demand and supply of the vietnamese rice market

Supply of goods: The supply of goods show the quantity of productions or services that the producers are able to sell and willing to sell at any different prices in a certain period of t

COLLEGE OF BUSINESS MAJOR: BUSINESS ADMINISTRATION

Essay:

DEMAND AND SUPPLY OF THE VIETNAMESE RICE

MARKET

- Dinh Hoang Anh

- Truong Dinh Manh Duy

- Phan Tan Anh Khoa

- Nguyen Tran Bao Thien

- Nguyen Van Trung

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Table of Contents

INTRODUCTION 2

DEMAND AND SUPPLY OF THE VIETNAM RICE MARKET 3

I Theoretical background 3

1 Demand of goods 3

2 Supply of goods. 4

3 Market equilibrium: 5

II Empirical evidences 6

1 VietNam's agricultural in recent years. 6

2 Advantages 7

3 Disadvantages 7

III The general situation of VietNam's rice export: 9

CONCLUSION 12

Agriculture is a vital economic industry and a source of employment in Viet Nam, contributing significantly to the country's GDP and providing employment to the majority of the population Our country is still primarily agricultural in nature After China, we are ranked second in the world Agricultural items, particularly food crops like as rice and maize, make significant contributions to the economy due to their diversity and abundance of high-quality, low-cost products The number of agricultural exports, particularly rice, is steadily expanding year after year, bringing in significant revenue to the government

Agricultural items, particularly food crops like as rice and maize, make significant contributions to the economy due to their diversity and abundance of high-quality, low-cost products The number of agricultural exports, particularly rice, is steadily expanding year after year, bringing in significant revenue to the government

However, we need not be frightened if the economy experiences several ups and downs in

2012, hurting the entire world's agriculture That is also true in our own country, Viet Nam Agriculture in our country is likewise beset by problems: The rising USD price, along with the ever-increasing price of gasoline, has had a significant impact on agricultural product output and production: staple commodities such as rice, rubber, coffee, coconut, and so on have all experienced price drops, making production and export difficult

The topic "Demand and Supply of the VietNamese Rice Market" was chosen by a group of three of

us based on the practical role and impacts of rice on people's lives as well as the development of the country's economy We addressed this topic together in order to have a better grasp of the characteristics as well as price variations, as well as the evolution of the rice market over time.

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DEMAND AND SUPPLY OF THE VIETNAM RICE MARKET _

Chapter I Theoretical background

1 Demand of goods:

The definition: The demand of goods is the number of productions and services that buyers are

affordable and they willing to buy at any price in a certain period of time The quantity of Demand (Q d ) is the number of productions and services that buyers are willing to buy and affordable at the given Price in the time There are 6 factors that affect the Demand of goods including:

+) The income of buyers: This is an important factor, which affect the quantity of Demand in a

certain time Incomes affect directly to the ability of buying of consumers When incomes

rise, the ability of buying also rises and either the consumers’ demand, the reverse is also true.

+) Changes in price of related good: Demand of goods is not only rely on the price of its’

own but also depend on other related goods When the sales of a shop fall also leads to the fall

in other goods’ demand, we called them “substitutes“

Substitutes usually a concept of similar products which can be used in place of another

Substitutes play an important part in the marketplace and are considered a benefit for consumers They provide more choices for consumers, who are then better able to satisfy their needs such as: fuel, moto, cars, computers

+) Tastes and preferences of consumers: When we like something obviously we would go

for it at any price! On the other hand, the quantity Demand for the productions that we are not used to is low However, the act of researching the trends of consuming a product is complex for the reason that tastes and preferences are not visible Hence, economists have put a theory: If demand remains unchanged or its’ change happens slowly then demand is independent to other factors of supply

+) Consumers’ expectations with regard to future prices: Our expectations for the forthcoming

market may impact the demand in reality Moreover, if we expect a price of one

good will fall in the future so we wouldn’t buy it now

+) The numbers of consumers in the market: This factor plays such a core in the function

of demand When the popularity rise so does the demand of goods goes up, especially for the essential commodities that it would rise to any price due to the change in number of

consumers +) Government policies: Government’s legislations at times have a

strong impact to the incomes of consumers and the price of productions and services Hence, affecting the demand of goods either

The law of demand:

The demand for goods and services have a negative-correlated to price of goods (P) If the price of goods falls, other factors doesn’t change then consumers will buy more and the reverse is also true.

