Wheat and barley markets in Vietnam

Abstract

The strategic importance to Australia of Vietnam's wheat and barley markets are investigated

Full text

Wheat and barley markets
in Vietnam
Peter White | Chris Carter | Ross Kingwell | Sean Cowman | Peter Elliott
THEIR STRATEGIC IMPORTANCE TO AUSTRALIA

Purpose
AEGIC exists to increase
value in the Australian
grains industry.

AEGIC is an initiative of the Western Australian State Government and
Australia’s Grains Research and Development Corporation
MIRP19015EN
June 2019. All contents copyright @AEGIC
All rights reserved
aegic.org.au
Contents
Summary 05
Introduction 08
Country profile 09
Economic growth 09
Population growth 11
Income and consumption 12
Urbanisation 13
Wheat 15
Wheat for food 15
Wheat for feed 18
Wheat imports 22
Consumption trends in wheat-based foods 26
Barley 29
Beer consumption 29
Barley and malt imports 31
Barley 31
Malt 32
Implications for Australia 34
References 38

Wheat and barley markets in Vietnam: their strategic importance to Australia04
Recommendations
Australia needs to monitor and
respond to the changing needs of
Vietnam to ensure it remains a
preferred wheat supplier for
noodles andbread.
Vietnam’s middle class is expected to
make up one-quarter of the population
by 2030 and will demand higher quality
food and beverages. New consumption
preferences will become manifest
within this group and will help set the
future trends that eventually move to
the broader population as the
economygrows.
While Australian wheat is well regarded
in Vietnam, functionality variations in
recent years have negatively impacted
perceptions of Australian wheat quality.
The Australian wheat industry needs to
remain aware of the impact of
thesetrends.
Convenience and affordability will
remain important consumer factors for
the foreseeable future. Australian
wheat needs to be attractively priced
despite its preferred status in the
market.
Wheat consumption per capita as
food in Vietnam has increased from 5kg
in 1990 to over 16kg in 2018, and will
continue to grow to about 23kg by
2030.
Australia is well positioned to benefit
from this growth, mainly in the noodle
and bread sectors where quality is
important.
However, despite the expected
economic growth, incomes are
relatively low in Vietnam and cost will
remain a major factor for most
Vietnamese people.
The feed market in Vietnam has
expanded rapidly over the past 10
years but feed barley is not yet used.
Providing technical information and
assistance about the advantages of
Australian feed grains may stimulate
demand in Vietnam.
The feed sector continues to expand
rapidly in Vietnam, providing
opportunities for a range of Australian
feed grains.
Building awareness of the benefits of
feed barley and other feed grains, and
supporting their use in the Vietnam
feed industries, should allow Australian
farmers to participate in this
expandingmarket.
1 2 3

Wheat and barley markets in Vietnam: their strategic importance to Australia 05
Economy, demographics and
population
• Vietnam is set to outpace the rest of South East Asia and
much of the rest of the world in its rate of economic growth
and development over the coming decades.
• Vietnam’s economy will more than double in size by 2030 and
by 2050 Vietnam’s global GDP ranking is expected to have
jumped 12 places up from 32nd into the top 20 — the largest
move of any country.
• Vietnam has the third largest population among the countries
of South East Asia and continues to grow; however, its growth
is slowing and its population is ageing. The proportion of the
population aged between 15 and 40, which in 2017 made up
the largest share of the country’s gross income, will decrease
in absolute terms by about 3.5 million people. By contrast,
Indonesia and the Philippines will continue to experience an
increase in the total number of people in this age bracket in
their respective countries.
• By 2030, more than two-thirds of the population is expected
to continue to have limited discretionary spending power
where about 50 per cent of their consumption expenditure
will involve purchases of essential items such as food and
non-alcoholic beverages. A smaller proportion of the
population (about 25 per cent) will be sufficiently affluent to
demand a greater range of foods with improved quality.
• Vietnam’s level of urbanisation lags behind much of the rest
of Asia and so affects the patterns of food consumption.
Despite steady growth in the urban population, only 35 per
cent of Vietnam’s population lived in urban areas in 2017.
The urban population is not expected to exceed the rural
population until well after 2030, whereas in Indonesia this
situation was reached by 2010.
Summary
GDPPopulationUrbanisation
2018
2030
44%
36%
106 million
97 million
US$ 185 billion
US$ 367 billion
Economic and
demographic projections
Wheat use in Vietnam
has increased rapidly
from below 1mmt in 2000
to 4.5mmt in 2018.

Wheat and barley markets in Vietnam: their strategic importance to Australia06
Wheat in Vietnam
• Wheat use in Vietnam has increased rapidly from below 1mmt
in 2000 to 4.5mmt in 2018. Consumption of wheat as food for
people has increased steadily, while consumption within the
animal feed industry has jumped from nearly zero up to
3mmt in the space of 10 years.
• From 1990 to 2018, the compound annual growth rate in per
capita wheat consumption for food averaged about 5.6 per cent
each year, rising from about 5kg per capita in 1990 to more
than 16kg per capita in 2018. However, wheat use for food
consumption is still at low levels in Vietnam compared to other
Asian countries. There remains substantial opportunity for
further growth in consumption. Wheat consumption for food is
expected to grow at about 3 per cent per annum to 2030.
• Demand for feed wheat is similarly likely to continue to grow
as aquaculture and animal industries continue to grow.
However, demand for feed wheat is more variable as it
depends on the relative prices of alternative local and
imported competing feed sources, such as corn and cassava.
There is nevertheless an underlying demand for wheat in
aquafeeds given wheat’s functional role in stabilising feed
pellets and its ease of use in industrialised feed processing.
• Australia has been the largest and most consistent supplier of
wheat to Vietnam by far over the past 20 years. From 2000 to
2008, imports of Australian wheat averaged about 0.43mmt
but with a growth rate of only 1.4 per cent per annum. A step
change in imports occurred in a handful of years after 2008
when imports of wheat for feed grew rapidly by more than
1mmt per annum. As a result, from 2009 to 2017, imports of
Australian wheat averaged about 1.5mmt and again grew at
about 1.4 per cent per annum.
• Since 2016, significant expansion in the use of feed wheat in
Vietnam has mainly been supplied by wheat from the Black
Sea region. This import of feed wheat has seen the Australian
share of total wheat imports decline, although Australia’s
share of the wheat for food market has remained steady.
• Total demand for wheat for food is projected to grow to
2.8mmt by 2030, which is an increase of about 1.2mmt over
the next 12 years.
• In an average year, Australia may reasonably expect to supply
about 0.9mmt of wheat to Vietnam’s higher priced food
market. Australian wheat exports to this market may rise to
about 1.4mmt by 2030. Higher volumes of Australian wheat
will be imported in years when Australia can supply higher
protein wheat (e.g. APH), which is preferred by the
Vietnamese over its North America counterparts.
• Additional quantities of Australian wheat also may be
supplied when it is competitively priced against wheat from
the Black Sea or South America that is currently used in
blending or other lower value uses such as feed. The superior
hygiene and integrity of Australian wheat provide some
advantage over competing origins for these purposes.
• It is also possible that the quantity of Australian wheat
supplied to Vietnam may decline if it fails to meet the growing
quality requirements of consumers. Indeed, in recent years
Vietnamese importers have expressed a strong preference for
wheat sourced from some regions in Australia over others
because of perceptions about declining wheat quality in some
regions.
Total wheat
for food imports
~1.8mmt
Wheat imports from
Australia for food
~0.9mmt
Total wheat
for food imports
~2.5mmt
Wheat imports from
Australia for food
~1.3mmt
2018 2030
Total demand for wheat
for food projections

