Report structure

SOYBEAN VALUE CHAIN ANALYSISDIEN BIEN

C Th L Thy

And

Dien Bien SIEED Project Team

Final Version

September, 2009

Table of Contents

I-INTRODUCTION41.1Rationality and Methodology41.1.1Rationality41.1.2Objectives41.1.3Methodology and scope of the study41.1.4Study team51.1.5Location to collect preliminary data51.1.6Schedule61.1.7Limits of the report61.2General information of soybean71.2.1Origin71.2.2Nutrients71.2.3Usage8II-INTERNATIONAL AND NATIONAL CONTEXT102.1Production112.1.1World112.1.2Vietnam122.2Consumption142.2.1World142.2.2Vietnam142.3Trade152.3.1World152.3.1Vietnam152.4Price Trend172.4.1World172.41Vietnam17III-DIEN BIEN SOYBEAN SUB.SECTOR183.1Production183.2Trade193.3Market requirements193.4Price trends193.5Soybean commodity chain of Dien Bien and actors along the chain203.5.1Scale, capacity and gross profit of chain actors22IV-CONCLUSION AND RECOMMENDATION244.1Conclusion244.1.1Opportunities and challenges to soybean sub-sector of Dien Bien244.2Recommendations25

Figure 1: Soybean, soybean oil and soybean meal production of the world (2000-2010)11Figure 2: Top ten soybean production countries12Figure 3: Vietnam Soybeans Figure 4: Imported Soybeans13Figure 5: Import of soybean in Vietnam16Figure 6: Price Trend (2003-2008)17Figure 7: Prices from June to August, 200917Figure 8: Purchase price by collector in 2003 - 200919Figure 9: Soybean commodity chain diagram from Dien Bien21

I- INTRODUCTION1.1 Rationality and Methodology1.1.1 Rationality

Social Inclusion Economic Enterprise Development Project in Dien Bien was implemented by CARE Vietnam with funds from EU and CARE Denmark (SIEED) and launched in Dien Bien on 1st April, 2008. Project overall objective is to help poor rural producers in Dien Bien province participate in and benefit from Vietnams economic growth post World Trade Organization (WTO) accession.

The project will act through the development of market-led approaches and interventions to add value to production and processing undertaken by the poor, while at the same time maintaining or enhancing environmental quality. Enabling poor women and men to form interest and collaborative groups, and supporting these groups to develop and adopt new productions and technologies, will lead to business opportunities and better capture of revenue in lower levels of the value chain. Equally, improved quality and business service provision to the processing and marketing sections of the value chain will allow improved revenue capture by other actors, resulting in an overall win-win situation.

In project sites of Dien Bien, three products have been identified for improvements are soybean, cattle and black chicken. Those three products will be studied for better understanding under a method of value chain analysis with expectation that an intervention plan will be developed for upgrading the chains. Soybean is the first chain to be selected for participatory value chain analysis as a pilot.

1.1.2 Objectives

Soybean chain analysis was conducted in order to:

1- Build an intervention plan that can add value into local soybean subsector through improving production, processing capacity then income can be generated for beneficiaries in pilot project sites of Nua Ngam and Noong Luong, Dien Bien district.

2- Build capacity for project and counterpart staff through providing skills of information collection; information process and analyzing. It is expected that after exercises of soybean value chain analysis the project team members can do value chain analysis of cattle and black chicken by themselves from lesson learnt from soybean analysis.

1.1.3 Methodology and scope of the study

Methodology: Value chain analysis method was applied to collect and analyze information and data related to soybean. This describes linkages of actors along the chain with operations of each actor including services providers. Tools were used including: Literature review: SIEED project documents were reviewed to get an overview of the project context, activities and expected outputs; World production and trade of soybean were studied for understanding trends and potential development of soybean sector of Vietnam; Discussion on possibilities to develop soybean sub.sector of Dien Bien was made on the basis of data and information collected from reviewing national soybean sector.

Collection of primary data and information: Soybean Chain Mapping were made by relevant stakeholders including representatives from DARD of Dien Bien; Provincial Extension Center; District Extension Station of Dien Bien; Farmers from piloted communes of the Dien Bien district (piloted SIEED project communes) for primary identification of actors along the current product chain; Actors along the chains were openly interviewed with support of checklists (Annex 1: Checklists) for primary data collection. Direct observation was used during field study

Analysis of data and information: Collected data and information were analysis by using trend lines and graphs under the support of Excel software.

Scope: For the main purpose of the study is to build an intervention plan to increase income for the two project communes of Nua Ngam and Noong Luong where soybeans have not been much developed yet in both of production practices and areas, field acitivities of the study were limited to Dien Bien city and districts of Dien Bien and Dien Bien Dong only. However, the consultant made decision to go to Chuong My Ha Noi to collect more information for cross checking information collected from the province in terms of marketing seasonality and market shares of the produces.

1.1.4 Study team

Study team were including SIEED project staff in Dien Bien, staff from Centre for Community Development of Dien Bien (CCD), representative from Department of Agriculture and Rural Development and Centre for Extension of Dien Bien, Extension station of Dien Bien districts and Womens Union members of Noong Luong and Nua Ngam communes. (Annex 2: Members of study team)

1.1.5 Location to collect preliminary data

Preliminary data was collected by open interview of farmers, collectors, agro-product traders, tofu processors, and animal feed processors in the districts of Dien Bien, Dien Bien Dong, Dien Bien city and Hanoi city.

