Rice policy in a transitional economy: balancing the social and political objectives

Abstract

Rice is an important component on the global food security agenda. However, prevailing economic analysis suggests that rice policy globally is often damaging and not economically efficient, rendering food security as a goal highly vulnerable to volatility in the world rice market. This paper explores the case of Vietnam’s rice policy as a key rice exporter, a country that has developed highly distinctive policy settings to manage the inherent tensions between ‘socialist’ policy legacies and ‘market-based’ objectives during an economy-wide liberalisation process. In open economy political terms, our case study facilitates the exploration of two key issues. First, how well the OECD-centric concept of agricultural policy exceptionalism works in a developing country context. Second, how the policy may succeed politically even in the face of what appear to be severe political constraints from external economic pressures. The paper develops a narrative of the political economy of rice policy in Vietnam during the Renovation (Doi Moi) Period from 1986 to the present. We find, first, that the policy trajectory in Vietnam’s rice sector runs counter to recent claims about post-exceptionalism in agriculture; that is, rice policy has resisted pressures to comply fully with market rules despite Vietnam’s accession to the World Trade Organization. Second, the interaction of economic liberalisation processes and the ruling Communist Party’s political survival strategy results in policy settings that fail standards of policy coherence and are often economically inefficient, although the survival strategy itself remains stable and reform-resistant over time.

Appendix

This Appendix provides details on the interviews carried out by the authors and the household survey data collected by the General Statistical Office (GSO) of Vietnam.

1.1 Interviews

Our sample of respondents for our interviews was selected from six categories based on desk research on the structure of Vietnam’s rice market. Category 1 consists of policymakers from agencies that have been in charge of regulating the market since 2008 (Fig. 1). Given the decentralisation in the country, we interviewed officials from both the central and provincial government levels. Respondents came from the Government Office, ministries of Finance (MOF), Trade and Industry (MOIT), Agriculture and Rural Development (MARD), and an ‘industry’ association, the Vietnam Food Association (VFA).

In category 2 are food export companies, the most important of which are the Vietnam Northern Food Corporation (VNF1) and Vietnam Southern Food Corporation (VNF2). They are not only the largest trading food companies, but as state-owned enterprises serve as an essential tool of the government to control Vietnam’s rice market. In addition to these two companies, we interviewed state-owned provincial food companies because they are crucial to the implementation of rice policies at the provincial level. The sample of category 2 also included some private rice companies to investigate any discrimination in treatment towards them due to their ownership status.

The sample in category 3 was selected to explore the widespread support that rice-exporting companies and farmers receive in terms of subsidised credit and interest. Hence we approached the State Bank of Vietnam (SBV), the key decision-maker, and the Bank for Agriculture and Rural Development (Agribank) as a primary policy executing agency in this regard. A few commercial banks were also included in our sample to get diversity in opinions.

In category 4, we interviewed representatives from academia and non-governmental agencies (NGOs) to get their independent views. To investigate the effects of Vietnam’s institutions in the rice market, we carried out systematic interviews with wholesalers, millers, and collectors (category 5), and farmers (category 6) selected in key rice-producing provinces, namely Can Tho and An Giang in the Mekong river delta and Nam Dinh in the Red river delta. These groups had large, medium and small size entities to ensure diversity in perspectives. The interview content discussed with each category is shown in Appendix Table 1. This content has been designed based on the role and responsibility in the rice market of different stakeholders. We used two kinds of questions, namely open-ended and closed. The former was applied mostly to elite interviews with policymakers, banks and academia while the latter was used for categories 5 and 6. A combination of them was asked in interviews with rice exporting companies. The interviews took place on December 2016 and January 2017. As seen in Appendix Table 4, we succeeded in reaching almost all planned interviewees. Among those we failed to interview were VFA and VNF2, who refused to participate in our study.

Table 4 Intended versus actual interviews by category

1.2 Household Living Standard Survey Data

Vietnam’s Household Living Standard surveys (VHLSS) were carried by the General Statistical Office (GSO) of Vietnam. The first survey was in 1993, with 4800 households interviewed, all of whom were included in the second survey five years later, together with an additional 1200 families. Since 2002, GSO surveyed households on a biennial basis. The sample size was increased to almost 30,000 households in 2002 but then reduced to about 9000 since 2004. All surveys are nationally representative, with the master sample being updated every ten years, based on population censuses. The core modules of these surveys are household comprehensive income and expenditure, which are hardly changed over time. Therefore, statistics using the data on income and expenditure are comparable across years. Description of the surveys and their results can be found on the website of the World Bank and GSO (e.g. GSO (2014), GSO (2016), and GSO (2017)).