(TIỂU LUẬN) demand and supply of the vietnamese rice market

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 out

MAJOR: BUSINESS ADMINISTRATION

Essay:

- Dinh Hoang Anh

- Truong Dinh Manh Duy

- Phan Tan Anh Khoa

- Nguyen Tran Bao Thien

- Nguyen Van Trung

DEMAND AND SUPPLY

OF THE VIETNAMESE

RICE MARKET

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

Introduction _

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

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 (Qd) 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 any price! it at 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 consuming a product complex of is 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 independent is 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 ↓ ➔ Qd ↑

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 ↓ ➔ Qs ↓

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

 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 Empirical evidences II

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,

2002 is not strong enough to create close links between farmers and businesses and agribusiness organizations

- Policies to support the development of domestic production have not created a strong enough incentive to overcome the current weakness of agricultural production

Specifically:

+ Policy on agricultural land has not been directed towards the same level of concentrated agricultural production areas has not yet promoted the creation of large-scale production units; + Policies to support taxes, freight, and other fees have not been fully applied and are not attractive

to investors to invest in agricultural business;

+ Preferential credit policy in terms of loan amount, lending conditions, and loan period is not flexible to effectively support large-scale production of goods

+ The investment policy is also not large enough to create infrastructure to meet the requirements

of large-scale commodity agricultural production development, especially infrastructure in concentrated production areas of industrial crops, fruit trees, etc large cattle breeding areas

+ The policy on development of agricultural human resources is slow to be implemented and is ignored, making agricultural human resources unable to meet the requirements of modern production, being cooperative and strictly complying with regulations on hygiene and safety food safety according to WTO commitments;

+ Agricultural science and technology policies have not had enough impact to improve productivity, quality and competitiveness of agricultural products Many agricultural product industries such as split, mulberry, vegetables, fruits, poultry and pig raising lack competitive technology in breed, cultivation and harvesting processes which limit the value enhancement increase

- Other weaknesses:

+ The industry has not yet focused on serving the needs of suitable machinery and equipment with high labor productivity in agriculture Most of post-harvest and agricultural product processing equipment must be imported at high prices and there is no service manual or warranty, causing many difficulties for agricultural producers

+ The quality control system for agricultural products and agricultural inputs has not yet been established to create a healthy market for agricultural products and agricultural inputs The backlog

of residues of pesticides, antibiotics banned from being used in agricultural products, and the status

of harmful agricultural materials without instructions for use, which can be freely imported, are common causing many difficulties and pressing difficulties for agricultural producers and consumers about the situation of reduced quality goods, which do not meet the requirements for quality and safety for health

Chapter I The general situation of Vietnam's rice export: II

- Affected by the 4th Covid-19 wave, there is a drop in strength Vietnam's export price has fallen

to the lowest level in the past 1 year

Data number:

- According to statistics from Reuters on August 10, the price of 5% broken parboiled rice at the world's leading exporter, India, decreased by 354 - 358 USD/ton last week; The price of ThaiLand 5% broken rice increased slightly from 385 - 408 USD/ton in the last week of July, the lowest level since 2 years

- Meanwhile, Vietnam's (VN) 5% rice price was unchanged, staying at 390 USD/ton last week - the lowest level since February 2020 So that the same time of this year with the price as a center averaged 485 USD/ton, rice came in at nearly 100 USD/ton lower

- On August 10, the price of rice purchased in a number of provinces in the Mekong Delta region went sideways after a period of reduction in the depth of the impact on Covid-19 services, unfinished trading and production activities Specifically, the price of IR50404 rice is purchased from 4,600 - 5,000 VND/kg, OM 9582 rice is priced at 4,600 - 4,900 VND/kg, OM 6976 is priced at 5,100 - 5,200 VND/kg, ST24 is from 6,100 - 6,200 VND/kg At the same time in this year's crop, the price of rice purchased this year is about 1,000 VND/kg lower

- In the first months of 2021, Vietnam's rice industry grew in production due to favorable weather and a number of trade agreements opening up advantages and export prospects for rice In addition, the complicated developments of the global COVID-19 epidemic may make the demand for food consumption and food reserves expected to remain high By May 2021, before the COVID-19 epidemic occurred, the situation of domestic rice consumption and export market was stable Accumulated rice exports in the first 5 months of 2021 reached 2,598 million tons, worth 1.410 billion USD, compared with the same period in quantity decreased by 15.39%, compared with value decreased by 5.31% The average export price reached 542.81 USD/ton, up 57.74 USD/ton over the same period last year

- However, from the beginning of June 2021 until now, when the COVID-19 epidemic spread throughout the southern provinces, traveling to harvest, transport and consume rice for the summer-autumn crop with an area of nearly 1,780 thousand ha with an estimated output of 10,152 thousand tons, faced many difficulties and challenges In the condition of applying Directive 16 of the Prime Minister, continuously for many months, the ability to move people and equipment, and transport agricultural products between provinces bordering the provinces are hindered by many obstacles regulations on epidemic prevention such as rapid testing, PCR testing, isolation so the lack of businesses, traders purchasing the same means and workers involved in harvesting and transporting