Information of current production capacity was collected with groups of farmers in Nua Ngam and Noong Luong Communes where SIEED projects were piloting its activities. (Annex 3: Daily reports)

1.1.6 Schedule

Field works including training were conducted into two times: The first time was from 20th July to 28th July 2009 and the second time was from 17th August to 21st August 2009.

Activities conducted in the first time was including product selection for pilot of value chain analysis methodology, refreshment of value chain analysis methodology, training on collection and process of data and information, field work exercises in Dien Bien district and Dien Bien city.

Activities conducted in the second time was including training on analysis of information, further collection of information from soybean supply channel from Dien Bien Dong district, however, information collected from this trip have not been fully met requirements of the analysis because time of field trip was not coincident with harvesting season of soybean in the district. (Annex 3: Schedule)

1.1.7 Limits of the report

Current quality of local soybeans was not mentioned in this report because of its unavailability at the time of study conduction.

Cost and benefits of farmers on soybean production were analyzed based on combination of data collected from interviewing farmer groups in Noong Luong and Nua Ngam commune and data mentioned in the baseline reports of Dien Bien and Tua Chua made by Dr. Nguyen Dinh Vinh in March 2009 and report of opportunities to develop agriculture sector in Dien Bien Dong made by Mr. Nguyen Ngoc Kiem in November 2008.

1.2 General information of soybean

1.3 1.2.1 Origin

Table 1: Nutrient FactsMeasure Description100 Grams

Servings1

Servings Weight100g

Water (g)62.18

Energy (kcal)172

Protein (g)16.54

Fat, total (g)8.92

Carbohydrate (g)9.87

Sugars, total (g)2.98

Fiber, total dietary (g)6

Saturated fatty acids, total (g)1.289

Monounsaturated fatty acids, total (g)1.969

Polyunsaturated fatty acids, total (g)5.034

Calcium (mg)102

Copper (mg)0.405

Iron (mg)5.11

Magnesium (mg)85

Phosphorus (mg)244

Potassium (mg)512

Selenium (mcg)7.3

Sodium (mg)232

Zinc (mg)1.14

Vitamin C (mg)1.7

Vitamin B-6 (mg)0.233

Choline, total (mg)47.2

Vitamin E, alpha tocopherol (mg)0.35

Folate, DFE (mcg)54

Folate, food (mcg)54

Folate, total (mcg)54

Vitamin K (mcg)19.1

Niacin (mg)0.397

Riboflavin (mg)0.283

Thiamin (mg)0.154

Carotene, beta (mcg)5

Soybean (science name: Clycine max) is one plant of bean family (Fabaceae) which was found within 11 century B.C. in North East of China then gradually spread to the Central, Southern of the Country and Indonesia Insular by the first century A.C. traditionally, soybean was used as feeds, ingredient of medicine and to strengthen soils then it was processed into soy sauce, tempeh, natto and miso

Soybean came to other Asian countries as Japan, Indonesia, Philippine, Vietnam, Thailand, Malaysia, Myanmar, Nepal and India in about decades of 15th and 16th A.C. Soybean was known in Europe in 1700s and America in about 1765 and firstly used as animal feeds.

Although, soybean has been an important crop of many Asian countries since then but until 1910 it was appreciated by other continents. It is very interesting that the world leading countries in production of soybean is not China but United States of America, Brazil and Argentina, currently.

Nowadays, there are about 1,000 varieties of soybean with various characteristics and colors such as red, yellow, brown, and black. There are two main types of soybean produced: one for food processing and one for oil processing.

1.2.2 Nutrients

Soybean is more highly appreciated than other cereals for its very high protein contents.Sources: USDA Nutrition Database

In average, protein contents of soybean are about 30% but to some other varieties the contents might be reached to 40% or 50%. In addition, soybean contains many other vitamin of B1, B2, B6, E, fatty acid (18%-20%) and minerals such as ion, calcium, sodium and isoflavones. Science studies said that nutrients from 1kg of soybean are as rich as that of 7.5 liter of milk, 2.5kg of meat or 58 eggs. Group of B vitamin in 1 kg of soybean are triple higher from powder milk and 30% higher than 1kg of pork meat.

1.2.3 Usage

Soybean is processed into two main products of feeds and oil. There are two varieties of soybeans developed to serve this processing purpose, nowadays.

