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FOOD SECURITY IN VIETNAM – CHALLENGES AND POLICY

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. Contents. Food security situation in Vietnam Possible risk scenarios of food security in Vietnam

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FOOD SECURITY IN VIETNAM – CHALLENGES AND POLICY

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  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

  5. Surplus supply now concentrated on: “Core Rice Belt’ in six provinces

  6. Vietnam per capita rice consumption has begun to decline, this will likely to accelerate

  7. Domestic Market Growth: Changing size/composition of food expenditure 2010: $30 billion 2020: $65 -70 billion? Source: WB

  8. Changing economic role of rice Source: Steve Jaffee, WB, 2011

  9. Food Affordability Poverty Rate (%) Domestic Food Price (VND/kg) Source: VHLSS 2002 – 2012

  10. Food AffordabilityHigh margin attained but income from rice production is still below $1 Per Capita/day

  11. Food UtilizationThreat of Undernourished ChildrenPercentage of Under-5 Children Undernourished (weight for age)

  12. …. More rice cannot solve all problems of food insecurity… 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 (1999-2009) Source: CASRAD, 2011 Source: FAO, http://www.fao.org/hunger/en/

  13. Food Security Risk

  14. Chỉsốgiá LT thếgiới (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 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) 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, 2020 - 2010 Source: MONRE, 2009 Source: Van Dijk et al., 2013

  19. Flood Risk 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 ScenarioYield: 5.8 tons/ha. Post-harvest losses: 10% • 2030: • Population: 110, 4 million • Consumption: 120 kg per head • Urbanization rate: 41,8% Source: WB, 2011

  26. Efficiency Question 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

  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: Agroinfodata

  32. Supply Interventions (4) Conditionalities on rice export enterprises • Source: Decree No. 109/NĐ-CP/2010 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 volumeof rice in 6 months ago=> if the domestic price of rice increase suddenly, the storage will provide rice to meet demand

  33. Supply Interventions (5) Direct support to paddy farmers • Source: Decree No. 42/2012/NĐ-CP issued 11/05/2012 Objectives: Support to protect and develop paddy land Content: • Supporting 500.000 VND/ha/year for organizations, households, privates producing on specialized land of wet rice; • Supporting100.000 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

  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. Demand Intervention (1) Policy to restrain export in emergency case • Source: Decision No.104/2008/QĐ-TTg issued 21 /7 /2008, 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)

  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. Demand Interventions (2) CT: 03/2008/CT-BTC (01/12/2008) CT: 03/CT-BTC (31/12/2009) Retail price stabilization CT: 03/CT-BTC (12/12/2011) CT: 05/CT-BTC (22/12/2010) • Movement of retail price of rice (VND/kg) 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)

  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

  39. Changing Approach

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