Risk management for Rice value chain to adapt with climate change in
the Mekong river delta, Vietnam
Hoang Thanh Tung* Yoshiro Higano**Graduate School of Life and Environmental Sciences, University of Tsukuba, Japan
interpersonalvn@gmail.com
Abstract
Rice is the most important crop in Vietnam. It is the livelihood of well over 50%
population contributing around $ 1.5 billion in export revenue annually. Rice production,
however, has to face increasingly difficulties due to potential impacts of climate change
especially in the Mekong river delta and the red river delta where over 70% rice wasproduced. If the mean sea level rises 0.69 m as forecasted by IPCC, 91% Mekong riverdelta will be submerged that will adversely affect the rice production. Therefore,
introducing a risk management system to mitigate the potential loss caused by climatechange is extremely necessary. This paper research aims to find out the way to mobilize
community resources for risk management emphasizing the cooperation of community andstate to support rice production adapt to climate change. Furthermore, mechanism forsharing risk and value among stakeholders engaging to rice value chain and ensuring
equality in allocating value and risk throughout value chain will be established.
Keywords: value chain, climate change, risk management
1. Introduction
Rice production plays an important role in agricultural production; it provides income formore than 50% population. Although rice area has been reduced in recent year due tourbanization and industrialization as well as sea water intrusion, rice production in the
Mekong river delta significantly contributes to national food security and partly ensure
world food security thank to its second biggest rice exporters in the world market.
However, rice production, recently, faces many difficulties. Climate change that will bringtemperature rise, shift in rainfall patterns and rise of sea level in fertile delta like Mekong
river delta, increased degradation, erosion and lost of agricultural land, rapid spread of
diseases and pest and lost of biodiversity. Especially, unpredictable change of flood,
climate change, temperature, precipitation and unusual storms has affected yield and total
profit of rice producers and other stakeholders. Therefore, it is essential to have a holistic
strategy for risk management to adapt with climate change. In which, finding out
mechanism to share value and risk among stakeholders is a key condition for sustainablerisk management.
The recent results indicated that a doubling of the CO2 level would increase yield by 1015%, but that this would be balance by the effect of the expected accompanying rise intemperatures(Matthews and Wassmann 2003). To the yield farmers produced at regional
scale, it was observed that positive yield correlation with temperature was accompanied bypositive correlation, while yields were also observed negatively correlated to temperature
in several places when there is a positive correlation between yield and Rain accompanied(Zhang, Zhu et al. 2010). The Mekong river delta rice sector is now almost entirelycommercialized, with only about 7% of the region’s paddy production being held by
farmers for own consumption rice production (Nguyen Cong Vinh, 2009). Thanks to therenovation policy, which was implemented in 1980s, Vietnam has achieved remarkableincreases in paddy. From a rice importing country, Vietnam started exporting rice since
1989 and since then rice export has continuously increased, and Vietnam now become thesecond largest rice exporter in the world just behind Thailand. There is advancement ofrice market both in the domestic and international market; farmer is still most vulnerable
actor due to climate change while they get least added value among stakeholders.
Therefore. Value added that is created in rice value chain should be shared evenly among
stakeholders to help farmers tolerate to negative impact of climate change.
2. Objectives
One of main objectives of this paper is to establish mechanism to share risk and value
among stakeholders in rice value chain by using added value to compensate for risk andpotential lost that may be encountered due to climate change.
Another objective is to a holistic strategy for rice value chain adapt with climate change bymobilizing community source, in which emphasizing institutional reform for risk
management. Therefore, the cooperation among stakeholders and between the state andprivate sectors are also paid much attention.
3. Methodology
Using value chain approach to identify the change of added value through stakeholders invalue chain. Value chain is a process form production to final consumption (Kaplinsky, R.,
and M. Morris, 2000). Beside, the method of regression to evaluate the affect level ofclimate factor will be estimated by using regression of rice yield and other factor affecting
to rice yield such as precipitation, temperature, sunny time, CO2 concentration andfertilizer use. Based on this model, some scenario will be constructed such as appraise theimpact of mean sea rise at different level and flood frequency. To predict the change ofrice yield, time series analysis is also implemented based on the time series data of abovementioned data.
4. Result4.1. Rice production and rice yield fluctuation
Total rice production area in 2009 is about 4.7 million hectare; this area reduced becauseof urbanization, industrialization and some rice land area are transferred to cultivate higher
value crops. Beside many regions in the Mekong river delta has to face seawater intrusion
making it impossible to continue to produce rice anymore. In 2009, the Mekong river delta
was account for 52.1% total rice production area of whole country, contributes almost allrice export volume with amount of over 5 million tons in 2009.
Figure 1: Rice production distribution and Yield change in Vietnam
Unit: 100kg/ha

