food security in vietnam – challenges and policy
DESCRIPTION
FOOD SECURITY IN VIETNAM – CHALLENGES AND POLICY. Nguyen Trung Kien Acting Director, Commodity Markets Division Institute of Policy and Strategy for Agriculture and Rural Development - IPSARD. Contents. Food security situation in Vietnam Possible risk scenarios of food security in Vietnam - PowerPoint PPT PresentationTRANSCRIPT
FOOD SECURITY IN VIETNAM – CHALLENGES AND POLICY
Nguyen Trung KienActing Director, Commodity Markets Division
Institute of Policy and Strategy for Agriculture and Rural Development - IPSARD
Contents
1. Food security situation in Vietnam
2. Possible risk scenarios of food security in Vietnam
3. Policy for managing food security risks
Food Security Situation
3
Food Availability by Commune
Northern provinces achieved food sufficiency
Per capita milled rice Per capita foodgrain
Kg of milled rice equiv. per capita in 2006
0 - 5051 - 100101 - 200201 - 500501 - 15001501 - 30003001 - 6763
Southern provinces produced surplus food (rice) for export
Surplus supply now concentrated on: “Core Rice Belt’ in six provinces
Vietnam per capita rice consumption has begun to decline, this will likely to accelerate
P.C. Rice Consumption in Asia (Kg/Yr)
Myanmar 160
Vietnam 135
Philippines 128
Indonesia 104
China 95
South Korea 88
Malaysia 80
India 77
Japan 45 50 70 90 110 130 150 170 1900
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
PC Rice Consumption and PC Income: China, Vietnam, Malaysia, Thailand, and Philippines,
1995-2005
Domestic Market Growth: Changing size/composition of food expenditure
2010: $30 billion 2020: $65 -70 billion?
30
2010
10
15
87
Cereals/Tubers Meat Fr/Veg FishOut of home Beverages Sugar/Sweets
15
24
1315
20
85
Cereals/Tubers Meat Fr/Veg Fish Out of homeBeverages Sugar/Sweets
Source: WB
Changing economic role of rice
1996 2000 2005 2010 20300
2
4
6
8
10
12
14
16
18
Share of Rice + Rice Processing in National GDPShare of Rice in Average Household Expenditures
Source: Steve Jaffee, WB, 2011
Food Affordability
Poverty Rate (%) Domestic Food Price (VND/kg)
2006 2010
Vietnam 15.5 10.7
Urban 7.7 5.1
Rural 18 13.2
By region
Red River Delta 10.1 6.5
North East 22.2 17.7
North West 39.4 32.7
North Central Coast 26.6 19.3
South Central Coast 17.2 14.7
Central Highlands 24 21
South East 4.6 3.7
Mekong Delta 13.3 11.4
2002 2004 2006 2008 20100
20
40
60
80
100
120
140
0.0
5.0
10.0
15.0
20.0
25.0
Rice (1000 VND/kg) Pork (1000 VND/kg)Beef (1000 VND/kg) Buffalo meat (1000 VND/kg)Poultry (1000 VND/kg) CPI (%)Real income growth (%)
Source: VHLSS 2002 – 2012
Food AffordabilityHigh margin attained but income from rice production is still
below $1 Per Capita/day
An Giang 2009/10 (MDI Survey Results)
Total Cost/KG (vnd 000)
Profit/KG (vnd 000)
Profit/Cost Profit Per HH (VND Million)
Profit Per HH ($)
Winter – Spring
2.87 1.53 53% 8.7 527
Summer Autumn
3.96 (0.03) -1% (0.1)
Autumn Winter
3.30 1.90 61% 8.0 485
Average 3.33 1.09 33% 1012
Average household size is 4.4 members
Average profit per capita $230/year = VND 3.8 million or 316,250/month. Current poverty line is VND 400,000/person/month
Food UtilizationThreat of Undernourished Children
Percentage of Under-5 Children Undernourished (weight for age)
Group/Region PercentageVietnam 20.2VietNam - Kinh/Chinese 18VietNam - Other Minorities 29.7Red River Delta 18.5North East 22.3North West 28.8North Central Coast 21South Central Coast 23.7Central Highlands 23.2South East 10.8Mekong River Delta 20.4
…. More rice cannot solve all problems of food insecurity…
Indicators 90-92 95-97 00-02 05-07
Malnutrition rate (%) 31 22 17 11
Number of malnourished
people (million)
21.0 16.7 13.3 9.6
Minimum calorie request
(Kcal/person/day)
1710 1740 1780 1810
Calorie consumption
(Kcal/person/day)
2090 2310 2520 2770
Source: FAO, http://www.fao.org/hunger/en/
Mekong Delta: malnutrition with food surplus
Malnutrition rate is higher in the specialized area of rice production in comparison with areas with agricultural diversification
