It\u2019s a turn-around that has been nothing short of remarkable. Since embarking on a series of stunning economic reforms in the 1980\u2019s, Vietnam has gone from a nation heavily affected by food shortages, to being one of the world\u2019s leading producers and exporters for a number of crucial food crops, including coffee, peanuts, walnuts, pepper, and (of course) rice.<\/p>\n\n\n\n
While the agriculture sector now accounts for less of the Vietnam\u2019s overall GDP than before, due to a developing service economy, its value has continued to grow steadily over the years: up by 3.36 percent in 2022, with revenues of $53.22 billion.\u00a0 Agriculture is responsible for more jobs than any other sector \u2013 and around 36% of the labour market.\u00a0 Last year Vietnam exported $3.4 billion of walnuts, $2.3 billion of (green) coffee, $2 billion of rice and US$1.8 billion of pepper.\u00a0 It is the EU\u2019s largest source of cashew nuts too \u2013 nearly 100,000 tons last year.\u00a0 Rice prices are currently surging, as a result of concerns about the potential impact of El Nino; Vietnam\u2019s rice exports for January-May were up 30% on 2022, and farmers could be in for a windfall.<\/p>\n\n\n\n
With a population of nearly 100 million, Vietnam is now the fifth largest consumer of rice globally, and, with rapid population growth and increasing household incomes, its livestock consumption has increased dramatically too.\u00a0 Livestock production, however, remains fragmented, with 85% of livestock being raised on small farms in 2019, despite it being the third-largest market for meat in East Asia that year.<\/p>\n\n\n\n
As well as receiving strong government support, the overall agricultural sector brought in 12 significant FDI projects last year, worth around $68 million.\u00a0 It is a relatively unrestricted field for foreign direct investment.<\/p>\n\n\n\n
FREE TRADE AGREEMENTS<\/strong><\/p>\n\n\n\n Vietnam is now party to a total of 15 different FTAs, including (since 2020) with the EU - the EVFTA.\u00a0 Whilst opening up new markets for agricultural exports, these agreements also have the effect of exposing Vietnam to powerhouse agricultural exporters, such as Australia.\u00a0 In some situations, this may become something of a one-way-street, as Vietnam\u2019s producers struggle to comply with quality and other standards required by target markets, while presenting an open door to their own domestic market.<\/p>\n\n\n\n Having diversified its production, and now being highly integrated into international markets, Vietnam knows it has to keep upgrading technologies and systems, right through its agricultural supply chains \u2013 from feeds to logistics, and from mechanisation to testing and packaging.\u00a0 Though some larger producers (such as TH Group and Vinamilk) have invested heavily in technology in recent years, \u201cagtech\u201d is a relatively unknown concept in Vietnam\u2019s rural areas.\u00a0 There is massive potential for both local and foreign investors.<\/p>\n\n\n\n GREEN GROWTH<\/strong><\/p>\n\n\n\n Vietnam\u2019s government has a national strategy for green growth in agriculture.\u00a0 It has tough targets for 2030, including for the use of organic fertilizers (which it wants to account for one third of use), as well as water saving, and the protection of forest cover.\u00a0 Such green policies, Hanoi hopes, will strengthen Vietnam\u2019s hand with the eco-conscious EU, both in terms of export opportunities, and the attraction of FDI.<\/p>\n\n\n\n The greening of Vietnam\u2019s agricultural production and processing, still very reliant on old, inefficient equipment and methods, is an opportunity for the producers of more advanced equipment and technologies. From seeding, spraying and spreading, though to harvesting, as well as advanced, environmentally friendly animal husbandry and livestock management solutions, Melchers Vietnam is seeing strong demand for increasingly sophisticated products and services in 2023, and we expect that to continue and develop further in the next few years.<\/p>\n\n\n\n