Source: General Office of Statistics, 2010

As shown in above figure, the rice yield gradually increases in all regions, but it isfluctuated from 2000 up to now. There many reason explain why there is so change of rice

yield, in which climate change is also responsible for rice yield fluctuation. Climate change
causes unusual flow schedule that producers cannot respond to it timely. Accordingly,
many rice production areas are submerged and cause huge post harvest lost. This situation
becomes more serious in the recent years due to climate change.
4.2. Expand export market
Vietnam’s rice export volume increased from 3.48 million tons to 6.05 million tons from2000 to 2009. This increases precisely due to the growth in Mekong river delta. Rice
production over this period increases from 10.85 million tons to 13.31 million tons. The
role of rice production in food security has thus grown internationally, rather thannationally over the past decade. This is even more evident when one considers that a large
and growing proportion of the export trade was carried out on the basis of government-togovernment transactions with the shipped rice frequently being distributed through safety
net or other concessional government programs. As a result of its recent expansion in trade,
Vietnam’s share of world rice exports has crossed the 20% mark, having been in the rangeof 10 to 13% earlier in the decade. None of the other leading exporters have experienced asimilar upward trend in trade. In fact, the rice trade of these countries is notable for its
volatility over the past decade.
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Figure 3: Vietnam rice export expanded in 20 years

Volume (000)Source: Ministry of Industrial and Trade, 2010

Value ($000)

The rice export of Vietnam increase stably from 2000, and it always takes the position of
second largest exporter in the world behind Thailand. Even getting a lot of achievement inrice production and world market, value is not shared equality among stakeholders, while
farmer still the most vulnerable actors due to risk of climate change. Farmers are always
less profitable in term of market participation, while they are the most vulnerable in termof production risk compared to other stakeholders.
4.3. Producing more, farmers get less
In 2009, rice production was 38.9 million tons and export volume was 6 million tons
milled rice equivalent to 9.23 million tons rough rice. So the total domestic use was 29.87
million tons. In which, 1 millions tons used for seed and 7.5 million tons used for animal
feed including reserved stock and loss during storage. Accordingly, the volume of riceused for human consumption was 21.37 million tons (Bui Ba Bong et al, 2010). The surveyof Mekong Delta Institute (MDI) has show clearly result that famers usually get less profit
than other stakeholders.

Table 1: Domestic rice value chain

Total cost(đ/kg)

Price (đ/kg)

Profit (đ/kg)

Averagequantity/stakeholder/year(tons)

4,887
5,184
6,100
6,943
120
8,822
9,454

507
39
128
50
120
727
632

8.4
1,700
4,948
1,300
3,528
1,200
240

Farmer4,380
Traders
5,145
Millers
5,972
Polishers
6,893
Transporter
240
Wholesalers
8,095
Retailers
8,822
Source: Mekong Delta Institute, 2010

Profit/stakeholder (Million
VND)

4.3
66.3
633.3
65.0
423.4
872.4
151.7

Profit/stakeholders/year(USD1000)

0.3
4.0
38.4
3.9
25.6
52.9
9.2

There are different value added reveived by other stakeholders from farmers to retailers
even though it is domestic market or global one. In domestic rice value chain, farmer
usually get lowest value compared to other stakeholders, whereas the wholesalers are themost profitable one.

