Vietnam relies on imports over declining corn output

The farming area and output of corn have been decreasing sharply over the last few years, making Vietnam's animal feed producers rely more and more on material imports.

 

In 2009, the corn import turnover increased vigorously by 133%, or US$171.1 million, over 2008, attaining a record high of US$300.21 million. The import revenue of DDGS (Distillers dried grains with solubles) in 2009 reached US$67.92 million, an increase of US$7.23 million over 2008.

 

Meanwhile, Vietnam's corn export turnover in 2009 was US$730,000 only, a sharp fall of 83,6% in comparison with 2008.

 

Agricultural analysts maintain that this is because, in 2009, the growing area for farm produce, especially corn growing regions in the northwest, decreased sharply. The total corn grown in Vietnam in 2009 was 1.09 million hectares, a decrease of 4.68% from 2008. Of the key corn growing provinces, Dien Bien and Thanh Hoa saw farm lands decrease sharply, dropping by 3000 hectares in each province. Farm land in Nghe An decreased by 2000 hectares.

 

The average yield increase of 1.7% could not offset the corn decrease in 2009 and explains why the 2010 corn output still decreased when demand rose. This has forced animal feed producers to import corn, mainly from Thailand, China, the US and Argentina.

 

The average domestic corn price in 2009 was VND3,980 (US$0.21) per kilogramme. However, prices rose dramatically in the fourth quarter of 2009.

 

Just within six months, the domestic price soared from VND1,950 (US$0.10) per kg to VND5,500 (US$0.29). The sharp rise was explained by the plunge in domestic output and by the Ministry of Finance's 2009 decision to raise import tariffs on corn.

 

Shortages pressed the domestic price up, but the world's price in 2009 was always low, so Vietnamese enterprises imported corn in large quantities.

 

Agricultural policy makers have learned lessons from the 2009 corn shortage. They have realised the importance of corn in the animal feed industry. When setting up the 2010 production plan, the Ministry of Agriculture and Rural Development decided to increase corn farm land by 10% and increase the expected output by 19% over 2009.

 

Commenting on the plan, some analysts remarked it would not be easy to implement. Even if only 70-80% of the plan is fulfilled, it can ease the burden on domestic production and help the industry partly reduce its reliance on imports.

 

Agromonitor, a market forecast firm, predicts that 2010 imports of corn and animal feed materials will increase. Vietnam's economy will also recover, with an expected GDP of 6.5%. With better economic performance, industries will also recover, including those of husbandry and seafood.