Vietnam Agribusiness Report Q4 2011
Business Monitor International, October 2011, Pages: 87
BMI View: The agriculture industry is very significant for the Vietnamese economy. In fact, Vietnam's agriculture industry (including forestry and aquaculture) contributes to more than 20% of the country's GDP and employs almost half of the country's population. While the country is looking forward to higher agriculture export earnings in 2011, BMI believe Vietnam will still face strong competition from neighbouring countries' cheap imports, especially for the livestock and dairy sectors. Thus, the government has pledged to invest more than VND20trn (US$1bn) in the agricultural sector in order to increase the 'value' of its exported products by at least 20% over the next ten years. This would imply lifting the quality of agricultural outputs such as coffee and rice, through better technologies.
Key Trends:
- Corn production growth to 2014/15: 39.7% to 6.9mn tonnes. This will be due to current yield immaturity, which means significant gains are still available via this avenue, especially as robust local corn prices provide incentives to farmers. Also an important growth driver will be domestic consumption, especially from the livestock sector.
- Coffee consumption growth to 2015: 54.2% to 1.6mn bags. This will come as the Ministry of Agriculture and Rural Development (MARD) has said it hopes to boost domestic consumption to 10-15% of the national coffee crop.
- Poultry production growth to 2014/15: 19.8% to 419,000 tonnes. This is because rising incomes will stimulate domestic meat consumption growth (due to diet diversification) and production will increase to keep pace.
- 2011f Real GDP Growth: 6.3% (down from 6.8% in 2010; predicted to average 7.0% from 2010 until 2015).
- Consumer Price Inflation: 27% y-o-y in July 2011 (forecast to average 18.6% in 2011). Industry Developments
With the domestic coffee supply crunch expected to persist until the 2011/12 the crop starts to come online in early October, BMI believe these developments should offer some support to prices in the near term. Coffee exports in June totalled 80,000 tonnes, 15.8% lower on a year-on-year basis, and July exports are forecast to reach 55,000 tonnes, representing a 38.2% dip from a year ago. A reason for the shortage is the fact that farmers had sold close to 90% of the harvested 2010/11 crop on the back of surging prices at the start of this year, leading to a year-on-year surge of exports by 21.7% for the first five months of the year. Approximately 40,000 tonnes of coffee deliveries have already been cancelled for July delivery. According to reports, there is currently about 200,000 tonnes of coffee, or only approximately three months' worth of coffee exports currently kept under storage in warehouses in Vietnam.
Consumers will be confronted with higher dairy product prices, especially milk powder prices in the medium term. Anecdotal reports in late March 2011 claimed that prices of imported milk products such as milk powder had risen by 18% on the back of an 8.5% Vietnamese Dong devaluation. According to the report, milk powder products from Abbott products have increased 12-18%, Similac IQ 400-gram box rose by 13% to VND215,000/box, and Similac IQ 900-gram box increased by 12% to VND437,000/box. Foreign milk firms such as Nestlé, FrieslandCampina, 3A and Mead Johnson will also reportedly raise milk powder prices by an average 5-17% starting from March 1. Given the low incomes earned by the average worker, BMI think these milk price hikes will only place these products further out of reach of the masses and might lead to substitution effects in the short to medium term.
While BMI are largely optimistic about the growth prospects for the livestock industry - BMI forecast production output of poultry, pork and beef to grow by 19.8%, 15.1% and 52.5% respectively over their five-year forecast period - there are salient downside risks to this outlook. BMI highlight the three main challenges as high interest rates, a reliance on imports (which causes the livestock industry to be vulnerable to fluctuating input prices) and finally, the fragmented nature of the market.
Executive Summary
SWOT Analysis
Vietnam Agricultural SWOT
Vietnam Political SWOT
Vietnam Economic SWOT
Vietnam Business Environment SWOT
Supply Demand Analysis
Vietnam Sugar Outlook
Table: Vietnam Sugar Production & Consumption, 2010-2015
Table: Vietnam Sugar Production & Consumption, 2006-2011
Vietnam Livestock Outlook
Table: Vietnam Poultry Production & Consumption, 2010-2015
Table: Vietnam Pork Production & Consumption, 2010-2015
Table: Vietnam Beef & Veal Production & Consumption, 2010-2015
Table: Vietnam Poultry Production & Consumption,2006-2011
Table: Vietnam Pork Production & Consumption,2006-2011
Table: Vietnam Beef & Veal Production & Consumption,2006-2011
Vietnam Coffee Outlook
Table: Vietnam Coffee Production & Consumption, 2010-2015
Table: Vietnam Coffee Production & Consumption, 2006-2011
Vietnam Dairy Outlook
Table: Vietnam Milk Production & Consumption, 2010-2015
Table: Vietnam Butter Production & Consumption, 2010-2015
Table: Vietnam Cheese Production & Consumption, 2010-2015
Table: Vietnam Whole Milk Powder Production & Consumption, 2010-2015
Table: Vietnam Milk Production & Consumption, 2006-2011
Table: Vietnam Butter Production & Consumption, 2006-2011
Table: Vietnam Cheese Production & Consumption, 2006-2011
Table: Vietnam Whole Milk Powder Production & Consumption, 2006-2011
Vietnam Grains Outlook
Table: Vietnam Corn Production & Consumption, 2010-2015
Table: Vietnam Corn Production & Consumption, 2006-2011
Vietnam Rice Outlook
Table: Vietnam Rice Production & Consumption, 2010-2015
Tale: Vietnam Rice Production & Consumption, 2006-2011
Commodity Price Analysis
Monthly Grains Update
Corn
Rice
Soybean
Wheat
Monthly Softs Update
Cocoa
Coffee
Palm Oil
Sugar
Industry Forecast Scenario
Vietnam's Consumer Outlook
Food
Food
Table: Food Consumption Indicators -- Historical Data & Forecasts, 2010-2015
Canned Food
Table: Value/Volume Sales of Selected Food Sub-Sectors -- Historical Data & Forecasts, 2010-2015
Confectionery
Table: Value/Volume Sales of Selected Food Sub-Sectors -- Historical Data & Forecasts, 2010-2015
Table: Sugar Confectionery, 2008-2015
Trade
Table: Food & Drink Trade Indicators -- Historical Data & Forecasts, 2010-2015
Mass Grocery Retail
Table: MGR Indicators -- Value Sales by Format -- Historical Data & Forecasts, 2010-2015
Macroeconomic Forecast
Table: Vietnam - Economic Activity, 2008-2015
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