Agricultural Policy Monitoring and Evaluation 2024

29. Viet Nam

Main findings

Support to agriculture

Viet Nam’s Producer Support Estimate (PSE) is negative and increasingly so since 2019, with an average of -12.4% in 2021-23. The PSE is largely driven by negative Market Price Support (MPS), most significantly for producers of rubber, tea and poultry meat, and to a lesser extent to producers of rice and coffee. In contrast, producers of maize, sugarcane and beef benefit from tariff protection. Overall, the positive MPS for these products is outweighed significantly by negative MPS, such that farmgate prices were on average over 10% below international reference values.

Budgetary transfers to producers are relatively small and come entirely in the form of the most production- and trade-distorting measures. These include payments based on variable inputs use, namely an exemption from the payment of irrigation service fees and input subsidies under the Sustainable Poverty Alleviation Programme, which targets producer support to communes in remote and mountainous areas. The government also supports the production of rice by guaranteeing an average profit margin of 30% for rice growers, which is maintained through rice purchases for the national strategic reserve and the use of minimum and maximum price brackets.

Support for general services for agriculture (General Services Support Estimate, GSSE) as a percentage of the value of production fell from 2.2% in 2000-02 to 1.7% in 2021-23. General service expenditures predominantly go to the development and maintenance of infrastructure, one-third of which goes to hydrological infrastructure for irrigation and the maintenance of 3.8 million ha of land in paddy. Expenditures under the Sustainable Poverty Alleviation Programme support the development of infrastructure, including roads and small irrigation schemes, as well as agricultural knowledge systems, via training targeted to ethnic minorities.

Total support accounted for negative 1.3% of Global Domestic Product in 2021-23, down from +2.4% in 2000-02.

Key recent policy changes

In response to a finding of high rates of contamination of Vietnamese vegetables by pathogens and pesticide residues, the government issued several decisions concerning food safety. A decision was issued to advance the Plan to Ensure Food Safety and Improve the Quality of Agricultural, Forestry and Fishery Products, which specifies objectives for monitoring and the certification of food processing facilities. A decision issued by the Ministry of Agriculture and Rural Development defines the development of “safe, concentrated vegetable production areas,” which will be subject to routine testing of soil and water quality, limitations on livestock farming, and monitoring of pesticide residues.

New limits were specified on greenhouse gas (GHG) emissions from agriculture, forestry and other land use (AFOLU). The Plan to Reduce Greenhouse Gas Emissions in the Agriculture and Rural Development Sector seeks to reduce emission from agriculture by 13.1% relative to the Business as Usual (BAU) projection for 2025 and by 38.2% relative to the BAU projection for 3030. In addition, forestry and land use measures are to achieve reductions of 39.3 million tonnes of CO₂-equivalents by 2025 and 79.1 million tonnes by 2030. These targets represent 5.4% and 8.5% of total BAU emissions for the country.

A Free Trade Agreement between Viet Nam and Israel (VIFTA) was signed after more than seven years of negotiations and will enter into force in 2024. The agreement, which marks a first between a southeast Asian country and Israel involves removing duties on at least 86% of Vietnamese products and 93% of Israeli products. It is expected to increase the bilateral trade turnover by over 36%, in part by opening up opportunities for Vietnamese seafood to enter and penetrate more deeply into middle eastern markets.

Assessment and recommendations

• Supporting green growth is a key objective of Viet Nam’s agricultural policy, which is broadly aligned with sustainable productivity growth, as manifest in national plans and strategies, including the National Strategy on Green Growth that articulates a vision forward to 2050. However, the key elements of the strategy are not targeted to mitigate the environmental degradation caused by current production systems. The impact on the environment of some of the measures, like expanding irrigation and converting land in rice to other crops is uncertain. For example, expanding the irrigated land base will increase pressure on water resources and could worsen air and water pollution. The likely environmental consequences of planned measures deserve to be assessed, with particular attention paid to the long-term implications for the sustainability of the sector.

• The government has recently undertaken efforts to improve research and innovation in plant breeding and emerging technologies to strengthen analysis and forecasting tools. However, the country remains reliant on private sector investments in R&D. Support to general services predominantly focuses on infrastructure development, with relatively few resources allocated agricultural knowledge generation and transfer. Shifting budgetary support towards these activities may better serve ambitions for sustainable productivity growth and resilience in the agricultural sector.

• Market price support is negative and increasing in magnitude for key export commodities, including tea, rubber and poultry meat. This harms farmer revenue and benefits state-owned enterprises (SOEs) that play a dominant role in the production, wholesale and international trade of these commodities. SOEs benefit from preferential access to credit and land granted from the government. These policies discourage entry and reduce farmgate prices below international reference levels and should be reconsidered. Increased effort should be made to phase out preferential treatment of these firms and to encourage increased competition.

