Vietnam - Global downturn is to bite into the agriculture sector’s fortunes

Vietnam’s agricultural sector is unlikely to make hay while the sun shines this year due to the global continued economic downturn.

The Ministry of Agriculture and Rural Development (MARD) last week forecast that the agricultural sector’s total export turnover this year might be $25.5 billion, slightly higher than last year’s $25 billion.

The MARD said it could not reap $29 billion in agricultural export turnover as expected by Deputy Prime Minister Nguyen Thien Nhan early this year. Locked down export prices and shrinking outputs and farm land would make sure there was no repeat of last year’s golden export figures.

For example, rice exports are expected to be nearly seven million tonnes worth $3.5 billion, down from last year’s 7.4 million tonnes and $3.73 billion. Vietnam’s rice exports currently ranked fourth globally, not second in the past many years, due to many nations boosting rice exports, said Nguyen Dinh Bich, a senior rice trade expert from the MARD’s Information Centre for Agriculture and Rural Development.

The MARD also targeted a 2.5 per cent agricultural sector growth rate for 2012, against last year’s 4 per cent. “This also means that the sector’s contribution to the whole economy’s growth this year will be smaller than last year,” said Nguyen Do Anh Tuan, director of the MARD’s Centre for Agricultural Policy.

“In 2011, though Vietnam experienced an economic downturn coupled with high inflation, limited credits and trade deficit, agriculture “saved” the whole economy as it created a net export surplus of $18 billion and trade surplus of $9.2 billion last year, when the whole economy’s trade deficit was $9.5 billion,” said Dang Kim Son, director of the MARD’s Institute of Policy and Strategy for Agriculture and Rural Development.

However, the Ministry of Industry and Trade ascribed the sector’s impressive export turnover last year to global price and export volume hikes. Specifically, the increase in the export price and volume helped the sector earn an additional $3.9 billion last year.

“The world’s economic volatilities and Vietnam’s internal difficulties such as high inflation, tough weather conditions and epidemics are threatening the sector’s development. The sector’s growth has reached its peak and cannot be higher. Thus, the sector would need more investment,” Son said.

Tuan said Decree 61/2010/ND-CP on luring investment into agricultural and rural development had done little since it was issued in 2010, due to a lack of specific guiding documents.

At the Davos World Economic Forum in January, 2012, Vietnam’s agricultural performance was high on the agenda and it was highly appreciated and considered the best practice of agricultural development in developing countries, said MARD Minister Cao Duc Phat.

However, world-famous American agricultural economist Peter Timmer said agriculture would continue playing a crucial role for Vietnamese economic growth and social stability. He said the sector would open great opportunities for investment during the next 50 years.

Nguyen Thanh | vir.com.vn

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