HANOI, VIETNAM — Vietnam is a major producer, consumer and exporter of rice, but wheat flour is playing a growing part in the diets of its citizens. 

In its March 17 Grain Market Report, the International Grains Council (IGC) put Vietnam’s total corn production in 2021-22 at 4.4 million tonnes, unchanged from the forecast it produced a month earlier and down on the previous year’s output of 4.6 million.

The IGC forecasts Vietnam’s total grains imports in 2021-22 at 16.4 million tonnes, unrevised from a month before, and down from the 17.2 million imported in 2020-21. The import figure includes 3.6 million tonnes of wheat, down from 3.9 million the previous year. Corn imports are put at 12.2 million tonnes, down from the prior year’s 12.7 million.

The Council forecasts Vietnam’s 2021-22 rice output at 28.9 million tonnes, an upward revision from its February forecast of 28.3 million and also up on the previous year’s crop of 28.5 million.

Vietnam also is slated to import 1.8 million tonnes of soybeans in 2021-22, a figure unrevised from the previous forecast and unchanged from 2020-21.

Vietnam is one of the world’s leading exporters of rice, behind only India (which is well ahead of all others) and Thailand, with forecast shipments abroad of 6.5 million tonnes forecast for 2022-23, a prediction that was revised up from 6.4 million tonnes a month earlier. Rice exports in 2021-22 are put at 6.5 million tonnes.

Rice shipments in 2022 started more quickly than the previous year. Jan. 1 to Feb. 28 shipments are put at 975,000 tonnes, compared with 656,000 in the same period in 2021.

According to a Background on Vietnam supplied to World Grain by US Wheat Associates (USW), “Vietnam is a quickly growing imported wheat market with an exploding middle class eager to consume more and better-quality wheat-based foods.”

“Bakers and end-product manufacturers are aggressive in meeting new demand and the milling industry is increasingly savvy in supplying higher quality flour,” USW said. 

Wheat from the United States “made significant inroads in the market, capturing considerable share of traditional products that had long been made from Australian wheat flour and dominating segments where US wheat classes have a clear advantage, such as biscuits, cakes and loaf bread.” 

In 2020-21, US shipments took 20% of the milling wheat market, despite a record harvest in Australia.

“Total wheat imports by Vietnam have varied widely over the past decade as feed millers shift more freely between wheat and corn than their regional peers,” USW said. “Milling wheat use is far more stable, rising consistently through the past decade, forecast at 2.25 million tonnes for 2021-22.” 

USW puts growth in milling wheat demand at an average 4.6% a year, a rate equal to that of the Southeast Asian region as a whole. 

“The annual milling wheat use increase has greatly exceeded population growth, indicating strong growth in per capita consumption,” USW said. “According to USDA’s 2021 long-term projections, Vietnam’s wheat imports are expected to increase to 5 million tonnes by 2030-31.”

Flour and feed milling

USW said the 29 flour mills in Vietnam have an annual capacity of about 3.95 million tonnes of wheat, putting the industry’s actual capacity utilization at around 53%.

“New investments, mainly by foreign companies, are making it difficult for less efficient mills to compete,” USW said. “The larger mills are increasing capacity, with at least five recent expansions adding 1 million tonnes in milling capacity.”

US Wheat also explained that after talks last year, which it described as “productive,” the Vietnamese government eliminated a 3% import tariff on US wheat on Dec. 30, 2021. The first shipment of US wheat purchased without a tariff, more than 68,350 tonnes of soft white and hard red spring wheat grown in the Pacific Northwest and Northern Plains, arrived at the port in Ho Chi Minh City on Feb. 6.

An annual attaché report on the grain and feed sector, published April 1, 2021, said that the country’s domestic pigmeat industry had not yet recovered from the effects of the 2019 African swine fever outbreak on production, despite encouragement from the government for producers who can meet biosecurity requirements to increase output. 

“Poultry and bovine production also expanded in 2020, with noticeable new large-scale investments in the poultry sector,” the attaché said. “The Vietnam feed industry continues to rely heavily on imported ingredients with approximately 70% of feed ingredients being imported. Although most broken rice is supplied by local production, Vietnam imported some broken rice from India to cope with high prices in CY2020.

“Corn production continued to trend downward, and cassava feed stock has faced competition from exports and local industrial production.” 

It also noted that “according to experts and farmers, fodder corn is easier to grow than grain corn, requires less husbandry efforts, and can be rotated with rice during the winter season in the north and northern central regions.”

Increased soybean demand

In an annual report on oilseeds, dated April 13, 2021, the USDA attaché said “soybean meal demand for feed use is forecast to increase in MY2021-22 as the swine herd repopulates from the impacts of African swine fever, along with a forecasted increase in poultry production and bovine herd expansion.”

“Increased domestic soybean crush is driven by increasing feed and oil consumption demand,” the report added. “Soybeans for food consumption are also forecast to increase due to expected recovery from COVID-19.”

However, the attaché forecast that production would fall to 55,300 tonnes in 2020-21, and then to 47,500 tonnes in 2021-22. 

“Low average yield of 1.58 tonnes per hectare and fragmented production makes local soybean production uncompetitive with the lower price of imported soybeans for the feed and food processing industry,” the attaché said. “The decline in soybean planted area in 2019-20 is a part of an overall trend of Vietnamese farmers switching to more profitable crops such as various fruits and vegetables that are grown for both export and domestic consumption.

“Vietnam has two industrial soybean crushing facilities. The demand for soybean crush is driven both by the need for meal for animal feed and a continued steady annual soy oil growth rate.”

The report also forecast growth in soybeans for food use in 2020-21 and 2021-22. 

“This is due to the expected reopening of restaurants, schools, and industrial canteens,” the attaché said. “US soybeans have a strong advantage in food-use categories compared to other sources, as US soybeans are preferred for their flavor and color.”

Vietnam has several large soy milk producers, including Vinasoy, VinaMilk, and NutiFood, the report said.

“According to one soy milk industry source, the industry continues to plan for a packed soy milk production growth rate of 4% to 5% in 2021 and 2022, due to the expected recovery from COVID-19,” the report said.

Biotech benefits

In a report on the use of agricultural biotechnology in Vietnam, dated Oct. 18, 2021, the USDA attaché said the country “continues to benefit from biotech corn as a sustainable tool in the fight against fall army worm (FAW) and increased the production area to more than 100,000 hectares in 2020-21.”

“Growing domestic production also helps meet demand for local feed materials,” the report said. “Vietnam remains a major importer of biotech crops and products, including soybeans, corn, distiller’s dried grains with solubles (DDGS), soybean meal, and cotton.”