Thesaigontimes.vn – “We see a golden opportunity for Vietnam”s agriculture that you have to seize. Agriculture is a big chance that you cannot miss and have to prepare from now by investing in agricultural sector, producing, processing and selling, as well as building a commodity market with full transaction tools for the near future. “, said Mr. Paul Deane – economist in agricultural sector under the global ANZ bank’s Research Department – in a recent client meeting held by ANZ in Ho Chi Minh City.
One of the factors which bring great opportunity for the agricultural sector is that agricultural produce price in the world market will start rising from 2013.
Rising prices
“In my opinion, the agricultural market outlook in the region is very attractive. We are in the favorable phase of the agricultural produce price cycle. Since 2013, food prices are expected to rise again after the biggest rally in history in 2009”, said Mr. Deane.
Many arguments were given by this expert to prove this trend. First, corn produce of the biggest corn supplier of the world, United States, sharply fell in 2012 while here in the region it has continuously increased since many years ago. Worldwide corn and wheat produce also sharply dropped in 2012 in all countries growing these two plants.
Second, China – one of the largest agricultural producing and selling markets – has recently applied food reserve policy. Imports of cereals in 2012 of China tripled compared to 2011 and were the highest volume ever. Besides, China has increased imports of cotton, fabric and sugar in 2012 by 40% compared to the previous year. Imports of soybean, cotton, corn and sugar in the last year doubled compared to 2005. “China almost only exported food before; now it imports more and more cotton and soybean. This leads to a change in prices and production costs of agricultural produce of the region”, said Mr. Deane.
Third, in one of the world”s largest corn and soybean exporter – Brazil, labor costs have doubled in the past seven years that made Brazilian corn and soybean prices sharply rise in 2012.
“The first rally of agricultural produce within the last decade has started from the end of 2012″, said Mr. Deane, “compared to the time of five years ago, most agricultural commodities’ prices have increased from a few dozen to such 100% for coffee and even 1000% for cocoa (10 times greater), pork price rose nearly 50%, sugar rose up to 120% and cotton rose 50%”.
Question about supply
Head of ANZ’s Agricultural sales department in Asia – Mr. Slatter Andrew, notes that there will be a major lack of agricultural produce in the global and Asian market, and today market’s biggest problem is how to boost supply. He says that Asia must ensure food security for the region itself before supplying the world market. 80% of Robusta coffee is from Asia and Asia itself becomes a considerable consumer of sugar, spices, fruits and vegetables due to rising incomes for food consumption. If this region only produced raw food before, now it can also process food, therefore, Asia is becoming an agricultural produce processing factory for the West. Food manufacturers and processors in Southeast Asia are getting more reputable and the region is becoming an active and potential market.
In that market, Vietnam and Indonesia continue to be the two markets where the rising of annual sugar production is highest of the world. There should be policies to encourage people to focus more on the processing of value-added of agricultural produce. If not, ten years from now much more effort will have to be made for rubber, coffee and other agricultural products, according to the expert.
Mr. Herur Vinayak, Head of Customer service and Institutional Banking at ANZ Bank asks again the question: “Vietnam ranks first in export of rice and coffee, second in export of pepper, third in export of rubber, but why not many people in the world know about that ? It proves that you haven’t succeeded in agricultural produce sector and lack of effective management strategies. You gave up your value-added to the others and enjoyed very few while working very much. The manufacturers are small and not yet united”.
According to Mr. Vinayak, this is the golden opportunity for the Vietnamese agriculture to soar thanks to its unique advantages: golden population structure, tropical climate, abundant labor force and traditional agricultural society. “Even compared to the competitor Thailand, Vietnam still has many more advantages. Working-age population in Thailand grows 0.6% per year in the next 5 years, 0.5% per year in China, 2.5% per year in Indonesia while the average rate of the world is 2%, and in Vietnam it’s 2.8% per year, higher than the world’s average. That is the advantage that no country has”, said Vinayak.
He also added: “In the next time, we will continue to focus on loans in the agricultural sector, such as loans for supply chain, loans for main agricultural products e.g. rice, coffee, rubber, seafood for both wholesale and retail, animal feed and fertilizer manufacturing. Agricultural commodity derivatives are not yet allowed in Vietnam, but we will produce it as soon as allowed”.