• Food safety and quality remain significant challenges for Viet Nam. This is particularly true in the context of efforts to integrate into the global economy via free trade agreements, including that with Israel. Attention to these issues has recently increased and plans have been introduced in response. Investments in monitoring and evaluating these measures will be needed in the near term to allay phytosanitary concerns that may arise with key trading partners and to increase the competitiveness of Viet Nam in international markets.

Development of support to agriculture

Figure 29.1. Viet Nam: Development of support to agriculture

Table 29.1. Viet Nam: Estimates of support to agriculture

Million USD

	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	9 013	47 903	46 985	47 886	48 838
of which: share of MPS commodities (%)	77.05	77.99	74.92	78.92	80.13
Total value of consumption (at farm gate)	7 808	47 419	49 238	46 188	46 831
Producer Support Estimate (PSE)	593	-5 965	-5 398	-5 545	-6 951
Support based on commodity output	472	-6 230	-5 793	-5 744	-7 152
Market price support¹	472	-6 230	-5 793	-5 744	-7 152
Positive market price support	963	1 115	1 465	659	1 220
Negative market price support	-491	-7 345	-7 258	-6 403	-8 372
Payments based on output	0	0	0	0	0
Payments based on input use	101	263	393	197	199
Based on variable input use	101	263	393	197	199
with input constraints	0	0	0	0	0
Based on fixed capital formation	0	0	0	0	0
with input constraints	0	0	0	0	0
Based on on-farm services	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on current A/An/R/I, production required	0	2	2	2	2
Based on Receipts / Income	0	2	2	2	2
Based on Area planted / Animal numbers	0	0	0	0	0
with input constraints	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0
With variable payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
With fixed payment rates	0	0	0	0	0
with commodity exceptions	0	0	0	0	0
Payments based on non-commodity criteria	21	0	0	0	0
Based on long-term resource retirement	21	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0
Percentage PSE (%)	6.38	-12.40	-11.39	-11.53	-14.17
Producer NPC (coeff.)	1.06	0.89	0.90	0.89	0.87
Producer NAC (coeff.)	1.07	0.89	0.90	0.90	0.88
General Services Support Estimate (GSSE)	201	809	978	723	724
Agricultural knowledge and innovation system	23	134	132	133	138
Inspection and control	0	0	0	0	0
Development and maintenance of infrastructure	173	658	830	574	570
Marketing and promotion	0	0	0	0	0
Cost of public stockholding	5	16	16	16	16
Miscellaneous	0	0	0	0	0
Percentage GSSE (% of TSE)	25.67	..	..	..	..
Consumer Support Estimate (CSE)	-697	3 741	2 688	3 978	4 558
Transfers to producers from consumers	-696	4 761	4 342	4 094	5 848
Other transfers from consumers	-22	-1 249	-2 050	-97	-1 601
Transfers to consumers from taxpayers	0	0	0	0	0
Excess feed cost	22	229	397	-19	311
Percentage CSE (%)	-8.79	7.92	5.46	8.61	9.73
Consumer NPC (coeff.)	1.10	0.93	0.96	0.92	0.92
Consumer NAC (coeff.)	1.10	0.93	0.95	0.92	0.91
Total Support Estimate (TSE)	794	-5 156	-4 420	-4 822	-6 227
Transfers from consumers	718	-3 512	-2 292	-3 997	-4 247
Transfers from taxpayers	98	-395	-78	-727	-379
Budget revenues	-22	-1 249	-2 050	-97	-1 601
Percentage TSE (% of GDP)	2.42	-1.28	-1.19	-1.18	-1.45
Total Budgetary Support Estimate (TBSE)	323	1 074	1 373	922	925
Percentage TBSE (% of GDP)	1.00	0.27	0.37	0.23	0.22
GDP deflator (2000-02 = 100)	100	533	523	543	..
Exchange rate (national currency per USD)	149.67	23 391.81	22 935.62	23 402.71	23 837.11

.. Not available

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Viet Nam are: rice, rubber, coffee, maize, cashew nuts, sugar, pepper, tea, beef and veal, pig meat, poultry and eggs.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

Domestic price support is the main form of support for Vietnamese producers, particularly in the form of border protection for import-competing commodities such as beef, veal and sugarcane. Following Viet Nam’s accession to the WTO in 2007, the simple average Most Favoured Nation (MFN)-applied tariff on agricultural imports decreased from around 25% in the mid-2000s to 17.1% in 2022. Despite the decline, this is more than double the MFN-applied tariff for non-agricultural goods of 8.4% (WTO, 2022[1]). Applied tariffs are much lower on imports originating from countries or regions with which Viet Nam signed free trade agreements. For example, the simple average preferential tariff on agricultural imports is just 2.3% from ASEAN members and the People’s Republic of China (hereafter “China”), and 4.5% from Australia and New Zealand.