Traditional food processed from soybean in Asian countries is soy sauce, temped, miso, tofu and soymilk. Soybean processed food is able to substitute for animal processed food. In addition, soybean is one of main ingredients in animal feeds. Whole soybean foods are high in protein, fiber and unsaturated fat and rich in vitamins and minerals. They also show many anticarcinogenic properties related to the unique benefits of soy isoflavones, phytochemicals which exert biological effects in humans and other aminals. Tofu (soybean curd) is a bland, cheese-like cake formed from soymilk by adding a coagulant (typically calcium sulfate) to the milk to form curds that are shaped and pressed into cakes. Depending on the coagulant used, tofu is rich in minerals and is an excellent source of high-quality protein, polyunsaturated fats (including linoleic and linolenic acids) & B vitamins. Versatile and nutritious, tofu can be used in soups, salads, pastries, sandwiches, and spreads. It can also be used as an alternative to yogurt or soft cheese. Miso is a thick, high-protein paste made from soybeans, salt and a fermenting agent, that is similar in taste and color to soy sauce. Sometimes a grain, such as rice and barley, is fermented with the soybeans for additional flavor. Miso is popular in Japan. Natto is made of fermented, cooked whole soybeans, and offers nutritional values similar to those found in miso. It has a sticky, viscous coating and is strong-smelling, with a cheesy texture. It is used as a spread or in soups. Tempeh is made of whole, cooked soybeans infused with a culture to form a dense, chewy cake. It is a good source of fiber protein, polyunsaturated fats and lecithin, as well as useful amounts of calcium, iron, magnesium, potassium, and some B vitamins. Soybean sprouts are rich in vitamins A, B and C, and are served raw in salads or cooked. Soy sauce is the most widely recognized soybean food. Soy sauce is fermented for about 18 months as a mixture of whole soybeans, wheat flour, and fermenting agents. The resulting liquid is extracted and processed. Soy sauce adds sodium and flavor to foods. Soyoil is the most widely consumed vegetable oil worldwide. It is not only used as cooking oild in household but a key fat ingredient in industrial food manufacturing.

For protein contained in soybean is able to reduce cholesterol and triglyceride and it can help to prevent some type of cancer caused by hormone as breast cancer. Moreover, soymilk can prevent obesity, diabetes, hormone disorder, osteomalacia and heart related diseases.

Soybean is used also widely in industry. Soy oil can be used in paints production. Cazein in soybean can be an ingredient to produce artificial material as cellulose in paper processing, rubber extract and gas. Soybean is also a main ingredents to make bio-fuel, nowaday.

In addition, soybean is able to strengthen soil nutrition thanks for very deep roots. With these roots, soil nutrition can be exchanged; moisture and air can be added. Roots and leaves of soy plants can strengthen soil structure and richen phosphoric acid.

II- INTERNATIONAL AND NATIONAL CONTEXT1. 2. Among oilcrops, soybean takes a leading role at the global scale. Season 2008/2009 total world production of oil crops is 394.34 million tons, of which soybean production is 210.72 million tones accounts for 53.44% of total oil crops outputs. Cultivation is highly concentrated geographically, with only four countries - USA, Brazil, Argentina and China - accounting for 88% of world output. Asia - excluding China - and Africa, the two regions where most of the food insecure countries are located, together account for only 5% of production (Sources: FAO & USDA).

Soybean is a high value and profitable crop thanks to high commercial utilization of its two main subproducts. Soyoil and soymeal are consumed worldwide as food and animal feed. Soymeal accounts for over 66% (158.4 million tons) of world output of vegetable and animal meals and takes a prominent position among protein feedstuffs used in the production of feed concentrates, while soybean oil is the second most important vegetable oil, accounts for 27% (37.35 million tons) of global vegetable oil production after palm oil which accounts for 33% of total world vegetabl oil production. (Souces: USDA Oilseed World Market and Trade October 2009). The rapid rise in the demand for compound feed has contributed considerably to the rise in soybean and soyoil production. In terms of economy, soybean economy is particularly considerable value added at the downstream stages of the production and processing chain. At the global level, the bulk of soybeans produced is stored and shipped in bulk to large-scale industrial units for further processing into oil and meal. Downstream transformation and marketing of processed products can thus be considered as separate economic sector which generates value outside the agricultural sector, which explains the economic importance of soybean for food industries and markets at the national as well as international level.

Although soybeans and its subproducts are produced in a few countries worldwide they are widely traded and available in almost every country of the world. In many developing countries, including Vietnam, where soybean production can improve farmers income but still limited, soybean is often imported from large produced countries by the local vegetable oil and feed industries because of limited production capacity of local production system in terms of both practices and demands.

Soybean production farms in leading producing countries are normally at medium and large size with high level of mechaniztion, including North America, EU and South America. Production system is totally different in Asia including China, India, Indonesia, Japan, PDR of Korea, Thailand and Vietnam, at small scale and need intensive labor with limited production practices.

2.1 Production2.1.1 World

World soybean production is dominated by four countries including USA, Argentina, Brazil and China. Those four countries account for 88% of world production output in the season of 2008/2009.

Compare to previous years, soybean production consecutively reduced in 2008 and 2009 due to severe drought in Argentina one of the leading soybean production countries in the world. Production in Paraguay reduced 40% also due to drought. Brazil, the second biggest producers, soybean yield was reduced too because of farmers deduction of investment due to limited credit policy and production cost rose. However, world production in season of 2009/2010 will be improved because of better weather, according to forecast of United States of Department of Agriculture (USDA).

For decrease of soybean production, production of soybean subproducts had reduction in season of 2008 and 2009 although tendency within recent 10 years were increasing.

Figure 1: Soybean, soybean oil and soybean meal production of the world (2000-2010)

050,000100,000150,000200,000250,000300,000'000 tonesSoybean meal116,15125,07130,64128,85139,07145,81153,94158,52152,00158,40Soybean oil26,73628,89730,58330,24632,63134,61536,35937,55435,89537,346Soybean175,75184,81196,86186,63215,77220,67237,11221,13210,72243,932000/20012001/20022002/20032003/20042004/20052005/20062006/20072007/20082008/20092009/2010Sources: USDASoybean: For many years, United States of America (USA) has been leading country in soybean production and processing in the world. Annual production of USA accounted for more than 30% of total world production. Following USA is Brazil, Argentina, China and India.

