Báo cáo nghiên cứu khoa học " Developing an Agricultural Research and Development Priority Framework for Vietnam Crops Sub-Sector Workshop " pot

4 R&D Information 4.1 Main Research Areas  Genetic improvement in yield and quality including development of hybrid varieties,and selection for very early and early maturity, Uniform va

and Development Priority

Framework for Vietnam

Crops Sub-Sector Workshop

Data and Information Sheets:

Areas of Research & Development

Opportunity (ARDOs)

October 2006

ARDO 1: RICE

1.1 National Goal

Increase yield, and quality of rice to ensure national food security, competitiveness in

export markets, reduce the cost of production and maintain exports at 4-5 millions

ton/year

1.2 R&D Scope

Research into genetic improvement and development of agronomic techniques (GAP,

ICM, IPM) improving quality standards and food safety and further develop harvest and

post-harvest management including storage and processing and development new and

improved products to meet identified market needs

1.3 Coverage:

 Improved varieties

 F1 hybrid varieties

 Locally purified varieties

 Varieties with high yield good quality and possess aromatic character (Aroma

varieties)

 For all varieties high yield, good grain quality (to meet exporting markets), suitable

for different ecological environments (intensive cultivation areas, adverse

condition areas such as salinity soils, acid-sulphate soils, floating areas, rain fed

lowland as well rain fed upland conditions etc.) through out country

 These varieties should be divided in to 4 mainly groups base on growth duration

1. Very early maturity (< 90 days from seed to seed);

2. Early maturity (90-100 days);

3. Medium maturity (>100 - 125 days);

4. Late maturity and/or Mua group (for most photosensitive varieties, growth

duration relates to day length)

Northern of country

and highland zones

Very early, Early maturity:

Central plateau Very early maturity:

- Aromatic varieties

2.1 Introduction

Rice production in Vietnam started more than 4,000 years ago The skill and

knowledge of producers has grown over time in keeping with neighbouring countries

including China, Thailand and Indonesia

Rice is very important food crop It provides about 20% energy requirement for the

world, 60-70% for Asia people and 35 - 59% for more than 3 billion people

(FAO,1984), particularly in Asia countries including Vietnam Rice crop can develop

and tolerate many disadvantageous environmental conditions (long time flooding soil,

salt and acid soil) which many other crops cannot For this reason rice is sometimes

called a “volunteer plant” and in the tropical monsoon reason is one of the few annual

crops that can be successfully grown Rice is a core component of food security in

many Asian countries including Vietnam, and has been grown repeatedly in the same

areas for thousands of years Diversification into more profitable crops has only been

achieved once household and national food security needs have been met Rice plays

important role the daily nutrient and health requirements of many rice eating nations

New varieties, high in protein, ‘golden rice” with pro-vitamin A are now becoming

available for further improvement in human nutrition

2.2 Industry Characteristics and Prospects

Area and Productivity

According to statistical data (Agriculture Development - GSO), in 2005, Viet-Nam had

7326,400 ha of rice divided into 3 groups

 Winter-Spring (W-Sp, from November to April the next year) rice crop

season 2942,000ha;

 Summer-Autumn (S-Aut, From April to October) rice crop season: 2348,600

ha

 Mua (from July to December in the North and from August to February the

next year in the South) rice crop season 2035,800 ha (table No.1)

Table 1 Area and Production of Rice in (1990-2005)

Spring paddy

Autumn paddy

Winter paddy

Spring paddy

Autumn paddy

Winter paddy

1990 6006,8 2037,6 1215,7 2753,5 19225,1 7865,6 4090,5 7269,0

1995 6765,6 2421,3 1742,4 2601,9 24963,7 10736,6 6500,8 7726,3

2000 7666,3 3013,2 2292,8 2360,3 32529,5 15571,2 8625,0 8333,3

2001 7492,7 3056,9 2210,8 2225,0 32108,4 15474,4 8328,4 8305,6

Rice production in Vietnam is characterized by:

 2 main rice seasons in the North (W-Sp) and Mua crop that coincides with dry andwet seasons

 3 main crops in Central and the South (W-Sp, S-Aut and Mua)

 The Green Revolution in 1960’s when a lot of new varieties with short growthduration, short stem, resistance to logging, adapt to intensive farming condition, highyield etc were developed This enabled more intensive cropping systems to bedeveloped that significantly increased total yield and income

 From 1990 to 2005, the total area of rice has expanded by 22% (W-Sp rice up 44.8%,S-Aut rice up 93.4% and Mua rice down 26.2%) Since 2001 there has been a small(2.5%) decrease in the total area of rice grown

 The total yield of rice has increased by 86% from 1990 – 2005

 The big change in production over the years has occurred for the following reasons

(Table 2)

o Strongly supportive Government of Viet Nam policies in agriculture e.g.Improvements in irrigation systems, development of improved varieties,food security and poverty reduction

o Increased funding for rice research enabling development of newvarieties and replacement of old varieties throughout the country

o Introduction of F1 hybrids, mainly in RRD and parts of the CentralPlateau

o Photosensitive varieties that have a high yield and good quality as well

as better adaptation and better tolerance/resistance to pests and diseases

o Mua crop varieties have declined and been replaced by improvedvarieties, especially in the RRD region

Table 2 Area, Yield and Production of Paddy (1961-2005)*

Thousand.

ha

Index (Previous year=100%)

Ton /ha

Index (previous year=100%)

Thousand.

ton

Index (previous year=100%)

* Source from Ministry of Agriculture and Rural Development

Average yields have increased 2.2% per year from 1961 – 1990 (1.896 to 3.189tons/ha) This increase is attributed to the Green Revolution impact of rice breeding.From 1990 - 2005 total yield increased 2.3% per year (3.69 to 4.89 tons/ha) Most ofthis increase can be attributed to application of hybrid rice in the North (RRD) and highyielding varieties in the South (MKD) In addition improved rice cultivation andimproved seeding techniques, and application of “3 increases 3 deceases”, (ICM, IPMand GAP)

Over the last 30 years, total production of rice in Vietnam has increased about6.6%/year – the first rank in the world Vietnam now is the second/third largest riceexporting nation

Value and Markets

 Some major exporting countries (Thailand, China and Vietnam are diversifying fromrice into other crops while other producers (Cambodia) have increased area and yield

as national goals

Table 3 Rice Exports from Vietnam (1989- 2005)

Year Export quantity

(tons)

Price (USD/tons)

Value (1000 USD)

Worldwide imported rice (tons)

Table 4 Export Markets

Destination

Market

Quantity (1.000t0n)

Value (million USD)

Quantity (1.000ton)

Value (million USD)

Quantity (1.000ton)

Value (million USD)

 Improved variety: Genetics improvement, breeding for very early and early maturity

for Mekong delta areas, Red river delta areas, central areas, and intensive cultivationareas to meet the demand of importing markets, overcome floating and drought,rotation with winter crops ( vegetables, potato, sweet potato, corn, water melon)

 F1 Hybrid rice: A big government, it contributes to increasing the yield from Redriver delta areas, central areas, and central plateau to ensure national food security Inthe coming year Viet-Nam will produce its own F1 hybrid seed to ensure riceproduction is based on domestic seed

 Aromatic rice: Strong attention to improvement genetics to release varieties (with

very early and early maturity but high yield and aromatic character and goodresistance/tolerance to disease and insect pets) to meet demand from rice markets aswell as increase national income from exporting rice

 Locally uniform variety: Purification of Special rice varieties from local varieties

such as Lua -Tam, Tam -Xoan, Nang-Thom, Nang-Thom -Cho-Dao.from to improvevalue in exporting markets

 At present Vietnamese breeders have been released some of high quality with aromavarieties those are testing in lager scale These varieties would be grown as nationalvarieties on larger areas in the near future years

3 Industry Analysis

3.1 Structure

Households and Size of Holdings

 In the MKD the area of rice per farmer household is rather large, may be severalhectare for each household

 In other regions, especial in the RD regions, rice area of a household is verymoderate, of some hundreds and thousands m²

 On some river banks rice planting area of a farmer household is not so large - usuallyless than a hectare for each household

 In river delta regions, especial in the MKD and RRD regions, rice planting area isreduced; rice is replaced by crops that are more profitable such as vegetables, fruittrees, and flowers

3.2 Supporting Infrastructure

 At present irrigation systems for rice production are almost completed in RRD toMKD

 Seed production Plant protection centres are sufficient and good enough to controldisease and insect pest.