Viet Nam is a member of the WTO, the Association of Southeast Asian Nations (ASEAN), and the Asia-Pacific Economic Cooperation (APEC) and supports trade liberalisation between ASEAN members and their major trading partners. Outside of ASEAN, Viet Nam has negotiated bilateral free trade agreements with Chile, Cuba, the Eurasian Economic Union, Japan, and Korea. Agreements with the European Union and the United Kingdom came into effect in 2020. Viet Nam, along with ten other countries, signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 8 March 2018 entering into force in January 2019. In 2022, the Regional Comprehensive Economic Partnership (RCEP) came into force for Viet Nam and 12 other countries, including ASEAN members and partner countries.1

State-owned enterprises (SOEs) have declined in importance following reform and privatisation efforts, though they continue to play a role in the production, wholesale, and international trade of export commodities such as rice, rubber, coffee and tea. SOEs have preferential access to capital, natural resources, land and human resources, which allows them to exert market power, discouraging entry and reducing farmgate prices below international reference prices (OECD, 2022[2]).2 Key SOEs operating in the agricultural sector include the Vietnam Rubber Group (VRG), the Vietnam Southern Food Corporation (Vinafood II), the Vietnam National Coffee Corporation (Vinacafe) and the Vietnam National Tea Corporation (Vinatea).3

Rice farmers benefit from a guarantee by the government to earn 30% profit above estimated production costs. To reach this profit level when prices are low, the government provides concessional loans to rice purchasing enterprises for the temporary storage of rice during harvest. In addition, the government considers the 30% profit objective when it determines the volume and price of rice that it purchases each year to maintain the national reserve, managed by the General Department of State Reserves (GDRS) under the Ministry of Finance. In addition, MARD calculates price brackets (maximum and minimum levels) to ensure the desired profit margin after receiving information on costs for the season; companies are required to purchase rice within the prescribed bounds.4 The government also seeks to maintain 3.8 million ha in paddy land by providing funding for local rice growers through support programmes at the provincial level. These programmes focus on the adoption of new rice varieties and investments in agricultural and rural infrastructure, among other measures.

Exporters of rice are regulated to promote stockholding to balance exports and domestic consumption, stabilise domestic rice prices, and fulfil international commitments in the event of natural disasters or crop failures. To obtain a certificate from Ministry of Industry and Trade (MOIT) to export rice, exporters must have at least one storage and one milling facility (either owned or leased) that meet national standards and maintain rice reserves equivalent to 5% of the volume they shipped in the preceding six months.5 Exporters of organic rice are exempted from the need to obtain a certificate and from the storage and milling conditions.

An irrigation service fee (ISF) waiver exempts producers from payments to manage, maintain and protect irrigation works above the canal gate.6 The budget allocated to support this subsidy to irrigators has declined in recent years, with a budget in 2023 equivalent to 27% of the budget allocated in 2020.

Other support based on input use includes central and local government support to subsidise certain varieties of rice seeds and seedlings. Support for producers is also provided through the Sustainable Poverty Alleviation Programme (previously known as “Program 135”), which allocates support to communes in remote and mountainous areas. The programme includes subsidies for agricultural inputs and services such as extension.

Expenditures on irrigation systems dominate general services for the agricultural sector, a strategy that is manifest in the Hydraulic Work Strategy that sets objectives related to the supply of water for paddy fields and total land area in irrigation. Expenditures are allocated through investments by the central government in developing and maintaining irrigation infrastructure and through funding provided under the Sustainable Poverty Alleviation Programme to support the construction of small irrigation schemes.

Private ownership of land is not permitted in Viet Nam, rather, all land is owned and administered by the state. The law allows ownership of a Land Use Right, under which title holders may conduct real estate transactions, including buying, selling, bequeathing, and leasing land, as well as using land as collateral for mortgages with financial institutions. There are different types of Land Use Rights with differing restrictions, limiting the duration of the right,7 the choice of crops, the process for converting paddy land from rice to another crop, and land transfers and exchanges. Agricultural land use plans and support policies tend to favour rice production, and this is reflected in the Land Use Rights.

Since 2003, most farming households and organisations benefit from a reduction in the land-use tax or are exempt from paying it. The exemptions and reductions were initially provided for a seven-year period but have been extended twice and are currently valid until 31 December 2025.

Funding for extension activities is channelled through both national government agencies and provincial governments. The Science, Technology and Environment Department of MARD administers an open bidding process to allocate central government funding for agricultural extension to both public and non-public providers. Provincial People’s Committees play the same role for local level projects. Funded projects follow a top-down model that emphasises the introduction of new crop varieties or technologies (Gray and Jones, 2022[3]).