In season 2008/2009 total world production was 210.72 million tones, of which USA production accounted for 38% with 80.5 million tones. Highly intensive farming, high production areas and bio-technology applied into seed production are the main factors driven to such high production of soybean in USA. Currently, 92% of total production areas of USA used bio-varieties with high resistance against diseases, herbicide and give high yield (Sources: Larry G. Heatherly, US Soybean Production).

Following USA, Brazil production accounts for 27% total world production, with 57 million tones, and Argentina accounts for 15% total world production, with 32 million tones. China and India account for 8% (16 million tons) and 4% (9 million tons) of total world production, respectively. (Sources: USDA Database)

Figure 2: Top ten soybean production countriesSources: USDA DatabaseSoybean meal and Soybean oil: Top five countries in this sector are (1) - USA with 35.79 million tones soybean meal and 8.58 tones soybean oil; (2) China with 32.47 millions soybean meal and 7.31 soybean oil; (3) Argentina with 25.65 million tones soybean meal and 6.29 million tones soybean oil; (4) Brazil with 24.64 million tones soybean meal and 6.1 million tones soybean oil; (5) EU with 9.84 million tones soybean meal and 2.24 million tones soybean oil.

Despite that soybean processing has been consecutively decreasing in 2008 and 2009 due to reduction of soybean production but according to forecast of USDA and Food and Agriculture Organization (FAO) production tendency of soybean will be increasing in order to meet with increasing demand because of population and economic growth, particularly in developing countries. Moreover, soybean is one of the crops where biotechnology applications are particularly important. Demand for using soybean in bio-fuel processing is also increasing, particularly in Brazil, Argentina, and Europe. Within next 10 years, Brazil will take over leading position on production of the products from USA thanks to high potential land while land in USA is limited and high competition against soybean from maize production.

2.1.2 Vietnam

Although soybean is one of the most important crops in group of shorterm industrial crops, Vietnam is not a country of soybean. Vietnam soybean production in 2008 was 268,500 tones accounted for 0.13% of total world production and 19% of total production of ASEAN countries (1.4 million tons) (Sources: Official Statistic Books of Vietnam and USDA). Vietnam, therefore, mainly depends on import sources for animal feed processing sector.

There are many policies aiming to develop the crop. Since 2000 to 2008 annual growth rate of soybean production areas is 6%, production growth is 8%. Yield is ranged from 1.3 to 1.4 tons per hectare. Highest domestic production reached to 300,000 tones was in the year of 2005. Production tendency since 2005 has been decreased due to abnormal bad weather and serious diseases out broken in husbandry sector. In 2008, total areas of soybean were 191,500 ha, higher than that of 2007 but total production were lower due to severe weather very cold in the beginning of the year and flooding in the end of the year that made yield reduced.

Table 2: Soybean Production in Vietnam (2000 2008)

Description200020012002200320042005200620072008

Harvested areas (ha)124,100140,300158,600165,600183,800204,100185,600190,100191,500

Yield (tone/Ha)1.201.241.301.331.341.431.391.451.40

Production (tone)149,300173,700205,600219,700245,900292,700258,100275,500268,600

Seeds (tone)4,9105,5515,7966,4337,1436,4966,6536,653

Sources: MARD of VietnamAccording to reports of Ministry of Agriculture and Rural Development of Vietnam (MARD) soybean areas and production in 2009 will not be different much from 2008 because harvested areas of winter season of 2008/2009 was much lower compare to the same season of last year due to serious flood in October and November, 2008.

In term of production of 2008, the leading provinces were Hanoi: 16%; Daknong: 12%; Ha Giang: 8%; Thai Binh and Ha Nam and Dong Thap: 5%; Dien Bien, Daklak and Son La: 4% of total national production. Highest yield was in Mekong Delta provinces at 2.3 tones/ha, second high was Red River Delta provinces and Highland at 1.6 tones/ha. North East provinces had lowest yield compare to other provinces of the country at 1 tone/ha. Highest yield can be reached in the country is 3.3 tones/ha (Kien Giang province).

Figure 3: Vietnam Soybeans Figure 4: Imported Soybeans

Seed production has been gradually increasing. Seed production of 2007 was more than 6,600 tones, 1,700 tones higher than that of 2000.

In term of out looking and quality, soybean produced domestically is much worse than import soybeans. While imported soybeans are very homogeneous, domestic produced soybeans are heterogeneous and mixed with many bad beans and matters.

Soyoil production sector is developing but not yet met with domestic demand. Annual growth rate of oil processing is about 15%. Production in 2008 was 6.6 thousand tones that met with 5% of domestic consumption only (Sources: FAO).

Soybean meal processing has not been developed in Vietnam yet. 2.2 Consumption2.2.1 World

According to a reseach by FAO on roles of soybean and its subproducts, soyoil occupies a prominent role in peoples diet. World consumption of both soyoil and soymeal has increasing tendency. For the period of 2004 and 2008, consumption of both soyoil and soymeal is increased 3% annually. Consumption levels of soyoil differ from countries and regions over the world. In average, soysoil consumption levels in industrialized countries are almost three times higher than that in developing countries. Soyoil consumption level in industrial sectors has been significantly increased with almost 4 times higher in 2008 (4,7 million tons) compare to 2004 (1.2 million tons) while that in food sector almost keep the same fluctuating between 30 and 32 million tons. (Sources: USDA Database)

Soymeal industrial consumption is greater increasing tendency than food use consumption. Within finve years from 2004 to 2008 soymeal industrial consumption is increased 7.9% but that of food use consumption is 1.4% only (Sources: USDA Database).

