Agricultural issues
/My eye was caught by three stories that are confusing to me:
1) This story about dragon fruit prices moving from VND5,000/kg to VND40,000 in just a few days. It seems to be something to do with some Chinese warehouses. The key is that this just returns dragon fruit prices back to pre-COVID-19 levels.
2) Chicken prices have fallen to VND9-10,000 per kg, with reports of farmers losing VND30,000 per head.
3) Durian prices have fallen significantly wholesale, but because transport is difficult, retail prices are still high.
4) Lobsters and king crab prices have fallen. Again, because of COVID-19.
Maybe it’s not so confusing. Basically, COVID-19 is causing all sorts of distortion in the market, with prices falling hurting farmers, but retail prices sometimes sticky because of transportation issues.
I am worried, particularly about chicken prices, given another outbreak of avian flu in Tra Vinh province.
The number of poultry died or culled has risen to more than 55,000, the agency reported quoting the country's Department of Animal Health under the Ministry of Agriculture and Rural Development. In 2019, bird flu outbreak was detected in 41 districts of 24 provinces and cities nationwide with a total of more than 133,000 culled, according to the country's Ministry of Agriculture and Rural Development.
SOURCE: US INTERNATIONAL TRADE COMMISSION DATA, CHARTS BY VIETECON.CO
This is a regular occurrence, and so far it isn’t as bad as last year, but it is very early. Plus, there weren’t other health issues out there last year. We have COVID-19, swine flu, avian flu, plus all of the regular problems.
Agriculture is always difficult. I believe that it is important that countries are somewhat self-sufficient. But that comes at a cost to productivity, to prices and to farmers. It doesn’t help that volatility is high, and the goods are generally perishable, meaning there is little wiggle room - it has to go right as planned. Finally, even if farmers are continuously increasing productivity, profits can fall.
For example, the Vietnam Food Association expects rice exports to grow again this year to 6.75m tons, up 6%. This would be another year of greater productity: exports were up 4% in tonnage terms in 2019. But prices were down so much more than that, and revenue dropped 8%+. I am worried about that again this year, given that the article linked to above mentions that "Vietnamese rice is more competitive in terms of prices.” That’s code for “our prices are going to fall again.” Let’s hope the productivity means better margins, which can help offset the price decline.
China is having problems, but I really think that Vietnam is going to have its own problems. It probably won’t be manufacturing, which is getting a boost from China being out of the game. But for farming, for tourism, for other services, the country might face a lot of challenges. It will be interesting to see how the government steps in, as there has been talk of stimulus.