Wheat and barley markets in Vietnam: their strategic importance to Australia 07
Barley in Vietnam
• Beer production in Vietnam has grown at 9 per cent per
annum over the past 10 years, lifting Vietnam up 16 places in
the global rankings of beer production. Vietnam has overtaken
Thailand and South Korea to become the 9th top producer of
beer with more than 4.3 billion litres produced annually.
• Most Vietnamese prefer beer over other alcoholic beverages.
Continued growth in beer consumption at 3 to 5 per cent per
annum up to 2030 will see Vietnamese per capita beer
consumption reach about 70L, substantially passing the per
capita consumption levels in many other major Asian nations.
• As incomes increase, the demand for higher quality beers is
rising, which may lead to increasing production of full malt
beers. By 2020, about 10 per cent of the market will be
high-end beers, 62 per cent will be mid-range products and 28
per cent will be lower quality, cheaper beers.
• A continuing rise in the special consumption tax has put
pressure on brewers’ margins and may dampen demand for
beer if tax rates continue to rise. The special consumption tax
on beer increased from 45 to 55 per cent in 2016 and has
increased a further 5 per cent each year since. If this trend
continues, the tax will reach 70 per cent in 2019.
• From 2002 to 2016, barley imports to Vietnam have fluctuated
between 40,000 and 50,000mt. This then increased by about
100,000mt to reach more than 150,000mt after Intermalt — an
Interflour subsidiary partly owned by the Australian grain
handling cooperative CBH — opened a new malting facility in
Vietnam. Australia has supplied 80 per cent (120,000mt) of
barley imported into Vietnam. Nonetheless, that amount
represents less than 1 per cent of Australia’s total barley
exports and is less that the total amount of malt Australia
exports to Vietnam.
• In the future, a feasible doubling of Intermalt’s malting
capacity to 280,000mt of barley throughput would see total
malt barley imports increase to about 330,000mt. With a
4 per cent annual increase in beer production up to 2030, this
would still leave a total malt import requirement of about
490,000mt by 2030, which is similar to the current import
requirement.
• Vietnam does not import barley for feed despite its high
suitability for their feed rations. Work aimed at familiarising
Vietnamese feed millers with the virtues of Australian feed
barley, particularly its ease of use and general hygiene, may
provide an opportunity to expand and diversify Australia’s
markets for export feed barley.
Malt Barley Malt
2018
2030
0.15 mmt
0.42 mmt
0.41 mmt
0.33 mmt
Projected barley
and malt imports
From 2002 to 2016, barley imports
to Vietnam have fluctuated between
40,000 and 50,000mt.
Wheat and barley markets in Vietnam: their strategic importance to Australia 07

Wheat and barley markets in Vietnam: their strategic importance to Australia08
These changes present important opportunities for Australian
grain exports. Wheat is the second staple cereal in Vietnam
(after rice) and is growing in popularity. Similarly, beer is the
preferred alcoholic beverage, with beer consumption doubling
over the past decade. Vietnam is now one of the top 10 beer
markets in the world.
Australia currently occupies a dominant position in supplying
milling wheat to Vietnam and is a preferred supplier for both
bread and noodles manufacturing. Furthermore, the International
Trade Centre has identified Vietnam as among the top 10 wheat
export growth opportunities for Australia towards the early 2020s
(ITC 2018). Similarly, Australia is the largest and most consistent
supplier of malt and malt barley to Vietnam. However, the
competitive landscape for international grain trade continues to
change with low-cost producers targeting Vietnam and other
important markets in South East Asia. Since 2011, the value of
Australia’s grain exports to Vietnam has remained steady or
declined slightly and its market share is diminishing.
As the Australian grains industry strives to build enduring
long-term profitability, the industry needs to understand its
changing position in the Vietnamese grain market. How
important is Vietnam to the Australian grains industry and how
well positioned is Australia? Can it maintain its preferred
position in wheat and barley and take advantage of the
compelling growth opportunities? What is the potential upside,
how long will it endure and what are the factors underpinning
the stability of Vietnam as a major long-term market for
Australian grain? To facilitate answering these important
questions, this report provides an overview of Vietnam’s grain
market and economy to better understand the trends, prospects
and future actions for Australia.
Introduction
Vietnam is experiencing rapid economic and social change. It is currently the third
most populous nation in South East Asia with about 96 million people, including an
emerging middle class that will double from 13 per cent of the population in 2017 to
26 per cent by 2026. Fast and consistent economic growth is likely to see Vietnam
outpace the rest of South East Asia (and much of the rest of the world) in economic
growth and development over coming decades.