We can sum up that:

P ↑ ➔ Q d ↓

P ↓ ➔ Q d ↑

2 Supply of goods: The supply of goods show the quantity of productions or services

that the producers are able to sell and willing to sell at any different prices in a certain period of time The quantity of supply (Qs) is the numbers of goods and services that the sellers willing to sell and they have the right to sell at any prices at times

Factors that affect the supply of goods:

(1) The market prices: Market prices is one of the top factors reflect the numbers of

productions that a company can produce and supply If the price goes up (other factors remain unchanged) then the business will gain higher profit when selling their productions

(2) Cost of productions: To produce a good, businesses have to use inputs such as:

employment,

technology, factory, materials… If the price of any inputs rises then it will lead to the fall of profit per good In this case businesses must cut the quantity they produce and the supply to the market will fall, eventually Remaining in the upstream elements decreases, the profit per unit product will increase from which enterprises can expand production scale, increase supply to the market.

(3) Technology: In nowadays civilized world technology is the element that influents the

supply most affectively A closed production line with cutting edge lines will increment labor efficiency, production costs will be lower, the quality will be higher, from which businesses will make more profits and the sum of items they will supply to the market increased

(4) Expectations: The amount of products a commerce offers to the market nowadays can too

be affected by its desires within the future In case it is anticipated that the selling price of items within the close future will increase, the endeavor will store a portion within the stockroom (not offer), the supply of items on the market will too diminish

(5) Government policies: Government policies will too have a certain impact on supply, such as high

charges causing input costs to extend, corporate profits to diminish, from which businesses will decrease production scale, making market supply less costly, market field is diminished When the government has numerous charge incentives, businesses will increase their profits, in this manner creating more and the supply within the market is additionally more plenteous.

The law of supply: The supply of goods have a positive – correlated with price, if the price rises and

other factors remain unchanged the business will provide more and the reverse is also true.

We can sum up that:

P ↑ ➔ Q s ↑

P ↓ ➔ Q s ↓

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3 Market equilibrium:

Market equilibrium is an economic state where the supply and demand curves intersect and suppliers produce exactly the amount of products and services that consumers are willing and able to consume Market equilibrium may be a state where the amount of products and services that buyers are willing and able to purchase is precisely rise to to the amount of products and services that sellers are willing and able to sell At market harmony, the equilibrium cost is determined The equilibrium cost may moreover be called the cost that equilibrates supply and demand since at this cost everybody within the market is satisfied Buyers bought everything they needed to purchase, and sellers sold everything they needed to offer

The change in market equilibrium:

The market equilibrium will be broken when the supply curve or demand curve or even both shift The price and quantity will change until it generate a new market equilibrium, when there is

no impact to change the price

There are 3 circumstances:

The supply curve shift, demand curve remain unchanged:

The chart outlines the case of a alter in equilibrium within the motorcycle market since supply increases when the Government subsidizes production, coming about in a diminish

in equilibrium price and an increase in equilibrium quantity On the other hand, in case within the rice advertise, severe climate causes a diminish in supply, the supply curve will shift to the left, causing the equilibrium cost to extend and the equilibrium quantity to diminish.

The demand curve shifts, supply curve remain unchanged:

The chart outlines the case where the alter in equilibrium within the Dove scented soap market after a tv commercial increases request, the demand curve shifts to the right causing the equilibrium price to extend and the equilibrium quantity to increase Alternately, in case within the bike market when buyer wage desires drop, the demand curve shifts to the left, causing the equilibrium cost to diminish and the equilibrium quantity to diminish

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Demand curve and Supply curve both shift:

The figure illustrates the case where both the supply and demand curves shift On the chart, the supply curve shifts to the left and the demand curve shifts to the left either In this case we know for beyond any doubt the alter in quantity, that the equilibrium quantity diminishes, but the equilibrium price can increase, diminish or remain the same depending on the changing relationship between supply and demand We can moreover outline three other cases: both supply and demand increase;

supply diminishes demand increases and supply increases demand diminishes so that changes in equilibrium cost and equilibrium quantity can be seen

Chapter II Empirical evidences.