Viet Nam signed and ratified the Paris Agreement on Climate Change in 2016. In its updated Nationally Determined Contribution (NDC), submitted in July 2020, the country committed to reducing, by 2030, Business as Usual (BAU) greenhouse gas (GHG) emissions of 927.9 MtCO₂eq by 9% using domestic resources and potentially up to 27% with international support. A reduction of 9% would represent an increase in total GHG emissions of 3.0 times the level of emissions in the historical base year of 2014 (284 million tonnes of CO₂eq); a reduction of 27% would represent an increase of 2.4 times relative to 2014. This goal represented a less stringent mitigation target than that set in the first NDC. However, in 2022, Viet Nam issued a decree on Mitigation of Greenhouse Gas Emissions and Protection of the Ozone Layer, under which the country strengthened its commitment to mitigation by pledging a 14% reduction from the 2030 BAU. Additionally, Viet Nam signed the Global Methane Pledge and committed to achieving net-zero carbon emissions by 2050 at the COP26.

These national-level targets have been translated into sector-specific goals for implementation via the National Action Plan on Green Growth for 2021-30, the National Strategy on Climate Change to 2050, the Action Plan to Reduce Methane Emissions by 2030, and the Scheme on Tasks and Solutions to Implement the Results of COP26. Notably, the latter sets the objective to reduce GHG emissions from agriculture, which accounts for almost one-third of the country’s total emissions, by 43% relative to the 2030 BAU. Adaptation-related activities are defined in the National Adaptation Plan in Agriculture (NAP‑Ag), under which the Ministry of Agriculture and Rural Development (MARD) carries out vulnerability assessments, stocktakes of climate-smart agricultural practices, and pilot projects related to early warning systems, disaster response and training of government officials.

Innovation for sustainable productivity growth

Strategic plans developed by Viet Nam prioritise long-term sustainable development as the focus of agricultural policy. The National Strategy on Green Growth for 2021-30, vision to 2050 sets guiding objectives to move towards a green, carbon-neutral economy. The accompanying National Green Growth Action Plan for 2021-30 sets out tasks to achieve growth in agricultural value added of 2.5-3% per year, while promoting efficient use of natural resources. Among specific targets for 2030, the country seeks to irrigate at least 30% of dryland cropping area using water-saving irrigation methods; convert 300 000 ha (approx. 4%) of rice land to more environmentally friendly and profitable crops; and increase organic cropland to 2% of total crop area and organic livestock products to 2-3% of total production.

Research and innovation is driven in large part by private sector activities in Viet Nam (Gray and Jones, 2022[3]). From 2013-18, 351 new crop varieties were formally registered, 46% of which were for rice. The vast majority of these were the product of private sector research. Research institutes and centres under the umbrella of the Vietnamese Academy of Agricultural Sciences (VAAS), the government-funded body leading agricultural research, released only 30 varieties over the same period. Foremost among private sector innovators are Thai Binh Seed (for rice and maize) and the Nafoods Group (for fruit and vegetables). Foreign donors and private companies play a pivotal role in fuelling innovation and diffusion, by supporting agricultural research and providing resources and aid in implementation of new technologies.

In 2020, the government approved the Research and Development Programme for Plant and Livestock Varieties Serving Agricultural Restructuring for the period 2021-30. The programme aims to improve research capacity and the development of agricultural plant and livestock varieties to support the modernisation of the agricultural sector, adaptation to climate change and the restructuring of agricultural production to improve competitiveness, increase value-added, and promote sustainable development. Total investment in the programme, including private funding, is VND 103 trillion (USD 4.4 billion) over the lifespan of the project.

A decree was issued in 2023 that strengthens the Law on Intellectual Property with respect to plant varieties, including procedures for establishing rights to plant varieties, including those that are produced via state-funded research, the rights and obligations of plant variety breeders, and the transfer of rights to protected plant varieties.

A large project was initiated in 2023 for the sustainable development of 1 million ha specialising in high-quality and low-emission rice cultivation to support green growth in the Mekong Delta. The project will be implemented in two phases, with phase 1 (2024-25) focused on the existing area of the Vietnam Sustainable Agriculture Transformation Project (VnSAT), totalling 180 000 ha, and phase 2 (2026-30) incorporating an additional 820 000 ha in other areas (to be specified). The decree specifies targets to be achieved over the two phases, namely:

• an increase in the area of high-quality, low-emission rice growing of 180 000 ha by 2025 and 1 million ha by 2030

• a reduction in inorganic fertiliser and pesticide use of 20% by 2025 and 30% by 2030

• the number of households applying sustainable farming practices reaches 200 000 by 2025 and 1 million by 2030

• straw collection and re‑use reaches 70% by 2025 and 100% by 2030

• high-quality, low-emission rice accounts for at least 20% of the total rice export volume

The project Promoting Application of Information Technology to Collection of Information about and Forecasting of State Agricultural Product Markets was approved in 2022. The overall objective is to provide timely information to support regulation and trade, and to enhance the competitiveness, value-added, and sustainable development of Vietnamese agricultural products. The decision approving the project includes a vision statement to 2030 that includes the application of big data, artificial intelligence and other information technologies to advance the collection of information, analysis and forecasting for agricultural product markets. The project likewise seeks to improve training, communication and international co-operation to strengthen the human resources needed to support the application of these technologies.

