Rice Market Monitoring In Vietnam

MOTIVATION

The Vietnamese economy underwent a series of profound macroeconomic and institutional policy reforms after 1986 that put the country on the path to becoming a market economy. As this process of transition continued, Vietnam faced the challenge of formulating and implementing a growth strategy that was both economically and politically viable. Critical to this growth strategy was the role of agriculture and, within agriculture, the development of an efficient and flexible rice marketing system. The rice market was the most important subsector in Vietnam’s agriculture and its development had serious implications for the rest of agriculture and the country’s overall economy. The Rice Market Monitoring project, supported by ADB, identified market development as the main element of a strategy promoting the growth of the rural economy. The objective was to provide the Vietnamese government with more in-depth analysis of alternative rice policies.

 

OUTCOMES

 

IFPRI’s research partnership with Vietnam from 1995 to 1997 illuminated the policy environment with new information that informed and influenced rice policy. Research results showed that Vietnam had the potential to be the largest rice exporter in the world if exports were not too heavily taxed, quotas were not too restrictive, and the exchange rate depreciated at a pace close to that of inflation. To help realize this potential, IFPRI suggested a set of policy recommendations that would contribute to higher national income, higher farmer incomes, and improved food security: 1) relax or eliminate restrictions on internal movement of rice and on rice exports; 2) reduce the role of state-owned enterprises in rice marketing; 3) maintain macroeconomic stability; 4) provide targeted food security assistance rather than distorting the rice price; and 5) increase investment in agricultural research.

• Conservative estimates of the benefit–cost ratios on the investment made in the IFPRI research were 56:1 when only the benefits to Vietnam were included and 91:1 when the returns to the rest of the world were included as well, according to an external evaluation of the project.

• Key decision makers in the Ministry of Agriculture and Rural Development requested that IFPRI examine current rice policy in Vietnam and various policy alternatives, including relaxing internal movement restrictions and raising the rice export quota. These decisionmakers then advocated for the study’s policy recommendations when the results were released. IFPRI conducted 19 workshops and seminars in Vietnam, which helped to build theconsensus required for policy change. The study filled a gap in research on Vietnam by providing a detailed understanding of the rice sector and basic information on a number of market aspects.

• Following the study’s conclusion, the government of Vietnam requested IFPRI assistance in a number of different studies on topics including crop diversification, poverty mapping, livestock promotion, fruit and vegetable development, and food processing.