Firms eye agriculture as lucrative new field
Due to Vietnam’s obvious advantages in agriculture, many major domestic firms are targeting the agricultural sector.
Hoang Anh Gia Lai Group (HAGL), once a major player in the real estate sector, has felt justified in abandoning property projects to shift to agricultural sector.
“We’re completely convinced that the shift from real estate to agriculture was completely the right move for HAGL,” said HAGL chairman Doan Nguyen Duc.
HAGL’s recent shareholder meeting reported that the firm’s post-tax profit of VND972 billion ($46.3 million) in 2013, almost triple that of 2012, was thanks to a 58.7 per cent contribution from its agriculture sector.
Aware of the lucrative nature of their shift in priorities, the group has also begun a new programme to raise 100,000 cattle. Duc estimated cattle-rearing would provide VND4 trillion ($190.5 million) in the group’s annual revenues.
In addition to HAGL, Tan Tao – an industrial group that has virtually no experience in agriculture – surprised business observers when it announced the launch of ITA Rice, a fragrant rice export and research company, to cultivate rice paddies on 60.3 hectares in the Mekong Delta province of Long An. The company plans to expand its cultivation to 5,000ha in the coming years.
Cam Nguyen Steel Co. has also invested in agriculture by building a rice paddy kiln and grinder with the capacity of 580 tonnes per day and a storehouse of 100,000 tonnes in the Mekong Delta province of Dong Thap.
The company’s director Huynh Cam admitted that during recent years, Cam Nguyen has faced difficulties in steel trading so it decided to invest in agriculture, and it saw promising returns.
Dang Kim Son, general director of Institute of Policy and Strategy for Agriculture and Rural Development under the Ministry of Agriculture and Rural Development, said Vietnam had obvious advantages in agriculture.
“Businesses acknowledge that agriculture is a very promising sector, the prices of farming products have risen and will continue to peak for many years, so agriculture in Vietnam offers big opportunities,” he said.
Major transnational groups are also increasing their participation in Vietnam’s agricultural sector. Metro Cash & Carry is increasing investment in seafood, while Nestle and Bayer are targeting coffee, and consumer giant Unilever is dipping their toes in the tea sector.