 Agricultural extension bureau belong to MARD and extension centres fromprovinces are strongly supporting in rice production, too

 There are 270,000 rice millers in Mekong Delta with total capacity of 21,000 tonspaddy batch (equal to 11 million rice/year), more than 300 machines for polishingrice, and some rice grading machines are produced in Vietnam

3.3 Future Trends and Key Market Issues.

 Market for rice is rather convenient to export and there is high domesticconsumption demand

 Rice areas will decrease year to year due to developing industry and diversificationinto more profitable crops The challenge is how to produce sufficient amount formarket meanwhile

 In 1989 Viet-Nam exported rice (1,420,000 tons) Since 2000 Viet-Nam has becomethe second largest rice exporter

 Value of exports was billion USD meanwhile to meet domestic demand

 Target for 2010 is to maintain 35 million ton of paddy rice with better quality andaromatic although rice areas would be decrease yearly also

4 R&D Information

4.1 Main Research Areas

 Genetic improvement in yield and quality including development of hybrid varieties,and selection for very early and early maturity, Uniform varieties, aromatic varieties

 Introduction and evaluation of new F1 hybrid varieties

 Development of production packages incorporating agronomic practices, pest anddisease management and commercial production systems

 Improvement harvesting and post harvest processing

 The 1978-2000 national science and technology program for food crops (major croprice) had a focus on germplasm collection, breeding and selecting new varieties forintensive areas and disadvantage areas

 The 2001 – 2005 varieties program for crops, animal and forest is focused onbreeding and selecting rice varieties for intensive farming areas as well as dis-advantaged areas, breeding and selecting hybrid rice, super rice variety, special ricevariety, high quality rice for exportation

 Main research disciplines/fields include: - Bio technology, breeding, regionalplanning/projecting, farming/crop systems, soil science, plant protection, post harvesttechnology

4.2 Major Research Providers

Ministry of Agriculture and Rural Development

 Viet-Nam Agricultural Science Institute (VASI) (now Vietnam Academy ofAgricultural Sciences – VAAS)

 Institute of Agricultural Science for Southern Vietnam (IAS)

 Agricultural Genetics Institute,

 National Centre of Variety Evaluation and Seed Certification (NCVESC),

 Cuu Long Rice Research Institute,

 Food Crop Research Institute

Universities

 Hanoi Agricultural University,

 Thai -Nguyen Agro-Forestry University,

 Ho- Chi - Minh Agricultural University,

 Hue Agricultural University

 Can -Tho University

Others

 Vietnam Atomic Energy Commission (Mutation rice breeding)

 IAEA (mutation rice breeding)

 International cooperation on R & D of the rice crops is very active in training,scientific information exchange and particularly in germplasm for breeding as well assolutions F1 hybrid seed production in Viet-Nam

 International Rice Research Institute (IRRI)

 Provincial seed companies with trained technicians

 Hundreds senior scientists and thousands researchers with different research fieldssuch as bio-technology, plant breeding, farming systems, regional project, varietypattern, soil research, fertilizer, irrigation, plant protection, agriculture, engineeringand post harvest technology and protection of Vietnamese as well as foreignIntellectual Property especially in rice hybrid seed

 Total researchers working in rice crops are thousands people many of them are trained from developed countries (RUSIA, USA, UK, JAPAN, HOLAN, CHINA, INDIA )

 Crop seed Companies, Agri Science and Tech service Companies of Vietnam andfrom out side which are investing in Vietnam just after Viet-Nam became a member

of WTO

 Foreigner companies have invested for seed production in Vietnam, it needs toencourage in introduce new varieties and new materials into Vietnam for researchcollaboration

4.3 Funding

 Mainly from the Government and partly from international cooperation projects

 Budget for rice research and development are always much considered, many billionVND yearly This amount would be increased in the next years also

4.4 Major Achievements to Date

 Selecting and maintaining germplasm for local special varieties

 Breeding and selecting high quality rice varieties for exportation including:

o Breeding and selecting high quality new varieties

o Identification of high quality varieties for export including OM1490,OM2717, OM2718, OMCS2000, OM3536, VND95-20, IR64

o Organizing seed production (from pre-basic to certified seed to supplyseed to growers in rice growing areas for exporting (1 million ha inMekong Delta and 300,000 ha in the North)

 Breeding and selecting rice varieties for adverse soil conditions

 Hybrid rice research including:

o Creation and selection of parents of two and three lines of hybrid ricevarieties,

o Creating new domestic crosses

o Import the crosses with high yield and high quality from other countries

o Improving techniques in Research and implement of male sterility lines(multiplication male sterility lines and produce F1 hybrid seed in Viet-Nam)

o Agronomic research and definition of most suitable areas for commercialhybrid rice production

 Research on integrated intensive techniques to increase rice yield for different ecological zones

agro- Research on IPM, ICM and GAP in rice production to ensure security and safety offood

5 SWOT Analysis

 Large area for rice production (ranked the

6thin the world

 18 years of rice exporting experience

 Ability to multi-crop and grow year round

– particularly in the South.

 Area of rice with 3 crops/year grown from

30,000 ha in 1977 to 239,000ha in 1995

 4000 years of traditional rice growing

experience

 Diversified genetic resource with varieties

adapted to different agro-ecological

zones, tolerance to pests and diseases

 Large domestic markets for 80 million

people and well established in export

markets

 Strong support from government to

maintain high production levels and

improve quality

 Very large research resource both in terms

of expertise and research infrastructure

and a relatively high proportion of the

research budget

 Proven track record in rice research in

Vietnam and good international

recognition of research and development

skills

 By-products provide valuable resources

for the rapidly developing livestock

industries

 Competition for rice growing land – especially in the Red River and Mekong Delta from industry and urban development and throughout Vietnam from urban expansion

 Rice producers diversifying into more profitable crops and production systems

 Rice growing fields are small and scattered making it difficult to organize production for seed and export purposes

 Relatively poor land-use planning including development of appropriate infrastructure (irrigation, fields etc)

 Facilities for drying, storage, milling, and packaging lack cost effectiveness and require improvement

 Low profitability for farmers due to quality

of rice, poor market research, need to further develop trademarks/brands compared with other major exporting countries

 Low and variable export prices

 Scattered research facilities with uncoordinated and poorly focused research strategy and implementation plans

 With a large investment in research in the past many of the potential gains from research have already been achieved and further gains are likely to be more difficult.

 Profit form growing rice is comparatively low and rice farmers find it difficult to afford adoption of new technology

 Domestic markets are likely to increase

with population growth and quality

demands likely to increase as standards of

living rise

 Further significant improvement of

quality and diversity of rice production

and products will improve export returns

 WTO membership may reduce trade

barriers but will also increase requirement

for export standards

 Improvements in dryer capacity and

post-harvest and storage management

including quality standards likely to

improve export returns

 Development of intensive rice production,

with high yielding, high quality varieties

 The changing global weather due to climate change, environmental pollution, and salt penetration may impact on ability to maintain high level of total rice produced.

 Industrial development on traditional rice growing lands and pollution from rural based industries

 Demands for water resources and high quality water for human consumption may impose limits on expansion of rice growing areas and availability of water for rice production.