Wheat and barley markets in Vietnam: their strategic importance to Australia 09
Economic growth
Vietnam’s economy has experienced sustained and rapid
growth over the past 30 years and that growth is set to continue
as Vietnam transitions from a factor-driven economy (natural
resources; low skilled labour) to an efficiency-driven economy
(more efficient production; higher wages). Long-term economic
growth has averaged more than 13 per cent per annum since
2000, with per capita growth at 5.1 per cent per annum (IMF
2017).
Short-term economic prospects for Vietnam are stable and
positive, barring external shocks (World Bank 2018). The tight
confidence intervals shown in Figure 1 suggest that even for
pessimistic scenarios there is still an expectation that growth will
be positive, at least to 2022. This is consistent with the fact that
economic growth has been remarkably stable in Vietnam, with
volatility among the lowest in the world and declining (World
Bank and Ministry of Planning and Investment of Vietnam 2016).
Longer term growth projections are also strongly positive,
although there is more uncertainty. The United States
Department of Agriculture (USDA) predicts that, compared with
2017, Vietnam’s economy will more than double in size by 2030
(USDA 2018). This is a greater expansion in percentage terms
than any other country in Australia’s top 10 wheat exporting
markets, apart from India (see Figure 2). Similarly, in an analysis
of how the global economic order is likely to change by 2050,
PwC (2017) has Vietnam jumping 12 places in the global GDP
rankings, from 32nd into the top 20 by 2050, the largest move of
any country. This momentum is likely to be driven by capital
investment and technological progress that deliver real labour
productivity improvements and strong growth in the value of
goods and services produced (see Figure 3).
Further indications of the robustness of future growth in the
Vietnamese economy is its accompanying integration with the
world economy, allowing more sophisticated and stable trading
relationships.
Country profile
1800
1600
1400
1200
1000
800
600
400
200
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
$USD/person
Spread of 95% of projectionsSpread of 80%of projections
Actual/medium
Year
2022
Figure 1
Five-year forecast GDP
for Vietnam
Source: World Bank (2018)
Vietnam’s economy is rapidly growing and its workforce
is modernising

Wheat and barley markets in Vietnam: their strategic importance to Australia10
Year
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
Real GDP relative to 2017
Indonesia (1090)Vietnam (174) China (10,123)
Korea (1342) Japan (6128)Malaysia (359)
Philippines (302)
Iraq (218)
India (2634)
Thailand (419)
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Figure 2
Estimated real GDP to 2030 relative to 2017 for the countries that constitute Australia’s top 10 wheat export destinations
Note: Real GDP in US$ billions in 2017 indicated in brackets after each country name in the legend
Source: USDA 2018
Vietnam became the 150th member of the World Trade
Organization in 2007. Vietnam is a member of the
Association of Southeast Asian Nations and hence is
committed to the ASEAN Free Trade Area (AFTA). Together
with the ASEAN countries, Vietnam has signed trade
agreements with China, the Republic of Korea, Australia
and New Zealand (AANZFTA), India, Chile and Japan. It
also signed a bilateral trade agreement with Korea in
2015, as well as a trade agreement with the Russian-led
Customs Union block that has been in effect since
October 2016. Vietnam has completed all bilateral
negotiations of the Trans-Pacific Partnership (TPP) free
trade agreement but has not yet ratified the agreement.
In February 2016, Vietnam completed negotiating a free
trade agreement (FTA) with the European Union and is
waiting for the Council of Ministers for their ratification.
Vietnam is also currently negotiating an FTA with the
countries of the European Free Trade Association (Norway,
Iceland, Liechtenstein and Switzerland).
Australian wheat enjoys duty free access to Vietnam
under its FTA as does wheat from Russia, while US wheat
attracts a 5 per cent import duty. In addition, in November
2018 the Vietnamese government announced that it would
enact stricter quarantine measures for grain contaminated
with Canadian thistle (Cirsium arvense). This initially
resulted in the slowing of imports of North American
wheat; however, its full impact is yet to be determined.
Growth in Vietnam’s economy over the past two decades
has also been accompanied by complex structural,
demographic and income distribution changes that
impact consumption patterns within the country,
including expectations about the type and quality of food
people will demand in the future.
Year
2050
2016
Average annual GDP growth rate, 2016–2050
Up 9 places
28th
19th
Philippines 4.3%
Up 8 places
22nd
14th
Nigeria 4.2%
Up 12 places
32nd
20th
Vietnam 5.1%
Figure 3
Vietnam is predicted to have the greatest move up the global GDP
rankings by 2050, followed by the Philippines and Nigeria
Source: PwC 2017

Wheat and barley markets in Vietnam: their strategic importance to Australia 11
Population growth
Vietnam has the third largest population in South East Asia and
continues to grow, but growth is slowing and the population is
ageing. In 1980, the fertility rate was five children per female
but this decreased to two children per female by 2015, which is
close to the population replacement rate of 2.1. It is expected
that the fertility rate will fall slightly further and stabilise at
about 1.9 over the next decade (UN 2017).
By 2030, Vietnam’s population will have increased by 13 million
to a total of 108 million (see Figure 4). However, the total
working age population (aged 15–64) will have increased by only
about six million people and so in proportional terms will
decrease from 70 per cent of the population in 2015 to 66 per
cent in 2030. A greater contrast will have occurred in the
proportion of the population aged between 15 and 40, which in
2017 made up the largest share of the country’s gross income
(Euromonitor 2018a). By 2030, the number in this age bracket
will have decreased in absolute terms by about 3.5 million
people, shrinking from about 42 per cent of the population in
2015 to 34 per cent in 2030. These changes contrast with
changes in Indonesia and the Philippines, which will both
continue to see an increase in the total number of people in this
age bracket by 2030, but are similar to the decreases expected
for China and South Korea (UN 2017).
Net migration is negative but slowing. Between 2015 and 2030, it
is expected that about 40,000 more people per year will
emigrate from Vietnam than migrate to it. This is slightly lower
than the expected average net migration rate for the Asia-Pacific
region over this period. It is also substantially lower than the
net migration rate between 2000 and 2014, which was negative
120,000 people. The main factor influencing outwards migration
from Vietnam has been a relatively young, increasingly educated
population searching for non-rural opportunities that have been
scarce.
0
20
40
60
80
100
120
2015 2020 2025 2030
Population (million)
Year
Total 15–39 15–64
42%
70%
39%
68%
36%
67%
34%
66%
Figure 4
Population changes in
Vietnam in different age
brackets (total population,
working age (15–64) and
younger working age (15–39),
2015–30. Percentage figures
indicate the proportion of the
population in each age
bracket
Source: UN 2017
Vietnam’s population growth is slowing and ageing. The 70–79 age
group will grow by 137 per cent or 3.5 million people between 2015
and 2030 while the fertility rate will fall to 1.9 — just below
replacement rate

