Viet Nam : adjustment, growth and rice

Agriculture and more particularly the rice economy has been central to 15 years of reform encompassing the doi moi period, the 1989 stabilisation package and the consolidation of the market economy now in progress. Since stabilisation, Viet Nam has moved from being a net rice importer to the world's third largest rice exporter. A review of the reform process is accompanied by an assessment of the current constraints on food agriculture and rice's future prospects. While physical and marketing infrastructure need strengthening, modernising rural credit is of key importance to sustaining improved foodgrain terms-of-trade. However, recent data suggests that the surge in rice output may now have peaked and that future per capita output growth could be low. Given the high income-elasticity of foodgrain demand typical of a poor country, Viet Nam probably will cease being a major exporter in the coming decade. With rapid export diversification, this development is unlikely to constrain foreign exchange availability; however, increased wage good prices may begin to squeeze profits unless there is sustained growth in the productivity of labour.