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FOOD SECURITY IN VIETNAM: SITUATION AND POLICY OPTIONS
Nguyen Trung Kien
Center for Agricultural Policy, Vietnam
.
MEETING FOOD SECURITY GOALS WITH GOOD POLICY PROJECT
2013 Meeting Food Security Goals with Good Policy Regional Dialogue
1
1. Food Security Situation
• Availability
• Affordability
• Utilization
2. Food Policies
3. Policy Options
2
Contents
Part 1: Food Security Situation
3
The State of Food Security in Vietnam – At a Glance
Source: World Bank (2012); FAO (2012); UNDP (2012)
Calorie supply per capita (2012)
2850* kcal/person/day
Percentage of population undernourished (2012)
9.01%
Food security and nutrition status core indicators
Cereals, roots, tubers as % of DES** (2007-2009)
62%
Life expectancy at birth(2012)
75.4 Under 5 morality rate (2011)
21.7/1000
Proportion of children under 5 underweighted (2008)
20% Percentage of adult with body mass index BMI*** < 18.5 (2000)
26.5%
Food consumption Health status Nutritional status
(*) Minimum dietary energy requirement: 1810 kcal/person/day. (**) Dietary Energy Supply (***) Body Mass Index
Rice Production, Use & Trade in Vietnam –
The Past Trend of 1990-2010
Unit 1990 1995 2000 2005 2010
Paddy Land 1000 ha 4109 4203 4213 4165 4106
Paddy sown area 1000 ha 6043 6766 7666 7329 7514
Paddy yield ton/ha 3.18 3.69 4.24 4.89 5.32
Paddy Output 1000 tons 19225 24964 32530 35833 39973
Paddy Seed, Feed & PH Loss 1000 tons 3268 4244 5530 6450 7195
Industry rice use & loss 1000 tons 363 471 614 873 973
Farm rice stock 1000 tons 1116 1198 1237 1261 1278
State Rice Reserve 1000 tons 100 200 1179 831 869
Rice export 1000 tons 1624 1988 3477 5255 6828
Per capita rice consumption kg/pr 109 133 142 136 134
Total population 1000 persons 66017 71996 77631 82394 86928
Rural population 1000 persons 53136 57057 58906 60061 60850
Major Trends
1. Paddy land decreases while cultivated area increases;
2. Paddy yield and output improve significantly;
3. Paddy kept for seed, feed and post-harvest losses doubles during 1990-2005. There has not been much improvement in reducing post-harvest losses.
4. Rice stock at farm seems no change but there is a big increase in rice state reserve;
5. Rice export peaks up;
6. Rice consumption per capita increases during 1990-2000, then declining during 2000-2010.
Food Availability by Commune 2006
• Enough self-sufficiency for the Northern communes
• Surplus from the Mekong must be sold
Per capita milled rice Per capita foodgrain
Kg of milled rice equiv.
per capita in 2006
0 - 50
51 - 100
101 - 200
201 - 500
501 - 1500
1501 - 3000
3001 - 6763
Surplus Supply Now Concentrated: “Core Rice Belt’ in Six Provinces
Rice consumption per capita decreased in all regions at
1.4% on average (equivalent to 2kg/person/year) during
2002-2008
Region
2002 2004 2006 2008 Change
2008/2002
(%)
Annual
Change
2002-2008
(kg) (kg) (kg) (kg) (kg)
North West 162 164.4 157.2 159.6 -1.48 -0.4
North East 164.4 165.6 154.8 153.6 -6.57 -1.8
Red River Delta 147.6 150 140.4 136.8 -7.32 -1.8
North Central
Coast 150 150 145.2 140.4 -6.4 -1.6
South Central
Coast 132 133.2 127.2 123.6 -6.36 -1.4
Central Highland 150 147.6 141.6 139.2 -7.2 -1.8
South East 116.4 109.2 108 103.2 -11.3 -2.2
Mekong Delta 146.4 146.4 138 132 -9.84 -2.4
Country 144 144 136.8 132 -8.33 -2
Source: Vietnam Household Living Standard Survey (VHLSS) 2002, 2004, 2006, 2008 - GSO
Rice contributed to calorie consumption at peak of 75% during 1975-1985. This contribution has continuously decreasing: accounts for only 55% of calorie consumption at present
Meat Seafood Egg Soybean Vegetable Fruits
Vietnam 4.2 3.1 6.3 0 -0.5 2.8
Urban 1.9 1.9 2.7 0 -1.4 2.1
Rural 5.6 3.1 7.5 0 -1.1 3.2 50
55
60
65
70
75
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
Source: CAP, 2011.