Despite relatively slow growth in the
younger population, the projected
fast-paced economic growth is likely
to produce steady increases increases
in total income and expenditure
Wheat and barley markets in Vietnam: their strategic importance to Australia12
Income and consumption
Despite relatively slow growth in the younger population, the
projected fast-paced economic growth is likely to produce
steady increases in total income and expenditure. Up to 2030,
total consumer expenditure is forecast to rise by about 4.6 per
cent per annum, which equates to a cumulative increase over
this period of just over 70 per cent (Euromonitor 2018a). This
level of consumption growth is lower than for India, the
Philippines or China and about the same as Malaysia and
Indonesia, but considerably higher than Japan or South Korea
(see Table 1).
Kingwell (2018) showed that with rising income, a smaller share
of spending goes towards necessities, such as food, and that
even within food groups a shrinking proportion is spent on food
grains compared with fruit, milk and meat. As incomes rise in
Vietnam, consumers will follow similar trends with a smaller
proportion of total income being spent on rice and wheat-based
products compared with these other food groups.
Table 1
Forecast annual growth in total consumer expenditure for
selected countries, 2018–30
Country Consumption growth
2018–30 (%)
Philippines 6.9
China 5.4
Indonesia 4.9
Malaysia 4.7
Vietnam 4.6
Thailand 3.0
South Korea 2.2
Australia 2.3
Japan 0.6
Source: Euromonitor
However, income levels in Vietnam are still among the lowest in
South East Asia. For example, in 2017 GDP per capita in Vietnam
was US$2111 compared with US$3346 for Indonesia and US$5815
for Thailand. Furthermore, the GDP per capita in Vietnam is the
lowest of Australia’s top 10 grain markets except for India
(figures for Yemen are not available; World Bank 2018). Even
with growth projections at the top end of the expected range
over the next 15 years, average incomes in Vietnam will still be
lower than those in Malaysia or South Korea in the early-2000s
(World Bank and Ministry of Planning and Investment of Vietnam
2016). At these relatively low incomes, many Vietnamese
consumers will continue to devote a high proportion of their
income to food necessities. Therefore, the expected growth in
expenditure on food and non-alcoholic beverages in Vietnam is
still projected to be just over 4 per cent per annum, which is
only slightly lower than growth in consumption overall
(Euromonitor 2018a).
Another factor impacting on patterns of food consumption as
incomes rise in Vietnam is how evenly income is distributed.
Income distribution in Vietnam is uneven by both regional and
global standards and the income gap continues to expand
(Euromonitor 2018a). For example, the lowest socioeconomic
group in Vietnam will account for about half of the expected
population rise by 2030. Nevertheless, there is an emerging
middle class — currently accounting for 13 per cent of the
population, which is expected to reach 26 per cent by 2026
(World Bank 2018a).
The diverging growth in income among sections of the
population will increasingly polarise the market for food and
drinks in Vietnam. A large proportion of the population is
expected to continue to have limited discretionary spending
power, with essential items such as food and non-alcoholic
beverages comprising about 50 per cent of their consumption to
2030. Whereas a smaller proportion of the population will likely
have greater discretionary spending power, demanding a greater
range of foods with improved quality as well as a broad range of
other discretionary consumer items (Euromonitor 2018a).
Part of the reason for Vietnam’s increasing income gap is that
rural areas lag behind urban areas in terms of income due to
limited access to education and employment opportunities.
Rates of urbanisation within Vietnam will therefore affect both
income growth and the change in food consumption patterns.

Wheat and barley markets in Vietnam: their strategic importance to Australia 13
8.2–35
Vietnam
Share of total
population (%)
35–52
52–66
66–79
79–100
Figure 5
Urban population as a share of total population in 2017
Source: UN 2018
Urbanisation
Vietnam had fewer than 14 million urban residents in 1990. By
2016, this had increased to 33 million, with urban areas
contributing more than half the country’s GDP. However,
Vietnam lags behind much of Asia in its level of urbanisation
(see Figure 5). Despite the steady growth in Vietnam’s urban
population, only 35 per cent of the population lived in urban
areas in 2017, the lowest level among Australia’s top export
grain markets, except for India (33 per cent) (UN 2018).
A comparison between urbanisation rates in Vietnam and
Indonesia indicates that Vietnam is about 25 years behind
Indonesia in its degree of urbanisation (see Figure 6). Very low
levels of urbanisation in Vietnam during the postwar period
until 1990 coincided with a rapid rate of urbanisation in
Indonesia. Consequently, the urban population in Vietnam is
not expected to exceed the rural population until well after
2030, whereas in Indonesia this had already occurred by 2010.
Kingwell et al. (2018) explained the relationship between
urbanisation and diet in the context of Indonesia. They found
that the time-pressed lifestyle of the average urban-based
office worker, together with greater affluence, provided both the
motivation and capability to demand convenience foods that
could be purchased cheaply and ‘on the run’. Other social
trends, such as the participation of women in the workforce,
particularly in urban service industries, further reinforced these
changes. As women’s participation in higher paid employment
in urban areas improves, the opportunity cost of their lost time
increases; hence the demand for convenient, easily prepared
foods increases at the expense of more traditional options
(Pingali 2007). At 73 per cent, Vietnam already has a high level
of female participation in the workforce, substantially higher
than Indonesia (51 per cent) or Australia (59 per cent), but
much of this employment is in rural agriculture (World Bank
2018a). The percentage of women employed in the service
industries is only 35 per cent, which remains low compared
with Indonesia (55 per cent) and Australia (91 per cent) (World
Bank 2018a).

