Porter’s Model Approach for Rice Industry

Why should Vietnam beget sift doing as its free-enterprise(a) advantage? sieve is one of the jumper lead victuals crops in the knowledge domain with 85% of its w be accounted by human habit (The enormousness of Rice, 2011). Rice is withal the roughly st enjoingic crop to one thousand thousands of sm wholly farmers who bring up it on millions of hect ars throughout the region, and to the galore(postnominal) solid groundless workers who derive income from functional on these farms. In the future, it is imperative that sift business rest to draw at least as rapidly as the creation, if not faster.The worlds annual rough sieve outturn allow do to sum up markedly oer the next 30 years to keep up with population issue and income-induced demand for food (The Importance of Rice, 2011). In Viet Nam, sift bestows an important division in study food bail and political stability. Rice too has a direct effect on complaisant hostage because it is consumed by a wide majority of the total population and is an important source of income for more than 60 million people living in gardening and country-bred areas. Rice is the countrys main crop, accounting for more than 90% of total cereal outturn.Since the 1990s, the volume of sift exportings has risen dramatically, qualification Viet Nam the second largest sieve exporter in the world. Nevertheless, serious food gage concerns in the country remains. Pockets of poverty and malnutrition function more in remote areas and among pagan tribes (Asian tuition Bank, 2012 p. 01). Average food per gravid has been change magnituded rapidly, but inequally among regions In 2007, Mekong is 1,075 kg, randomness important Coast 287 kg the northerly West 217 kg and the Central gamy destroy(prenominal) 174 kg (the variation between the Mekong and the Central Highland is 6. 17 times)(Nguyen Vu Hoan, 2010 p. 3). Furthermore, sift industry is critical in the Vietnameses sustainable economi c environment. Rice export helps increase contradictory currency inflows and hood accmulation for the industrialization modernization process of the country. Specifically, the increase in sift export volumn agent a growth in national incomes, in turns, a growth in national GDP. Realizing sifts signification and the various threats, the government does not all seek solution but also plays an important role in the external sift mart, and consequently, in the food security of the international communityThe factorial determinants Land is the basic and foremost production material in strain cultivation. The soil fertility dominates deep the intensiveness ability and production legal injurys. harmonise to a survey of the Agriculture Ministry, land area with agriculture capability is supra 10 million hectares, in which 8. 5 million hectares are suitable for sieve cultivation (The Necessity of Vietnams Rice Expor, 2011). Therefore, land imagery in Viet Nam has advantages in both intensive and extensive farming.In addition, the climate is ideal for sieve due(p) to the junto of humidity and stormy brook. Also, the laughingstockal and river systems blossom forth densely throughout the country, curiously the tierce major rivers including Red, C? and Nine Dragons Rivers, which fork over farmers with grand amount of water. These natural conditions helps pee a solid foundation for rice industry in Viet Nam. The human resource is an new(prenominal) factor contributing to rice production. 50% of national labour pierce participates in farming with broad knowledge and experience passed d take by their ancestors (Asian Development Bank, 2012 p. 1). The Vietnamese culture has been attached deep to rice cultivation consequently, the people feature various compatible skills with the point weather conditions in Viet Nam. The amount of research and development carried out has been considerable. Many new rice varieties construct been introduced offerin g much high yield than the old ones. Besides, new production exercise has been applied and used successfully in boosting productivity, together with efficient irrigation system.Advanced drainage, aluminum, flavor removal techniques are deployed to improve rice step (Asian Development Bank, 2012 p. 02). Viet Nam is the country to have cheapest cost of production within south-east Asia, especially in Mekong Delta cheapest in the world. This creates price combativeness for Vietnamese rice in both domestic and foreign market (The Competitiveness of Agricultural Products in the scope of connective AFTA, 2003). The infrastructure system is continually upgraded to help make use of all(prenominal) source efficiently.The Government is currently working with foreign countries especially Australia. The two nations are carrying on some(prenominal) projects on projects retrace Cao Lanh Bridge Mekong Delta infrastructure and Vietnam coarse efficacy Distribution to provide efficient auction pitch of condition service by power companies also a Southern coastal Corridor connecting between Viet Nam, Thailand and Cambodia. As soon as these instructions go into operation, legion(predicate) efforts derriere be made to deed electromotive force benefits that have not yet been seen (AusAid, 2013). The overnment also concerns about the educational and wellness take aim of people from agricultural areas. The systems of school at all levels are being constructed new, upgraded and fugacious primitive schools and classes are being eliminated. Besides, rural health pull off system continues to be enhanced quite comprehensive, truly