Agribusiness continues to represent a significant portion of Vietnam’s economy, averaging between 13% – 17% of national GDP over the past decade. In the first half of 2024, total export turnover of agri-food, forestry and fishery products amounted to $29.2 Billion USD, an increase of 19% when compared to the same period in 2023, according to the Ministry of Agriculture & Rural Development.
With a year-round growing season and the ability to harvest two to three crops annually, Vietnam benefits from favorable natural conditions for agriculture production. Additionally, the usage of technology continues to drive innovation, productivity and quality control in crop, livestock, poultry and aquatic production – leading to higher value yields and new opportunities for global integration.
In recent years, Vietnam’s agricultural sector has continued to expand in both scale and production value, maintaining steady growth and contributing significantly to the country’s socio-economic development, reaffirming its role as an economic cornerstone. With a solid foundation in place, increased production value and innovation, and government support, the agricultural sector presents new and exciting horizons for global businesses.
Trends & Insights
Improved Crop Yields: As a result of improved crop varieties and modern irrigation technologies, Vietnam has significantly increased its agricultural output. Rice production alone saw a 15% increase in June 2024 compared to the same period last year, due to drought-resistant rice varieties and advanced farming techniques. This not only ensures food security domestically but also strengthens Vietnam’s position in the global rice export market. Similar trends have been observed in fruit and vegetable production.
Animal Health and Nutrition: In the first six months of 2024, pork production reached 2.54 million tons, up 5.1%, while poultry production reached 1.21 million tons, up 4.9%, marking strong signs of recovery from difficulties in recent years, according to the Ministry of Agriculture & Rural Development. Advances in animal nutrition and health management continue to improve production efficiency and product quality.
Food Quality and Processing: Foreign Direct Investment in Vietnam’s food processing industry continues to grow, as companies look to utilize Vietnam as a production hub for processing operations, leveraging free trade access to export products to regional and global markets. Additionally, demand for quality food products in Vietnam’s domestic consumer market helps to drive growth in this sector.
Agricultural Technology (Agri-Tech) & The Development of Advanced Production Processes:
Vietnam is transitioning from traditional agriculture to a modern agricultural economy, with a focus on developing efficient, high-tech and sustainable agriculture production practices. Recent trends include producers adopting new, higher-quality crop varieties, shifting to organic and clean production methods, and restructuring supply chains to meet green and sustainable production standards. The ultimate goal is to increase economic value per unit of land used, while reducing negative impacts from production. This trend is being driven both by the private sector and supported via government incentives.
Digital agriculture is becoming a key driver for sustainable development in the agricultural sector. The integration of AI in crop monitoring, drone applications in pesticide spraying, and blockchain technology in traceability has led to a strong wave of investment in Vietnam’s Agri-Tech sector. In June 2024 alone, this sector attracted over $250 million USD from foreign investors, according to the Ministry of Planning & Investment.
The development of environmentally friendly, cost-effective, and easily integrated solutions is essential. However, despite the large number of small-scale farmers, the number of agricultural technology companies and initiatives in Vietnam remains limited. For example, according to the British Chamber of Commerce in Vietnam, there are roughly 28 million workers in the agri-food sector, yet there are only 48 Agri-Tech companies operating in the market as of 2022.
Opportunities
Agriculture has always been considered one of Vietnam’s key sectors with significant advantages. Thanks to favorable natural conditions and abundant resources, the country has strong potential to be a global player through its diverse agricultural sector with various crops and livestock distributed across the country. Additionally, incentives such as unprecedented global market access via Vietnam’s numerous Free Trade Agreements, and large-scale private sector investments continue to drive growth in the sector. However, as is the case in any evolving industry, significant demands create opportunities for global companies:
- Supplying Vietnam’s Agri-foods Industry: Global companies have opportunities to supply raw materials, additives, equipment and technology to support Vietnam’s agriculture industry. As the industry continues to evolve, so too does the demand for innovative and quality inputs.
- Leading Innovation: Agri-Tech companies have the opportunity to develop and implement their technologies in Vietnam, leveraging Vietnam’s young and skilled workforce and relatively low-cost research & development environment. Additionally, Agri-Tech companies may also find new opportunities in exporting their technologies for use in the Vietnam market.
- Foreign Direct Investment: Global players looking to become a part of the domestic industry, or those looking to utilize Vietnam’s relatively low cost environment and unprecedented global market access via 18 active and planned Free Trade Agreements may consider investing in greenfield agriculture projects in Vietnam, or developing strategic partnerships in the sector via mergers and acquisitions opportunities.
- Sourcing: Vietnam’s quality control and traceability systems continue to develop, presenting new opportunities for global importers to source a wide variety of agricultural products from Vietnam.
The Bottom Line
Vietnam’s agri-business sector is not only a vital industry but also a promising investment and trade opportunity. With strong advancements in quality, technology, and market potential, this sector is becoming an ideal destination for global companies..
If your organization is seeking opportunities to supply product to Vietnam’s agricultural sector, source agriculture products from Vietnam, or invest in the agricultural sector, The Herbers Agency is here to be your trusted partner in Vietnam – providing you with the benefits of being your market representative and helping you assess the opportunities and develop strategic relationships with the right stakeholders.
Contact us today to begin your Vietnam journey!
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