ARDO 2: Upland Crops

1.1 National Goal:

To improve yield and quality and reduce cost of production To contribute to meetinglivestock feed requirements and the development of processing technologies to diversifythe processed product base

1.2 Research scope:

Research into genetic improvement, development of agronomic techniques (GAP, ICMIPM), improving quality standards and food safety and further developing harvest andpost-harvest processing, storage and preservation and conservation techniques

1.3 Coverage: Maize, sweet potatoes, cassava and potatoes

2.1 Introduction

In Vietnam, maize, sweet potatoes, cassava and potatoes are the upland food cropswhich ranked as secondary after rice However, the role of these crops has beenchanged in recent years with a rather high rate of substitution from food crops(including upland crops) to industrial ones The upland food crops are considered asadditional cash crops for small households in many regions, particularly in mountainousareas (maize and cassava), sandy coastal areas (sweet potatoes) Recently specializedcommercial production of some crops such as the “corn belt” in Son La, Dak Lak andDong Nai provinces and cassava in the South East region, central plateau and Northernmountainous mid land areas has occurred In other regions, upland crops are mainly forhome consumption Areas for the upland food crops are mainly under unfavourablenatural and social conditions, difficult communications and limited storage facilities.With the exception in some large commercial upland crop areas, cultivars and othermaterials are supplied by agro–services Demand of the upland crop products hasincreased rapidly and is likely to continue in the future as animal feed demands rise, forincreased processing and for human consumption

2.2 Industry Characteristics and Prospects

Growing Areas and Yields

Maize

Acreage (1000 ha) 556.8 730.2 729.5 816.0 912.7 991.1 1,043.3 1,200.0 Yield (qtl/ha) 21.1 27.5 29.6 30.8 34.4 34.6 36.0 45.00 Production (1000

tons) 1,177.2 2,005.9 2,161.7 2,511.2 3,136.3 3,430.9 3,756.3 5,400.0

Sweet

potatoes

Acreage (1000 ha) 304.6 254.3 244.6 237.7 219.6 201.8 188.4 160.0 Yield(qtl/ha) 55.3 63.4 67.6 71.7 72.4 74.9 77.5 85.0 Production (1000

tons) 1,685.8 1,611.3 1,653.5 1,703.7 1,576.6 1,512.3 1,460.5 1,360.0

Cassava

Acreage (1000 ha) 277.4 237.6 292.3 337.0 371.9 388.6 423.8 380.0 Yield (qtl/ha) 79.7 83.6 120.0 131.7 14.7 149.8 156.8 200.0 Production (1000

tons) 2,211.5 1,986.3 3,509.2 4,438.0 5,308.9 5,820.7 6,646.0 7,600.0

Potatoes

Acreage (1000 ha) 27.74 28.0 33.3 34.97 33.89 33.96 35,00 50,0 Yield (qtl/ha) 89.3 115.7 119.4 120.4 106.9 107.5 105.7 140.0 Production (1000

tons) 247.7 324.1 397.7 421.0 362.37 365.0 370.0 700.0

Source: - FAOSTAT and General Statistics Office

Production

 Maize: Over the last 5 years the area has increased from 730,200 to 1,043,300 ha

(1.5 times), yield from 2.75 to 3.6 t/ha (1.3 times), and total Production from 2.0 to3.76 million MT (1.8 times) Hybrid corn now accounts for about 90% of the area.Vegetable corn (glutinous, sweet, baby corn for human consumption) occupies about10% of the maize area Vietnamese weather, climate and soil conditions areconsidered to be favourable for growing vegetable corn (glutinous, sweet, baby corn)for human consumption

 Sweet Potato: Over the last 10 years, acreage of sweet potatoes has fallen sharply

(304,600 ha to 188,508 ha in 2005) Yields have inreased significantly (5.53 t/ha to7.75 t/ha) Overall production has fallen slightly (1,685,800 to 1,460,500 MT)

 Cassava: In 2005, total of fresh root cassava production was 6,646,000 MT (three

times that of 2000) This is resulted from: expanded acreage (277,400 - 423,800 hawith an average annual growth of 11,7%); sharply increased yield (79.7 – 156.8 t/ha

- 14,7% growth rate per annum)

 Potato: Area has been static over recent years at about 35,000 hectares 60% of

potato acreage is in the Red river delta in an efficient crop rotation of Spring rice Summer rice - Winter potatoes In the South, only Da Lat and Lam Dong provinceshave grown annually 1,000 hectare of potatoes Yield is relatively low 11-12 t/ha

-Value and Markets

 Maize: Vietnam is a net importer of maize Net value of imports is US$10 30m/year About 75% of the total maize production is for animal feed The demand

-of feed for animal husbandry in 2010 is anticipated to be 11 – 12 million MT, whichequals to 5 – 5.5 million MT of maize grain with an approximate value approximate

of USD 700-800 million

 Sweet Potato: used for domestic market, mainly for feed animals in farmer

households Some products from sweet potato as chip, jam, and starch powder areprocessed by simple techniques In recent years, some vegetable sweet potatovarieties have been released into production to meet the demand of urban regions.Some sweet potato varieties origin from Japan planted in the Central Highland andCuu Long River Delta was exported and gained high benefit

 Cassava: About 70% cassava starch was exported Wholesale value of exports to

China is over USD 10 million annually Annual, Vietnam export cassava chip aboutUSD 14 million

 Potato: used as food for human as a fresh root and for chip production Vietnam

imports 60% of its total processing potato from China

Comparative Advantage

 Maize: China is planning to import 10 million MT of maize by the year 2010 and 40

million MT by 2020 With the high price of fuel for transportation the import price

of maize is about the same as the cost of domestic production

 Sweet Potato: Some countries such as China and Japan have bred varieties that have

yields of 45-60 tons/ha with a high dry matter content (over 30% of fresh weight),polished root skin and nice shape This is 6-7 times the yields obtained in Vietnam

 Cassava: In recent years, cassava’s yield has increased from 8.36 T/ha in 2000 to

15.68 T/ha in 2005 This is higher than the average yield of the world (10.7 T/ha),ranking the 4th in Asia after India (26.2 T/ha), Thailand (17.55 T/ha) and China(16.2 T/ha) Vietnam has some comparative advantage in this crop

 Potato: Potato yield in Vietnam is around 11-12 T/ha, which equals to 60% of the

world average of 16-17 T/ha

Government Policies: Cereal development is an orientation given priority by theGovernment It is not only for hunger alleviation, poverty alleviation, but also forhuman food security for the remote regions

 Maize: Maize development is not only to meet the demand of feed for animals but

also to meet the demand of market of vegetable corn and in crop rotations to improveproduction and returns per hectare in plain regions

 Sweet Potato: Sweet Potato can take advantage of the ecological conditions of some

regions It is used for feed for animals and to diversify food for human consumption Emphasis is on varieties with high yield and best quality root and varieties withhigh yield and best quality leaves

 Cassava: Cassava development based in comparative advantage of ecologicalconditions and market, but environmental protection is also an issue for this crop

 Potato: Government encourages developing potato as domestic and international

markets are large Potato production in the North in winter and winter-spring cropshas given high benefits to farmers

3 Industry Analysis

3.1 Structure

Households and Size of Holdings

 Maize: In Northern-east, Southern-east regions, maize area of a farmer household is

rather large, may be several hectare for each household In other regions, especial inthe river delta regions, maize area of a household is very moderate, of some hundredsand thousands m² On some river banks maize planting area of a farmer household islarger but usually less than a hectare for each household In river delta regions,especial in the near urban of the Red River Delta region, maize planting area isreduced, field corn is replaced by vegetable corn – for human consumption Withadequate irrigation, some maize areas may convert to planting another crop that giveshigher benefits However in some rice growing areas without irrigation riceproduction is being replaced by planting maize Farmers are encouraged to plantfallow land after the autumn rice crop in Northern mountain region with maize

