Vietnam Agribusiness Report Q2 2016
BMI View: Recent developments in the country's economic and business environments add further weightto our positive view on Vietnam's agribusiness sector. The industry holds strong growth opportunities interms of production, exports and retail sales, particularly with regard to the rice, coffee, livestock and dairysectors. Moreover, economic and financial integration in South East Asia will benefit Vietnam's exports ofrice, dairy and coffee. However, Vietnam is facing growing competition in its key markets. The fulfilment ofits promising potential will only be achieved if the country steps up its competitiveness and improves bothproduct quality and supply chain efficiency. Vietnam will have to significantly ramp up investments on cropproductivity in order to not be left behind and, if it does, it will be able to produce more value-added cropsand maintain its status as an export spearhead.
Sugar consumption growth to 2020: 23.0% to 2.4mn tonnes. Rising income, population and growingconsumption of manufactured food products will help sugar consumption grow quickly in the comingyears. Domestic production growth will not be able to keep up with consumption expansion.
Coffee production growth to 2019/20: 13.2% to 31.6mn 60kg bags. After more than a decade of strongoutput growth, coffee production expansion will slow down in the coming years. Low coffee prices andthe attractiveness of alternative crops such as pepper will lead to a slowdown in new planted area growth.
Milk production growth to 2019/20: 61.9% to 876,000 tonnes. Dramatic increases in cattle numbersand increased public and private sector investment - part of the effort to reduce the country's growingimport dependency - will be the main boost to growth. Commercialisation will also play a key role aslarger, more efficient farms come to play a greater role in milk production.
2016 BMI universe agribusiness market value: USD44.1bn (up from USD43.4bn in 2015; growthexpected to average 3.3% annually between 2016 and 2019).
2016 real GDP growth: 6.6% (down from 6.7% expected in 2015; predicted to average 6.4% over2015-2020).
2016 consumer price index: 2.1% y-o-y (up from 0.8% expected in 2015; predicted to average 4.3%over 2015-2020).
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