Boston, MA -- (SBWIRE) -- 06/07/2013 -- BMI View: The agriculture industry (including forestry and aquaculture) contributes to more than 20% of Vietnam's GDP and employs almost half its population. It holds strong growth opportunities in terms of production, exports and retail sales, more specifically with regard to the coffee and livestock sectors. However, some industries face large risks in terms of losing competitive advantage as other Asian countries step up production, particularly of rice and coffee. We believe Vietnam will have to significantly ramp up investment in crop productivity to avoid being left behind, and if it wants to be able to produce more valueadded crops and maintain its status as an export spearhead.

Key Forecasts

- Rice consumption growth to 2017: 7.7% to 21.3mn 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 2016/17: 43.4% to 7.1mn 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: 25.7% to 416,000 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$25.4bn in 2013 (down from US$27.3bn in 2012); growth expected to average -0.5% annually between 2012 and 2017.
- 2013 real GDP growth: 7.0% (up from 5.0% in 2012; predicted to average 6.7% over 2012-2017).
- 2013 consumer price index: 6.5% year-on-year (y-o-y) (down from 9.3% in 2012; predicted to average 6.1% over 2012-2017).
- 2013 central bank policy rate: 9.00% (similar than in 2012; predicted to average 6.67% over 2012-2017)

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Key Revisions To Forecasts

- 2012/13 coffee production forecast revised down, to 19.6mn 60kg bags (compared to a previous estimate at 22.3mn bags). The decline is mainly due to weather fluctuations, with rains hampering cherry development during the coffee flower blossoming period, followed by a dry spell in July and August.
- 2012/13 rice production forecast revised up, to 27.0mn tonnes (compared with a previous estimate at 26.7mn tonnes). Favourable weather conditions during planting allowed for expanded crops in the Mekong River Delta region for spring and autumn crops.

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