 Sweet Potato: Sweet potato areas per household are small Without better varieties

the area will be reduced In recent years, in Central Highland and Cuu Long RiverDelta, Japan sweet potato varieties are planted and provide high benefits Withstable markets, these varieties area will be increased Sweet potato varieties withgood leaf production has a high benefit but its scale is small, only several hundredmetric square per household

 Cassava: Nowadays, cassava is not considered as a food crop but it is still the main

income source for small households at many localities, especially in the mountainousareas of Vietnam Cassava is mainly used for processing starch for exportation withsome used for animal feeds Cassava area for each household in Central Highlandand Central Coastal regions are rather large, from several thousands metric square up

to several hectares It is also used in some areas for animal feed

 Potato: Contributes to shifting cropping systems for the Northern provinces,especially for the Red river delta and Northern midland regions

3.2 Supporting Infrastructure

 Maize: Small scale processing is established with products such as starch, alcohol,

oil, milk, and cakes now available in the Vietnamese market In the near future, it isanticipate that the demand for these kinds of products will grow significantly.According to MARD, there are now 249 animal feed processing mills with totalcapacity of 8 million ton per year 23 large joint venture companies process just over70% of all animal feedstuffs Small feed processing companies find it difficult tocompete with these large companies By 2010, the total capacity will be increased

up to 11-12 million tons In 2005, it produced 5.5 million tons of feed for animals.Most of animal feed processing factories are located far from maize growing zones

 Sweet Potato: used mainly as fresh consumption There are some sweet potato

processing mills but their scale is small

 Cassava: Ten years ago there were no medium or large scale cassava starchfactories in Vietnam There are now 44 cassava starch factories operational and 9more under construction Total capacity of 2.4-3.8 million MT of root per year.Total annual cassava starch processed in Vietnam is 0.8-1.2 million MT, of which

70% was exported and 30% for domestic consumption There is likely to be someover capacity deeveloped as new factories come on line Intensive cassavaproduction for processing needs to be on hills with a slope of <150, at soil depth >30

cm, and at a distance <100 km from processing factories

 Potato: used as fresh consumption Its processing is simple.

 3.3 Markets

 Maize: There is no export market apart from re-exports About 75% of maizeproduced is for livestock feed With increasing livestock numbers, the demand formaize is likely to significantly exceed the capacity of Vietnam to supply Demandfor sweet, glutinous and baby corn is increasing rapidly Presently, over 10% of themaize acreage is planted with this kind of maize The major market is for animal feedand large amounts are delivered to feed processing factories by private traders withunreliable marketing contracts Sometimes maize grain in Son La province, Centralhighland and South East regions is exported to China and some other countries

 Sweet Potato: used mainly as fresh consumption and feed for animals in farmer

household In recent years, products of Japan sweet potato varieties are sold indomestic and overseas with high price

 Cassava: Vietnam is the second largest exporter of cacssava products after Thailand.

5.9 m MT of cassava products including cassaca slices, tablets and starch wereproduced in 2003 Thailand and Vietnam are the two leading exporters with a totalannual production of 5.6 and 0.2 million MT, respectively Major markets ofVietnam cassava are China, Taiwan, Japan, Singapore, Malaysia, South Korea andsome other countries in Easten Europe

 Potato: Up to now, potato is used in domestic market as fresh root and chip

processing Vietnam imports large volumes of potato from China for processing.The market for potato in the Asian region is still large and growing and withincreased production Vietnam could export potato to regional countries as Japan,Korea, Malaysia, Australia, and Singapore

3.4 Future Trends and Key Market Issues

 Maize: Prior to 1996 Vietnam exported maize (250,000 MT in 1996) Since 1997,

Vietnam has become a maize importer (50,000 MT in 2001 to over 300,000 MT in2002) Value of imports was US$ 51.6 million (2003), US$ 17 million (2004).Small amounts of maize have been re-exported but Vietnam has continued to be a net

importer of maize (Vietnam General Customs Department, 2005) Maize is now

mainly used for animal feeds with a continuously increasing demand Target for

2010 is to expand area to 1.2 million hectares with aerage yield of 4.5-5.0 tons per haand a total production of 5.5 – 6.0 million MT Also to expand the area of vegetablemaize (mainly hybrids), that has high quality and yield

 Sweet Potato: Recently, acquired renewed attention due to its mutli-end uses such as

fresh vegetables and production of pharmaceuticals Target for 2020 is an area of160,000 hectares and to increase average yield to about 8.5 tons per ha

 Cassava: Intensive monoculture production systems has caused some problems,

including expansion into areas of other crops such as sugar cane, tea, fruit crops anddeforestation, reduction of yield and soil degradation on the hills and environmentalpolution from cacssava processing factories It is illegal to expand cassava intoforest areas Target for 2010 is to maintain area of 380,000 hectares with anincreased yield of 20 tons per ha and a total production of about 7,600,000 MT.

 Potato: It is estimated that 200,000 ha are suitable for production To date this has

not been achieved due to a low number of cultivars with high yields, quality andtolerance to pests and disease, imported commercial potatoes from China being usedfor seed potatoes in Vietnam; the application of traditionally cultural techniques andpoor post harvest and processing technologies The 2010 National goal is to increasearea to 50,000 hectares and total yield to 700,000 MT (14t/ha)

4 R&D Information

4.1 Main Research Areas

 Genetic improvement in yield and quality including development of hybrid varietiesand selection for early maturity

 Introduction and evaluation of new varieties

 Development of production packages incorporating agronomic practices, pest anddisease management and commercial production systems

 Limited work on processing including development of novelty foods (chips, candiesetc)

4.2 Major Research Providers

Ministry of Agriculture and Rural Development

 National Maize Research Institute (NMRI) which is located in Dan Phuong district,

Ha Tay province

 Institute of Agricultural Science for Southern Vietnam (IAS) (maize, cassava, potato)

 Agricultural Genetics Institute, (maize)

 National Centre of Variety Evaluation and Seed Certification (NCVESC), (maize)

 Cuu Long Rice Research Institute, (maize)

 Food Crop Research Institute (sweet potato, potato)

 Research Centre for Root Crops of Vietnam Agricultural Science Institute (VASI)(now Vietnam Academy of Agricultural Sciences – VAAS) (Sweet potato, cassava,potato)

Universities

 Hanoi Agricultural University,

 Thai Nguyen Agro-Forestry University,

 Ho Chi Minh Agricultural University,

 Hue Agricultural University

 International Maize and Wheat Improvement Centre (CIMMYT), and FAO etc

 CIP, CIAT (sweet potato, cassava)

4.3 Funding

 Mainly from the Government and partly from international cooperation projects

 1996-2000: MARD’s fund for upland crop project held by NMRI was VND 1,032million, (approximately USD 70,000) Annual fund was about USD 14,000

 2001-2005: MARD’s fund for maize crop project held by NMRI was VND 13 billion(approximately USD 830,000) Other sources of fund for maize from internationalcooperation projects was USD 37,800

 Funding for root crops was smaller

4.4 Major Achievements to Date

 Maize: During period 2000-2005 the main achievements have been:

Field corn: Area from 730,200 to 1,043,300 ha (1.5 times) Yield from 2.75 to 3.6

t/ha (1.3 times) Total Production from 2.0 to 3.76 million MT (1.8 times).Proportion of maize grain in total food production from 5.7% to 9%

Percentage of hybrid maize acreage increased from 0% in 1990 to about 60% in 2000and approximately 90% in 2005 Vietnamese developed hybrids occupy about more60% of the total maize area as they appear to be more adapted to Vietnameseconditions In spite of this Vietnam is not self-sufficient

For vegetable corn: Imported hybrid varieties are supplemented by domestically

released hybrid varieties since 2000 now some promising waxy corn hybrids havebeen demonstrated

