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New market study, "Vietnam Agribusiness Report Q1 2014", has been published

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2014-01-05 23:38:56 - New Food research report from Business Monitor International is now available from Fast Market Research

Recent adjustments in our outlook for Vietnam's economy and business environment add further weight to our positive view on the country's agribusiness sector. The industry holds strong growth opportunities in terms of production, exports and retail sales, particularly with regard to the rice, coffee, livestock and dairy sectors. However, Vietnam is facing growing competition in its key markets, and the fulfilment of its promising potential will only be achieved if the country steps up its competitiveness and improves product quality and supply chain efficiency. Vietnam will have to significantly ramp up investment in crop productivity in order to avoid being left behind, and if it succeeds in producing more value-added crops and maintaining its status as an export spearhead.

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Key Forecasts

* Rice consumption growth to 2017: 7.8% to 21.3mn tonnes. Rice remains the major food staple in Vietnam, and we do not see this changing over our forecast period. However, rising interest in foods such as wheat-based goods - supported by rising incomes - will restrict demand for rice, and over the forecast period we expect production growth to significantly outpace that of consumption.
* Corn production growth to 2016/17: 28.0% to 6.0mn tonnes. Although acreage is likely to remain stagnant or diminish, current yield immaturity means significant gains are still available via this avenue, especially as robust local corn prices provide incentives to farmers. Domestic consumption will be another important driver.
* Milk production growth to 2016/17: 20.9% to 461,600 tonnes. Dramatic increases in cattle numbers and increased public and private sector investment - part of the effort to reduce the country's growing import dependency - will be the main boost to growth. Commercialisation will also play a key role as larger, more efficient farms come to play a greater role in milk production.
* BMI universe agribusiness market value: US$25.7bn in 2014 (down from US$27.3bn in 2013); growth expected to average -1.2% annually between 2013 and 2017.
* 2014 real GDP growth: 6.0% (up from 5.3% in 2013; predicted to average 6.1% over 2013-2017).
* 2014 consumer price index: 6.2% year-on-year (y-o-y) (down from 7.0% in 2013; predicted to average 5.7% over 2013-2017).
* 2014 central bank policy rate: 7.00% (same than in 2013; predicted to average 6.40% over 2013-2017).

Key Developments

Vietnam's livestock sector, especially the pork sector, experienced significant challenges in 2012 and 2013 on the back of rises in feed ingredient and fuel prices, lower demand and plummeting domestic prices. As a result, many farmers were forced to reduce or suspend their operations in order to limit losses, with as many as 30-50% of individual farmers in southern provinces abandoning their farms, while owners of large farms with more than 1,000 head reducing their herd size by up to 70%. The situation has been improving since H213, as pork prices are starting to recover, and consumers are showing more confidence in the pork market. However, we believe pork and poultry production growth will remain below historical averages. Despite the challenges, foreign and locally owned feed companies such as Charoen Pokphand Vietnam Livestock, Japfa Comfeed Vietnam and GreenFeed Vietnam Corporation have announced investments to increase feed production capacity.

The ongoing restructuring of Vietnam's largest coffee export company, Vinacafe, is reflective of the difficulties facing the country's coffee export industry. It also highlights the government's push to restructure ailing state-owned enterprises, which we see as a positive development. The ongoing difficulties in the coffee export sector are the result of a combination of factors, including the extensive use of short-term debt to fund long-term projects, high interest rates, and poor management and futures trading abilities. Although the extension of loan terms and decreasing interest rates will give a breath of fresh air to exporting companies, the sector's outlook remains hindered by overcapacity in the beans processing industry and bad management practices.

Vietnam Dairy Products Joint-Stock Company (Vinamilk) was given the green light in July 2013 to export its products to the US market. This reinforces our positive view of the company, as it will support Vinamilk's promising sales growth. We remain positive about Vinamilk's long-term prospects given the strong growth potential for dairy consumption in Vietnam and the region, the company's investment in supply chain and capacity expansion, and its strong financial position. We also like Vinamilk's export growth potential.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at or call us at 1.800.844.8156.

Bill Thompson
Phone: 18008448156

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