Recent policy developments

Domestic policy developments in 2023-24

A new action sets in motion the 2022 resolution on Agriculture, Farmers and Rural Areas by defining tasks to support broad goals related to scaling up commodity production, protecting the environment, adapting to climate change, and linking with foreign and domestic markets. A decision was also issued to advance the Plan to Ensure Food Safety and Improve the Quality of Agricultural, Forestry and Fishery Products, with targets for the percentage of samples monitored for food safety and the number of safety-certified processing facilities.

The National Action Plan to Transform a Transparent, Responsible and Sustainable Food System in Viet Nam by 2030 was issued in March 2023. It specifies 36 programmes and tasks. For agriculture, the plan specifies quantitative targets such as: organic production on 2.5% of the total agricultural land area; organic fertiliser use over 30% of the fertiliser supply on the market; post-harvest losses of key agricultural, forestry and fishery products to be reduced by at least 0.5% every year up to 2030; and GHG emissions from the food system should decrease by 10% relative to 2020. The plan specifies a set of tasks to achieve these goals but does not include specifics on measurement and monitoring of progress towards them.

A food safety report published by the Asian Development Bank in early 2023 found high rates of contamination of vegetables by pathogens and pesticide residues (Asian Development Bank, 2023[4]). In its wake, MARD issued a decision on 9 November 2023 to develop “safe, concentrated vegetable production areas” and ensure traceability by 2030. Following the decision, the government will undertake testing of soil and water quality, monitors pesticide residues and prohibits livestock farming that can lead to contamination. The decision seeks to increase national vegetable production to fully meet domestic needs; enforce strict adherence to safety standards; increase the proportion of land in safe, concentrated vegetable areas; and increase vegetable exports.

Efforts have been undertaken to encourage the development of agricultural co‑operatives. The aforementioned decision to increase safe, concentrated vegetable production areas includes the promotion of new farmer co-operatives within these areas. Additionally, a July 2023 resolution seeks to hold up agricultural co-operatives as a model in rural areas to encourage sustainable development, including the application of science and technology and the digital transformation. The goal by 2030 is to have at least 300 new operating agricultural co-operatives with an average annual revenue of at least VND 5 billion (USD 211 362). Moreover, MARD has committed to training 30% of co-operative directors.

New limits on GHG emissions for AFOLU have been delineated as part of the Plan to Reduce Greenhouse Gas Emissions in the Agriculture and Rural Development Sector until 2030. In particular, the agricultural sector is to reduce emissions by 14.26 million tonnes of CO₂-equivalents by 2025, a reduction of 13.1% from the Business as Usual (BAU) projection, and by 42.85 million tonnes by 2030, a reduction of 38.2% from the BAU projection. Forestry and land-use emissions are to achieve reductions of 39.31 million tonnes by 2025 and 79.1 million tonnes by 2030. In line with commitments under the Global Methane Pledge, the plan also seeks to cap methane emissions at 59 million tonnes for 2025 and 45.9 million tonnes for 2030.

Following the “Glasgow Declaration on forests and land use” from the COP26, Viet Nam implemented a decision effective 24 August 2023 that specifies goals on managing natural forest area, restoring and upgrading forest quality, increasing the area of forests certified as sustainably managed, and developing policies to promote industry development towards a low-emissions, circular and green economy.

Trade policy developments in 2023-24

A free trade agreement between Viet Nam and Israel (VIFTA) was signed on 25 July 2023 after more than seven years of negotiations. The agreement, the first between a southeast Asian country and Israel, is expected to enter into force in 2024. It will involve removing duties on at least 86% of Vietnamese products and 93% of Israeli products (Vietnam Investment Review, 2023[5]). It is expected that bilateral trade turnover will increase from USD 2.2 billion (the level in 2022) to USD 3 billion, as Vietnamese tropical products are exported for processing in Israel (including for seafood) and as Israel gains access to ASEAN countries (Vietnam National Trade Repository, 2023[6]; Viet Nam Center for WTO and International Trade, 2023[7]).