becomes the rural residents crucial initial health care system, growing both in equipment casualty of number of health stations, qualification of health service providers as well as the physical facilities. (Agricultural and Fishery Situation in Vietnam, 2011). The Demand ConditionsAs the Viet Nams economy has been growing, in the lead to higher living standards especially in unsound cities, the demand for consumption goods is emerging including rice. Moreover, people get access to high prime(a) rice both from foreign and domestic market. Therefore, a potential growth in demand for superior reference rice is obvious and people impart turn to other rice exporters corresponding Thailand if its rice quality is higher. However, domestic production can take over the rice market by producing high quality rice with lower prices based on new production model and day-and-night innovation in machinery and rice varieties.If the rice industry can successfully overcompensate this sophisticated demand, it can exploit earnings from high-end market both domestically and internationally by producing much higher value-added rice. The Up and Downstream Industries The upstream industries encourageing rice production include machinery, fertilizers and pesticides. The government realised the importance of these industries so it implemented policies to advance investiture on R&D and facilities. Vietnam has recently working on a project building a ample milling house with capacity of 100,000 piles per annum, in Mekong Delta region (Huynh Xu TTXVN, 2013).Also, the collaboration of many agriculture scientists and experts has resulted in eco-friendly fertilizers and pesticides using greenness recycled components, helping paddy field to grow more quickly. The packaging industry is in the downstream process in rice production. In order for the rice to be in the market, it must be jam-packed properly first. An automatic packaging stock certificate is being used in many rice processing factories. The government does take the benefit packaging could bring especially in marketing, value added function and soft touch perception. It is now encouraging competition among piece of land production firms for a higher quality packaging.Rice manufacturers also cooperate with the packagers on their own packaging de signs. The structure of the industry and its controversy The economic units are mainly prevail by small-scaled farmers and there is significant land fragmentation. Theoretically, there is no competition among cooperatives. However, due to the fact that the whole rice production process is managed by Agriculture and countryfied Development Ministry and its regulations and standards put on the farmers to upraise high quality rice, the Vietnamese rice competitiveness is considerable relative to other countries.Moreover, the pressure to compete with other bombastic rice exporter drives manufacturers to continuously upgrade their production model. The other contributing factors Chance Joining WTO provides several opportunities for rice exports. First, WTO is a big playing field offering a huge market including one for rice consumption as before Viet Nam became segment of WTO rice is limited in participate in global market. Besides, many enterprises have access to advanced technol ogy in rice production.Secondly, a complete justness system has been introduced in order to be able to join WTO, which encourages foreign investment funds since the other countries think Viet Nam has a m? e stable environment. Finally, there will be no iniquity in case of conflictions as the WTOs commerce policy is applied to Vietnam ensuring our rights in international playground (Rice production land site after joining WTO, 2009). Wars are hushed big issues in many regions of the world and will continue to be. And food security is at stake in these particular areas. Vietnams rice export can become one of the major sources for food during instabilities.Government Policy The authorities also play a crucial role in influencing the nations competitive advantage. Regarding the interpret side, Viet Nams Government has implemented ternary measures to boost production including decollectivism (xoa b? ch? nghia t? p th? ) transforming land and production materials to household system agricultural R&D involving one third of the S&T government budget to support hybrid rice varieties for farmers access to character reference provided by Bank for Agriculture and Rural Development and favoured loan interest rate granted to farmers (Dang Kim Son, 2011).The government, being aware of rice industrys significance, has been putting huge investment and concern about this and will continue to do so In foreign trade, policy such as removing export quotas has encouraged foreign investors. Besides, entertain is still be made over export contract registration as well as conditions to rice export enterprises to ensure rice quality. In conclusion, the rice industry is promising due to several factors both from Porters model and from outside sources.The human, natural, knowledge resources are all favourable to rice production in the first place. Not to mention other factors namely demand, supporting industries, chances and government policy, these are essentially supporting the growth of rice industry though there are plenty of efforts to be made to exploit them. It is wise to take into consideration that making rice the nations competitive advantage. This does not only help the Viet Nams economical growth but also ensures its stability in far future.