NMRI, IAS and NCVESC have released dozens of maize varieties (TSB1, TSB2,MSB49, Q2, and HL31) and maize hybrids (LVN10, LVN4, LVN9, LVN99 etc).Maize breeding has applied bio-technology in areas such as anther culture, ovuleculture, genetic diversity analysis, and the use of molecular markers

 Sweet Potato: Several newly released sweet potatoes varieties such as K51 and KL5

can yield 20-25 tons per ha with high quality Imported varieties VD1 and VT1 canhave high vegetable yield with high quality Some new cultivars such as K51, KL5,and DT2 have been evaluated for yield and quality

 Cassava: Collaboration with CIAT in release and evaluation of and importingvarieties inlcuding promissing cassava cultivars such as KM60, KM94, KM95,KM95-3, SM937-26, KM98-1, KM98-5, KM98-7, KM140 and HL124 Application

of intensive farming packages such as intercropping, rotation, application of farmyard compost or microbilogical fertilizers, cultivation on the hill soil, and utilization

of mechanization in soil preparation and crop harvest

In 2004-2005, about 270,000 hectares of Vietnam cassava were planted with newvarieties, equals to 60% of the total national acreage Construction of cassava starch

processing factories has enhanced the increased yield and total production ofcassava in many provinces.

 Potato: Four new varieties (KT2, KT3, VC38-6, and P-3) and two hybrid varieties

(Hong Ha 2 and Hong Ha 7) released with P0-3 provisonally released Atlanticpotato varieties promissing for the prosessing industry are under large scaleproduction testing Technologies of potato conservation in cold storage, high healthseed potatoes are certified and advanced packages for production developed.Research results show that within 90 days, one hectare of potatoes can yield harvest15-30 MT

5 SWOT Analysis

Strengths Weaknesses

 Diversified climate and soil conditions

suitable for development of upland crops

 Demand for water is less than for crops

such as rice, but there is a need to ensure

available moisture at critical times (e.g.

tuber development for root crops)

 Use of crops (e.g maize) in cropping

rotations assists in the management of pests

and diseases

 Farmers very familiar with traditional

cropping systems over a range of cropping

seasons

 Some processing facilities established

 Good relevant research experience, but

relatively low level of investment in

 Most upland crops lack competitive advantage with imports

 Many crops require good cultivation and agronomic practices to achieve high yields and quality

 Although grown for a long time the understanding of correct agronomic practice is relatively low

 Vietnam is not self-sufficient in most upland crops

 Competition from other crops such as fruit and vegetables for available land

 Not many crop cultivars with high yield, high quality and resistant to stress conditions are available

 Relatively high costs of production and high risk to variable weather and poor soil conditions and drainage

 Potential for overcapacity in cassava processing industry

 Poorly developed domestic and export markets and contracts for production and marketing

 Lack of diversity in processed product range

 Significant improvements of yield and

quality are obtainable

 Post-harvest handling, storage and

processing to add value

 Development of a diverse range of

processed products for local markets

 Development of self-sufficiency and

import substitution

 Role in improvement of conservation

techniques for animal feeds (maize and

 Entry into WTO may ease restrictions on imports making imports more competitive and possibly lead to further reductions in areas

 Environmental impacts of increasing planting areas may have flow on effects for local communities

 Use of improved research strategies

including bio-technology should improve

yields, quality, resistance to pests and

diseases, improve competitiveness and

reduce costs of production

 Extension of production season through

development of early and late maturing

varieties

 Development of larger scale commercial

production packages.

 Development of varieties to fit end use

needs including higher starch yields, and/or

different food quality attributes and

processing end uses

 Development of high health propagation

and seed certification techniques

ARDO 3: LEGUMES

1.1 National goal: Cultivated area expansion, crop yield and quality improvement,

production cost reduction, and satisfaction of domestic consumption and export-relateddemands and requirements

1.2 Research Scope:

Research into the introduction, adaptation and genetic improvement, integrated cropmanagement (ICM), product preservation and processing, and market development offood legumes

Over the past years, along with rice, paddy and other farm produce exports, groundnutand mungbean have contributed significantly to increased Vietnam’s agriculturalproduce export revenue as well as to the country’s GDP (Gross Domestic Product)growth Besides, the production of legume crops and other plants has generated a largenumber of jobs and contributed greatly to the processing industry’s development andagricultural modernization in Vietnam

2.2 Industry characteristics, current situation and prospects

 Legume crops in Vietnam are divided into two major groups:

1) Grain legumes (groundnut, soybean, mungbean etc.) and

2) Vegetable legumes (cowpea, long bean etc.)

 Among them, groundnut, soybean and mungbean are grown on a large area of tens

of thousands to hundreds of thousands ha

 Groundnut is mainly produced for export, soybean is developed for domesticconsumption (food for human and feed for animal), and mungbean is produced forboth domestic consumption and export purposes

 Mungbean-growing areas are scattered, and farmers mostly plant this crop on soilthat was used to grow rice seedlings, rice, or intercrop it with other plants

 Production of groundnut, soybean and mungbean has had specific advantages and

disadvantages However, the common points for three crops is the cultivationarea, yield and production in general tend to increase (shown in table 1).

Table 1: Cultivated area, yield and production of Groundnut and soybean 2005)

Table 2: Cultivated area, production of Groundnut at ecological regions (2004)

Highest groundnut yield is at Nam Dinh province (3.7 ton/ha), while in Nghe and ThanhHoa provinces it is only 2.0 to 2.1 tons/ha

Table 3: Main Soybean Growing Areas (2002)

Region Area (1000 ha) Yield (kg/ha) Production(1000 ton)

2.3 Importance of Legumes and Government policies and regulations

Groundnut has become an important raw material for the oil production industry, and

soybean and mungbean are widely used in the foodstuff industry Vietnam importshundreds of thousands tons of soybean to process feed for livestock Apart fromhelping improve soil quality, these crops have been contributing to agriculturalsustainable development and employment generation in Vietnam.

Exports: In 1995 115,100 tons of Groundnut was exported with approximate value of

USD 74.7 million 20,000 tons of Mungbean are exported annually

Table 3 Production and export profit of groundnut (1995 – 2004)

 Groundnut, soybean and mungbean are important components of the daily diet

 Per capita consumption of tofu is estimated to be 12 kg Total consumption of tofu

is 984,000 tons

 National dietary requirement of soybean is 300,000 tons of grain Totalproduction is 291,500 tons, of which 190,000 tons is used for feed animal Thisleaves a deficit of approximately 200,000 tons for human consumption

 If per capita consumption of groundnut is 10kg/year, the national requirement is820,000 tons Total production is about 300 thousands tons per year At least 100thousand tons is used for animal feeds

 However livestock feed processing costs are 10 -20% higher than the average for the Asian Region For example, the cost of maize is 2,700 VND/kg, sativa is 2,350VND/kg; soybean dry oil is 6,390 VND/kg (in 2004); 4,500 VND/kg (in 2005).

 1 hectare of mungbean with a yield of 1.5 tons provides incomes worth VND15 millions and a profit of VND 10 million

Government Policy

 In the next five years, the State will continue to consider legume crops (mainlygroundnut, soybean and mungbean) as important crops, with groundnut andmungbean being earmarked for export and soybean for domestic consumption

 The State plans to increase the legumes growing area to one million ha by 2010,including 450,000ha of groundnut, 400,000ha of soybean and 150,000ha ofmungbean There will be areas that are specialized for growing a certain legumecrop and areas on which legume crops are intercropped with other plants, whilethe cultivated area of groundnut and soybean will be expanded

3 Industry analysis

3.1 Structure

Groundnut: focus is Northern Central and South-eastern regions roughly equally areas.Soybean: focus is Red river Delta region; Northeastern region and Central Highlands.Northern regions have 140,700 ha, and South region is 56,400 ha

 China is biggest market for Vietnam Annual imports are 10 million tons.

