Miller Magazine Issue: 130 October 2020

VIetnam 83 MILLER / OCtOber 2020 ing concerns over the livelihoods and the food security situation of about 2.5 million pig farming households. Grain import requirements, mostly corn and wheat, in the 2020/21 marketing year (July/June) are forecast at a near‑record level of 15.5 million tonnes, 10 percent above the five‑year average. Import requirements of corn are forecast close to last year’s record level of 11.5 million tonnes, supported by the growing demand by the feed in- dustry that accelerated from 2012. While the local rice bran and broken rice supply is abundant as Vietnam’s rice pro- duction remains stable, corn production has seen a slight downtrend and cassava feedstock has faced competition from the increasing demand for exports, local industrial production, and the biofuel industry. Vietnam has been importing corn primarily from South America, with limited quantities from the United States and Eastern Europe. AN IMPORTER OF MILLING WHEAT Wheat is an important staple food in Vietnam, being consumed mainly as bread, noodles and sweet biscuits. Wheat consumption per capita as food in Vietnam has increased from 5kg in 1990 to over 16kg in 2018 and will continue to grow to about 23kg by 2030. The total de- mand for wheat for food is projected to grow to 2.8mmt by 2030. Consumption of wheat as food for people has increased steadily, while consumption within the animal feed industry has jumped from nearly zero up to 3mmt in the space of 10 years. Vietnam does not produce wheat. Import require- ments of wheat are forecast at 3.6 million tonnes, 10 percent below the five‑year average, reflecting a decrease in the demand for feed use. Australia has been a traditional exporter of milling wheat that has accounted for approximately 38-40 percent of the market share. However, imports of Australian wheat into Vietnam have been decreasing since MY17/18, due to unfavorable weather conditions that lowered production and pushed up prices. Declining imports from Australia have been offset by other importing markets. Russian wheat imports increased significantly in MY17/18 but fell by 43 percent in MY18/19 due to tightened phytosanitary inspections by the Vietnam- ese government. Demand for feed wheat is similarly likely to continue to grow as aquaculture and animal industries continue to grow. However, demand for feed wheat is more variable as it depends on the relative prices of alternative local and imported competing feed sources, such as corn and cassava. There is nevertheless an underlying demand for wheat in aquafeeds given wheat’s functional role in sta- bilizing feed pellets and its ease of use in industrialized feed processing. Vietnam already has free trade agreements with ma- jor wheat suppliers, such as Australia and Russia. Import volumes of wheat may be further boosted by Vietnam's efforts to expand its exports of flour products to neigh- boring markets—as well as the positive growth prospects for animal husbandry and aquaculture. WHEAT MILLING INDUSTRY IN VIETNAM Vietnam’s wheat milling capacity is about 3.5mmt an- nually. This is more than twice the current demand for wheat for food; indeed, more than the demand estimat- ed above using 3 percent growth to 2030. Four mills dominate wheat milling in Vietnam: Vimaflour, Mekong, Interflour and Bing Dong. These mills account for about 50 percent of market share. This large milling capacity suggests the industry is anticipating strong future growth in the consumption of wheat for food, but may also point to expectations of growth in flour exports and the in- creased use of milled wheat for aquafeeds. Flour exports have increased by more than 20-fold since 2001, with Vietnam being the largest exporter in South East Asia. Flour is mainly exported regionally with the main destinations being Thailand and the Philippines. ASEAN is the major market for Vietnam’s wheat flour products, as Vietnam enjoys tariff-free Access. Vietnam’s exports of wheat flour declined in MY18/19 on reduced wheat imports and competition from other countries. USDA estimates that MY19/20 exports will continue their downtrend for the same reasons. SOURCES: The Food and Agriculture Organization of the UN The United States Department of Agriculture The Australian Export Grains Innovation Centre Wheat Production, Consumption and Import in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 0 0 0 Consumption 3300 3200 3750 Imports 3500 3650 3800 Source: USDA Corn Production, Consumption and Import in Wheat Production, Consumption and Import in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 0 0 0 Consumption 3300 3200 3750 Imports 3500 3650 3800 Source: USDA Corn Production, Consumption and Import in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 4650 4460 4500 Consumption 14400 14050 14300 Imports 10500 10200 10500 Source: USDA Rice Production, Consumption and Export in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Wheat Production, Consumption a d Import in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 0 0 0 Consumption 3300 3200 3750 Imports 3500 3650 3800 Source: USDA Corn Production, Consumption and Import in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 4650 4460 4500 Consumption 14400 14050 14300 Impo s 10500 10200 10500 Source: USDA Rice Production, Consumption and Export in Vietnam (1000 Tons) 2018/19 2019/20 2020/21 Production 27767 28300 27488 Consumption 21400 21400 21400 Exports 6570 6700 6600 Source: USDA