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Figure 2: The difference between farm gate price and export price
Unit: USD/tons

Export priceSource: Ministry of Industrial and Trade, 2010

Farmgate priceOne of the reasons why farmers are the most vulnerable actor in the rice commodity chain
is that they get lowest profit, while they face most risks due to climate change. The pricethat farmer sell to wholesalers and other stakeholders are usually much less than those of
the wholesalers sell to export companies or final consumers.
4.4. Risk identification and adaptation measures•

Risk of seawater intrusion

Because Vietnam in general and Mekong river delta in particular, when sea level rise from
0.2-0.6m, 100.000-200.000 hectare will be submerged that causes reduction of agriculturalland, especially rice land. If the sea level rise 1 meter about 90% Mekong river delta will
be submerged 4 to 5 months, in the dry season over 70% area will be salt intrusion withsalt concentration is over 4g/l. it also predict that 2 of 4 millions ha will be loosed, thisseverely affect national food security and millions for rice farmers (MONRE, 2009). Some
scientist believe that the calculation of th IPCC on sea level is slightly lower because notfully account the level of ice melted. Damage production by loss of rice land based on
scenarios of climate change for Vienam is very serious. Most of the potetial flooded area
including the red river delta and mekong river delta is the rice bowl of Vietnam. Institute

of Agricultural Environment also predicted that mekong river delta is the most affected
area, where 38,29% of land will be submerged under sea water among that 31.16% areagricultural land and it is mainly allocated for rice production. It is also estimated thatthese area will lose7.6 millions tons of rice per year equivalent to 40.52% total rice outputof mekong river delta today (IAE, 2010).
•

Increasing insects and disease

Climate change also causes change of habitat condition of living insects, so many
disease occur in rice production cause serious reduce rice yield in many regions, in someseasons the insect and disease can affect over 400,000 ha of rice in the Mekong river delta,
it increase production cost and reduce rice yield. Normally, key pest and diseases on rice
plant are usually occurred in a certain period. It observed that major pests and diseases onrice production like brown plant hopper (BPH), rice leaf folder, stem borer, rice plast,
sheath blight, bacterial leaf blight, etc were often occurred in a certain period with interval
3 – 5 years. Taking the example form current status of rice growing in Vietnam shows thatthe only epidemic outbreaks of BPH in winter spring rice season 2005-2006 in mekong
river delta occurred in the large area over 200,000 hectare with pesticide spray equivalent
to 13% of total rice growing acreage. In the other seasons namely summer – autumes
monsoon rice there were very high damages caused by both BPH and viruses and total
crop loses worth over 2,000 billion VND, farmers has to tolerate all those losses.
•

Flood is unusual schedule and increasing weather extreme events

Many weather extreme events will occur, flood in many irrigation constructions will
increase suddenly, it sometimes causes overload of these systems and flood in many key
production area. Beside climate change also causes change of precipitation in accompany
with industrialization and urbanization, the current irrigation system cannot meet the water
demand for both daily life and irrigation. As stated above, Mekong river delta play animportant role in agricultural development, food security and stability. Recent decades has
been suffering by climate change, in which the rollers are large fluctuations offlood, more and stronger hurricanes, more serious drought, forest fires, landerosion. Actually, climate change is responsible for many extreme events occurred in the
Mekong river delta in las 10 year. In 2000, historical flood was recorded; 05 consecutive
years with below-average flood, which in 2006 water level 4.00 m at Tan Chau. Mekong
Delta 04 years have limited, particularly limited combination of runoff on the MekongRiver in 2004; 02 times greater storms landed and affect mekong river delta. Landslide
occurred more oftent in the river banks and salinity become more popular in the mekong
river delta.
•