Because of the expansion of intensive livestock production using high protein compound feed in both developed and developing countries, soymeal is widely consumed and has penetrated markets in most regions. Currently, leading country in soymeal and soyoil consumption is China with 31.6 million tonnes and 9.4 million tons consumed in 2008 respectively (Sources: USDA Database)

2.2.2 Vietnam

In Vietnam, soybean production is mainly for food processing. Consumption of soyoil and soymean has increasing tendency to serve domestic consumption demand for human food and animal feed processing industry. Total soyoil consumption within the country is increased 7 times within 5 years from 14,000 tonnes in 2004 to 100,000 tonnes in 2008 while soymeal consumption is increased 2 times in the same period from 1,150 tonnes to 2,300 tonnes (Sources: USDA).

2.3 Trade 2.3.1 World

Soybean contributes significantly to the total value added by the agricultural sector in the major producing countries and particularly in USA, Brazil and Argentina. In these countries, soybeans and its two main sub-products play an important role in export earnings from agriculture.

Soyoil takes a second position in global vegetable oil trade after palm oil. Soymeal takes the leading position in global feedstuff trade because of a high value ingredient for compound feed. The main export market are USA, Brazil and Argentina while the main import markets are China, Indonesia, Vietnam and Thailand.

Soybeans: USA, Brazil and Argentina are the leading countries in soybean export over the world. In 2009 export from USA accounted for 46% total world export. Total world export percentage from Brazil and Argentina were 38% and 8% respectively.

Although being ranked fourth in production of the world but China has to import a lot of soybeans to meet domestic consumption. China is a leading country in soybean import. In 2009, Chinas soybean import reached 39.8 million tones accounted for 54% total world import. Soybean importation of soybean of China will be increasing because this country is investing in soybean processing to meet with high domestic food and vegetable oil consumption.

Soybean meal: Argentina and Brazil are the two biggest export countries of this product over the world. Argentina export 97.47% total processed products in 2009 and accounted for 74% total export of the world.

Biggest import countries of soybean meal are EU and ASEAN countries. EU imported 43% of total world import of this product, following that were ASEAN countries leading by Indonesia (5%), Vietnam (4%) and Thailand (4%).

Soybean oil: China is the second biggest oil producer in the world after USA. Annual production of China is about 7 million tones but domestic demand is 9 million tones. China, therefore, imports 2 million tons of soybean oil annually to fill the deficit. Since 2005, China has been always the lead country in importing this product.

The largest export of soybean oil is Argentina. Annual soybean oil export from this country is 5.5 million tones.

Countries where consumption of soybean meal and soybean oil is increasing are China and Brazil.

2.3.1 Vietnam Because soybean meal proces sing industry in Vietnam has not been developed plus that import tax imposed to this products is 0% then animal feed processing industry is mainly dependent on importing sources. Vietnam ranks 3rd in the world in term of importing soybean meal after EU countries and Indonesia. In 2008, Vietnam imported 2.31 million tones with value of more than 1 billion US dollars accounted for 4% of total world import. In the first six month of the year 2009 soybean meal import of Vietnam reached to 1.36 tons at 518 million USD. Main exporters of this product to Vietnam are India and Argentina. USA and China a lso supply sources to the country but not much compare to India and Argentina. (Sources: Custom Office of Vietnam).

Table 3: Production and Trade of soybean in Vietnam (2000-2008)

Description200020012002200320042005200620072008

Domestic production (tone)

Soybean Oil2,8573,4754,5475,1124,7615,6754,1856,645n/a

Soybean149,300173,700205,600219,700245,900292,700258,100275,200268,600

Import Volume (tone)

Soybean meal293,900497,500632,800990,000912,5001,422,1381,820,3382,399,4572,310,000

Soybean Oil21,70039,20053,10032,4009,06213,76867,91163,89996,000

Soybean1,1009,20033,75049,4004,6895,98646,23175,324140,000

Import value (1000USD)

Soybean meal75,000123,000140,000240,000233,600330,989423,580789,0211,050,000

Soybean Oil20,00035,30047,50028,0005,6937,40338,05252,502n/a

Soybean3001,9006,81012,1001,3831,85713,00425,928n/a

Export volume (tone)n/a

Soybean meal--91,0008629811152n/a

Soybean35,70027,10032,50019,80025,00030,0004211n/a

Export value (1000 USD)n/a

Soybean meal--123828102484n/a

Soybean10,9009,3006,5005,5006,8008,2002726n/a

(Sources: FAO & USDA)

Vietnam produced soybean oil but with very limited production that met with 5% of domestic consumption only. In 2008, domestic production of this product was 6.6 thousand tones. Import of this product was 96 thousand tones mainly from ASEAN countries and Argentina. Import tax imposed to this product is 5% for ASEAN countries origin and 30% for other countries origin.