Policy context

Key economic and agricultural statistics

Viet Nam is a mid-sized country in terms of land area, but its population of over 98 million makes it the 16^th most populous country in the world. Almost two-thirds of the population live in rural areas. Since the reforms of Doi Moi in the mid-1980s, the country has seen strong and steady growth in GDP, in the order of 5-7% annually from 2000-19 (Figure 29.3). Growth in GDP slowed as a result of COVID-19, but rebounded to just over 8% in 2022.

Agriculture contributes nearly 12% to Viet Nam’s GDP and employs over one-third of the labour force, although the relative importance of agriculture in the economy is declining. The sector has undergone significant structural changes in recent decades, reflecting a shift away from staple foods to export commodities, such as rubber and cashew nuts, and to livestock production, particularly pig meat. Crops dominate the agricultural landscape, accounting for 63% of total agricultural production in 2022 (Table 29.2). Rice alone plays a dominant role, accounting for around one-quarter of the value of agricultural production.

Table 29.2. Viet Nam: Contextual indicators

	Viet Nam		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	202	1 321	0.5%	1.0%
Population (million)	79	98	1.8%	1.9%
Land area (thousand km2)	310	313	0.4%	0.4%
Agricultural area (AA) (thousand ha)	8 780	12 360	0.3%	0.4%
			All countries1
Population density (inhabitants/km2)	252	313	52	64
GDP per capita (USD in PPPs)	2 553	13 457	9 363	25 965
Trade as % of GDP	49.5	89.4	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	22.7	11.9	2.9	3.8
Agriculture share in employment (%)	65.3	33.6	-	-
Agro-food exports (% of total exports)	16.9	6.1	6.4	8.0
Agro-food imports (% of total imports)	6.1	9.7	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	78	63	-	-
Livestock in total agricultural production (%)	22	37	-	-
Share of arable land in AA (%)	71	55	32	34

Note: *or closest available year.

1. Average of all countries covered in this report. Agro-food trade includes natural rubber.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

With the progressive liberalisation of trade, the value of imports and exports has increased substantially since the early 2000s (Figure 29.4). Imports, in particular, saw a sizeable jump in the last two years, increasing from USD 22.4 billion in 2020 to USD 34.9 billion in 2022. The value of exports has also steadily increased, reaching USD 22.6 billion in 2022. Viet Nam is one of the world’s largest exporters of a range of agricultural commodities, including rice, coffee, tea, cashew nuts, coffee, black pepper, natural rubber and cassava. However, exports often sell at a discount compared to the same commodities from other leading exporters due to quality differences.

Over 60% of Viet Nam’s agro-food exports are delivered as primary or processed goods for household consumption, where the share of the latter in exports increased in 2022 relative to 2021. In contrast, 70% agro-food imports are used as primary or processed inputs to production, rather than for household consumption. Key imports into production include livestock feedstuffs, such as oil cake and maize, and raw commodities for further processing and export, including cotton and cashew nuts. The remaining 30% are products to meet food demand from domestic consumers, including higher-value foods and beverages.

Agricultural production increased by 2.8% from 2012-21 (Figure 29.5). This was largely driven by growth in total factor productivity, which outpaced the world average during the same period. Growth in intermediate inputs likewise outpace the world average and contributed to the country’s relatively high level of growth in agricultural output.

However, agricultural production gains have been accompanied by significant pressure on natural resources. The nitrogen and phosphorus balances for Viet Nam exceed the OECD average in for the period 2012-21 by a factor of 4.5 and 13.3, respectively. The country abstracts nearly double the amount of water for agriculture and the share of agriculture in total GHG emissions is three times greater than the OECD-wide average, although agriculture accounts for a larger share in the country’s economy. The environmental degradation of production in Viet Nam poses a risk to agricultural production and the capacity of the sector to support sustainable productivity growth in the future.

Table 29.3. Viet Nam: Productivity and environmental indicators

	Viet Nam		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	2.5%	2.1%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	164.1	126.7	32.1	28.2
Phosphorus balance, kg/ha	29.9	30.5	3.3	2.3
Agriculture share of total energy use (%)	1.7	5.0	1.7	2.0
Agriculture share of GHG emissions (%)	47.9	31.6	8.7	10.1
Share of irrigated land in AA (%)	..	..	-	-
Share of agriculture in water abstractions (%)	94.0	94.8	47.0	49.5
Water stress indicator	..	..	8.7	..

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Following its declaration of independence in 1945 and ensuing reunification into the Socialist Republic of Viet Nam in 1975, the Communist Party of Viet Nam initially structured the country according to the Soviet model, which was grounded in central planning and self-reliance. Within this context, agriculture’s primary role was to support the development of heavy industry by providing food at low prices and achieving food self-sufficiency (OECD, 2015[8]). Production was organised around co-operatives and state farms, with SOEs providing inputs and controlling output markets. By the mid-1980s, food shortages and famine were pervasive, as was inflation.

