Porter’s Model Approach for Rice Industry

Why should Vietnam develop strain business as its belligerent advantage? strain is mavin of the leading food crops in the human beings with 85% of its production accounted by human intake (The Importance of sieve, 2011). Rice is also the most substantial crop to millions of sm all(prenominal) farmers who grow it on millions of hect bes throughout the orbit, and to the many knowledge domainless workers who derive income from working on these farms. In the future, it is imperative that sieve production continue to grow at to the lowest degree as rapidly as the commonwealth, if not faster.The worlds one-year rough sieve production will buzz off to increase markedly oer the next 30 years to keep up with population growth and income-induced demand for food (The Importance of Rice, 2011). In Viet Nam, sieve plays an all-important(prenominal) role in theme food aegis and political stability. Rice also has a direct effect on social shelter because it is consumed by a vas t majority of the total population and is an important source of income for more than 60 million batch living in agriculture and agricultural areas. Rice is the countrys main crop, accounting for more than 90% of total cereal production.Since the 1990s, the volume of sift exports has arise dramatically, devising Viet Nam the second largest strain exporter in the world. Nevertheless, serious food certificate alludes in the country remains. Pockets of poverty and malnutrition persist more in remote areas and among ethnic tribes (Asian festering Bank, 2012 p. 01). Average food per capital has been increased rapidly, simply inequally among regions In 2007, Mekong is 1,075 kg, South primaeval Coast 287 kg the North western United States 217 kg and the Central High world 174 kg (the variation between the Mekong and the Central Highland is 6. 17 times)(Nguyen Vu Hoan, 2010 p. 3). Furthermore, rice industry is critical in the Vietnameses sustainable frugal environment. Rice e xport seconds increase overseas currency inflows and capital accmulation for the industrialization modernization process of the country. Specifically, the increase in rice export volumn means a growth in democracyal incomes, in turns, a growth in national GDP. Realizing rices significance and the various threats, the government does not only seek ascendant but also plays an important role in the international rice market, and consequently, in the food security of the international communityThe actorial determinants Land is the basic and foremost production material in rice cultivation. The soil magnificence dominates profoundly the intensiveness ability and production prices. According to a bailiwick 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 Vietnams Rice Expor, 2011). Therefore, land resource in Viet Nam has advantages in both intensive a nd 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, oddly the three major rivers including Red, C? and Nine Dragons Rivers, which come through farmers with huge nitty-gritty of water. These natural conditions helps create a solid ground 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 emergence Bank, 2012 p. 1). 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 competent irrigation system.Advanced drainage, aluminum, salt removal techniques are deployed to improve rice quality (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 combat for Vietnamese rice in both domestic and un similar market (The Competitiveness of Agricultural Products in the Context of Joining AFTA, 2003). The infrastructure system is continually upgraded to help key out use of every source in effect(p)ly.The Government is currently working with remote countries especially Australia. The two nations are carrying on several projects on projects reach Cao Lanh Bridge Mekong Delta infrastructure and Vietnam artless Energy Distribution to provide efficient delivery of power service by power companies also a Southern Coastal Corridor c onnecting between Viet Nam, Thailand and Cambodia. As soon as these instructions go into operation, many efforts can be made to exploit possible benefits that have not yet been seen (AusAid, 2013). The overnment also concerns about the educational and wellness level of people from rural areas. The systems of school at all levels are being constructed new, upgraded and temporary primitive schools and classes are being eliminated. Besides, rural health care system continues to be enhanced quite comprehensive, truly becomes the rural residents crucial initial health care system, growing both in terms of number of health stations, qualification of health service providers as well as the physical facilities. (Agricultural and Fishery Situation in Vietnam, 2011). The consume ConditionsAs the Viet Nams economy has been growing, leading to higher living standards especially in elephantine cities, the demand for consumption goods is rising including rice. Moreover, people get doorway t o high quality rice both from foreign and domestic market. Therefore, a potential growth in demand for superior quality rice is obvious and people will turn to other rice exporters like Thailand if its rice quality is higher. However, domestic production can take over the rice market by producing high quality rice with start prices based on new production model and continuous diversity in machinery and rice varieties.If the rice industry can successfully citation this sophisticated demand, it can exploit profits from high-end market both domestically and internationally by producing much higher value-added rice. The Up and Downstream Industries The upstream industries documentation rice production include machinery, fertilizers and pesticides. The government realized the brilliance of these industries so it implemented policies to encourage investment on R&D and facilities. Vietnam has recently working on a project building a huge milling house with capacity of 100,000 tons 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 green recycled components, back up paddy theatre of operations 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 packed properly first. An automatic rifle packaging line is being used in many rice processing factories. The government does realize the benefit packaging could bring especially in marketing, value added function and brand perception. It is now encouraging opposition among package production firms for a higher quality packaging.Rice manufacturers also join forces with the packagers on their own packaging designs. The structure of the industry and its rivalry The economic units are mainly dominated by small-scaled farmers and at that place is significant land fragmentation. Theoretically, t here is no competition among cooperatives. However, due to the fact that the whole rice production process is managed by Agriculture and Rural Development Ministry and its regulations and standards drift on the farmers to produce high quality rice, the Vietnamese rice competitiveness is considerable relative to other countries.Moreover, the pressure to compete with other liberal rice exporter drives manufacturers to continuously upgrade their production model. The other contributing factors candidate 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 member of WTO rice is limited in take part in global market. Besides, many enterprises have access to advanced applied science in rice production.Secondly, a complete law system has been introduced in order to be able to join WTO, which encourages foreign investment monetary resource since the other count ries think Viet Nam has a m? e stable environment. Finally, there will be no unfairness in case of conflictions as the WTOs commerce policy is applied to Vietnam ensuring our rights in international playground (Rice production situation after joining WTO, 2009). Wars are still 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 governance also play a crucial role in influencing the nations competitive advantage. Regarding the supply side, Viet Nams Government has implemented triple 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 hybridizing rice varieties for farmers access to credit provided by Bank for Agriculture and Rural Devel opment and favoured loan interest rate granted to farmers (Dang Kim Son, 2011).The government, being cognisant 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, take for is still be made over export contract adaptation 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 appoint other factors namely demand, supporting industries, chances and government policy, these are essentially supporting the growth of rice industry though there are mount 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.