Figure 5: Import of soybean in VietnamIn terms of soybean, domestic production is met with 50% consumption only. Domestic products mainly used for human food processing. Import tax imposed to this product are from 5% to 15% depends on country of origin. Difference import tax between soybean and soybean meal in the context of limited domestic production is one of the constraints to develop soybean meal processing industry in the country. (Sources: FAO & USDA)

Export of soybean meal and oil are very limited. Export tendency is decreasing because of animal feed industry booming in the country particularly since 2005/2006.

2.4 Price Trend2.4.1 World

Price of soybean, soybean meal and soybean oil have been strongly increasing in recent two years. Soybean price in season 2007/2008 was 64% higher than previous year. Soybean oil price increased 72% compare to 2006/2007 and soybean meal price increased 69% compare to the same year. Main factor driven this high price is reduction in soybean production and increase of crude oil. Figure 6: Price Trend (2003-2008)Price of 2009 has increasing tendency due to reduc tion in supply from main exporters of Brazil and Argentina while demand from importing countries keeps unchanged; particularly demand from China and India.

According to oil crops world market analysis by FAO and Oil Worl d, price will be kept at high level in season of 2009/2010 because world supply has not met with demand yet.

2.41 Vietnam

Figure 7: Prices from June to August, 2009Domestic demand on soybean and soybean based products are increasing since recent years and keep being increased in the future because of increasing demand on animal feeds. Annual Growth of poultry and animal of Vietnam is about 3% based on forecast by FAO in order to meet with meat demand increasing due to higher income generated and growing population. Compare to 2007, import of soybean meal in 2008 was a bit lower but increased strongly in the first half of 2009. To soybean and soybean oil, import volume in 2008 was two times higher than that of 2007.

Because it is mainly dependent to import sources price of soybean and processed products fluctuated based on international prices accordingly. Domestically produced soybean can enjoyed higher price than import soybean because of small producers preference. Soybean price in some main retail markets recently move around 17,300VND/kg and 19,000VND/kg (Sources: Agroinfo)

III- DIEN BIEN SOYBEAN SUB.SECTOR2.42 Total natural land areas of Dien Bien province is 955,409 ha. Of which, land allocated to agriculture production is 111,749 ha, accounted for 11.6% natural areas. There are still 225,594 ha available land in the province that accounted for 23,6% total natural areas but that land are almost sloppy land which is more suitable for forestry production (Sources: Official statistic of Dien Bien).Agro-climate in the province is suitable to many crops such as rice, soybean, and snow Shan tea. Rice production mainly concentrates in the districts of Tuan Giao, Dien Bien Dong and Tua Chua. Snow Shan tea is in some communes of Tua Chua district, Punhi commune of Dien Bien Dong district and Muong Phang of Dien Bien district.

3.1 ProductionSoybean is one crop under promotion policy of the province. Subsidies for soybean farmers are from 50% to 100% of seeds costs depends on areas and type of land allocated for soybean production (Sources: Decision No. 15/2007/QD-UBND). Thanks to this promotion policy, the areas and production of soybean within the province has been increasing in recent years. Since 2005, annual growth rate is 5%. In 2008, production volume reached 11,700 tones accounted for 4% of total domestic production and rank 7th of the country. In North West region, Dien Bien is the leading province in production with 43% of total production of the region. Following are Son La, Hoa Binh and Lai Chau, however, production volume in Hoa Binh and Lai Chau is very limited.

Main production areas of the province are districts of Dien Bien Dong, Tua Chua and Tuan Giao. Tuan Giao district is the leading district. In period of 2005 to 2008 annual production of the district is about 5,000 tones and always accounted for 50% of total provincial production. Annual production of Tua Chua and Dien Bien Dong district is about 1,500 tones, accounted for 15% of total provincial production volume. In terms of production tendency, Tuan Giao production is decreasing due to decrease in areas but production volume in Tua Chua and Dien Bien Dong is increasing because of areas development.

Soybean was selected for to pilot value chain analysis methodology by Dien Bien district but production of this product is very limited. The district ranked 5th out of seven soybean production districts of Dien Bien with total production volume of 645 tons in 2008 (Sources: Statistic Office of Dien Bien District).

Seasonality: There are two main season of soybean in Dien Bien: Spring Summer season and Summer Autumn season. Winter crops are only applied to make used of idle land in the Winter.

SeasonPlantationHarvestingGaps

Spring - SummerEnd of Feb. beggining of MarchEnd ofMay begining of JuneFeb. March. April. May. Aug. Sept

Summer AutumnJuly beggining of August October November

WinterSeptember October December January

Harvesting and post- harvest management: Farmers often harvest soybean in whole plants and brought all home to sun dry. When it becomes dry, they collect seeds then store in plastic bag without sorting at all.

3.2 Trade

In the province, soybean is used mainly processed into toufu for human food. Soybean sold to small holder husbandary was very limited.

As the same as soybean produced in other provinces of Vietnam, soybean of Dien Bien is not used for oil extracting into soybean meal one of main ingredients in animal feed processing industry because this industry has not developped in Vietnam. While import tax of soybean meal is 0% plus with protein contained in import soybean meal (45%) is much higher than domestic soybean, therefore, animal feed processors in Dien Bien prefer importing the products from other countries. At the time of this study, animal feed company of Viet Trung located in Dien Bien province informed that import price of soybean meal from Argentina was VND8,000/kg only including transportation cost to the company site in Dien Bien, that even lower than soybean price in Vietnam. Although the company has a soybean extracting line but almost no used because of higher processing cost than import cost.

