Agriculture: It’s not just rice anymore

The country has benefited economically from lower wages than other Association of Southeast Asian Nations (ASEAN) members, and its demographics have been more promising with relatively high literacy rates – producing a workforce with the drive and skills for factory labour.

The country is widely known for building its civilization on thousands of years of agriculture in general and rice in particular. But now, the face of agriculture has been changing and the nation is rapidly becoming a major producer and exporter of a variety of other agriculture commodities.

Hoang Anh Gia Lai (HAGL) is a typical example, having shifted its focus from the real estate industry to more sustainable technological agriculture growing plants such as sugar, rubber, palm oil and corn in addition to dairy and cattle farming.

On June 9, HAGL, JSC Nutrition Food JSC and Vissan Limited Company formed a joint venture to get into the dairy and cattle farming business.

According to the parties agreement the trio will invest US$300 million for building dairy and beef cattle farms. Once completed, they will have a total of 236,000 head acquired in Thailand, Australia and the US for farms located in Vietnam, Laos and Cambodia.

Nutrition Food JSC will begin constructing a US$238.09 million milk processing plant in the Tra Da Industrial Park in September 2015 with the capacity to produce 290 million litres of fresh milk per year in the first phase rising to 500 million litres in the second phase.

The factory's equipment will come from Germany and Sweden. It will process milk supplied by HAGL.

Meanwhile, Vissan Company will erect a US$95.238 million meat packing plant in southern Long An Province, with an annual capacity to process 100,000 metric tons of beef to be supplied by HAGL.

Vietnam has a total of 10.3 million hectors of arable land, much of which is devoted to profitable agricultural exports, representing US$30 billion per annum, or 20% of the nation’s total exports.

In fact, average Vietnam agriculture exports to the US from 2011 through 2013 were US$1.17 billion, which is close to double that of Japan at US$521 million, according to the US Department of Agriculture.

After Vietnam joined ASEAN in 1995, its agricultural trade within the 10-member regional trade bloc significantly expanded.

The country has also been benefiting from the renormalization of trade with the US since 2001 and the World Trade Organization (WTO) accession in 2007 provided a major catalyst for growth and integration.

Subsequent preferential trade agreements have led to tariff reductions that have only recently begun to take effect.

Today, Vietnam’s agricultural trade is still led by its ASEAN partners; however, China is now Vietnam’s largest trade partner and the US is a close second and the largest source of imports.

The Trans-Pacific Partnership (TPP) agreement is viewed as important to the long-term economic strategy for Vietnam, which could help secure markets abroad, facilitate the flow of foreign investment, and reduce tariffs on imported inputs needed for production of export commodities, such as cotton and hides used for textiles and footwear.

Regarding meats, Vietnam’s pig industry ranks 10th globally and production is growing to satisfy rising pork demand. Hog farming is also changing from small backyard operations, using locally procured feeds, to full-time farms raising hogs bred for more efficient meat production and using formula feeds.

Vietnamese demand for chicken is also rising, with growing production of corn and cassava used as feedstuff.

According to leading economists, the government’s rapid privatization of major state-owned enterprises, initiated last year, is having a major effect on agriculture.

The government has plans to withdraw US$151 million from 167 businesses owned by the Ministry of Agriculture and Rural Development, paving the way for the new face of Vietnamese agriculture.