Agricultural Policies in Vietnam: Producer Support Estimates, 1986-2002

Abstract

Since 1986, Vietnam has moved from a centrally planned towards a market-oriented system through several major economic and trade reforms. First positive results of the reform process became visible in the early 1990s when poverty declined significantly. The Vietnamese agricultural sector has also experienced high growth and impressive export achievements. The country changed from a food importer to one of the major exporters worldwide. The question arises to what extent support policies contributed to this growth, especially of the agricultural sector. To answer this question, domestic and trade policies in the agricultural sector are analysed and the market price support (MPS) and producer support estimates (PSEs) are calculated. To account for the special conditions in Vietnam, adjustments for country- and commodity-specific factors like transportation costs, marketing margins and the quality difference of exportables (or importables) at the border and domestically are included. Selected agricultural commodities for MPS and PSE calculation comprise rice, coffee, tea, rubber, pepper, sugar, groundnut, cashew nut and pig meat. Their shares in total output exceed 70% allowing for a generalization of the calculated PSEs, thus roughly representing the whole agricultural sector. The finding is that most agricultural products were taxed in the mid 1980s until the mid 1990s. This was mainly due to the dominance and monopoly position of the state-owned sector, restrictive trade policies like import and export quotas and licenses, and distorted markets and prices in the country. The domestic reform process and the opening of the economy since the early 1990s, however, impacted on the gaps between the domestic and international prices. Thus, since the mid 1990s, the net support of agriculture became positive and increased - but still reaching only rather moderate levels. This study of Vietnam is the third comprehensive review conducted within an IFPRI project on understanding and assessing domestic and trade policies in the agricultural sector in developing countries. The data are meant to deliver a basis for further trade-related research to be conducted in the future.