In the period from September to November, it is main harvesting season of soybean in Dien Bien. In this time, soybean from Dien Bien was brough to various provinces over the country as Son La and Hanoi. In the off-season Dien Bien used soybean from other provinces including import soybean.3.3 Figure 8: Purchase price by collector in 2003 - 2009Market requirements

Soybean in districts of Dien Bien Dong, Tua Chua are prefered by many toufy processors because of its high starch contens, however, due to high moisture, processors and traders normally not store local soybean for off-season in order to avoid loss by molded. Instead, they use soybean imported from other provinces and countries.

3.4 Price trends

Price trend of soybean in Dien Bien has been increasing in recent years because of many factors such as inflation, higher price of crude oil, limited supply from other countries.

3.5 Soybean commodity chain of Dien Bien and actors along the chain

One of the objectives of soybean value chain analysis is to build an intervention plan to improve production and process of soybean in two pilot project communes of Nua Ngam and Noong Luong under Dien Bien district. Therefore, field work was carried out right at these communes to get understanding production system with farmers and goverment agencies within the communes and district.

Market information was collected through market participants located in Dien Bien city, Dien Bien district, Dien Bien Dong district and Hanoi city.

Information related to processing industry was limited to collect from toufu processor within Dien Bien province and animal feed processing company of Viet Trung.

The study focused on getting understanding the soybean chain of Dien Bien but not soybean processing industry.

3

Figure 9: Soybean commodity chain diagram from Dien Bien

FertilizerPesticideSeedsSold at 9.000-10.000VND/kgGross margin: 300VND - 500VND/kgGross Margin: 200VND/kgInput suppliersFarmersLocal collectorsAgro-products traders in Dien BienAgro-products trader from other provinces (H ni, Sn La)Tofu and soymilk processors Retailers Animal Small holderLocal Tofu ProcessorsAnimal Small holderLocal tofu processorRetailersGross margin: 200VND/kg90%5%5%10%80%20%50%

3.5.1 Scale, capacity and gross profit of chain actors

Production and post harvest management: Main season of soybean in Dien Bien district is Spring Summer and Summer Autumn after planting maize. Planting time of Spring Summer is from the end of February to beginning of March and harvesting in the end of May and beginning of June. The Summer Autumn started from the end of July and beginning of August with plantation and ending within October and November with harvesting.

It is piloted soybean production in rice field that being idle in the Winter in couple of times but failed because of seasonal conflict with rice. Soybean varieties is being used are DT84 and DT42 produced and supplied by PuNhung Seed Supplying Company. Average yield that farmers wihtin this district can produce is 1.3 tonnes per hecta. Farmers in two communes of Nua Ngam and Noong Luong produce soybean in Summer Autumn season only.

Cultivation practices of farmers in these two communes is very limited. They spent time in seeding and harvesting only. Fertilizer is almost no use. Only input applied is pesticide. Cultivation practices are very traditional and limitied. For seeding, they normally make a hole and put seed into it without any manure or fertilizer. Those practices result in low yield and low quality of soybean. After being harvested, farmers do not sort out spoiled beans but store all in the same bags.

Gross profit farmers get: Gross profits made from one ha of soybean with yield at 1.3 tons per ha estimated around 5.5 million. Farm gate price is ranged from VND9,000 to VND10,000 per kg depends on collector they sell to or they bring products to sell at retail market. Currently, farmers from two communes of Noong Luong and Nua Ngam do not sell any soybean because of limited production.

Local collector: Small scale collector living within the district often get gross revenue of from VND300,000 to VND500,000 per tonne. The often sell most of collected products to agro-products traders at price of from VND10,000/kg to VND10,500/kg. Sometimes they sell produces to toufu processors but with small volume. Local collectors do not store soybean. Right after buying from farmers they sell to traders in order to avoid risk of loss due to molded. They work on seasonal basis. Traded volume of each season is often small, around couples of tonnes a season.

Agro-product traders in Dien Bien: Those traders normally trade various agro-products as rice, cassava chip, maize. In terms of soybean, they sell Dien Bien soybean to other traders in Son La, Ha Noi when it is in peak season from September to November anually. The traders do not store soybean for selling in off-season because of high loss due to high moisture of local produced soybean. In off season they buy in soybean from other traders in Son La and Hanoi. Their trading volume per year is gfrom 200 tonnes to 400 tonnes. Gross profits the earn per tonnes of produces is from VND100,000 to VND200,000.

Agro-traders in Hanoi: Large scale agro-product traders are mainly located in Chuong My Hanoi. They are trading various type of produces and from different sources. Regarding soybean trading, they often buy soybean from Dien Bien in September and October, from Daknong in May and June. Import soybean are sold to them through commercial trading company as Duc Loc and VINA ec... Estimated gross profits they can fetch are from VND100,000 to VND200,000 per tonne.

Toufu processors: Toufu proccessors prefer domestic produced soybean and willing to pay premium price to local soybean provided that the soybean moisture is not too high and molded. Toufu makers in Dien Bien like soybean from Suoi Lu area under Dien Bien Dong district because of its high starch connent. One kg soybean can be produced into 1.8kg or 2.2 kg toufu. Income generation to toufu processor is relatively stable. In average one toufu processor consume about 200kg soybean and earn from VND4,000,000 to VND5,000,000 per month.