Abruptly temperature change

In 2009, Ministry of Natural Resource and Environment (MONRE) recommended climatechange scenario to Vietnam focusing on temperature and sea level rising in Vietnam in21th century based on high emission scenario, medium and low. Result shows that by 2100,
annual average of 1.1 to 1.90C for B1 scenarios; from 1.6 to 2.8oC for B2 scenario andfrom 2.1 to 3.6oC for A2 scenario. Additionally, IPPC (2007) estimated that sea level riseof about 26-59 cm by 2100. It is also forcasted that by the end of 21th century, the airtemperature may raise 2-3oC and it occurs rapidly in the the mekong river delta. Rainfall
would be rise in average by 5% in rainy season and during a year, but reduced in dry
season. This obviously impact very much on rice production, adversely causing water
scarcity, drought, flooding, soil salinity, acidicity, unusual weather occurred: newemerging pest and disease, threatening rice sharply yield reduction and bad grain quality.

•

Rice production is also partly responsible for climate change

Beside the negative impact of climate change on rice production, rice cultivation itself
responsible for climate change due to releasing methane, N2O, Carbon monoside andoxide nitrogen (NOx). Therefore, green gas mitigation research and development ofsolution to apply sustainable agricultural farming techniques to enhance the agricultural
production and to mitigate green house gas emission. Improvement of irrigation anddrainage management in rice fields. Strengthening the capacities of agricultural institutions
is very essential.
5. Discussion and conclusion
Vietnam has a long history with rice production and achieves a significant
achievement in last two decades make Vietnam from a chronic rice import country become
the world’s second largest rice exporters. This achievement is firmly consolidated whenboth production and export value increase continuously in recent year. However, climatechange severely affects rice production locally. It causes high risk for rice producers that
require appropriate measure to mitigate losses that farmers may face in the coming time.
There are two simultaneous measure should be regarded including indirect solution or
economic solution and direct solution or adaptation solution. When it comes to economic
solution that takes advantage of rice value chain itself. If use total value added evenly
distributed to farmers and other stakeholders will make it feasible for farmer tolerate
climatic change. Therefore, value chain approach and fair trade should be promoted tocompensate for farmer to confront with climate change. The problem is how otherstakeholders accept to share value to producers. The experience of many supply chain
show that it is only all stakeholders share value evenly can achieve sustainable
development, it is also call multiple win situation. So as to reach that achievement, it isessential to have transparent information system because unfair trade only can exist when
there is asymmetric information. If all stakeholders share a same information system, they
can be willing share their own value even their profit to get more profit in long run.
As regarding direct solution, if the economic solution focus on market institutions
and solve the relationships among stakeholders in value change, this solution focus on
production stages. Certainly, there is no solution can solve also problems of climate change
causing for rice production, but risk management in rice production based on the risk
classification and assessment. In this solution, two different measures are proposed
including one for mitigate the impact of rice production on climate change and another one
is to support rice to adapt with climate change. As mentioned above, rice can be an actor
releasing GHG emissions, so it is appropriate techniques that can solve the problems. So
the solution should be focus on issue as follows: 1) development of crop patterns suitable
to climate change; 2) effective use of irrigation water; 3) upgrading of irrigation systems
for agriculture; 4) development of new varieties that could tolerate against revere
environmental conditions; 5) reserve and storage of local crop varieties, establishing crop
seed bank and 6) development of farming techniques appropriate to climate change. Beside,
improvement of irrigation drainage management in rice fields is necessary in which
implementation of water drainage during maximal stem spreading and after grain-fillingphases would save water, increase rice yield and mitigate methane emission. Establishingdata bank and equipping calculation facilities to serve specialized research in agriculture
and climate change. As for the future perspective, this research will be expanded byestimate and simulate the interactive level of production and market factor with climatechange.

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