Boston, MA -- (ReleaseWire) -- 04/14/2014 -- 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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- Rice consumption growth to 2018: 4.0% to 20.9mn tonnes. Rice remains the major food staple in Vietnam, and we do not see this changing over our forecast period. However, rising interest in other foods such as wheat-based goods - supported by growing affluence - will restrict demand for rice, and over the forecast period we expect production growth to significantly outpace that of consumption.
- Corn production growth to 2017/18: 28.9% to 6.2mn 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: 21.9% to 484,700 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 2012); growth expected to average -1.2% annually between 2013 and 2017.
- 2014 real GDP growth: 5.9% (up from 5.4% in 2013; predicted to average 6.3% over 2014-2018).
- 2014 consumer price index: 5.8% year-on-year (y-o-y) (down from 6.6% in 2013; predicted to average 5.2% over 2014-2018).
- 2014 central bank policy rate: 7.00% (same than in 2013; predicted to average 6.20% over 2014-2018).
Key Revisions To Forecasts
- 2013/14 coffee production forecast revised up, to 27.5mn 60kg bags (compared with a previous estimate at 24.5mn bags). Concerns over a prolonged drought spell in Central Highlands that hindered coffee trees blossoms, have now eased. Moreover, cultivated area of higher yielding trees has been growing at a faster pace than expected.
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