 Japan is biggest market for Vietnamese mungbean

3.3 Processing

 Processing facilities are still limited with relatively low efficiencies.

 There are 106 centrally-controlled and local feed processing factories with a combined capacity of 2.8 million tons per year, and 9 oil pressing factories that have a total designed capacity of 386,000 tons per year that process groundnuts and soybeans.

4.1 Major Research Areas

 Introduction and testing new varieties and genetic improvement to increase yieldand oil content

 Improved seed production technologies

 Integrated Crop Management (ICM) to improve yield, quality and management ofpests and diseases

 Product preservation and processing, and market approach

 Application of advanced, high quality seeds and new cultivation techniques,including include covering plants with nylon, growing soybean on wet soil, andcultivation and harvest mechanization to reduce average production costs

4.2 Major Research Providers

Ministry of Agriculture and Rural Development

 Agricultural Genetics Institute

 Cuu Long Delta Rice Research Institute

 Food Crops Research Institute

 Institute of Agricultural Science of South Vietnam

 National Center for Variety Evaluation and Seed Certification

 National Institute for Plant Protection

 National Maize Research Institute

 Institute of Biotechnology

Ministry of Industry and Commerce

 Oil plant Research Institute

Agriculture Universities

 Hanoi Agricultural University

 Thai Nguyen Agro-forestry College

 Hue Agro-forestry University

 Thu Duc Agro-forestry University - HCM City

 Can Tho University

There are over 100 legumes researchers, who hold university or higher degrees in 14 Research Institutes and Universities or Organizations nationwide:

4.3 Ministerial and State programs and projects.

Research funds are derived from the State Budget, enterprises, production factories and assistance sources through international programs and projects.

4.4 Major Achievements to Date

From 2001 to 2005:

 Seven new groundnut varieties, 10 new soybean varieties and 3 mungbeanvarieties were released More than 80% new varieties release to the farmers

 Advanced technology for groundnut, applied to all areas in country

 Have been successful demonstrated trials for groundnut, soybean andmungbean at 20 provinces Groundnut yield: 4-5 tons/ha; Soybean: 2.5-3.0tons/ha; mungbean: 2.0-2.5 tons/ha

 Area, yield and production of groundnut, soybean and mungbean have beenincreasing

 Over 20 years a collection of fairly high-yield varieties (groundnuts, four tonesper hectare; soybeans, three tons per hectare; and mungbean, 1.5 tons perhectare) using advanced technologies

 Large growing areas (60,000ha of groundnuts in three provinces of Thanh

Hoa, Nghe An and Ha Tinh, 30,000ha of soybeans in Ha Tay; and tens ofthousands of hectares of mungbean in Ha Tinh province.)

 Several provinces have achieved high productivity (6,000ha of groundnut inNam Dinh province yielding an average of 3.7 tons per hectare

 Soybeans planted on over 300ha of the Dan Phuong Cooperative in Ha Tayprovince yield an average of almost three tons per hectare, and the productioncost has reduced to less than VND2,000 per kilogram

 Some progress in process – 20% of groundnuts pressed for oil – residues usedfor production of animal feed 30% of soybean production been pressed for oil,with soybean residues used for production of animal feed, soymilk, soy curds,and fermented soy sauce

5 SWOT analysis

 Diversity of land, topography and climate,

suited for legumes as a main crop or rotated

with spring, summer and autumn-winter

crops

 Large areas of ecological areas, which are

suited to the growth: for groundnuts in the

northern central region, Tay Nguyen (the

Central Highlands) and the south-eastern

region.

 Large areas of land for soybeans in the

northern mountain areas, Red River Delta,

the Cuu Long (Mekong) Delta, and the

Central Highlands.

 Availability of relatively high-yielding

varieties (groundnut, six tones per hectare;

soybeans, four tones per hectare; mungbean,

two tones per hectare; varieties that are

resistant to pests, droughts and floods).

 Used in crop rotations gives improved soil

nitrogen and assists in improving soil

organic matter.

 Experience in advanced farming techniques

such as covering groundnut growing areas

with mulching nylon, and integrated

management of crops.

 Progress in preservation and processing of

seeds using drying machines.

 Most products sold as raw materials.

 Development of advanced and complete processing facilities is relatively poor resulting

in low prices.

 Low price for unofficial exports (US$625-650 per tonne - world average price of US$900 per tonne).

 Limited capital investments in all legume crops.

 Poor infrastructure development for crop purchase, storage and processing.

 Comparatively high production costs (soybeans VND 1,500 per kilogram in the US, VND 2,065 per kilogram in the Cuu Long (Mekong) Delta and VND 2,870 per kilogram in the Red Delta.

 Relatively poor production practices including low level of mechanisation.

 Lack of availability of soybean varieties with high yields (7-8t/ha), for animal feed Limits competitiveness of Vietnamese soybeans.

 Little specialized production systems as most legume crops are grown in rotations with rice and corn.

 Small scale uncoordinated production systems

 Relatively poor linkages between scientists, extension, enterprises and farmers,

 Market and technology information is not updated among farmers and traders.

 Large export market for groundnuts in

particular

 High domestic demand for soybeans to

produce 2.8-3 million tones of animal feed per

 Expansion of the cultivated area may lead to epidemics such as soybean rust.

 Expansion into marginal lands will cause a decline in the average productivity.

year (of which soybeans and soybean residues

account for 15-20 percent),

 Animal feed processing industry needs

600,000-650,000 tones of soybeans annually,

(production 270,000 tones per year).

 Improved quality to meet first-grade

commercial standards (150-160 seed/100g)

will lift current price (200-220 seed/100g)

fromUS$625/t to US$900-1,000/t

 Increase in area and yields of high quality

legumes to meet human food needs

 Development of high yielding varieties for

.

ARDO 4: INDUSTRIAL CROPS

of pests and diseases, technologies for improved post harvest practices by producers andprocessors, processing and food sanitation and safety (HAACP) and development ofmarket research

1.3 Coverage

High value group: Coffee, rubber, cashew, black pepper, sugarcane and tea;

Low value group: Cotton, coconut and cacao (newly developed)

2 Industry Statistics

2.1 Introduction

Industrial crops contribute significantly to GDP They provide approximately 20% ofthe agriculture contribution to GDP and because of investment in processing industriesindustrial crops create a large number of downstream employment opportunities.Vietnam is competitive in many industrial crops produced but quality and price is alimiting factor Most industrial crops are exported, either as raw materials or semi-processed materials The level of value adding is low compared with other countries.The profitability of most industrial crops is relatively high compared with most staplecrops Significant increases in production are planned but the benefits of that andimprovement of quality and safety at the farmer level is not likely to be achievedwithout significant investment in equipment and practices in the processing industry

2.2 Industry Characteristics and Prospects

Source: Vietnam Statistics Department, 2005)

 Some industrial crops such as tea and sugarcane are grown nation-wide Most ofimportant industrial crops (rubber, coffee, cashew, black pepper, cotton and coconut)are grown mainly in the South of Vietnam Several industrial crops can be grownonly in suitable soils such as coffee, tea, black pepper, cotton and coconut whileothers can be grown in many soil types with different chemical and physicalcharacteristics

 Rubber: The main growing areas (2020 projections) are; Central Highland Region

(330,000ha), South Eastern Region, (300,000ha) and the Central Coastal Region(70,000ha)

 Coffee: Growing areas about 500,000ha of hectares Concentrated in the Central

Highland Region, parts of the South Eastern Region and a small area in the CentralProvinces Major variety is Robusta Small volumes of Arabica but in higherelevations (e.g Lam Dong Province) The fluctuating and low price for Robusta,coffee planted in unsuitable environments and competition from other crops hasrecently led to a reduction in coffee area

