Vietnam Agribusiness Report Q3 2012

The Vietnam Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Vietnam's agribusiness service.

BMI View: The Vietnamese government is increasing its efforts towards developing more public-private partnerships in order to encourage organic farming and sustainable farming practises, especially for more export-orientated agriculture products such as rice and coffee. As global demand for sustainably produced goods grows alongside environmental consciousness, Vietnam is likely to benefit.

Key Forecasts
- Milk consumption growth to 2016: 41.4% to 247,000 tonnes. Urbanisation, increased ownership of Western goods and the ongoing spread of modern, organised retail will prove supportive of strong dairy consumption growth, even if higher global dairy prices limit the growth outlook to some extent.

- Coffee production growth to 2015/16: 36.1% to 25.5mn bags. Work on replacing trees, many of which are more than 20 years old, will improve disease resistance and thus yields in the long term. Another growth driver will be export opportunities, given that Vietnam is the world's largest exporter of robusta coffee.

- Pork production growth to 2015/16: 13.1% to 2.2mn. Consumption will outpace production, and the country will therefore remain reliant on pork imports to satisfy demand.

- 2012 real GDP growth: 5.2% (down from 6.7% in 2011; predicted to average 6.7% over 2011- 2016).

- 2012 consumer price index: 8.8% year-on-year (y-o-y) (lower than 18.6% in 2011; predicted to average 5.8% over 2011-2016).

- 2012 central bank policy rate: 11.0% y-o-y (lower than 15.0% in 2011; predicted to average 8.2% over 2011-2016)
Industry Developments Sustainably produced farm produce sells - especially to developed markets and environmentally conscious customers - and the government of Vietnam knows it. Through numerous public-private partnerships, the Vietnamese government has started to pursue sustainable farming practises, placing significant emphasis on the coffee sector. According to statistics from Nedcoffee Vietnam, the amount of coffee produced under the UTZ Certified, 4C Association and Rainforest Alliance criteria has risen to 115,000 tonnes (or 1,916 60kg bags) of coffee beans in 2011 from close to zero a few years ago. This represents a small 10% of total national coffee production; BMI therefore expects this trend to gather more traction given the government's strong support.

We expect exports from Vietnam to remain strong in the coming months, as they are likely to stay very competitive globally. This is despite foreign buyers cancelling orders for more than 90,000 tonnes of the country's rice in April and May because of a short-term rise in local prices compared with India. In our view, this does not reflect the fundamental picture, as the country has a sufficient rice surplus to boost exports and prices are likely to remain very competitive, even compared with India. Vietnam exported 2.5mn tonnes of rice since the start of the 2011/12 season, which means it still has the capacity to export about 4.5mn tonnes of rice before December.

After discovering pork laced with clenbuterol and salbutamol in March, authorities have since conducted random tests of pork and pork products from numerous supermarkets in Ho Chi Minh. The meat inspected has not been found to contain any illegal substances; however, authorities said supermarkets will continue to be monitored. SHOW LESS READ MORE >

Executive Summary 5

SWOT Analysis 7

Vietnam Agriculture Swot 7

Vietnam Business Environment SWOT 8

Supply Demand Analysis 9

Vietnam Dairy Outlook 9
Table: Vietnam Milk Production & Consumption 10
Table: Vietnam Butter Consumption 10
Table: Vietnam Cheese Consumption 10
Table: Vietnam Whole Milk Powder Consumption 10
Table: Vietnam Milk Production & Consumption 11
Table: Vietnam Butter Consumption 11
Table: Vietnam Cheese Consumption 11
Table: Vietnam Whole Milk Powder Consumption 11

Vietnam Livestock Outlook 12
Table: Vietnam Poultry Production & Consumption 13
Table: Vietnam Pork Production & Consumption 13
Table: Vietnam Beef & Veal Production & Consumption 13
Table: Vietnam Poultry Production & Consumption 15
Table: Vietnam Pork Production & Consumption 16
Table: Vietnam Beef & Veal Production & Consumption 16

Vietnam Coffee Outlook 17
Table: Vietnam Coffee Production & Consumption & Trade 18
Table: Vietnam Coffee Production, Consumption & Trade 20

Vietnam Grains Outlook 21
Table: Vietnam Corn Production & Consumption 22
Table: Vietnam Corn Production & Consumption 23

Vietnam Rice Outlook 24
Table: Vietnam Rice Production & Consumption 25
Table: Vietnam Rice Production & Consumption 28

Commodity Price Analysis 29

Monthly Softs Update 29

Cocoa: Signs Of Life 30

Coffee: Holding Key Support 32

Palm Oil: Uptrend Intact 34

Sugar: Watching Brazilian Yields 35

Cotton: Downside Risks 37
Table: Select Commodities - Performance & BMI Forecasts 38

Monthly Grains Update 39

Wheat: Upside Risks Materialising 40

Corn: Moderation In Place 42

Soybean: Looking Weak 44

Rice: Temporary Strength 46
Table: Commodity Performance 46

Upstream Analysis 47

Tractor Growth In Asia Will Be Led By South Asian Countries 47

Asia Fertiliser: Reduced Government Subsidies & Fertiliser 'Rebalancing' 50
Table: Asia Fertiliser production & consumption 54

GM Seeds & Asia: Private-Public Partnerships The Way Forward 54

Downstream Analysis 60

Food 60
Table: Food Consumption Indicators -Historical Data & Forecasts 64
Table: Canned Food Value/Volume Sales-Historical Data & Forecasts 65

Table : Confectionery 66

Drink 67
Table: Alcoholic Drinks Value/Volume Sales - Historical Data & Forecasts 68
Table: Hot Drinks Volume Sales - Historical Data & Forecasts 69
Table: Soft Drinks Value/Volume Sales - Historical Data & Forecasts 71
Table: Carbonates 72

Mass Grocery Retail 73
Table: Mass Grocery Retail Indicators Value Sales By Format -Historical Data & Forecasts 75
Table: Trade Indicators -Historical Data & Forecasts 76

Country Snapshot: Vietnam Demographic Data 77
Table: Vietnam's Population By Age Group, 1990-2020 ('000) 78
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 79
Table: Vietnam's Key Population Ratios, 1990-2020 80
Table: Vietnam's Rural And Urban Population, 1990-2020 80

Our Forecast Modelling

81

How We Generate Our Industry Forecasts 81