Support for Agricultural Restructuring Project : The Financial and Economic Competitiveness of Rice and Selected Feed Crops in Northern and Southern Vietnam
2013
World Bank
One area of weakness in current agricultural policy work in Vietnam is the lack of a clear understanding of both the private profitability of farmers for different crop activities and the social profitability of such activities. Agricultural performance is thus gauged in physical terms (i.e. yields and the volume of aggregate output) rather than in financial or economic terms. This has hampered efforts to compare and contrast the impacts and effectiveness of alternative policy and program measures. Comparative metrics for different crops and farm management systems have been lacking. The main objectives of this paper are: (i) to describe the Policy Analysis Matrix (PAM) methodology and how to interpret key financial and economic indicators; (ii) to document the underlying assumptions used for the analysis; and (iii) to provide a summary and brief interpretation of the main quantitative results and outcome of selected sensitivity tests. As a step towards improved sector planning, this paper utilizes the PAM to analyze various farm management systems for rice, maize, and cassava in different parts of Vietnam. Tradeoffs are involved in all production decisions and the PAM provides a systematic way of comparing the private and underlying social costs and returns from different agriculture enterprises together with the effects of government policy. The paper is presented in following five sections: section one is introduction; section two describes the methodology and main assumptions used for the analysis; section three presents the main quantitative results for different kinds of rice grown for export in An Giang province in the Mekong delta of southern Vietnam and for domestic rice and alternative stock feed crops grown in northern Vietnam; section four presents the results of various sensitivity tests that looked at the impact of changes in crop yields, commodity prices, fertilizer costs, and labor costs; and section five concludes with a summary of key findings and policy recommendations.
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