The Vietnamese farm offensive

Ulhas Joglekar ulhasj at
Sat Dec 16 18:00:43 MST 2000

Business Standard

Last updated 1600 Hrs IST, Friday, December 15, 2000

The Vietnamese farm offensive
Diversification paves the way for a success story of the nation's farm
sector, says Barun Roy
Beginning next year, Vietnam will abolish all export quotas for rice, end
the public sector monopoly in rice trade and give private companies equal
authority to sell Vietnam's rice abroad. No permission from the Ministry of
Trade will be necessary. This, the government believes, will help find more
niche markets for the commodity and give exports a bigger boost.
Since Hanoi began reforming agriculture in 1981, the farm sector has grown
steadily and rice has emerged as the most profitable of crops. Vietnam used
to import around 1 million tonne of rice a year.
It no longer does. In 1999, it became the second largest exporter of rice
after Thailand, with a volume of 4.5 million tonne. This turnaround has
convinced the government that agriculture holds the key to higher export
earnings and the more the sector is diversified, the better would be its
Coffee is the other success story that has driven the government's
diversification offensive. Four years ago, Vietnam ousted Indonesia as the
world's third biggest coffee producer after Brazil and Colombia, and has
maintained the position since.
In the 1999-2000 growing season, 5,40,000 metric tonne were produced and
almost entirely exported, mainly to Europe and the US. In 2000-2001, a
harvest of 6,60,000 metric tonne is expected and, hopefully, Americans will
be drinking more Vietnamese coffee when tariffs go down under the new trade
pact with the US.
Much of this dynamism on the farm is the result of Vietnam's new land laws,
which recognize the farm household as the principal unit of production,
allow farmers to own the land they tend and make individual land-use rights
transferable and usable as collateral for credit applications.
Farming was never more attractive to the Vietnamese and diversification
never appeared more important. There is now in Vietnam a virtual rush into
plantations, and among the new favourites, in addition to rubber and
sugarcane, are tea and fruit.
The government is convinced tea can equal coffee as an export crop and is
planning a substantial development of the industry to lift Vietnam's ranking
(currently eighth) among the major tea producing countries.
Tea export has been rising since 1997 and reached from 30,000 metric tonne
in that year to 42,145 metric tonne in 1999. The plan now is to raise
production level from 60,000 metric tonne at present to 2,14,000 metric
tonne by 2010 and push export to 1,10,000 metric tonne.
Vietnam is in a good position to expand tea. It has large tracts of
deforested land that have been found suitable for the crop. The unit cost of
production is lower than all its major competitors, including India. And,
domestic consumption being green tea-oriented, almost all black tea is
available for export.
Quality has been a problem, as well as productivity, but that's being
addressed with a loan from the Asian Development Bank. New processing
facilities will be established, better clones will be developed and
introduced, credit will be made available to replant and rehabilitate old
gardens and another 30,000 hectares are to be added to the existing acreage
of some 75,000 hectares.
The goal for fruit is even more ambitious. By 2010, the fruit area is to be
expanded from 4,50,000 hectares at present to 1 million hectares, mainly
using deforested land, while production will, hopefully, increase from 4.5
million tonne to 12 million tonne.
Vietnam produces a wide range of tropical and sub-tropical fruit, such as
pineapple, banana, pomelo, mango, litchi, longan, dragon's eye and rambutan,
and as interest in Vietnamese fruit grows in such markets as China, Japan,
the Netherlands and Sweden, foreign investors are getting involved.
Foreigners, including Taiwanese, Japanese and Koreans, have already poured a
total of $70 million into 40 fruit and vegetable projects across the
country. The combined turnover of these projects is said to have reached
more than $30 million and over 90 per cent of it comes from exports.

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