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Chairman's Insights

Vietnam’s agro sector

The agricultural sector is maybe one of the most neglected sectors by foreign investors but with 70% of the population of 93 million engaged in the sector, in many ways it is a natural sector for development.

It is not widely recognised that Vietnam is amongst the world largest producers and exporters of several agricultural products and the country has gone from a net food importer to a net food exporter in less than 25 years. Vietnam was the world’s largest exporter of rice but has recently fallen back to number 5, it is the world’s largest producer of coffee and the world’s second largest exporter of coffee and Vietnam is the world’s largest exporter of pepper. Vietnam is also the world’s leading producer and exporter of Casher nuts.

The statistics on coffee are often unknown because Vietnam largely produces Robusta coffee which gets blended with other brands and therefore there is no internationally well-known brand of Vietnamese coffee.

According to the Ministry of Agriculture and Rural Development in the first eight months of 2016, Vietnam enjoyed a trade surplus of over US$ 5 billion in the agro-forestry and fishery sectors. The total turnover for the sector reached over US$ 20 billion in the same period.

Major increases have also been seen in aquatic products with a total export turnover of US$ 4.3 billion, in the first 8 months of this year.

The opportunities are there for adding value and tapping into both new and traditional export markets. However, one of the key issues facing interested investors is the fact that most farming is carried out by smallholders and guaranteeing the supply of raw materials in sufficient quantities to be able to get the benefits of scale. However the scene is changing and creative financing schemes for farmers are being used to guarantee supply and improve quality of crops.

Kenneth M Atkinson