‘Rice bowl’ responsibility robs Mekong Delta of growth opportunities: report

With an annual rice output of 24 million tons a year, or half of Vietnam’s total, the Mekong Delta has been given the responsibility of ensuring food security for the country over several decades, which is both a “destiny” and a “tragedy,” according to a recent report by the Vietnam Chamber of Commerce and Industry (VCCI) and the Fulbright School of Public Policy and Management.

“We need to release the region of the food security mission to reduce its dependence on rice. No country gets rich by growing rice. It is given the destiny to grow rice and because of that it has become poor,” said Vu Thanh Tu Anh, director of the school, at the release of the Annual Mekong Delta Economic Report 2022.

Vietnam exported over $3.5 million tons of rice in the first six months in return for $1.72 billion, a year-on-year increase of 4.5% in value and 16.2% in volume.

The reason for the gap between value and volume growth is because the world’s leading rice producers (China, India, Bangladesh, Indonesia, Vietnam and Thailand) have been increasing production, and their combined volume reached a new record of 521 million tons last year. The increased supply has resulted in lower prices.

“It is not wise to maintain a high output. If we keep increasing output, price will drop,” Anh said.

The Mekong Delta rice farming area has been expanding for the last two decades. In 2000, it accounted for 51.5% of Vietnam’s rice farming area and this rose to 54.5% by 2020.

“More output means more fertilizer and more pesticides. It also means more CO2 which makes Vietnam’s carbon neutral target more difficult to achieve. We need to lower rice output in the long run,” Anh said.

Bearing the “rice bowl” responsibility has also made the Mekong Delta struggle to grow. Its GRDP growth was merely 2.42% in 2020 and -0.43% last year.

Among nine localities with negative GRDP growth last year, six were in the region.

Anh explained that agriculture contribution to the region’s GRDP was just 0.5-1% point, which was not enough to lift up its economy.

Farmers in the region use outdated techniques and focus more on quantity more than quality, the report said, adding that their agriculture value added per worker in the region was $2,917 in 2019, lower than that of Thailand, the Philippines and Indonesia.

The VCCI-Fulbright report said that the food security mission has successfully helped Vietnam eradicate hunger and become one of the world’s top rice exporters, but it did not help the Mekong Delta region thrive.

The mission locked the region in low-added-value agriculture activities with poor infrastructure and lack of resources, chasing away investors and workers due to low living standards and scarcity of job opportunities.

Anh and other experts that authored the report said that the current rice farming area in the region needs to be reduced to make room for other activities with higher value and productivity.

Although the government has agreed to cut the region’s rice farming area by 88,560 hectares, or 2.3%, by 2030, it was unclear how the plan will be implemented, Anh said.