 Black pepper: Growing area 55,000ha (100 times that of 1975) Grown in many

regions of the South such as the South Eastern Region (Binh Phuoc is the biggestgrowing area province), the Central Highland Region, several provinces in theCentral and Phu Quoc island

 Cashew: Area of 350,000ha grown in hot and humid tropical areas (from Hai Van

mountain pass towards the south) Binh Phuoc (165,000 ha) and Dong Nai (70,000ha) are the two biggest cashew growing provinces In the past grown widely in manyprovinces of the Central and the South Eastern Region as it is tolerant of a widerange of soil types and drought and useful for afforestation of bare hills anddeforested areas

 Tea: Area 122,000ha Yield 1.2t dry tea leaves/ha A traditional industrial crop of

Vietnam that has an important socio-economic role in the midland and mountainousareas

 Sugarcane: 300,000ha (50% new cultivars) grown widely from the North to the

South Major growing areas are Northern Central Region, Southern Central CoastalRegion, South Eastern Region and Mekong Delta

 Cotton: 25 – 35,000ha Major growing areas in the South Eastern, Central Highland

and Northern Mountainous Regions

 Coconut: Is considered a minor industrial crop Area has declined to 132,000ha in

2005 The major growing areas are in several provinces of the South, mainly inMekong Delta (Ben Tre, Bac Lieu, Tra Vinh, Can Tho, Soc Trang and some otherprovinces)

 Cocoa: Small area less than 4,000ha Most grown in the Ben Tre Province

Production:

 Rubber: Approximately 500,000t, (5% of world production) 90% is exported 10%

for domestic consumption

 Coffee: Annual production is 600-800,000t (10% of World production) Vietnam is

one of the biggest coffee exporters

 Black pepper: Annual production is 100-120,000t (40% of world production)Vietnam is the biggest exporter (2005: 96,000t) Yield 2.5t/ha

 Cashew: Annual production is 300 – 350,000t Yield 1-1.2t/ha Vietnam is the

second largest cashew nut export country after India

 Tea: Annual production 140,000t (4% of world production) Yield is about 85% of

the world average and quality is low Price is only equal to 65% of the worldaverage price Vietnam is ranked the 5th in the growing area and 9th in the totalproduction In South East Asia, Vietnam is the second largest tea production afterIndonesia

 Sugarcane: Annual yield 15-16m ton Low average yield of 50 - 54 tons/ha (target

65t/ha) 2005 National sugar production was 1.2m ton (0.8% of the world sugarproduction)

 Cotton: Provides material for Vietnam Textile and Garment Corporation Annual

fibre production is 10 – 12,000t Yield 1-1.6T cotton seed/ha Domestic demand is

150 – 180,000t Vietnam imported US$190m of cotton in 2004 The plan is toincrease cotton areas to 100,000 ha but this may not be achieved

 Coconut was grown in Vietnam for a long time ago The total growing areas are

estimated about 150 thousands of hectares The coconut production volume is about

1 billion of nuts per year (250 thousands of tons of copra)

 Cocoa: Little reliable estimate of yield Annual production is 30 – 40,000t green

pod

Value and Markets:

 Contribution to GDP: Value of industrial crops in 2005 was approximately 20% oftotal value of agriculture

 Export values of industrial crops in 2005 was approximately US$2.3 billion:

USD850 million (rubber) and USD750 million (coffee); US$500 million(cashew); US$140 (Black Pepper); US$100 million (tea)

In 2004 export volumes were; Pepper 112,000t, coffee 975,000t, rubber513,000t and cashews 105,000t

 Cotton coconut and Sugarcane is mainly consumed by the domestic market

 Cotton imports included yarn 35,000t (US$45.5m) and 100.120,000t fabric(US$200m)

Comparative Advantage

 As a member of AFTA the level of taxes and protection is falling for all export crops

It is zero for pepper and cashew and is expected to fall to 5% for sugar cane

 Most of the main industrial crops compete well in international markets although therelatively low quality of tea and coffee reduce competitive ability

 Pepper and Cashew industry had a competitive advantage (domestic resources costs:DRC 0.472 and 0.379 respectively)

 Cotton production in Vietnam has not real competitive advantage apart from importsubstitution

 The comparative advantage of sugar cane is low as production cost is too high (337USD/ton in Vietnam while 205 USD/ton in Thailand) The material cane cost is alsohigh (Vietnam, 200 USD/ton; India, 139 USD/ton and Thailand, 131 USD/ton)

 Cashew: Rapid expansion of growing areas (100,000ha of grafted high yielding

cashew nuts since 2001) will continue as Vietnam imports 20-40,000t of raw nutsfrom Africa and Cambodia to keep processing plants fully operational

 Sugarcane: 2010 Plan is 1.5m of ton Total imports (legal and illegal) estimated to

be 200-300,000t annually

 Coconut: There is no long-term, stable and comprehensive development program of

coconut so far as other industrial crops

 Cocoa: Plan to increase areas to 15 – 20,000ha by 2010 Plans for processing

factories when area of cocoa reaches 10,000ha

3 Industry Analysis

3.1 Structure

Households and Size of Holdings

 Rubber: 27 rubber companies (10-20,000ha per company. 67,550 smallholderswith 1.3 to 2.8 hectares per smallholder, located in the South Eastern, the Central

Highland and the Central Coastal Regions

 Coffee: Mainly grown by farmer households, average size of 1.3 hectares perhousehold

 Black pepper: Approximately 100,000 households involved Average area of 0.5ha

 Cashew: Approximately 300,000 households National average holding estimated at

1ha In Binh Phuoc and Dong Nai provinces is 2.1ha

 Tea: Approximately 250,000 households, average area 0.5ha

 Sugarcane: 320,000 households, average area 1ha.

 Cotton: Approximately 50,000 households growing cotton Average area 1000m²

500- Coconut: Approximately 100,000 households, average area 0.4ha.

3.2 Supporting Infrastructure

 Rubber: Rubber processing factories are distributed in rubber growing areas The

most important issue is to determine the rubber processing products having properquality for the international market demands

 Coffee: Coffee processing factories are evenly distributed in the growing areas(including domestic and foreign invested processing factories)

 Black pepper: There are about 90 black pepper processing and export companies of

which 78 companies can export directly 26 of these export more thanUS$100,000/year 80% of the companies are located in Ho Chi Minh City and theSouth Eastern Region Harvesting, drying, processing and storage of black pepperare carried out by farmer households Product is mixed with impurities reducing thequality and price of the products is 20% lower than the world average price

 Cashew: 130 processing/export companies The 20 biggest processing companies

have annual export value of more than US$10m These companies meet theinternational standard of management and food sanity and safe based on ISO9001:2000, GMP and HACCP

 Tea: The annual tea export value is 100 millions of US dollars involving 235companies directly exporting tea products to 68 countries of all over the world

 Sugarcane: There are 38 sugar factories with total full design capacity of 76thousand tons of cane per day, annually producing 1.1 to 1.2 million tons of sugar.Most sugar mills produce 2 main products such as white and refined sugar (60% and40% respectively) Post-sugar products include alcohol, bio-fertilizers, and plywood,etc

 Cotton: 12 big textile companies belonging to Vietnam Textile and GarmentCorporation.

 Coconut: Processing factories mostly located in Ben Tre At least 20 factories in

Ben Tre town producing desiccated coconut 400 smaller workshops in rural areasprocessing to produce fibre, meat, shell, water, wood, midrib VOCARIMEX, astate-owned vegetable oil company produces about 400,000 tons of vegetable oilsper year But 80-85% of materials are imported from Malaysia, Singapore (mainlypalm oil) The rest of materials (15-20%) are collected from the domestic sources inwhich coconut oil makes up 60%.Several other joint venture companies of Vietnamand foreign countries in vegetable oil production such as GOLDEN HOPE, NHA

BE, CAI LAN, BINH AN hold the market share in Vietnam

3.3 Markets

Main markets include:

Industrial

Crop

Rubber China, Korea, Taiwan, Germany,

United States and Russia

Price is lower than Thailand and Malaysia because of poor processing.

