Porter's Model Approach for Rice Industry

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Why should Vietnam develop rice production as its competitive advantage? Rice is one of the leading food crops in the world with 85% of its production accounted by human consumption (The Importance of Rice, 2011). Rice is also the most important crop to millions of small farmers who grow it on millions of hectares throughout the region, and to the many landless workers who derive income from working on these farms. In the future, it is imperative that rice production continue to grow at least as rapidly as the population, if not faster. The world’s annual rough rice production will have to increase markedly over the next 30 years to keep up with population growth and income-induced demand for food (The Importance of Rice, 2011). In Viet Nam, rice plays an important role in national food security and political stability. Rice also has a direct effect on social security because it is consumed by a vast majority of the total population and is an important source of income for more than 60 million people living in agriculture and rural areas. Rice is the country’s main crop, accounting for more than 90% of total cereal production. Since the 1990s, the volume of rice exports has risen dramatically, making Viet Nam the second largest rice exporter in the world. Nevertheless, serious food security concerns in the country remains. Pockets of poverty and malnutrition persist more in remote areas and among ethnic tribes (Asian Development Bank, 2012 p.01). Average food per capital has been increased rapidly, but inequally among regions: In 2007, Mekong is 1,075 kg, South Central Coast 287 kg; the North West 217 kg and the Central Highland 174 kg (the variation between the Mekong and the Central Highland is 6.17 times)(Nguyen Vu Hoan, 2010 p.13). Furthermore, rice industry is critical in the Vietnamese’s sustainable economic environment. Rice export helps increase foreign currency inflows and capital accmulation for the industrialization modernization process of the country. Specifically, the increase in rice export volumn means a growth in national incomes, in turns, a growth in national GDP. Realizing rice’s significance and the various threats, the government does not only seek solution but also plays an important role in the international rice market, and consequently, in the food security of the international community

The factorial determinants
Land is the first and foremost production material in rice cultivation. The soil fertility dominates profoundly the intensiveness ability and production prices. According to a survey of the Agriculture Ministry, land area with agriculture capability is above 10 million hectares, in which 8.5 million hectares are suitable for rice cultivation (The Necessity of Vietnam’s Rice Expor, 2011). Therefore, land resource in Viet Nam has advantages in both intensive and extensive farming. In addition, the climate is ideal for rice due to the combination of humidity and stormy weather. Also, the canal and river systems spread densely throughout the country, especially the three major rivers including Red, Cả and Nine Dragons Rivers, which provide farmers with huge amount of water. These natural conditions helps create a solid foundation for rice industry in Viet Nam. The human resource is another factor contributing to rice production. 50% of national labour force participates in farming with broad knowledge and experience passed down by their ancestors (Asian Development Bank, 2012 p.01). The Vietnamese culture has been attached deeply to rice cultivation; consequently, the people possessed various compatible skills with the particular weather conditions in Viet Nam. The amount of research and development carried out has been considerable. Many new rice varieties have been introduced offering much higher yield than the old ones. Besides, new production model has been applied and used successfully in boosting productivity, together with efficient irrigation system. Advanced drainage, aluminum,...
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