Agriculture is the cornerstone of Vietnam's economy, contributing 40% to 50% to the G.D.P. and employing 70% of the workforce. Crop and livestock production is dominated by small farmers, and there are distinct differences between northern and southern parts of the country; average farm size in the north is 0.5 ha, while farms in the south average 1.5 to 2 ha.
Agricultural policy. Vietnam has been working to liberalize agriculture for more than a decade. The "home-grown" reforms have attempted to develop a mixed system of public and private enterprises.
The country's history has much to do with this approach, especially the fact that the north and south operated under different systems for decades. Collective agriculture had been firmly established in the north since the 1950s, but the drive to collectivize the south did not begin until unification in 1976.
Reports indicate collectivization in the south was not well-received by farmers. In fact, rice production in the south, which accounts for some 60% of national production, dropped sharply after collectivization.
With food deficits increasing, the government in 1981 introduced contract farming, whereby producers were allowed to manage their own farms and were obliged to sell a contracted amount of production to the state. Residual production could be used on farm or sold to private traders.
Although this system increased production incentives, it was not until further reforms were adopted in 1988 that Vietnam became self-sufficient in rice. At that time, land could be assigned to farm families through 10- or 20-year leases, and farmers no longer were forced to sell production to the state.
In the north, leases generally were assigned according to family size; in the south, leases were assigned to the former owners. Virtually all collective farms in the south have dissolved, although some remain in the north.
In 1989, reforms progressed even further with the complete privatization of domestic grain trading and the removal of price controls. A 1993 land reform law provided for private transfers of land-use leases, as well as compensation to private users in case of government recovery of the land.
Although the domestic market has been privatized, imports and exports of agricultural products remain controlled by the public sector. The national government sets import and export tariffs and determines export quotas for rice, while national, provincial or local governments may export or import commodities.
Flour milling. Vietnam currently has only one operating flour mill, in Ho Chi Minh City, but a second is under construction and is scheduled for completion in 1996.
The new mill, which will have an annual milling capacity of 90,000 tonnes, is being built by a consortium comprising the Australian Wheat Board; Goodman Fielder, an Australian food company; and VIFON, Vietnam's largest noodle manufacturer. It is located about 10 km from Ho Chi Minh City.
The existing mill was established in 1970 as a privately-owned facility, with plans for a 980-tonne per day capacity. Today, only two of the five units are operational, and many machines are not in use.
Vietnam produces no wheat, and the Vietnam Central Food Corp. (Vinafood) is responsible for importing for the mill. Funding and authorization for Vinafood activities come from the Ho Chi Minh City District II People's Committee. Annual wheat imports total fewer than 100,000 tonnes.
Because rice is the staple food, Vietnam's per capita wheat consumption is low, at 5 kg to 9 kg a year. Even so, flour demand outstrips Vietnam's milling capacity, and flour imports will be required until milling can be upgraded and expanded.
Private dealers under license from public authorities may import flour and sell it to small bread and pastry makers. With annual flour imports in excess of 350,000 tonnes in recent years, Vietnam is among the world's top 10 importers.
Baguettes, croissants and pastries are favored wheat products, based on historical French influences, especially in the south. The popularity of noodles also has increased recently.
Feed industry. Vietnam has little to no commercial-scale feed production. Feedmills are small, use limited technology, have low output and rely on homemade grinders and mixers. Although there is a trend toward specialized pig and poultry production around urban centers, livestock predominantly is fed on small farms with local crops and household by-products.
Vietnam's meat industry consists of small private-sector slaughterhouses or contract butchers that serve the domestic market. About 5% of Vietnam's meat production is exported, a market served by 24 publicly owned meat plants.
Meat production between 1980 and 1992 is estimated to have increased by 240%, and projections indicate overall meat demand probably will more than double between 1992 and 2005 as incomes rise. Vietnamese officials have expressed interest in feed manufacturing technology and possible joint ventures, and expectations are a commercial, vertically integrated feed industry gradually will develop.