Cheaper labour and production costs Potential to expand markets to EU.

Coffee Main markets: Germany, United

State, Spanish and Italy.

Other minor markets include

England, Japan, Korea,

Switzerland, France and

Netherlands.

The price of Vietnam exported coffee is lower than that of other surrounding countries (India and Indonesia) due to underdeveloped processing technologies

Black

Pepper

Traditional markets are Europe

(Netherlands, Switzerland,

Germany, France, Russia and

Poland) occupying 43%; United

States, 20%; Middle East and Asia,

Cashew Untied States, Canada,

Netherlands, England, Russia,

China, New Zealand and Australia.

Cashew kernels are the main export products Since 1998 imports of raw nut materials (20- 40,000t/year) has supported utilization of processing facilities.

Tea Middle East, Russia, the Eastern

Europe, Japan, Taiwan and the

United States.

The major tea export product is black tea A small amount of green tea and yellow tea are also exported.

Low tea quality and export prices are the biggest constraints

India, Kenya and Indonesia are the main tea export competitors of Vietnam.

Comparatively high production costs

3.4 Future trends and key market issues

 Rubber: The world demand of natural rubber is increasing High oil price is one of

main reasons leading to increment of natural rubber price Improving quality ofprocessed rubber to satisfy market demands in order to increase rubber export value

 Coffee: Coffee price is static or declining Stabilizing coffee growing areas Apply

intensive cultivation techniques to increase coffee yield and quality Improvingprocessing technology to increase the export value Increase the proportion ofArabica proportion over Robusta

 Black pepper: Maintain existing growing areas to avoid oversupply Intensivecultivation techniques to increase black pepper yield and quality Apply advancedprocessing technology to improve the quality of export products, especially whitepepper

 Cashew: Increase productivity to maintain throughput of processing factories.Develop domestic market and expanding new markets (the Middle East and EasternEurope) Establish and develop trade/brand names Apply international standards offood safety and quality management based on ISO, GMP and HACCP Diversifyingprocessing products from cashew kernels and improving nut processing technology

 Tea: Improve quality and processing technology to increase the export value of tea;

Expand markets in Japan, Taiwan, the United States and ASEAN

 Sugarcane: Apply intensive cultivation techniques to increase cane yield and quality

on existing growing areas Reduce cost of production Invest in factory processingcapacity and new technology and equipment to improve the quality and costeffectiveness processing Establish alcohol factories using advanced technology

4 R&D Information

4.1 Main Research Areas

 Breeding for high yield and good quality and adaptation for main ecological regions;

 Developing new propagating techniques including conventional and modernmethods;

 Researching and applying intensive cultivation techniques and integrate pestmanagement;

 Establishing and applying new technologies of post-harvest, processing anddiversifying processing products

 Establishing models of intensive cultivation and GAP

4.2 Major Research Providers

Ministry of Agriculture and Rural Development

 Rubber: Rubber Research Institute;

 Coffee and Cocoa: Western Highland Agriculture and Forestry Science Institute

(WASI);

 Black pepper and cashew: Institute of Agricultural Science of South Vietnam (IAS);

 Tea: Tea Research and Development Centre belonging to the Northern Mountainous

Agriculture and Forestry Science Institute (NOMAFSI);

 Sugarcane: Centre of Sugarcane Research and Development belonging to IAS;

 Hanoi Agriculture University

 University of Agriculture and Forestry HCMC

 Can Tho University

 Hue University of Agriculture and Forestry

 HCMC University of Technology

Others

Local organizations (Departments of Agriculture and Rural Development, Departments

of Science and Technology and Provincial Agricultural Extension) estimated number ofresearchers involved in industrial crops is about 600

There is no official organization of private sector involved in research

Major collaborators include FAO/UNDP, GTX, Nestle Group, CIRAD, Government ofFrance and Vietnam Pepper Association, Vietnam Cashew Association, etc

4.3 Funding

 Estimated research budget in 2005 is:

 Cashew Nuts VND 14b (US$875,000)

 Other Industrial Crops (Rubber, Coffee, Black Pepper, Tea, Sugar Cane,Cotton/Coconut) VND 4-6b (US$250,000) each

 Total Funding approximately VND50b (US$3.2m)

4.4 Major Achievements to Date

 Cashew: 10 new cultivars selected for high yield, nut size and nut recovery.Research in agronomy and growth regulators and foliar fertilisers Over 5 years(2000 – 2005), the national average yield doubled, production volume and exportvalue increased 4 times and export income rose to US$500m

 Coffee: New clones released, improved practices for farmer harvest, processing and

storage

 Black pepper: Selection of adapted cultivars, fertilizer requirements and fertigation

technologies, disease management (Phytophthora), agronomy and household harvest

and semi-processing and storage

 Tea: Released 3 state varieties

 Sugar Cane: Varietal selection, pest and disease management including bio-control,

models for intensive production systems

 Coconut: 10 improved and 3 hybrid varieties released Pest and disease

management (Brontispa)

5 SWOT analysis

 Soil and climatic conditions are favourable

for industrial crop development.

 Large areas of most industrial crops with

experienced producers

 Farmers quickly acquire new technologies

for higher yielding crops.

 Diversification into industrial crops has

significantly improved farmer income and

profitability

 Many research achievements successfully

transferred to production.

 Significant investment in industry

infrastructure for processing and export

markets.

 Large and growing exports of many

industrial crop products provides large

export income and contribution to GDP

 Industrial development creates very large

employment opportunities

 Some industrial crops with high

competitive advantage (pepper, cashew)

 Low labour costs also increase

competitiveness

 Some supply chains well developed

 Many agricultural products are in the top

rank of the world export and production

(coffee, rubber, cashew, black pepper).

 Processing technology and equipment needs upgrading

 Little value adding or diversification of products for most industrial crops

 Apart from some crops (e.g cashew) insufficient attention to good agricultural practices, food safety and certification and development of quality standards

 Lack of long-term projection for industrial crops.

 Small and scattered production areas and little larger scale commercial production

 Expansion of areas for increased production has led to production in unsuitable environments and an oversupply

of low yielding, low quality product

 Low quality of raw materials and export products reducing export prices.

 Lack of competitiveness in production of some crops (cotton, sugar cane)

 Relatively low quality semi-processing by producer households

 No trade/brand names of agricultural products in the international markets.

 Weak linkage among managers, companies and farmers and between institutions of MARD and MoI.

 Weak marketing in new markets.

 Weak systems of technology transferring to farmers.

 Improved quality, GAP and food safety to

capitalize on market expansion after joining

AFTA and WTO.

 Diversification of product base to expand

the domestic and export market demand for

industrial crops.

 Soil and environmental classification to

identify most suitable areas for expansion

of area for all crops

 Development of lower cost production

systems and improved semi-processing and

storage at the grower level

 Development of intensive production

systems with an emphasis on high yielding

varieties, high quality and GAP.

 Entry into WTO is likely increase costs of compliance to international market standards

 Failure of industry to invest in improved processing systems will impact on future growth of production and export revenue

 Competition with other cheaper and better agricultural products in export and domestic consumption.

 Competition from other producing countries especially for uncompetitive crops (cotton, sugar cane)

 Fluctuation of price due to change of the world supply and demand.

 Strict requirements of quality and food

 Further development of improved

agronomic and pest and disease control and

management practices

 Joint ventures to improve processing

facilities

 Linkages with processing and export

companies to facilitate supply of high

quality raw materials for processing and

export

 Industry investment in research programs

that meet industry and export needs

 Development of suitable crop rotations to

optimize grower income and minimize

risks from market fluctuations and pests

and diseases

 More chance for getting information and

international contacts to improve

production ability.

sanity and safety.