Source: Vietnam Household Living Standard Survey (VHLSS) 2002,
2004, 2006, 2008, 2010
Share of rice in
calorie consumption
in Vietnam
Annual growth rate of per capita consumption of major
food between 2002 and 2010
Food Affordability
Poverty Rate (%) Domestic Rice Price (VND/kg)
2006 2010
Vietnam 15.5 10.7
Urban 7.7 5.1
Rural 18 13.2
By region
Red River Delta 10.1 6.5
North East 22.2 17.7
North West 39.4 32.7
NorthCentral Coast 26.6 19.3
SouthCentral Coast 17.2 14.7
Central Highlands 24 21
South East 4.6 3.7
Mekong Delta 13.3 11.4
0.0
5.0
10.0
15.0
20.0
25.0
0
20
40
60
80
100
120
140
2002 2004 2006 2008 2010
Rice (1000 VND/kg) Pork (1000 VND/kg)
Beef (1000 VND/kg) Buffalo meat (1000 VND/kg)
Poultry (1000 VND/kg) CPI (%)
Real income growth (%)
Source: VHLSS 2002 – 2012
High poverty rate in the upland, but most of the poor is concentrated in the low land
Po
vert
y r
ate
Po
vert
y d
en
sit
y
Source: IFPRI Source: IFPRI
Food Affordability High margin attained but income from rice production is still below $1 Per Capita/day
An Giang 2009/10 (MDI Survey Results)
Total Cost/KG (vnd 000)
Profit/KG (vnd 000)
Profit/Cost Profit Per HH (VND Million)
Profit Per HH ($)
Winter – Spring
2.87 1.53 53% 8.7 527
Summer Autumn
3.96 (0.03) -1% (0.1)
Autumn Winter
3.30 1.90 61% 8.0 485
Average 3.33 1.09 33% 1012
Average household size is 4.4 members
Average profit per capita $230/year = VND 3.8 million or 316,250/month. Current poverty line is VND 400,000/person/month
Activities of Labors at Working Age (%)
Ho
use
ho
l
d G
rou
p
Em
plo
yed
Inco
me-
Earn
ing
Jo
bs
Wag
e
Jo
bs
Ag
ricu
ltu
ral
Pro
du
ctio
n
No
n-F
arm
Act
ivit
ies
Use
of
Na
tura
l
Res
ou
rces
Ho
use
Work
s
Very poor 95.0 93.2 32.0 88.4 11.6 16.4 69.2
Poor 96.1 93.5 32.9 82.8 15.7 11.6 65.2
Average 95.2 92.3 34.6 81.2 18.3 7.9 64.5
Fairly rich 93.3 88.2 32.0 72.2 22.2 6.3 61.9
Rich 88.4 83.9 34.0 55.3 25.0 4.2 57.8
Overall 93.6 90.3 33.1 76.1 18.5 9.4 63.8
- Agricultural production plays important role in rural household
activities, but there is a tendency of diversification toward off-
farm activities. Richer households move to off-farm, while
poorer households stuck in agriculture
Food Utilization
Threat of Malnourished Children
Percentage of Under-5 Children Malnourished (weight for age)
Group/Region Percentage
VietNam 20.2
VietNam - Kinh/Chinese 18
VietNam - Other Minorities 29.7
Red River Delta 18.5
North East 22.3
North West 28.8
North Central Coast 21
South Central Coast 23.7
Central Highlands 23.2
South East 10.8
Mekong River Delta 20.4
…. More rice cannot solve all problems of food insecurity…
Indicators 90-92 95-97 00-02 05-07
Malnutrition rate (%) 31 22 17 11
Number of
malnourished people
(million)
21.0 16.7 13.3 9.6
Minimum calorie
request
(Kcal/person/day)
1710 1740 1780 1810
Calorie consumption
(Kcal/person/day)
2090 2310 2520 2770
Source: FAO, http://www.fao.org/hunger/en/
Mekong Delta:
malnutrition with food
surplus
Malnutrition rate is
higher in the
specialized area of rice
production in
comparison with areas
with agricultural
diversification (An
Giang 19.0 vs. 18.3%;
Dong Thap 18.7 vs.
