Trip to Vietnam reveals some market potential

By Matt Reese

Visits to the market included butchered poultry with the heads and feet still on and no refrigeration for the meat products.

A contingent of Ohio Farm Bureau members, along with members from other states, recently went to Vietnam with the goals of broadening their understanding of trade and economic exchange between the United States and Vietnam, and learning more about Vietnamese agriculture and food production. On the trip the visitors got to see, first-hand, food purchasing and consumption trends and differences between American and Vietnamese farmers that provided insights into improving the relationships between the two countries.

"They are very friendly to Americans and we found that you can haul anything in Vietnam on a moped, even a refrigerator," said David White, with the Ohio Farm Bureau Federation, who went on the eight-day trip. "The average corn yield is 10 to 20 bushels per acre, and they will have to grow more for feed to meet the rising protein demand. They are under pressure from the European Union to adopt their anti-biotech food policies, but in the end I think Vietnam will do what is best for Vietnam."

The trip included a visit to the open market - where meat is sold from animals butchered that morning - and a tour of a farming village.

"They are intensely farming their front yards. The average family farm is less than 2 acres, and most large corporate farms are less than 5," White said. "There are chickens running around everywhere, and almost everything is done with hand labor."

The group also toured a fairly large hog farm that is modern in some ways, but has some catching up to do in others. All of the feed is handled in bags, and high-dollar wild hogs are captured and penned up right outside of the barns, causing a number of potential problems.

"Animal health and biosecurity need major improvements," he said. "They're still growing and improving. They're very resourceful, but I guess you have to be resourceful when the average income is $100 to $200 a month."
Despite the poverty in many places, the economy is booming in Vietnam.

"The economy is growing by 7% a year. This is an opportunity we can't ignore," he said. "This country has a huge demand for improving their diet."

Pork is a staple of the Vietnamese diet, they love ice cream, and pizza is starting to become very popular, which offer export opportunities for pork and dairy products in particular.

White, along with the other group members, compiled the following observations about the trip:

Vietnamese society seems to be enjoying better times than in the 1980s. The Vietnamese people are very optimistic about the future.

The Vietnamese people are incredibly productive; everyone seems to be busy working or trying to make a living. There are very few beggars.

The most accurate word to describe the people and their attitude is determination. They are a very resilient people; they don't know how to say no or how to give up.
Vietnamese history/politics

This is the first time in modern history that Vietnam has not been under the power, control, rule, invasion or attack of another country.

To the Vietnamese the war was the American Conflict, to us, the Vietnam War.

There is more of a sense of "group think" in Vietnam than in Western nations. That is, each individual takes care of his/her place within the group. Ancestor worship is a part of that; each person tries to preserve his place within the group.

While we didn't see everything, Vietnam is less restrictive than we thought they would be; there is less government line than in other communist countries.

The Vietnamese government has figured out what it needs to do to allow the economy to thrive without completely surrendering political ideology or control.

With socio-political stability in place, the government just lets the economy grow and prosper under the peoples' shear determination and strong work ethic.
Vietnamese economy

While no direct strategy is mentioned, Vietnam seems to have an economic growth plan in place; with market orientation being a key feature.

The government knows that it needs to have harmony and stability to have economic growth, so the government ensures stability and hopes for harmony via the freedom people have to make money through various economic means.

As one expert on Vietnam noted, "Like the traffic here, the Vietnamese have the right idea but are fuzzy on the details," of how best to accomplish many goals.

The infrastructure is better than in other developing countries (better roads, better electric systems, the youth are well educated, etc.). It seems like it would be much easier to do business here than in India or China.

Vietnam's infrastructure has exploded in the past 40 years and the country clearly views tourism as one of its best economic opportunities. Although sad to think that tourism will take the place of traditional industries like family fishing, the people know that such changes will offer their children economic opportunity.

Vietnamese market

The National Corn Growers Association small group here in late February appears to have received a more positive message about market opportunity than we did. We heard (from Bunge and Cargill) how nearly all of the commodities they are buying are from India and South America due to the cost of American commodities and shipping.

DDGs appear to be one immediate market opportunity. We were surprised of the 30% inclusion ration of DDGs for sow rations.

The United States wants to ship things in large quantities, but Vietnam still needs smaller shipments. Most buyers haul things on mopeds, both to the farm and to the market.

Once Vietnamese markets start emphasizing quality, we believe they will look to the United States instead of to South America or India for agricultural commodities. Right now, the market is price driven, and Vietnam sources from those lower-cost countries.

As incomes ramp up in Vietnam, there should be good opportunities for milk and dairy products including cheese, yogurt, ice cream, NFD milk and whey.

The ethnic desire is for seafood and pork, but eventually, the Vietnamese will embrace (and be able to afford) more diversity and variety in meat.

Vietnamese agriculture

Many farmers and rural dwellers are not enjoying the same economic prosperity as those in the city.

The government, Vietnam Farmers Union and other groups are clearly interested in maintaining rural economic development, not only to deter rural people from flocking to the cities, but also to maintain a strong, vibrant and socially stable rural sector.

There are some large-scale farms (hogs, dairies, poultry, etc.), but the "average" farmer makes very little money on a very small parcel of land.

Vietnam's cheap, abundant labor can allow companies to offer unbelievable quality control. This plays well to high-end Japanese and Korean markets.

The Vietnamese are very proud of the quality and skill of their labor and their agriculture, which will pay well in other high-end, high-quality food markets

It will be interesting to see if consumer interests will win over agricultural protectionism (e.g., the Vietnamese have zero tolerance for salmonella. Thus, it is nearly impossible for U.S. poultry imports to not be subjected to irradiation, but the country does not require it for its own poultry products).

There is the potential for discrimination against biotech crops, so the United States and others need to continue to work to get biotechnology approved and accepted.