Wheat and barley markets in Vietnam: their strategic importance to Australia14
Pingali (2007) cited family size as a further factor
influencing consumption patterns, associated with
urbanisation. Low fertility rates, leading to fewer
family members, may enable families to eat
outside the home more often. Vietnam already has
a low fertility rate of two children per female,
substantially lower that the fertility rate of
Indonesia at an equivalent level of urbanisation.
Ho Chi Minh City with 12 million inhabitants is the most populous metropolitan area in Vietnam. The city’s population is
expected to grow to 13.9 million by 2025 but even by this date Vietnam’s population will still be predominantly rural
0
10
20
30
40
50
60
70
80
1950 1970 1990 2010 2030 2050
Percentage of the population
in urban areas (%)
Year
Vietnam Indonesia
Figure 6
Percentage of the population
living in urban areas in Vietnam
and Indonesia projected to 2050
Source: UN 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia 15
Wheat for food
Wheat use in Vietnam has increased rapidly from
below 1mmt in 2000 to 4.5mmt in 2018 (see Figure
7). Consumption of wheat as food has increased
steadily while consumption within the animal feed
industry has jumped from nearly zero up to 3mmt
in the space of 10 years.
From 1990 to 2018, the compound annual growth
rate in per capita wheat consumption for food in
Vietnam averaged about 5.6 per cent each year,
rising from about 5kg per capita in 1990 to more
than 16kg per capita in 2018 (see Figure 8). This
growth contrasts with rice consumption, which has
remained more or less stable over this period,
although it should be noted that the average
Vietnamese person in 2018 consumed almost 10
times more rice (154kg per capita) than wheat in a
year (OECD/FAO 2018). Indeed, Vietnam remains
one of the highest per capita consumers of rice
and the lowest per capita consumers of wheat for
food in Asia (see Table 2).
Wheat
Other useFeedFood
Year
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
Wheat consumption (mmt)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Figure 7
Major uses of wheat in Vietnam, 2000–2018
Source: OECD-FAO 2018
Per capita wheat consumption
relative to 1990
Year
Wheat Rice
1990 1995 2000 2005 2010 2015
16kg/person
154kg/person
5kg/person
150kg/person
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Figure 8
Change in total food wheat or rice consumption in Vietnam relative to
levels consumed in 1990
Note: The graph shows annual average consumption levels in 1990 and 2018
Source: OECD/FAO 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia16
Given the relatively low levels of wheat consumption currently
in Vietnam, there is still substantial room for consumption to
grow (Table 2). Combined with changing demographics and
rising incomes, we expect that per capita wheat consumption
will continue to grow over the next decade but the pace of
growth may be slightly slower than has occurred over the past
decade.
Table 2
Per capita wheat and rice consumption for food in selected
Asian countries, 2018
Country Wheat Rice
Indonesia 26.58 135.87
Vietnam 16.38 154.82
Korea, Republic 47.77 61.21
China 62.64 77.21
Japan 40.47 53.41
Malaysia 31.62 82.93
Philippines 23.29 115.7
Thailand 18.66 99.32
India 59.99 69.97
Source: OECD/FAO 2018
As a comparison, when Indonesian GDP per capita and
urbanisation levels were similar to those of Vietnam now,
consumption levels for wheat as food in Indonesia were at
similar levels and grew at a similar pace, as has occurred in
Vietnam over the past 20 years (i.e. 1967–1990; see Figure 9).
The subsequent period after 1990 saw Indonesian per capita
consumption of wheat as food continue to grow at nearly 4 per
cent each year over the next 12 years. If a similar scenario
occurs in Vietnam, then the forecast rate of increase in the
consumption of wheat for food will be similar to the
Euromonitor (2018) forecast rate of food and beverage
consumption for Vietnam as a whole (i.e. estimated at 4.1 per
cent per annum).
However, we know that grains form a diminishing share of diet
by weight and calorie intake as incomes increase (Kingwell et al.
2018). Therefore, for wheat consumption to increase at a similar
pace as food consumption in general, then the consumption of
other grains, such as rice, will need to remain static or increase
only very slowly. This is possible given the already high level of
rice consumption and its static consumption trend in recent
years. Under this scenario, a 3 per cent annual increase in the
consumption of wheat for food in Vietnam over the next 12
years will see total rice and wheat consumption increase by less
than 0.7 per cent annually.
Wheat consumption
(kg/person/year)
Year
(Vietnam 1990 to 2013; Indonesia 1967 to 1990)
Vietnam Indonesia
y = 0.34x + 3.15
y = 0.29x + 3.10
0
2
4
6
8
10
12
Figure 9
Per capita wheat consumption
in Vietnam and Indonesia
offset by 25 years to when
levels of urbanisation were
similar in both countries
Source: OECD/FAO 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia 17
Importantly, the rate of growth of the Vietnamese population
over the next 10–15 years will slow and the population will age.
These factors will act to slow growth in the total demand for
wheat, counteracting to some degree the increase in the per
capita consumption of wheat for food. A 3 per cent annual
increase in the consumption of wheat for food until 2030, under
the medium population projections of the United Nations, will
see total demand for wheat for food grow to 2.5mmt, which is
an increase of about 0.9mmt over the next 12 years. However,
3 per cent annual increase in wheat for food consumption is
higher than the OECD/FAO projections. The OECD/FAO (2018)
estimated that wheat for food consumption in Vietnam will grow
at about 2.6 per cent per annum from 2017 to 2027. Using these
figures, total wheat for food consumption in 2030 will total only
about 2.3mmt. However, the OECD/FAO forecasts are likely to be
overly conservative. As a comparison, the USDA’s international
long-term projections to 2027 have wheat food, seed and
industrial consumption growing at 3.5 per cent annually (USDA
2018).
It should be noted that even if we assume high levels of growth
in wheat for food consumption that are close to the forecast
increase in total food and beverage consumption as explained
above (i.e. 3 per cent), then by 2030, the level of per capita
wheat consumption in Vietnam will still be low compared to
other South East Asian countries, only equating to the current
Indonesian per capita consumption level.
Currently, Vietnam’s wheat milling capacity is about 3.5mmt
annually (Quan Tran 2018). This is more than twice the current
demand for wheat for food; indeed, more than the demand
estimated above using 3 per cent growth to 2030. Four mills
dominate wheat milling in Vietnam: Vimaflour, MeKong,
Interflour and Bing Dong. These mills account for about 50 per
cent of market share. This large milling capacity suggests the
industry is anticipating strong future growth in the consumption
of wheat for food, as explained above, but may also point to
expectations of growth in flour exports and the increased use of
milled wheat for aquafeeds.
Flour exports have increased by more than 20-fold since 2001
(see Figure 10), with Vietnam being the largest exporter in South
East Asia. Flour is mainly exported regionally with the main
destinations being Thailand and the Philippines. Nevertheless, at
about 0.14mmt in 2016, flour exports still represent only about
4 per cent of Vietnam’s milling capacity. Possibly, faster growth
in demand for flour may be expected from the aquafeed
industry, which has had an annual growth rate of nearly 12 per
cent since 2005 (see Figure 14).
0
Flour exports (mmt)
Year
0.020
0.040
0.060
0.080
0.100
0.120
0.140
0.160
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 10
Wheat or meslin flour
exports from Vietnam
Note: Accurate data not
available for 2012
Source: ITC trade map
Vietnam has ample flour production capacity
allowing for future expansion of demand.