16.6%)
There are correlations
between poverty and
malnutrition rate(1999-
2009)
Source: CASRAD, 2011
Part 2: Food Security Policies
17
Focus on rice self-sufficiency
Policy objectives: • To ensure national food security
• To ensure food supply sources
• To meet nutrition needs
• To ensure benefit of rice farmers
• To ensure people’s accessibility to food
• To increase efficiency of paddy land
• To improve international position of Vietnam
18
Policy Objectives
Supply intervention:
1. Policy to ensure supply sources
2. Policy to fix floor price for rice procurement
3. Procurement policy for temporary storage
4. Policy on building the rice storage in MRD
5. Policy to fix conditions for the rice export
enterprises
6. Direct support policy for paddy farmers
Demand intervention:
1. Policy to restrict export in emergency case
2. Policy to stabilize price by fixing the retail price
3. Rice provision for poor households
19
Food Security Policies
To ensure supply sources
Objective: To ensure national food security
Content: Planning and keeping 3.8 million ha of paddy
land by 2020, of which 3.2 million ha is irrigated for >2
crops/year
Effectiveness:
It is an important policy to ensure food security
Vietnam remain to have enough domestic supply with
only 3 million ha of paddy land
To improve income, farmers still convert the planned
paddy land to other annual crops
Need to consider rice export strategy to grasp the
multi-dimensional benefits of rice production.
20
Supply Interventions (1)
Vietnam’s Rice Balance in 2030 in the Worst Scenario
Yield: 5.8 tons/ha. Post-harvest losses: 10%
21
Scenarios
Projection in 2030
Paddy
quantity
Rice
consumption Rice export
3.8 mil ha 40.3 12.7 5.2
3.6 mil ha 38.2 12.7 4.1
3.3 mil ha 35.0 12.7 2.4
3.0 mil ha 31.8 12.7 0.8
Source: WB, 2011
2030:
Population:
110, 4 million
Consumption:
120 kg per
head
Urbanization
rate: 41,8%
Efficiency Question, 2011
22
Paddy Coffee
Export value (billion USD) 3.7 2.7
Area (million ha) 4.1 0.5
Water use (billion m3) 101.4 9.1
Household number (million
households) 9.3 0.5
Source: AgroCensus
Policy to fix floor price to ensure a minimum profit
of 30% production costs for farmers
Objective: Ensure income of paddy farmers
Content:
• Food enterprises purchase paddy at floor price .
• MOF, MARD set up method; provincial authorities
estimate and declare floor price
• Provincial authorities monitor and manage the
process of procurement.
Effectiveness:
• It is difficult to calculate production costs
• Mainly apply in MRD, not for other regions
23
Supply Interventions (2)
Profit of Paddy Production (Summer – Autumn season 2010) in MRD
24
Floor price: 4,000 VND/kg
Not ensure profit of 30% production costs
Source: Survey of the Crop Department-MARD
Specialty seed
High - quality
seed
Procurement policy for temporary storage
Objective: increase demand to push procurement
price
Content:
Support 100% interest rate for enterprises procuring
for temporary storage within 3 months
The amount of procurement is proposed by VFA at
market price to stabilize national reservation,
consumption and export.