1 Vietnam's agricultural in recent years.

In the third quarter of 2021, the country's winter-spring rice yield this year reached 68.6 quintals/ha, an increase of 2.2 quintals/ha compared to the winter-spring crop in 2020, the output reached 20.63 million tons, an increase of 755.1 thousand tons

The share of agriculture in the economy has declined in recent years, while other economic sectors have increased In 2020, about 35.4% of employees will work in the fields of agriculture, forestry, and fishery Agricultural export output accounted for about 23.54% in the first nine months of 2021 The liberalization of agricultural production, especially rice production, has helped Vietnam become the second country in the world in terms of rice exports Other important agricultural products are coffee, cotton yarn, peanuts, rubber, sugar, and tea

According to a report of the Ministry of Agriculture and Rural Development, despite being affected by the Covid-19 pandemic, the total AFF export turnover in the first 6 months of 2021 still increased sharply, exceeding the set plan, achieving a high result of 24.23 billion USD, up 28.2% over the same period in 2020; in which main agricultural products are 10.40 billion USD,

up 13.3%; seafood 4.05 billion USD, up 12.5%; forestry products $ 8.7 billion, up 61.5% over the same period last year: Specifically, the export estimate of some agricultural products in June is as following: rice 700 thousand tons, bringing in 362 million USD, coffee reached 825 thousand tons, worth 1.52 billion USD, rubber 70 thousand tons, worth 220 million USD

The price of Vietnam's export rice offered for sale on the world market on October 28 remained at $433-437/ton for 5% rice, $408-412/ton for 25% broken rice, and $338-342/ton for rice with 100% broken rice In particular, Vietnam's Jasmine rice is priced at 583-587 USD/ton

Nearly 6 months ago, the price of summer-autumn rice was around 5,200 VND to 5,400 VND/kg, although the Vietnam Food Association (VFA) was purchased and temporarily stored by the Government, the price still did not increase When VFA bought to fulfill the temporary storage target , the rice price jumped to 7,500 VND / kg With the unusual fluctuations of the market , the government is currently having many policies to stabilize the prices of agricultural products in Vietnam.

2 Advantages

- Favorable natural conditions help:

+ Diversifying agricultural products

+ Applying measures of intensive farming, increasing the crop, shifting the crop structure

+ Basing on the terrain, the land has different forms of cultivation

- Investment in agricultural science and technology, combined with the acquisition and application of scientific and technological achievements in rice of countries in the region and the world are increasing

- The system of mechanisms and policies of the State to encourages and creates conditions for the development of agricultural production

- Vietnam has joined the WTO, this is a great opportunity to create favorable conditions for rice and other agricultural products to have equal rights to participate in the world's agricultural trade market

- Our country is effectively exploiting tropical agriculture:

+ Focused mainly on two factors: soil and climate In agriculture, people still have a saying:

“What kind of land does that plant or potato plant strange fields?” and “Until March, when the rice flowers fall, apply sesame seeds”

+In the past, our ancestors had learned from such experiences and today, the distribution of crops and livestock is more and more noticed by economic efficiency

3 Disadvantages

- Irrational structure of agricultural production:

The structure of agricultural products has not been suitable with market demand and with effective exploitation and use of land and water resources for production, high distribution, productivity and quality of crops and livestock are still low

- Strong and sustainable agricultural product value chains have not yet been established:

The objective and subjective factors for the creation and development of the agricultural commodity value chain are very primitive and have not been fully formed; popularizing the lack of organic linkage mechanism between agricultural production and processing , packaging and consumption of agricultural products; The policy to encourage the production and consumption of agricultural products through contracts under the Prime Minister's Decision No 80/2002/QD-TTg dated June 24,

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