Support for Agricultural Restructuring Project : The Financial and Economic Competitiveness of Rice and Selected Feed Crops in Northern and Southern Vietnam
One area of weakness in currentagricultural policy work in Vietnam is the lack of a clearunderstanding of both the private profitability of farmersfor different crop activities and the social profitabilityof such activities. Agricultural performance is thus gaugedin physical terms (i.e. yields and the volume of aggregateoutput) rather than in financial or economic terms. This hashampered efforts to compare and contrast the impacts andeffectiveness of alternative policy and program measures.Comparative metrics for different crops and farm managementsystems have been lacking. The main objectives of this paperare: (i) to describe the Policy Analysis Matrix (PAM)methodology and how to interpret key financial and economicindicators; (ii) to document the underlying assumptions usedfor the analysis; and (iii) to provide a summary and briefinterpretation of the main quantitative results and outcomeof selected sensitivity tests. As a step towards improvedsector planning, this paper utilizes the PAM to analyzevarious farm management systems for rice, maize, and cassavain different parts of Vietnam. Tradeoffs are involved in allproduction decisions and the PAM provides a systematic wayof comparing the private and underlying social costs andreturns from different agriculture enterprises together withthe effects of government policy. The paper is presented infollowing five sections: section one is introduction;section two describes the methodology and main assumptionsused for the analysis; section three presents the mainquantitative results for different kinds of rice grown forexport in An Giang province in the Mekong delta of southernVietnam and for domestic rice and alternative stock feedcrops grown in northern Vietnam; section four presents theresults of various sensitivity tests that looked at theimpact of changes in crop yields, commodity prices,fertilizer costs, and labor costs; and section fiveconcludes with a summary of key findings and policy recommendations.