1. FOOD SECURITY IN VIETNAM – CHALLENGES AND POLICY
Nguyen Trung Kien
Acting Director, Commodity Markets Division
Institute of Policy and Strategy for Agriculture and Rural Development - IPSARD

2. Contents Food security situation in Vietnam
Possible risk scenarios of food security in Vietnam
Policy for managing food security risks

3. Food Security Situation

4. Food Availability by Commune
Northern provinces achieved food sufficiency
Southern provinces produced surplus food (rice) for export
(a) Cropping intensity is about 1.85 and post-harvest loss is about 7%

5. Surplus supply now concentrated on: “Core Rice Belt’ in six provinces
Important structural changes are happening in MKD rice production. While rice is still produced in most districts, nearly all of the growth in production over the past decade has occurred within 20 to 25 districts, most of which being in the north west segment of the Delta. It is here double and triple cropping has been facilitated and where most of the technological changes are occurring.
Interestingly, this “core” rice growing area will likely be more impacted by upstream developments on the Mekong River than the expected impacts from climate change over the coming several decades.

6. Vietnam per capita rice consumption has begun to decline, this will likely to accelerate
P.C. Rice Consumption in Asia (Kg/Yr)
Myanmar
160
Vietnam
135
Philippines
128
Indonesia
104
China 95
South Korea 88
Malaysia 80
India 77
Japan 45

7. Domestic Market Growth: Changing size/composition of food expenditure
2010: $30 billion
2020: $ billion?
Source: WB

8. Changing economic role of rice
…Rice: important yet declining economic shares: healthy sign of growing and diversifying economy
Source: Steve Jaffee, WB, 2011

9. Food Affordability Domestic Food Price (VND/kg) Poverty Rate (%) 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
North Central Coast
26.6
19.3
South Central Coast
17.2
14.7
Central Highlands 24 21
South East
4.6
3.7
Mekong Delta
13.3
11.4
Source: VHLSS 2002 – 2012

10. An Giang 2009/10 (MDI Survey Results)
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

11. Food Utilization Threat of Undernourished Children Percentage of Under-5 Children Undernourished (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

12. …. 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
Mekong Delta: malnutrition with food surplus
Malnutrition rate is higher in the specialized area of rice production in comparison with areas with agricultural diversification
There are correlations between poverty and malnutrition rate ( )
Source: CASRAD, 2011
Trong giai đoạn , cung năng lượng hàng ngày đã đạt 2770Kcal/người/ngày, vượt qua tất cả các nước châu Á đang phát triển khác, trừ Trung Quốc. Con số tương tự của Thái Lan và Indonesia là 2530 Kcal và 2540 Kcal.
Tuy nhiên, an ninh lương thực không đơn thuần là vấn đề có đủ lương thực. Những vấn đề liên quan đến sức khỏe của mẹ, mất cân bằng dinh dưỡng trong bữa ăn, thiếu nguồn cung nước sạch, hoặc bệnh tật và giun sán là các yếu tố có tác động đến vấn đề suy dinh dưỡng nhiều hơn là vấn đề thiếu lương thực
Source: FAO,

13. Food Security Risk

14. Chỉ số giá LT thế giới (2002-04 = 100)
World food market has witnessed 3 times of price shock since 2007, with amplitude 50% higher than the last 2 decades, and strong correlates with energy prices
Chỉ số giá LT thế giới ( = 100)
World Food Price Index
Source: FAO

15. The rate of fertilizer price increase is higher than the rate of production growth and rice price increase
Price of rice
Price of NPK fertilizer
Source: Agroinfo

16. Import and price of material for animal feed is increasing
Rice export value
Animal feed and inputs import value (000 USD)
Năm 2013, SX 16,8 triệu tấn TĂCN chế biến công nghiệp cho GS, GC và thủy sản.
Nguyên liệu NK là: tấn = 54,9% tổng sản lượng TĂCN.
Từ tháng 1/2014 đến tháng 4/2014, VN đã nhập khẩu trên 2 triệu tấn ngô
Due to the rapid growth of livestock sector, animal feed companies have to import more than 60% of raw material quantity to produce each year.
Soybean import price
Source: GSO, Vietnam Animal Feed Association

17. Land use changes by land class and scenario, 2007 -2030
Source: Van Dijk et al., 2013

18. Climate change and impact on crop yield
Impact of climate change in Vietnam,
Source: MONRE, 2009
Source: Van Dijk et al., 2013

19. Area with high flood risk in high climate change impact scenario
Source: Van Dijk et al., 2013

20. Impacts of natural disasters on agriculture
Paddy & cultivation area loss due to natural calamity (000 ha)
Number of flash flood over years
National Centre for Hydrometeorological Forecasting, MONRE 2010
Central Committee for Flood and Storm Control, 2010

21. Food Security Policy

22. Policy Objectives 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

23. Food Security Policies
Supply intervention:
Policy to ensure supply sources
Policy to fix floor price for rice procurement
Procurement policy for temporary storage
Policy to fix conditions for the rice export enterprises
Direct support policy for paddy farmers
Demand intervention:
Policy to restrict export in emergency case
Policy to stabilize price by fixing the retail price
Rice provision for poor households

24. Supply Interventions (1) 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.

25. Vietnam’s Rice Balance in 2030 in the Worst Scenario Yield: 5
Vietnam’s Rice Balance in 2030 in the Worst Scenario Yield: 5.8 tons/ha. Post-harvest losses: 10%
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
4.1
3.3 mil ha
35.0
2.4
3.0 mil ha
31.8
0.8
2030:
Population: 110, 4 million
Consumption: kg per head
Urbanization rate: 41,8%
Trong 10 năm trở lại đây thì chỉ thiệt hại 1 triệu tấn lúa: 0,5 triệu tấn gạo trong trường hợp xấu nhất
Source: WB, 2011

