Vietnam - Expansion of agricultural land has come to an end

VietNamNet Bridge - Data shows that the period of "easy” expansion of agricultural land is coming to an end, if not the end. The future growth of agriculture will depend mainly on the increase of productivity.

Land is officially divided into agricultural land, non-agricultural land and unused land. Agricultural land is divided into agricultural land, forest land, land for aquaculture and salt production. The agricultural land is divided into land for annual crops and land for perennial crops. Land for annual crops is further subdivided into land for rice and other crops. Forest land is divided into protective forest, production forest and specially use forests. These basic divisions are the ground for the management and planning of land.

Vietnam's total land area is 33.2 million hectares. Agricultural land has increased from 18.2 million hectares in 1995 to 21.5 million hectares in 2000 and 24.7 million hectares at the end of 2006 (75 percent of the total area of Vietnam). During this time, the biggest change is that unused land decreased from 11.7 million hectares in 1995 to 5.1 million hectares in 2006 and the forest area increased from 10.8 million hectares in 1995 to 14.5 million hectares in 2006. Within the agricultural sector, the main change is the reduction of rice land from 4.3 million hectares in 1995 to 4.1 million hectares in 2006 and is accompanied by a significant increase of the land for other annual crops and perennial plants.

Data shows that the purpose of land use has changed significantly over time. The biggest change is for 3.7 million hectares of unused land. The total area of agricultural land has increased by 3.2 million hectares and the increase is largely forest land (2.9 million hectares). Non-agricultural land has increased by 328,000 hectares and aquaculture land has increased by 347,000 hectares. The land for long-day crops has increased by 277,000 hectares.

There are two significant declines. The first is the decline of bare land in mountainous areas (not covered by forest or trees,) with a reduction of about 580,000 hectares thanks to the efforts of the central and local governments in reclamation. The second is the decline of rice land, with the loss of 337,000 hectares.

Rice land decreased partly due to urbanization and industrialization. The rest is due to the planting of rice is low-benefit, not as attractive as breeding shrimp, freshwater fish, livestock or planting fruit crops, vegetables and flowers.

The data in 2008 showed little variation among the land use purposes. The total agricultural land area increased to the threshold of 25 million hectares. Land for crops and perennial trees remained stable. Forest land grew to 14.8 million hectares and unused land further reduced to 4.5 million hectares. Non-agricultural land increased to 3.4 million hectares, of which the land for urban housing increased to 113,000 hectares.

The changes in land use are partly due to the growth of the total agricultural output compared to the previous period and to the standard of the world. In the period from 1990 to 2000, the total agricultural output increased by 5.9 percent per year. From 2000 to 2008, agriculture growth was at 4.2 percent per year. The total agricultural output mainly consists of productivity of rice, which accounted for 80 percent of the total agricultural output in 1990 and 78 percent in 2008. These changes have turned Vietnam from a poor country, which lacked food into the world's 2nd largest rice exporter (behind Thailand). Vietnam has also started to export large quantities of rubber, coffee, cashew and seafood.

Major fluctuations in population and labor force are always associated with the change of land use purposes. In 1990, 80 percent of Vietnam's 66 million people lived in rural areas. In 2008, the rural population accounted for 72 percent of the 86.2 million people. The change in the labor force is stronger. In 2000, 62.5 percent (23.5 million people) of the labor force worked in the fields of agriculture, forestry and fisheries. In 2008, it was 48.9 percent of the labor force. Along with the increase of the rural population from 58.9 million in 2000 to 62 million in 2008, the process of restructuring of labor out of the agriculture, forestry and fishery sectors took place strongly. The move of the labor force out of the rural areas made the average land area per agricultural laborer increased from 0.9ha in 2000 to more than 1.1ha in 2008.

The above change is a testament to the economic reform, opening up the international market, strengthening the economy, improving income and social welfare. Perhaps the most dramatic change in Vietnam in the last two decades is related to food. Hunger was quite popular in the 1970s and 1980s. The shortage of rice forced Vietnam to increase its import of rice from 148,000 tons in 1976 to 250,000 tons in 1979 and after falling for four years, it again rose to 483,000 tons in 1986.