25
Supply Interventions (3)
Movement of rice price in 2008 - 2010
26
Effectiveness:
Building the paddy storage in MRD
27
Objective:
Build the storage system of 4 million
tons of rice in MRD to coordinate rice
production and business, enhance
production efficiency
Content:
Innovating the existing storages (1.5
million tons), building some new
storages with capacity of 2.5 Mil.
tons
Target: 3 years (2009 – 2011) 1.36
million tons in the Silo storages,
3.14 million tons in the engineering
steel structure frame storage.
Slow progress due to insignificant
support from State budget and
banking system
.00% .00% .00% .00%
60.400%
15.429%
66.00%
58.00%
40.00%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Long
AnĐồng
Tháp
Cần
Thơ
Hậu
Giang
Tiền
Giang
Kiên
Giang
VNF1 VNF2 Cả
nước
Progress by the end of 2011
Tỷ lệ % thực hiện Compared to plan (%)
Whole
Country
Source: Decision No. 3242/QĐ-BNN-CB issued 02/12/2010
Supply Interventions (4)
Conditionalities on rice export enterprises
28
Objectives:
Develop long-term relationship between enterprises and paddy farmers to stabilize market outlets and income for farmers
Ensure the balance between export and domestic consumption
Stabilize rice market, enhance efficiency of export
Content:
Setting conditions for enterprises to participate in rice export:
> 5000-ton specialized storage
>1 milling factory with capacity of >10 tons/h
Located in province/cities with rice surplus for export and international seaport .
=> Maintain the minimum storage, equivalent to 10% of export volume of rice in 6 months ago=> if the domestic price of rice increase suddenly, the storage will provide rice to meet demand
Source: Decree No. 109/NĐ-CP/2010
Supply Interventions (5)
Conditionalities on rice export enterprises
29
Assessment:
No clear conditions on long-term farmer-enterprise
relationship
Exclusive opportunities for big enterprises
Some enterprises are qualified but unable to export rice.
In contrast, many enterprises are competitive in rice
export but not eligible for certification (Source: Vietnam
Food Association)
Supply Interventions (5)
Direct support to paddy farmers
30
Objectives: Support to protect and develop paddy land
Content:
Supporting 500.000 VND/ha/year for organizations, households, privates
producing on specialized land of wet rice;
Supporting100.000 VND/ha/year for organizations, households, privates
producing on the other paddy land except the area of upland rice can expand
themselves without following any regulations and plans of paddy land use.
Effectiveness:
Support famers directly
Difficult to implement and monitor
Difficult to identify upland rice area in land use planning
Low effectiveness: Income of paddy farmers do not improve significantly =>
Move to other crops or to non-farm activities
Source: Decree No. 42/2012/NĐ-CP issued 11/05/2012
Supply Interventions (6)
General Support
31
Objective: to increase income of farmers from agricultural production
Content:
Exempting agricultural land use tax to the poor households, agriculture households in the disadvantaged areas, reduce 50% of agriculture land use tax for the others.
Support in borrowing loans to buy facility, materials with priority interest rate.
Exempting irrigation fee
R&D
Seed subsidy
Rural infrustructure
New rural village program .....
Supply Interventions (7)
Policy to restrain export in emergency case
32
Objectives: Reduce inflation, stabilize domestic
consumption price and ensure food security
Content:
In 2008, crisis of global food price => The guidance
of Prime Minister to stop signing any new contracts
of rice export
The Government imposes tax on rice export (period
of validity: from 21/7-19/12/2010)
Source: Decision No.104/2008/QĐ-TTg issued 21 /7 /2008,
Demand Interventions (1)
33
Export restriction
time (25/3/2008)
US Okays Japan export
stock (5/2008)
Policy to restrain export in emergency case
Profit analysis of stakeholders in the period of price fluctuation in 2008
(USD/ton)
Enterprises are passive in export plans
34
• Planning rice export by year and quarter.