26. Efficiency Question 3.7 2.7 4.1 0.5 101.4 9.1 9.3 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
Source: AgroCensus

27. Supply Interventions (2)
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

28. Households by Farm size (%)
Source: agrocensus 2011

29. Income Source of Paddy Farmers in MRD, 2010
Farm size
The average income per capita of a rural household (VND/month)
Total average income per capital (000 VND)
Contribution by paddy production (%)
1 ha
859
19%
1 – 2 ha
1183
26%
3 ha
1930
36%
4 ha
1972
68%
Source : VHLSS 2010
Trợ cấp /ha, quy mô hộ bình quân 4,4 người => mức trợ cấp bình quân đầu người: đ/ha/năm =9.500 đ/ha/tháng
Quy mô hộ trồng lúa dưới 1ha, nếu tính cả các nguồn thu nhập khác cũng không đảm bảo thu nhập bình quân của hộ nông thôn
Quy mô hộ trồng lúa dưới 3h, tỉ trọng thu nhập từ trồng lúa dwosi 50% => Người nông dân không thể sống chỉ dựa vào cây lúa

30. Supply Interventions (3) 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. 

31. Unclear impact of the storage procurement policy
20/9 buy 0.5 mil tons
Thailand 5% broken rice price (USD/ton)
Vietnam whole sale rice price (USD/ton)
Source: Agroinfo data

32. Conditionalities on rice export enterprises
Supply Interventions (4)
Conditionalities on rice export enterprises
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
Nghị định 109/NĐ-CP/2010 về kinh doanh XK gạo: Thời hạn áp dụng 1/10/2011 và được gia hạn đến 1/10/2012 => Chưa có hiệu lực)
có ưu tiên riêng cho nhóm DN nào không? => Trả lời: Không. Đáp ứng điều kiện thì được cấp phép. Nhưng do điều kiện này đòi hỏi doanh nghiệp phải có vốn lớn => Thường những doanh nghiệp lớn thuộc VFA mới đáp ứng đủ điều kiện
Nếu đảm bảo đủ điều kiện thì có thêm ưu đãi gì không? Ví dụ có thể thế chấp dự trữ và kho chứa để vay vốn ưu đãi không? Có làm dịch vụ cho ND gửi lúa không? => Trả lời: Bản thân các doanh nghiệp đáp ứng đủ yêu cầu thì được tham gia kinh doanh xuất khẩu, chứ không có điều kiện ưu đãi cụ thể. Tuy nhiên, khi doanh nghiệp xây dựng kho chứa và tham gia thu mua tạm trữ, có thể nhận được những ưu đãi như đã review trong các chính sách trước đó. Và các doanh nghiệp đó thường là nàm trong nhóm các doanh nghiệp đáp ứng được điều kiện của nghị định 109
Sàng lọc các doanh nghiệp nhỏ lẻ “tranh mua, tranh bán” (có phải là vấn đề không? Có làm hạ giá của ND hay không? Hay câu chuyện chính là việc hạ giá khi XK, mà đây có đúng là câu chuyện cần quan tâm không)
Source: Decree No. 109/NĐ-CP/2010

33. Direct support to paddy farmers
Supply Interventions (5)
Direct support to paddy farmers
Objectives: Support to protect and develop paddy land
Content:
Supporting VND/ha/year for organizations, households, privates producing on specialized land of wet rice;
Supporting 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

34. Supply Interventions (6)
General Support
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
.....

35. Policy to restrain export in emergency case
Demand Intervention (1)
Policy to restrain export in emergency case
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)
Số: 1746/BCT-XNK V/v Điều hành xuất khẩu gạo năm 2008: “Các doanh nghiệp xuất khẩu gạo xuất trình hợp đồng xuất khẩu có xác nhận "đã đăng ký" của Hiệp hội Lương thực Việt Nam khi làm thủ tục xuất khẩu tại cơ quan hải quan” => Việc đăng ký là bắt buộc
Source: Decision No.104/2008/QĐ-TTg issued 21 /7 /2008,

36. Policy to restrain export in emergency case
Profit analysis of stakeholders in the period of price fluctuation in 2008 (USD/ton)
US Okays Japan export stock (5/2008)
Export restriction time (25/3/2008)

37. Retail price stabilization
Demand Interventions (2)
Retail price stabilization
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)
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)

38. Demand Interventions (3)
Direct food support
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
Nghị quyết 30a của Chính phủ ban hành ngày 27/12/2008 quy định hộ nghèo nhận khoán chăm sóc, bảo vệ rừng được giao rừng và giao đất để trồng rừng sản xuất được hưởng trợ cấp 15 kg gạo/khẩu/tháng trong thời gian chưa tự túc được lương thực (không quá 7 năm). Ngoài ra, các hộ nghèo ở thôn, bản vùng giáp biên giới trong thời gian chưa tự túc được lương thực cũng được hỗ trợ 15 kg gạo/khẩu/tháng.

39. Changing Approach Current Approach New Approach Protect paddy land
Protect agricultural land
Rice self-sufficiency
Increase farmer income and improved nutrition
Resource intensive
Technology intensive and environmental friendly practices
Production focus
Post-harvest and trade focus
Small farm and middleman domination
Large scale and value chain linkage
Administrative control
Market-based intervention
Food export
Utilize the benefit of international integration
Inflation control
Target to poor and vulnerable groups of consumers