There are correlations between poverty and malnutrition rate (1999-2009) Source: CASRAD, 2011
Food Security Risk
13
Chỉ số giá LT thế giới (2002-04 = 100)
World food market has witnessed 3 times of price shock since 2007, with amplitude 50% higher than the last 2 decades, and strong correlates with energy prices
Source: FAO
World Food Price Index
The rate of fertilizer price increase is higher than the rate of production growth and rice price increase
Source: Agroinfo
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5
2008 2009 2010 2011 2012 2013 2014
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000 Giá lúa tẻ thường
Giá NPK
Giá UrePrice of nitrogen fertilizer
Price of rice
Price of NPK fertilizer
Source: GSO, Vietnam Animal Feed Association
Import and price of material for animal feed is increasing
2009 2010 2011 2012 2013200.0
250.0
300.0
350.0
400.0
450.0
500.0
550.0
600.0
650.0
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Giá trị XK gạo (000USD)
Giá trị NK TACN vàNguyên liệu(000USD)
Gía gạo XK (USD/Ton)
Gía Ngô NK
Gía Đậu tương NK
Rice export price
Corn import price
Rice export value
Animal feed and inputs import value (000 USD)
Soybean import price
Land use changes by land class and scenario, 2007 -2030
Source: Van Dijk et al., 2013
Climate change and impact on crop yield
Source: Van Dijk et al., 2013
Source: MONRE, 2009
Impact of climate change in Vietnam, 2020 - 2010
Flood Risk
Area with high flood risk in high climate change impact scenario
Source: Van Dijk et al., 2013
National Centre for Hydrometeorological Forecasting, MONRE 2010 Central Committee for Flood and Storm Control, 2010
Impacts of natural disasters on agriculture
Paddy & cultivation area loss due to natural calamity (000 ha)
Number of flash flood over years
Food Security Policy
21
Policy Objectives
Focus on rice self-sufficiency Policy objectives:
• To ensure national food security• To ensure food supply sources• To meet nutrition needs• To ensure benefit of rice farmers• To ensure people’s accessibility to food• To increase efficiency of paddy land• To improve international position of Vietnam
Food Security Policies
Supply intervention:
1. Policy to ensure supply sources
2. Policy to fix floor price for rice procurement
3. Procurement policy for temporary storage
4. Policy to fix conditions for the rice export enterprises
5. Direct support policy for paddy farmers
Demand intervention:
6. Policy to restrict export in emergency case
7. Policy to stabilize price by fixing the retail price
8. Rice provision for poor households
To ensure supply sourcesObjective: To ensure national food security
Content: Planning and keeping 3.8 million ha of paddy land by 2020, of which 3.2 million ha is irrigated for >2 crops/year
Effectiveness: It is an important policy to ensure food security Vietnam remain to have enough domestic supply with only 3 million ha of
paddy land To improve income, farmers still convert the planned paddy land to other
annual crops Need to consider rice export strategy to grasp the multi-dimensional benefits
of rice production.
24
Supply Interventions (1)
Vietnam’s Rice Balance in 2030 in the Worst ScenarioYield: 5.8 tons/ha. Post-harvest losses: 10%
25
ScenariosProjection in 2030
Paddy quantity
Rice consumption
Rice export
3.8 mil ha 40.3 12.7 5.2
3.6 mil ha 38.2 12.7 4.1
3.3 mil ha 35.0 12.7 2.4
3.0 mil ha 31.8 12.7 0.8
Source: WB, 2011
2030: Population:
110, 4 million
Consumption: 120 kg per head
Urbanization rate: 41,8%
Efficiency Question
26
Paddy Coffee
Export value (billion USD) 3.7 2.7
Area (million ha) 4.1 0.5
Water use (billion m3) 101.4 9.1
Household number (million households) 9.3 0.5
Source: AgroCensus
Policy to fix floor price to ensure a minimum profit of 30% production costs for farmers
Objective: Ensure income of paddy farmers
Content:• Food enterprises purchase paddy at floor price . • MOF, MARD set up method; provincial authorities estimate and declare
floor price• Provincial authorities monitor and manage the process of procurement.
