Vietnam seen as top new market for grains

03.08.2017

Vietnam ranks as the international market with the most promise for increasing demand for American corn grown to feed livestock over the next decade, U.S. Grains Council economists said Tuesday.

Vietnam is projected to add 10 million middle-class households by 2026, driving up meat consumption and the need for feed grains, according to a study presented at the council’s annual conference.

“Vietnam is clearly a high-priority market for us,” Grains Council chief economist Michael Dwyer said. “The raw demographics are in place.”

The study, led by council graduate fellow Logan Britton, rated the top 10 countries for potential growth. The council did the report to help its members in the corn, barley and sorghum industries to decide where to invest in marketing.

The U.S. Grains Council receives funding from two USDA marketing programs. The Trump administration has proposed eliminating those programs.

The study, likened to Forbes magazine’s rankings of best places to live or retire, looked at factors such as a country’s personal income growth and distribution, urbanization, domestic grain production and the current U.S. market share.

Vietnam edged Mexico for the top spot.

China and India’s growth in middle-class households will dwarf Vietnam’s, but the U.S. grains industry already enjoys a large market share in Vietnam, and the country’s increase in meat consumption is expected to be second only to China’s. The Southeast Asian country of 95 million people under communist rule also is seen as having a better business environment.

“Central planning is playing less and less of a role and market forces are playing more and more of a role,” Dwyer said.

China ranked sixth — a demographic giant but marked down for a “disruptive policy environment.” India, a major grain producer, did not make the top 10.

Mexico is projected to add 9 million middle-class households by 2026. U.S. grain suppliers will always have the advantage of being close to Mexico, even if trade relations become strained, Dwyer said.

“If Mexico buys Brazilian and Argentinian corn, it’s because they’re willing to a pay a premium because their national pride has been hurt,” he said.

Indonesia ranked third. The world’s fourth-most populous country with 263 million people is expected to add 32 million middle-class households, but with less growth in meat consumption than in Vietnam.

The six counties that along with the U.S. are in the Central American Free Trade Agreement were collectively ranked fourth. The countries are Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua and the Dominican Republic.

Colombia, which is not in CAFTA, was fifth.

Rounding out the top 10, in order, were China, Turkey, South Korea, the Philippines and Egypt.

The study listed a total of 47 countries. European countries with well-developed economies and an established middle-class ranked low for potential for growth.

The demand for U.S. grains worldwide will be driven by ethanol production, animal feed and meat products, according to council economists.



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