After the renovation, agricultural output increased significantly. Rice imports dropped to 55,000 tons in 1989 and ended in 1990. In 1995, the total food production was 26 million tons (25 million tons of paddy). In 2008, the total food production was 43 million tons (39 million ton of paddy). The annual average food output rose from 363 kg per person in 1995 to 502 kg per person in 2008 and it has steadily increased in all regions except the Southeast.

Since 1990, Vietnam has sufficiently supplied food for the domestic need. Annual export of rice reached at least more than 5 million tons of rice in recent times along with rich sources of supply of other export items such as fish, seafood, coffee, etc. In 2007 the value of agricultural exports accounted for 19 percent of the $48.4 billion of the total export revenues. Meanwhile, Vietnam also imported some food items, accounting for 6 percent of the $60.8 billion of import turnover.

Food supply has increased and it has led to improve the situation of the critical areas of social and economic benefits. A quite good criterion to reflect this is the lifespan (being influenced by the death rate of infants) and the mortality rate of children under 5 years old (determined mainly by the health and nutritional status). Life expectancy increased from 60 years in 1980 to 65 in 1990, 69 in 2001, 70 in 2004 and 74 in 2007. The mortality rate of children under 5 years old decreased from 70/1,000 in 1980, to 56/1,000 in 1995, 38/1,000 in 2004, and 15/1,000 in 2005. These are remarkable achievements. However, in that general trend there are significant differences between population groups.

Though the food supply increases, there are still a lot of works to be done to ensure food security for the Vietnamese people. A part of the population is lack of income (or ability) to buy food. For evidence, in 2006, 21.5 percent of the population lived below the international standard of "absolute poverty": $1.25 per day and 21.3 percent of children at the age of 7-14 had to work. Children would not have to work if their families had not been so poor. In 2000-2007, 20.2 percent of children under the age of 5 were malnourished. Also at the same time, the mortality rate of children under 5 years old was 53/1,000 in the group of the one-fourth of lowest-income people and 16/1,000 for the group of the one fourth of the highest-income population.

Another important problem of poverty is the growing gap in income between rural and urban areas. In $68.6 billion of GDP in 2007, agriculture contributed only 20 percent. Meanwhile, this sector used (of the total of 44.4 million workers in the country) 56 percent of male workers and 60 percent of female workers. Thus, about 26.5 million workers were employed; generating $13.8 billion of GDP on average, with each person generating $520. With per capita GDP in 2007 was $810, the average income of the group of 17.9 million of non-agricultural workers was around $3,100 per person. Income gaps are evident in the distribution of expenditure. The group of a quarter of the population with the lowest income accounted for only 7.1 percent of total spending.

According to data, consumer spending of $4.9 billion for 17 million people in the quarter of the population with the lowest income was equivalent to $290 per person. This figure is still lower than the "absolute poverty" level and this figure is consistent with the poverty data mentioned above. This also accounts for the continuation of the state of malnutrition and food insecurity.

Data also shows that there are many positive developments in the last two decades: reducing agricultural labor and increasing the area of agricultural land per capita; increasing food supplies; expanding agricultural exports; social benefit is improved if the criteria of longevity and mortality of children under 5 years old are considered. However, in the opposite direction is the existence of structural poverty, growing inequality between rural and urban, inequality in the distribution of benefits among income groups and the risk of insecurity food, especially in some rural areas.

There are two more points that should be noted. The first point, the data shows that the period of "easy" expansion of agricultural land is coming to an end, if not the end. The growth of agriculture in the future will depend largely on the increase of productivity.

The second point is population moving has created gender disparities in the distribution of labor between the regions. In 2003-2006, 60 percent of female labor participated in agricultural production compared to 56 percent of male workers, although the number of male workers outnumbered female workers. It is more serious imbalances in terms of level of labor between men and women. The majority of female workers who are unskilled have to work in rural areas.

The changes in land policy are necessary to deal with these problems. The next part of this article will look at what changes would be useful?

Ho Dang Hoa, Le Thi Quynh Tram, Pham Duy Nghia and Malcolm F. McPherson

Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.