Wheat and barley markets in Vietnam: their strategic importance to Australia18
Wheat for feed
The Vietnamese government does not support domestic corn
production through protective policies and thus wheat imports
compete on an economic basis with corn and other potential
sources in the animal feed market. Pigs, aquaculture and poultry
together account for 97 per cent of the feed use in Vietnam.
Wheat flour is used in the production of aquafeeds primarily for
its functional physical properties but also, depending on the
species, as an energy source. Wheat starch is used as a carrier
for the oil and protein components of the feed and, through
partial heat treatment, adjustments to the solubility and
integrity of the pellets are made to match the requirements of
different aquaculture species. Even at relatively low inclusion
rates, wheat is a highly effective binding agent in feed products
containing relatively high levels of less ‘pelletisable’ ingredients
such as dried distiller’s grain, palm kernel meal and canola
meal. The widespread use of bagged feed in Vietnam, as in
many other parts of South East Asia, means that pellet quality is
particularly important for feed mills.
Some aquafeeds contain more than 30 per cent wheat but
generally accepted inclusion rates for wheat flour are about
10–20 per cent (see Table 3). Industry experts estimate that 10
per cent of all milled wheat in Vietnam is used in aquafeeds. In
addition, the importance of wheat and other protein sources for
aquafeeds is increasing as the availability of fish meal declines
and prices rise. Vital-wheat gluten, for example, has been
identified as a potential protein source to replace fish meal in
some rations (Apper-Bossard et al. 2013) as well to increase
pellet stability, and is often added to raise gluten levels to
34–36 per cent.
As an ingredient for pig, poultry and other livestock feeds,
wheat is used mainly as an energy source. Inclusion rates of
wheat in these livestock feeds are more variable than in
aquafeeds, depending on the price of wheat relative to the price
of other feed sources. The integrity of the wheat source,
however, can also have a bearing on inclusion rates, as grains
with low levels of mycotoxin or other contaminants are used to
improve lower quality feed sources in order to maintain animal
performance.
Table 3
Ingredients derived from grain and their inclusion rates in manufactured aquafeeds in Asia
Nutrient Nile tilapia Grass carp Common carp Shrimp Freshwater
prawn Milkfish
Corn 6–22 9–13 7–10
Wheat flour 17–19 12 14–19
Bread flour 5
Soybean meal 17–46 30
Soybean cake 5–14 27–32 15 21–32
Rapeseed cake 41–51 40 15–26
Rice bran 49
Corn gluten meal 12
Wheat bran 10–11 4 7–10
Wheat meal 4 28–30
Wheat middling 4–30
Groundnut cake 11–16
Source: Hasan et al. 2007

Wheat and barley markets in Vietnam: their strategic importance to Australia 19
Table 4
Aquafeed production and aquaculture production in 2016 and forecast for 2030 for the main producers worldwide
Country Aquafeed
production
Aquaculture
production 2016
Forecast aquaculture
production 2030 Increase (%)
China 15.58 49.24 64.57 31
Vietnam 3.1 3.62 5.08 40
India 1.84 5.7 8.21 44
Norway 1.71 1.33 1.72 29
Indonesia 1.25 4.95 8.25 67
Bangladesh 1.2 2.06
Chile 1.1 1.03 1.31 27
Thailand 1.079 0.96 1.31 36
Brazil 0.9 1.03 1.31 27
Canada 0.8 0.2 0.25 25
Egypt 0.6 1.37 2.3 68
Philippines 0.28 0.8 1.1 38
South Korea 0.2 0.51 0.63 24
Source: FAO 2018; Alltech 2018
Aquaculture, pig and poultry production have been growing
annually at 11.8, 5.6 and 5.2 per cent respectively since 2000,
both for local consumption and export, and have outpaced
growth in the consumption of wheat as a food, which had a
4.4 per cent compound annual growth rate during this period
(see Figure 11). Vietnam largely supplies its own needs in pig
meat but still imports about 40 per cent of its poultry
consumption, despite a steady rise in its local production.
Growth in aquaculture — the fastest growing of the animal feed
industries — has seen Vietnam become one of the top 10
exporters of aquaculture products in the world, the second
largest producer of aquafeeds and a major exporter, albeit a long
way behind China (see Table 4). Strong projected growth of
aquaculture production in Vietnam and other Asian countries
will see continued expansion in Vietnam’s aquafeed production
and export. Indeed, Figure 12 suggests that as worldwide
demand for fish and related products continues to grow, and
supply from wild-catch fisheries stagnates, the production of
aquaculture products will become increasingly important in
meeting world demand.
Animal production (mmt)
Year
Aquaculture PoultryPigs
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 11
Production of pig meat,
poultry meat and
aquaculture products
Note: Poultry production in
2000 supplied nearly all
domestic consumption but
represented only about
60 per cent in 2018. Pig meat
production supplied 95–105
per cent of consumption
during the entire period
Source: OECD-FAO 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia20
Annual production (mmt)
Year
Aquaculture Wild-catch
120
100
80
60
40
20
0
1950 1960 1970 1980 1990 2000 2010 2020
Figure 12
Worldwide annual
production of wild-catch
fisheries and aquaculture
(data inclusive of all
aquatic species, including
aquatic animals and plants)
Source: World Bank (access via
Ritchie and Roser, 2017)
Vietnam’s strong growth in consumption of meat is remarkable
given the country’s relatively low per capita GDP (see Figure 13).
In 1990, relative to comparable countries in the region, Vietnam
had one of the lowest levels of per capita meat consumption
with just over 15kg per person consumed annually. Only
Indonesia had a lower level of consumption. However, over the
next 23 years to 2013, meat consumption more than tripled to
over 55kg per capita, one of the highest in the region and higher
than any other country at a comparative level of per capita GDP.
It is likely that the growth in meat consumption will moderate in
the future, although still grow, possibly following a trajectory
similar to that of China.
The growth of these industries has triggered the increased use
of wheat as a feed. However, the use of feed wheat is variable
and has not always correlated strongly with total feed demand
from the aquaculture or animal production industries. Part of the
rise in the use of wheat as feed has been the industrialisation of
the feed industry, as international feed millers entered the
market. Consequently, the industry’s reliance on feed mixed
either on-farm or by small local millers (and which uses only
local ingredients) has given way to industrialised feed
formulations. An important additional factor controlling the
amount of wheat going into feed rations is the price and
availability of imported wheat relative to local and imported
alternative energy sources, such as rice, cassava or corn.
Negligible amounts of wheat were used as feed up to 2009 (see
Figure 14). Indeed, the trend in total wheat imports closely
mirrored the trend in wheat consumption for food (see Figure
16). In 2009, the wheat price declined relative to the price of
corn and — given the continued expansion of the animal
industry — there was a spike in the use of wheat for feed (GSOV
2018). Following this period of low wheat prices, in 2011 the use
of feed wheat stabilised at about 0.9–1mmt, despite the relative
price of wheat increasing against corn. However, another fall in
relative wheat price after 2015 saw a tripling in feed wheat use
to about 3.2mmt and consumption has remained at this level up
to 2017.
Intensive production of whiteleg shrimp (Litopenaeus vannamei) in Vietnam
Part of the rise in the
use of wheat as feed has
been the industrialisation
of the feed industry, as
international feed millers
entered the market.

