 5.18
Millers and Polishers 1.94 1.81 0.09 1.7 0 0.03 0.66 0.49 2.46 25.49 2.63 37.3
Polishers 2.35 2.35 0.22 2.44 0.17 0 1.5 0.83 0.45 0.98 0.52 11.81
Small 0.32 1.2 0.12 2.48 0.03 0.04 0.59 0.5 0.02 1.15 0.16 6.61
MRD Medium 0.11 1.51 0.19 2.53 0.03 0.07 0.95 0.48 0.05 0.28 0.11 6.31
Large 0.36 2.1 0.15 3.1 0.02 0.03 0.83 0.48 0.04 0.07 0.1 7.28
Millers and Polishers 0.87 1.83 0.11 1.69 0.03 0.02 0.67 0.36 0.22 0.46 0.3 6.56
Viet Nam Millers 0.51 0.73 0.09 2.32 0.04 0.03 0.56 0.68 0.1 0.49 0.12 5.67
USD/tonne
Source: (IFPRI 1996, pp. 189-190 Table 5.32)

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Table 121 Costs and Returns for Export Rice and the Effect of Variable Purchase Prices – MRD Provinces
Low Price Medium Price High Price Best Price Worst Price
Dong/kg US$/kg Dong/kg US$/kg Dong/kg US$/kg Dong/kg US$/kg Dong/kg US$/kg
Brown Rice (Mill Gate) 2100 0.137 2150 0.141 2200 0.144 2100 0.137 2200 0.144
Milling Conversion 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88 0.88
Polished Rice Equivalent 2386 0.156 2443 0.160 2500 0.163 2386 0.156 2500 0.163
Processing 75 0.005 75 0.005 75 0.005 75 0.005 80 0.005
Milling Margin 39 0.003 32 0.002 25 0.002 39 0.003 0 0.000
Polished Rice (ex-Mill) 2500