Viet Trung Animal Feed Processing Company: This is a joinstock company. The company has an animal feed processing line at capacity of 50 tonnes feed per day but currently, it can be operated at 10% of capacity only. Although the comapny owns a soybean meal processing lines at capacity of 60 tonnes cakes of soybean per month but the company has not really run it yet because imported soybean meal is very cheap compare to locally production. In addition, imported soybean meal has higher protein contents of 48% while that of domestic one is 38% only. At the time of field work, the director of the company informed that price of imported soybean meal at company workshop was VND8,000/kg only. In order to promote the company products, the company is running promotion program by doing demonstration with farmers.

Business development services: Input supply services are availalbe at commune including fertilizer, pesticide, seeds. Extension network is available to village level. Transportation are available at 500,000VND per tonnes transported from Dien Bien to Hanoi.

IV- CONCLUSION AND RECOMMENDATIONV- 4 4.1 Conclusion5 5.1 4.1.1 Opportunities and challenges to soybean sub-sector of Dien Bien

a) Opportunities: Domestic market demand of soybean, soybean meal and soybean oil is huge. Soybean production in the country is met with 50% national consumption only. Soybean meal is totally depends on import sources. Soybean oil production is met with 10% national consumption only.

Processors of soybean for human food as miso, tempeh, soy sauce, and tofu prefer domestic soybean to imported soybean.

Soybean are one of the main crop of Vietnam, therefore, there are many development policy issued to promote this crop such as seed subsidies, high yield varieties development program.

Market demand of neighbor countries as China, ASEAN countries to soybean and soybean based products is huge too. Those countries import almost world processed production.

Demand of soybean for bio-fuel processing is increasing because demand of bio-fuel as a substitute of crude oil is increasing.

Buyers are willing to pay premium price for high quality soybean with low moisture and homogeneous.

b) Strengths

Climate conditions are suitable to soybean

Nature of local farmers is hard working and willing to learn. Local agronomists are active and good at cultivating this crop.

c) Weaknesses:

Minority group has not been familiar with cultivation practices of soybean. They have not been aware of benefits and profits that soybean can bring compare to other crops including cash and nutrition.

At two project pilot commune, Winter soybeans are planted in many different plots that conflict with Spring rice on irrigation.

Post-harvest management and semi-processing capacity is very limited.

Roads lead to some villages is very bad. Irrigation system is enough to cover rice production only.

Soybean production system is mainly depends on natural conditions

d) Challenges:

Weather in season of Spring Summer and Summer Autumn are relatively favorable to soybean. Limited water for Winter season.

Market requirement on product quality is quite high (low moisture, homogeneous, clean).

Requirement of protein contained in soybean meal is quite high. Imported soybean meal has 47% of protein contents but that of domestic production is 38% only.

Import tax imposed on soybean meal is 0% result in that price of this imported product is very low, even lower than soybean produced in the country sometimes.

4.2 Recommendations

In general, Dien Bien should promote soybean production including processing in order to meet with domestic market demand then export to neighbor countries.

a) Short term development

Production capacity of soybean should be built. Post harvest management should be improved in order to meet with local market demand both in volume and quality.

Raise awareness for farmers on benefits that soybean can bring compare to other crops, including soybean nutrition, soil improvement, potential profits.

Semi-processing technologies should be introduced but in such a way of simple and affordable to local people.

Coordination of irrigation system or allocate suitable land plots for Winter soybean production. Where possible, short term rice production should be taken into consideration to apply.

b) Long term development

When production capacity including volume and quality reach at certain grade, the processing industry should be considered to invest in, however, an in depth study should be carried out before making decision with consideration of cost and benefits made from these industry particularly under the context of many privileges given to import soybean-based products.

References

Monthly agriculture reports MARD

Statistic of MARD

Statistic Book of Dien Bien

Monthly Import and Export Report by Custom Office of Vietnam www.customoffice.gov.vnGoss, W.H. 1944. Processing soybeans. Soybean Dig. 5(1): 6-9. Liu, K.S., Orthoefer, F. and Thompson, K. 1995. The case of food-grade soybean varieties. INFORM 6(5): 593-599.Lusas, E.W. 2000. Oilseeds and oil-bearing materials. In Handbook of Cereal Science and Technology. K. Kulp and J. G. Ponte, Jr. (Ed.), Marcel Dekker, Inc., New York, pp. 297-362.Orthoefer, F. and Liu, K.S. 1995. Soybeans for food uses. Intl Food Marketing & Technol. 9(4):4-8. http://www.nsrl.uiuc.edu/aboutsoy/history1.html_ Soybeans: The Success Story* by Theodore HymowitzOilseeds World Trade by United State of America Circular Series September 2009World Market Oilseeds: FAO and USDA

FAOSTAT

What the 2008-2009 World Economic Crisis means for Global Agriculture Trade (May Peters et al.)

Oil crops Outlook 14 September 2009 (Mark Ash et al.)

Global Agricultural Supply and Demand: Factor contributing to the recent increase in Food Commodity

Prices Ronald Trostle: - www.ers.usda.gov

FAO - The role of soybean in fighting world hunger