Effectiveness:• It is difficult to calculate production costs• Mainly apply in MRD, not for other regions
27
Supply Interventions (2)
Households by Farm size (%)
Source: agrocensus 2011
Red Rive
r Delt
a
Northern
midlan
ds and m
ountain ar
eas
North Cen
tral a
nd Centra
l coast
al are
as
Centra
l High
lands
South Ea
st
Mekong R
iver D
elta
0.0
20.0
40.0
60.0
< 0.2 ha 0.2 ha - 0.5 ha 0.5 ha - 2 ha >=2ha
Income Source of Paddy Farmers in MRD, 2010
29
Farm sizeThe average income per capita of a rural household (VND/month)
Total average income per capital (000 VND)
Contribution by paddy production (%)
1 ha
1.070.500
859 19%
1 – 2 ha 1183 26%
3 ha 1930 36%4 ha 1972 68%
Procurement policy for temporary storage
Objective: increase demand to push procurement price
Content: Support 100% interest rate for enterprises procuring for temporary storage
within 3 months The amount of procurement is proposed by VFA at market price to stabilize
national reservation, consumption and export.
30
Supply Interventions (3)
Source: Agroinfo data
Unclear impact of the storage procurement policy
20/9 buy 0.5 mil tons
Thailand 5% broken rice price (USD/ton)
Vietnam whole sale rice price (USD/ton)
Conditionalities on rice export enterprises
32
Objectives: Develop long-term relationship between enterprises and paddy farmers to stabilize market
outlets and income for farmers Ensure the balance between export and domestic consumption Stabilize rice market, enhance efficiency of export
Content:
Setting conditions for enterprises to participate in rice export: > 5000-ton specialized storage >1 milling factory with capacity of >10 tons/h Located in province/cities with rice surplus for export and international seaport .
=> Maintain the minimum storage, equivalent to 10% of export volume of rice in 6 months ago=> if the domestic price of rice increase suddenly, the storage will provide rice to meet demand
Source: Decree No. 109/NĐ-CP/2010
Supply Interventions (4)
Direct support to paddy farmers
33
Objectives: Support to protect and develop paddy land
Content: Supporting 500.000 VND/ha/year for organizations, households, privates producing on specialized
land of wet rice; Supporting100.000 VND/ha/year for organizations, households, privates producing on the other
paddy land except the area of upland rice can expand themselves without following any regulations and plans of paddy land use.
Effectiveness: Support famers directly Difficult to implement and monitor Difficult to identify upland rice area in land use planning Low effectiveness: Income of paddy farmers do not improve significantly => Move to other crops
or to non-farm activities
Source: Decree No. 42/2012/NĐ-CP issued 11/05/2012
Supply Interventions (5)
General Support
34
Objective: to increase income of farmers from agricultural production
Content:
Exempting agricultural land use tax to the poor households, agriculture households in the disadvantaged areas, reduce 50% of agriculture land use tax for the others.
Support in borrowing loans to buy facility, materials with priority interest rate. Exempting irrigation fee R&D Seed subsidy Rural infrustructure New rural village program .....
Supply Interventions (6)
Policy to restrain export in emergency case
35
Objectives: Reduce inflation, stabilize domestic consumption price and ensure food security
Content: In 2008, crisis of global food price => The guidance of Prime Minister
to stop signing any new contracts of rice export The Government imposes tax on rice export (period of validity: from
21/7-19/12/2010)
Source: Decision No.104/2008/QĐ-TTg issued 21 /7 /2008,
Demand Intervention (1)
36
Export restriction time (25/3/2008)
US Okays Japan export stock (5/2008)
Policy to restrain export in emergency caseProfit analysis of stakeholders in the period of price fluctuation in 2008
(USD/ton)
Retail price stabilization
37
Objectives: Support the low income group in case of high inflation
Content: Subsidize the sale of basic foods: tax concession and interest rate subsidies for retailers (focus on supermarket system)
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5
2008 2009 2010 2011 2012
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000 CT: 03/2008/CT-BTC (01/12/2008)
CT: 03/CT-BTC (31/12/2009)
CT: 05/CT-BTC (22/12/2010)
CT: 03/CT-BTC (12/12/2011)
Movement of retail price of rice (VND/kg)
Demand Interventions (2)
Direct food support
38
Objective: Direct food support
Content: Poor households involved in forestation and forest protection will
receive 15 kg rice per capita per month during the period when they are not able to provide themselves with staple food (not over 7 years).
Poor household in the border areas will be granted 15 kg rice/person/month until they can self- sufficient in food.
Support for food-deficit provinces before the harvest Direct food support for provinces suffered from natural disasters
Demand Interventions (3)
Changing Approach
39
Current Approach New Approach
Protect paddy land Protect agricultural land
Rice self-sufficiencyIncrease farmer income and improved nutrition
Resource intensiveTechnology intensive and environmental friendly practices
Production focus Post-harvest and trade focus
Small farm and middleman domination Large scale and value chain linkageAdministrative control Market-based intervention
Food export Utilize the benefit of international integration
Inflation controlTarget to poor and vulnerable groups of consumers