Wheat and barley markets in Vietnam: their strategic importance to Australia 21
Total production (mmt)
Aquatic feedAnimal and poultry feed
18
16
14
12
10
8
6
4
2
0
Year
Aquatic feedAnimal and poultry feed
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Wheat used in feed and other uses
Figure 14
Total production of feed
for animal and aquaculture
uses and total use of
wheat for feed and other
uses
Note: Aquafeed does not
include fish used as feed.
The feed wheat figure is the
sum of the OECD/FAO data
specified as ‘feed’ and
‘other uses’
Source: OECD/FAO 2018
Estimates of total feed production and the use of wheat as feed
are variable. Vietnam’s Ministry of Agriculture and Rural
Development (MARD) reported that 23mmt of animal feed was
produced in 2017, citing that ‘local’ industry had the capacity to
produce 12.4mmt while production stimulated by foreign direct
investment had the capacity to produce about 15.7mmt
(reported by Vietnam News 2018). This is considerably higher
than the total feed estimate provided by the OECD/FAO (2018)
presented in Figure 14. Similarly, Stoxplus (2016) estimated
Vietnamese feed production in 2015 at 13.2mmt of industrial
feed and 6.3mmt of ‘self-made’ feed. We have assumed
therefore that figures presented by the OECD/FAO (2018) in
Figure 14 represent the industrial feed production sector without
accounting for on-farm and small local feed producers.
Further assumptions are needed to estimate wheat used by
on-farm or small mill producers. Up until relatively recently,
on-farm or small mill producers predominantly used local
ingredients for formulating feeds. However, Quan Tran (2018)
reported that in 2016 a strong rise in local demand for animal
feed resulted in a significant volume of imported ingredients
being used for on-farm and small local feed production. The
OECD and FAO estimated that in 2016 there was a tripling in
wheat being used for ‘other purposes’, rising from 0.4 to
1.5mmt. We have assumed therefore that ‘wheat used for other
purposes’ as nominated by the OECD/FAO (2018) was mainly
used as feed on-farm and in small local mills, and which
comprised about 40 per cent of the feed wheat use in 2017.
An interesting aside for the animal feed industry in Vietnam as it
further modernises and searches for improved efficiencies and
alternatives to fish meal is the possible use of other grains to
improve the functional properties of aquafeeds. Lupins have
shown to be an effective source of plant protein for aquaculture
diets; it brings added functional properties to feed pellets and
has been trialled in a range of Asian aquafeed markets
(Glencross 2008; Rajan and Bavitha 2015). Currently, at least one
small feed manufacturer has been including 5–10 per cent lupin
meal in feeds for hatcheries in Vietnam. Indeed, low-alkaloid
Australian sweet lupin represents an alternative protein source
for a range of animal feeds in Vietnam – not just aquafeeds.
Annual per capita meat
consumption (kg)
Per capita GDP
70
60
50
40
30
20
10
0
Vietnam China
South Korea Japan
MalaysiaPhilippines Thailand
5000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Indonesia
Figure 13
Average annual per capita meat
consumption for selected
countries in Asia compared with
per capita GDP measured in
constant 2011 international
dollars (the use of international
dollars corrects for price
differences between countries).
Figures do not include fish or
seafood
Source: FAO and World Bank
(accessed via Ritchie and Roser
2017)

