April 24, 2008

 

Vietnam's corn production rises while imports fall in 2007
 

 

Vietnam's corn production rose 11.3 percent to 4.2 million tonnes while imports fell 10 percent from their record highs in 2006 to 593,000 tonnes, according to  a USDA GAIN report released April 11, 2008 (Vietnam Grain and Feed Annual 2008).

 

Despite the drop in Vietnam's overall corn imports, US corn exports to the country continued the increasing trend of 2006, rising 42 percent in 2007 to 29,700 tonnes. 

 

Import tariff on corn was cut to zero percent in January 2008.

 

The report forecasts an even brighter outlook for US corn export growth given continued strong demand from the thriving animal feed sector and a more favourable tariff structure.

 

Eighty percent of the corn used in Vietnam goes towards animal feeds. Vietnam's feed demand in 2007 was 17 million tonnes. 

 

Corn production

 

Vietnam's corn production area expanded about 4 percent in 2008, and yields were 7 percent  higher than in 2006.  

 

However, the Animal Feed Association said yields of current seeds, which is about 4 tonnes per hectare, is still way below the 5 to 6 tonnes in other countries.

 

The Ministry of Agriculture and Rural Development, MARD, is focusing on improving yields to increase production levels, and efforts are underway to replace old seed varieties with high yielding hybrid seeds. 

 

Vietnam has now completed biosafety regulations for field trials of biotech crops and regulations for commercialisation of biotech foods. These regulations have been reported to WTO, and USG has already submitted its comments.  These regulations on labeling and certification are of particular concern and could hamper biotech grain and seed exports.

 

The report noted that Vietnam must import more and more of its feed energy inputs. 

 

At the same time, lower tariffs could lead to lower domestic corn prices, leading to much slower growth in production in coming years. 

 

Although yield improvements is possible, local production would not be likely to rival the pricing power of corn from countries with much bigger areas and better climates.

 

Furthermore, storage and grain handling facilities in the country itself are also limiting factors.

 

High international corn prices had forced some buyers to look for alternate sources locally, with rice and its byproducts being the favored substitute.  When rice prices soared in the latter half of the year, however, corn again became competitive, the report said.

 

The report also noted that unlike 2006 when much of Vietnam's corn imports came from Argentina, corn imports in 2007 came from several markets in the region, with India's exports increasing almost ten-fold.

 

Vietnam recently cut the tariff on corn to zero percent for countries with Most Favored Nation (MFN) status.  This, combined with reduced shipping rates for empty containers returning to Asia from the US should help boost US corn exports to Vietnam, the report said. The report forecasts 2008 corn imports will increase beyond current levels in response to strong demand for corn.

 

Wheat

 

Meanwhile, Vietnam imported an estimated 1.2 million tonnes of wheat in 2007, the same level as 2006. 

 

Demand for wheat remains strong, but imports remained flat due to imports of large quantities of cheap Chinese wheat flour flooding the market last year. US wheat exports made huge inroads into the market, however.  Wheat exports from Australia, the major supplier of Vietnam's wheat, declined about 30 percent last year as a result of drought and bad weather, opening up opportunities for US wheat in 2007, and all indicators point to another good year in 2008, the report said.