• Enterprises have to deliver on 2 months duration from date of
signing contract
• Have to follow criteria of VFA (price, volume, payment
method)
• Export plan may be changed (banned or temporary stopped) if
affecting to food security=> miss chance to export with high
price.
Face the risk that the contract signed cannot be implemented.
Export plan of enterprises depend on export management
scheme in each period, so it’s difficult to make long term
plans.
Retail price stabilization
35
Objectives: Support the low income group in case of high inflation
Content: Subsidize the sale of basic foods: tax concession and interest
rate subsidies for retailers (focus on supermarket system)
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5
2008 2009 2010 2011 2012
CT:
03/2008/CT-
BTC
(01/12/2008)
CT: 03/CT-
BTC
(31/12/2009)
CT: 05/CT-
BTC
(22/12/2010)
CT: 03/CT-
BTC
(12/12/2011)
Movement
of retail
price of
rice
(VND/kg)
Demand Interventions (2)
Retail price stabilization
36
Assessment:
Costly for local budget (tax concession and interest rate
subsidies)
Low impact on price stabilization
Creating two-price system.
Ineffectiveness for the poor. Supermarket account for small share of total domestic trade (less than
15%)
Supermarkets concentrate in big cities
Customers mainly are the middle class
Increase in food price reduces the welfare of low - middle
income group in urban areas.
Demand Interventions (2)
Direct food support
37
Objective: Direct food support
Content:
Poor households involved in forestation and forest
protection will receive 15 kg rice per capita per month
during the period when they are not able to provide
themselves with staple food (not over 7 years).
Poor household in the border areas will be granted 15 kg
rice/person/month until they can self- sufficient in food.
Support for food-deficit provinces before the harvest
Direct food support for provinces suffered from natural
disasters
Demand Interventions (3)
Direct food support
38
Assessment:
This is one of the direct support policies for the poor
Lack of M&E system to identify right beneficiaries,
quantity, efficiency of the programs
Narrow scope of food-for-work program
Dependency attitudes
Demand Interventions (3)
Part 3: Desired Policy Directions
39
CHANGING APPROACH
40
Current Approach New Approach
Protect paddy land
Protect agricultural land
Food security Increase farmer income
Food export Promote the multi-
dimensional benefits of rice
export (economic and
international cooperation)
Administrative control Market-based intervention
Dominant role of VFA and
SOEs
Level playing field
Inflation control Target to poor and vulnerable
groups of consumers
POLICY RECOMENDATIONS
41
For Rice Specialized Zones:
Focus on developing “small farms, large field’ models
Export enterprises: Required to have contracts with farmer groups/cooperatives in the zones (seed, technology, purchase, processing, marketing)
Gov: integrated supports for these zones (infrastructure, credit, extension, trade promotion)
Develop policies to take multi-dimensional benefits of rice export: Long term investment partnership in VN or in foreign country to ensure international food security
For Other Areas:
General support as other commodities and sectors (irrigation, research, extension, credit)
Land transformation: food to feed
POLICY RECOMENDATIONS
42
Demand Interventions:
Market-based interventions: storage conditions, export tariff
For the poor:
o Provide vouchers to vulnerable groups (old, disabled, vulnerable
ethnic minorities). Establish distribution channel for these groups
o Step by step replace direct support to livelihood support
o Expand scope of food-for-work programs to cover public
infrastructure development and other public services
(environment, security, cultural protection)
POLICY RECOMENDATIONS
Food Utilization: o Close collaboration between MARD, MOH, MOLISA, MPI,
MOE, local governments, the private sector, and civil society
organizations
o Strengthen legal framework and institutions for food safety and
hygienic enforcement
o For child malnutrition, emphasis on maternal health,
breastfeeding practices, dietary balance, disease control, and safe
water supply.
Thank you for your attention!
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