Research Findings

Viet Nam Publication Abstracts

Rice Markets, Agricultural Growth and Policy Options in Viet Nam

Viet Nam has undergone a profound transformation in recent years and, as a result of a series of macroeconomic and institutional reforms since 1986, it has made substantial progress toward becoming a market economy. As this transition continues, Viet Nam faces the challenge of formulating and implementing a growth strategy which is both economically and politically feasible. Critical to this growth strategy is the role of agriculture and, within agriculture, the development of an efficient rice marketing system. The emergence of Viet Nam as a major rice exporter has raised a number of important policy questions. First, will the country be able to continue its impressive growth? Second, how far has Viet Nam moved along the path toward a market economy? Third, what is the role of government in the development of a rice economy? Finally, what is the best way to promote food security? The paper addresses these issues and reports the results of a study conducted by IFPRI for the Asian Development Bank in collaboration with the Ministry of Agriculture and Rural Development of the Government of Viet Nam. The study is based on extensive data collection from marketing agents (farmers, traders, millers, state owned enterprises, and exporters) conducted during 1995 and 1996.

It concludes with the following responses to the stated questions. First, Viet Nam will be able to maintain its impressive growth rate if it is able to increase rice exports, which will require further reform of the rice marketing system. Though the private sector is growing in importance, it remains largely undeveloped, as revealed in the small size of transactions, storage and assets, and low levels of market integration. The public sector remains significant. Turning to policy, the government should allow the private sector responsibility for decisions concerning the production and distribution of rice, and focus its attention upon promoting a stable macroeconomic environment; investing in appropriate public goods such as infrastructure, research and extension; and developing the necessary legal infrastructure for private sector activity. Finally, in terms of securing food security, reliance on price and trade controls is generally self-defeating. Instead, the government should base policy upon promoting growth and distributing its gains more efficiently, especially through the use of targeted programs.

Key words: agriculture, exports, food security, liberalization, marketing, rice, policy, private sector, trade, Viet Nam

last updated: February 24, 1999