Strong Economic Growth In Asia Will Benefit Southeast Growers
By: Roy Roberson, Southeast Farm Press
10/10/2012 10:49:51 AM
Most Americans think of Vietnam as the under-developed, small Southeast Asia country that fought France and later the U.S. to a standstill now four decades ago.
However, modern Vietnam is one of American agriculture's biggest customers and is rapidly becoming a major power in Asian economics.
Modern day Vietnam has a higher population than any country in Europe, more than 90 million in 2012.
The economic statistics of Vietnam sound a bit like China from a decade ago. Most economists contend Vietnam is 20 years behind China in terms of economic growth, but will likely make up that difference in less than five years.
In just one year, from 2010 to 2011, food consumption in Vietnam jumped by 11.5 percent, grocery retail by 15 percent, soft drink consumption by 7.5 percent and alcohol consumption by 20 percent.
In the past five years beef and pork consumption in Vietnam have more than doubled. Perhaps the most telling statistic about Vietnamese economic growth is the jump in number of cell phones from less than five million in 2005 to more than 125 million this year.
In Vietnam, more than 25 percent of the population is under 16 years of age. The literacy rate is 94 percent and already the country is the sixth largest pork producing country in the world and the third largest in aquaculture production.
What does this dramatic growth mean for U.S. and Southeast grain and livestock producers?
"It means an outstanding opportunity today and more so in the future," says Roy Bardole, U.S. Soybean Export Council chairman.
Last year Vietnam imported nearly a million metric tons of corn. By 2015 that number is expected to jump to 1.5 million tons and increase to 1,850,000 tons by 2020.
U.S. FARMERS REAPING REWARDS
U.S. farmers are already reaping the economic rewards of doing business in Vietnam. From 2006 until 2010 U.S. farm exports to Vietnam skyrocketed from $215 million to $1.3 billion, Bardole says. Feedstuffs alone accounted for more than $150 million in exports in 2011.
While it may seem that huge jumps in grain exports would hurt the livestock industry in the Southeast, North Carolina Commissioner of Agriculture Steve Troxler says that isn't the case.
"A truly free market will take care of both Southeastern grain and livestock producers. While we export a relatively small amount of grain from North Carolina, we export a lot of poultry and pork products grown in the state and region," he says.
Recently, Troxler led a group of North Carolina farmers and agribusiness leaders to visit Asia.North Carolina Small Grain Directors Ron Perry, Jack Alphin, Burt Eure and Dan Weathington joined Commissioner Troxler and 25 others representing cotton, soybeans, wheat, and tobacco to make clients aware of the top quality products produced on farms in North Carolina.
"China is poised to become North Carolina's largest export market for agricultural products," Troxler says.
North Carolina doubled its agricultural exports from 2008 to 2010, increasing from $271 million to $542 million," Troxler says.
Vietnam is one of several countries in which North Carolina agricultural leaders are developing markets for state-grown products.
U.S. grain growers indirectly benefit from the growth of the livestock industry in Vietnam, because the country is the largest buyer of U.S.-produced distillers dry grain, a byproduct of ethanol production.
Despite significant growth in the livestock industry in Vietnam, Bardole says the country will become more and more dependent on foreign beef, pork and poultry as the population increases.
Like virtually every Asian country, Vietnam doesn't have the land base to produce enough livestock to meet demand.
Unlike China, the Vietnamese government is very interested in building U.S.-style livestock operations. Bardole says, he worked with one Vietnamese beef operation that has 130,000 head of cattle and similar size operations are being built for swine.
"Trade will be the solution to meet food demands of Asia. How well U.S. farmers, agribusiness leaders and politicians take advantage of export opportunities will play a big role in the future development of the U.S. grain industry," Bardole says.
He stresses that grain farmers in the United States, Argentina and Brazil will be keys to livestock development in Asia.
The really good news for U.S. grain and livestock producers is that none of these Asian countries, like China, India and Vietnam will ever have the capability of producing enough high protein meat to fill the demand of a rapidly growing population and skyrocketing middle class.
Vietnam will be a key proving ground for U.S. agriculture, Bardole says.
Already the country is the third largest soybean market in the world. To put that in perspective, he adds, two counties in Iowa produce more soybeans than Vietnam grows. And, the U.S. currently has 70 percent of the Vietnamese soybean export market.
One predominantly Southeast agriculture industry, catfish production, has seen the devastating effects of rapid aquaculture production in the Vietnam.
For thousands of years fish were the dominant source of meat protein in Vietnam. The aquaculture industry there was manure-fed, with a small amount of grain to add protein.
Now, the aquaculture industry is grain-fed, technologically modern and growing every year - currently third in world production of cultured food fishes.
In contrast, the U.S. catfish industry started in west Alabama and east Mississippi in the late 1960s. The big challenge was to develop a taste for farm-raised catfish in the U.S., and grower funded organizations were highly successful in doing so.
In more recent years the Southeast catfish industry has fallen on hard times, primarily because of foreign imports and high grain prices, and that challenge does not appear to be going away any time soon.
Townsend Kyser is a third generation catfish farmer in Hale County in west Alabama. He says, "We want to compete on a level playing field, and we feel like we can win on a level playing field."
"But the foreign fish is so much cheaper than what we can produce. The cheap imports are competition, but they also deflate prices that the market can't stand," he adds.
When asked what impact the continued growth of the Vietnamese aquaculture industry in general and catfish production more specifically would have on U.S. farm-raised fish products, Bardole, admitted the U.S. industry would have to change dramatically to keep pace.
Worldwide the demand for aquaculture products has increased dramatically over the past decade, and at the same time the wild catch is going down every year.
Unlike the U.S. government, political leaders in Vietnam recognized this economic opportunity and have developed a 10-year plan for growth of their aquaculture industry.
In a five year period from 2005 until 2010 Vietnamese fish farmers increased production from 160,000 tons of fish to more than a half million tons. Bardole says as worldwide demand goes up, production in Vietnam is likely to continue to increase.
For U.S. grain farmers the use of soybean meal for fish production is only going to increase foreign demand for U.S. grown beans, he adds.
Tom Dorr, executive director of the U.S. Grains Council, says most people think China is driving the grain economy worldwide, and the Chinese do play a key role, but they are far from alone.
"By 2020 India will pass China and will have more than 600 million households in the middle class. Other countries like Vietnam are growing rapidly in both population and economic output, and there is still Japan - a long-time economic power in Asia," Dorr says.
"How we as American producers take best advantage of these emerging economic markets is going to play a key role in shaping U.S. agriculture in the future," he adds.
For more information: http://southeastfarmpress.com/markets/strong-economic-growth-asia-will-benefit-southeast-growers