A long series of reforms embedded within the economy-wide programme known as Doi Moi or “Renovation” progressively liberalised Viet Nam’s economy and its agricultural sector starting in 1986 (OECD, 2015[8]). The paradigm evolved toward a “law-ruled socialist market economy,” in which the development of agriculture, forestry, and fisheries became a priority for stabilising the economy. The model for agricultural management shifted from co-operatives to farm households, with farmland redistributed in the form of land-use rights, and farm households given the ability to make their own production decisions provided they met certain production quotas. By 1992, prices for most goods and services were determined by markets, though regulation remained for certain commodities, such as fertiliser, sugar, and rice.

From 1993-2000, Viet Nam underwent a period of expansion, in which the country increasingly opened to trade and integrated into the global economy. Reforms introduced more market-oriented policies with the aim of expanding food production for export. A number of these reforms aimed to improve investment and technological innovation, including the 1993 Land Law, the establishment of a national extension service, and credit access for rural households. The Price Stabilisation Fund (PSF) was established to regulate the prices of certain commodities, including urea, paddy and rice, coffee, and sugarcane.

During this period, Viet Nam entered into bilateral and regional trade agreements and partnerships to expand market opportunities, including its accession to the Association of Southeast Asian Nations (ASEAN) in 1995 and its admission to the Asia Pacific Economic Community (APEC) in 1998. Most importantly, the country relaxed restrictions on the export of rice as well as internal barriers to trade between the south and the north. The country saw strong and steady growth throughout the 1990s, in terms of real GDP (7.4% per year) and agricultural output (6% per year), with the relaxation of production quotas, price controls, collectivised agriculture, restrictions on trade and investment, and bans on private enterprises (OECD, 2015[8]; World Bank, 2016[9]). The budgetary expenditure for agriculture quadrupled during this period, with several large-scale projects implemented, such as the Building Canals for All Rice Fields programme (Phan, 2014[10]; Ellis et al., 2010[11]).

From 2000-08, the policy framework aimed to stimulate agricultural and rural modernisation and industrialisation by improving yields, quality, and the value of production. Further international integration, including accession to the WTO in 2007, locked in previous reforms. The remaining few quantitative restrictions on agricultural imports and exports were progressively withdrawn but it was not until the late 2000s that private sector involvement in rice export was encouraged. Prior to this point, the right to export was limited to national and provincial SOEs.

Since 2008, two major resolutions have guided and reoriented agricultural policy development in Viet Nam. The first, the Tam Nong Resolution, emphasises the advancement of agriculture, rural development, and farmer livelihoods based on a socialist market economy. Alongside this, a resolution to ensure national food security was issued in response to sharp increases in food prices from 2007-09. The resolution sought to ensure national food security by guaranteeing adequate food supplies, particularly for rice. It set specific targets to preserve land in the production of rice and to ensure a farm-gate price such that growers are guaranteed a certain profit margin above production costs. In March 2021, this resolution was updated through 2030 to stabilise 3.5 million ha of land in rice production and to ensure an average profit of 35% above estimated production costs.

Table 29.4. Viet Nam: Agricultural policy trends

Period	Framework	Changes in agricultural policies
1976-1986	Reunification: Socialist centrally planned system	Centrally planned economy, including the agricultural sector Agricultural production organised into co-operatives that also administered land Upstream and downstream sectors reorganised as state-owned enterprises
1986-1993	Renovation (Doi Moi): Launch of reforms to transition Viet Nam to a socialist-oriented market economy	Farm households replace co-operatives as focus of agricultural and rural development Role of co-operatives reduced: farmers allowed to make production decisions; co-operatives limited to trading and providing services (e.g. irrigation) Economy opened to trade Reduced government control over prices, although prices regulated for some products (including fertiliser, sugar and rice)
1993-2000	Expansion: Further reforms to expand food production and exports	Land Law 1993; land use rights extended to 20 years (annual crops) and 50 years (perennial crops) Land use tax replaces production quota and agricultural output tax Rural households allowed to borrow loans from commercial institutions Price Stabilisation Fund for essential commodities Restrictions on rice exports relaxed Increased budgetary expenditure for agriculture
2000-2008	Consolidation: Policies to promote agricultural and rural modernisation and industrialisation	Policies to encourage production of primary and processed commodities, quality improvement, domestic and international trade, and increase investments from various sources in physical and social infrastructure Regional and bilateral trade agreements WTO accession
2008-present	Reorientation: Shift in emphasis from extensive development of agriculture based on quantity to one focused on quality and efficiency improvements	Agricultural policy guided by two major resolutions: - Resolution No. 26/2008/NQ-TW on agriculture, farmers and rural areas (Tam Nong) - Resolution No. 63/2009/NQ-CP to ensure national food security Implemented through the master plan for agricultural development (2012) and the agricultural restructuring project (2013)

Over the past 20 years, the overall level of support provided to Viet Nam’s agricultural sector fluctuated at low or negative levels, largely driven by changes in MPS (Figure 29.6). Since 2014, PSE has remained negative, dropping to around -10% in 2018 and remaining at that level since. Total support to agriculture (TSE) has also been negative over the same period, as budgetary transfers to producers and expenditure on general services do not compensate for overall negative MPS.

References

[4] Asian Development Bank (2023), Imperatives for Improvement of Food Safety in Fruit and Vegetable Value Chains in Viet Nam, Asian Development Bank, Manila, Philippines, https://doi.org/10.22617/tcs230009-2.

[11] Ellis, K. et al. (2010), Assessing the Economic Impact of Competition: Findings from Vietnam, Overseas Development Institute, London, https://odi.org/en/publications/assessing-the-economic-impact-of-competition-findings-from-vietnam/ (accessed on 29 March 2023).

[3] Gray, E. and D. Jones (2022), “Innovation, agricultural productivity and sustainability in Viet Nam”, OECD Food, Agriculture and Fisheries Papers, No. 181, OECD Publishing, Paris, https://doi.org/10.1787/9cc1f47a-en.

[2] OECD (2022), OECD Review of the Corporate Governance of State-Owned Enterprises in Viet Nam, Corporate Governance, OECD Publishing, Paris, https://doi.org/10.1787/a22345d0-en.

[8] OECD (2015), Agricultural Policies in Viet Nam 2015, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264235151-en.

[10] Phan, S. (2014), “A Qualitative Review of Vietnam’s 2006-2010 Economic Plan and the Performance of the Agriculture Sector”, Asian Journal of Agriculture and Development, Vol. 11/1, pp. 39-63, https://doi.org/10.37801/ajad2014.11.1.3.

[7] Viet Nam Center for WTO and International Trade (2023), FTA opens up opportunities in Israeli market: experts, https://wtocenter.vn/chuyen-de/22455-fta-opens-up-opportunities-in-israeli-market-experts (accessed on 19 March 2024).

[5] Vietnam Investment Review (2023), Vietnam, Israel sign free trade agreement, https://vir.com.vn/vietnam-israel-sign-free-trade-agreement-103846.html (accessed on 3 June 2024).

[6] Vietnam National Trade Repository (2023), Vietnam signs Free Trade Agreement with Israel, https://vntr.moit.gov.vn/news/vietnam-signs-free-trade-agreement-with-israel#:~:text=Vietnam%20has%20become%20the%20first,least%2086%25%20of%20Vietnamese%20products. (accessed on 19 March 2024).

[9] World Bank (2016), Transforming Vietnamese Agriculture: Gaining More from Less. Vietnam Development Report., World Bank, Washington, DC.

[1] WTO (2022), World Tariff Profiles 2022, WTO ITC UNCTAD, https://www.wto.org/english/res_e/publications_e/world_tariff_profiles21_e.htm (accessed on 29 March 2023).

Notes

← 1.  The RCEP countries are Australia, Brunei, Cambodia, China, Indonesia, Japan, Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Viet Nam.

← 2.  Producers of these commodities are implicitly taxed in that they receive prices lower than world prices for their outputs, resulting in a negative MPS.

← 3.  The VRG, one of the top ten largest listed companies across all sectors, controls 40% of the land in rubber plantations nationally and 85% of total export production (state ownership ratio 97%). Vinafood II is the country’s largest exporter of rice, with the capacity to process 3 million tonnes per year, and is an exporter also of cassava, maize, beans, cashew nuts, and coffee (state ownership ratio 51%). Vinacafe accounts for 20-25% of coffee bean exports, as well as exports of peppers and cashew nuts, and imports of fertilisers for coffee production (state ownership ratio 100%). Vinatea (converted to Vietnam Tea Corporation Joint Stock Company by decision of the Prime Minister) owns 4 300 ha of land in tea production (the largest concentrated area in the country) and produces up to 10 000 tonnes of dry tea per year, with exports to 15 countries. State ownership ratios from OECD (2022[2]).

← 4.  Decision 420/TTg-KTN of 12 March 2010.

← 5.  Export restrictions for rice provide a policy rationale for negative MPS values until 2017. After that point, formal export restrictions no longer legally apply, but some restrictions remain in terms of maintaining rice reserves. The ongoing presence and role of SOEs in the trade of rice and other export commodities is the most likely explanation for negative MPS values since 2017.

← 6.  The exemption is codified in the Law on Irrigation of 207, No. 08/2017/QH14.

← 7.  For example, foreigners may retain a LUR for 50 years, while locals may hold one indefinitely.