Wheat and barley markets in Vietnam: their strategic importance to Australia22
Wheat imports
Australia has been the largest and most consistent supplier of
wheat to Vietnam by far over the past 20 years. On average,
from 2000 to 2018, the amount of wheat Vietnam has imported
from Australia has grown by 10 per cent per annum (see Figure
15). Australian wheat has primarily been used for food purposes
together with wheat from Canada and the United States (US).
However, the significant expansion in the use of feed wheat in
Vietnam, which appears to have begun with Australian wheat,
has mainly been supplied by wheat from the Black Sea region
since 2016. This import of feed wheat has seen the Australian
share of the total wheat imports decline but its share of the
wheat for food market appears to have remained steady.
From 2000 to 2017, Australia has usually supplied more than 50
per cent of Vietnam’s total wheat imports and, in some years,
this increased to 90 per cent. In only three years (2003, 2007 and
2016) has Australia’s proportion of total Vietnam’s imports fallen
to about 30 per cent, and in only one of these years (2003) has
Australia not been the largest supplier (the years 2003 and 2007
were years of low exports from Australia due to drought).
However, in 2018 this pattern may have changed with Vietnam
importing more than twice as much wheat from Russia than
from Australia.
Closer examination of Australian wheat exports to Vietnam
shows that growth can more accurately be represented by two
phases. From 2000 to 2008, imports of Australian wheat by
Vietnam averaged about 0.43mmt with a growth rate of only 1.4
per cent per annum. A step change in imports occurred after
2009 when imports grew rapidly by more than 1mmt. This
change appears to be related to the beginning of the use of
wheat for feed. From 2009 to 2017, imports of Australian wheat
averaged about 1.5mmt and again grew by only 1.4 per cent per
annum over this period, although volatility was high. If the
unusually low 2018 import figure is included in the calculations,
then import growth may be slightly negative over this period.
Total imports (mmt)
Australia 2009-2017 North America Russia
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
Year
Australia 2000-2008
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 15
Imports of Australian
wheat by Vietnam,
2000–18. (the 2018 data
are preliminary and have
not been included in the
estimate of the dash fitted
line. If the 2018 line is
included then the slope of
the fitted line is slightly
negative)
Source: UN OECD/FAO for food
wheat; UN Comtrade (2018)
for wheat imports 2000–16;
GSOV for wheat imports 2017
and 2018
Australia has been the
largest and most
consistent supplier of
wheat to Vietnam over
the past 20 years

Wheat and barley markets in Vietnam: their strategic importance to Australia 23
Total imports (mmt)
North America + Australia
Black Sea + South America Wheat for food
6.0
5.0
4.0
3.0
2.0
1.0
0
Year
Total
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Figure 16
Vietnam wheat imports from Australia and selected regions: North America (Canada and US), the
Black Sea (Romania, Bulgaria, Ukraine and Russia) and South America (Brazil, Paraguay and Argentina)
and the total amount of wheat use for food
Note: the 2018 data are preliminary and the GSOV figures (2017 and 2018) do not include all Black Sea and
South American import figures. Although the total figure includes all countries, some minor imports are not
individually identified
Source: OECD/FAO for food wheat; UN Comtrade wheat imports for 2000–16; GSOV for wheat imports for 2017 and 2018
Imports from countries other than Australia have been highly
variable, often fluctuating from almost no imported grain to
substantial amounts. For example, Canada supplied about 1.4
per cent of Vietnam’s total wheat imports (70kt) in 2016 and
then 22 per cent (400kt) in 2017. Similarly, Vietnam imported
almost no grain from Russia up until 2017 but imported more
than 2.3mmt in 2018. However, if import figures are aggregated
to form regional origins, then the pattern of import growth
appears less variable (see Figure 16). This is best illustrated by
combining imports originating from Canada and the US and
shows that Vietnam has imported a relatively moderate but
consistent amount of wheat from North America since 2005. The
pattern of imports from the Black Sea region is less consistent,
partly because of uncertainties with the data. The UN (Comtrade
2018) indicates large imports of wheat from Romania and
Bulgaria (exporting through the Black Sea) but this is not evident
in data available from Vietnamese government statistics (GSOV
2018). Nevertheless, it is evident that since 2016 significant
quantities of grain have been imported from countries in the
Black Sea region and to a lesser extent South America.
Figure 16 show that wheat imports were mainly used for food up
until 2009 with total imports closely mirroring the estimated use
of wheat for food. During this period, wheat from Australia,
Canada and the US supplied on average 80 per cent of this
wheat, except for 2002–04 when total imports from India,
supplemented by China (data not shown), averaged more than
30 per cent.
Since 2009, the total import of wheat from Australia, Canada
plus the US exceeded estimated food use of wheat, indicating
that a proportion of this wheat was being used for feed as well
as food. Given the high proportion of Australian wheat that was
being imported and the average dollar values, it was most likely
Australian wheat that was being used for feed. During 2010 to
2012, three years that saw a rapid increase in the level of wheat
imports from Australia, the average value of Australian wheat
was about US$60 per tonne lower than the average value of
North American wheat (see Table 5). This indicates that, for 2011
and 2012, a proportion of Australian wheat imports were
supplied at feed prices, whereas before this the supply from
Australia was of higher quality, higher priced milling wheat.
From 2013 to 2016, wheat imports from Australia, Canada and
the US continued to exceed estimated food use (by about 10–20
per cent). In 2017, the excess was substantially higher at 80 per
cent. This was partly due to the unusually high amount of
Canadian wheat that was imported (0.96mmt) at low value
(US$207/t) together with a relatively high amount of Australian
wheat (1.8mmt). Imports figure for 2018, while still preliminary,
indicate that imports of Australian plus North American wheat
almost exactly match the estimated food use.

Wheat and barley markets in Vietnam: their strategic importance to Australia24
The value of wheat imported from Australia and North America
since 2013 has been at least US$30–60/t higher than the value of
wheat originating from the Black Sea region or South America,
except for Canadian wheat in 2017 as mentioned above (see
Table 5; MARD 2018). If we assume that all of this higher priced
wheat is used in the food market, then it seems likely that food
use of wheat is underestimated by the OECD/FAO, unless a
proportion of the North American or Australian wheat is going to
high-value uses other than food. Estimates from the USDA’s local
industry sources are that the total demand for milling wheat in
2018 was 2.1mmt (Quan Tran 2018). If this estimate is assumed
to be accurate, it suggests that the food use of wheat is
underestimated by the OECD/FAO by at least 0.2mmt, even after
allowing for 20 per cent use in aquafeeds.
If we assume that wheat for food usage is about 1.8mmt rather
than 1.6mmt as estimated by OECD/FAO, and that consumption
will grow at a rate of 3 per cent per annum, then we estimate
that future Vietnamese imports of wheat for food will be about
2.5mmt by 2030. This is similar to the estimate above using per
capita wheat consumption and medium UN population growth
projections. The amount will be closer to 2.3mmt if consumption
grows at only 2 per cent per annum.
Before 2008, when most wheat imported by Vietnam was for
food, Australia supplied about 40–50 per cent of Vietnam’s
requirements in a normal year (when Australia was not affected
by drought). If this is an indication of future demand, then in
the short term, Australia may reasonably expect (in a normal
year) to supply about 0.9mmt of wheat to Vietnam’s higher
priced food market, which will rise to about 1.3mmt by 2030.
This situation may change, and Australia may be able to supply
a higher proportion of Vietnam’s food wheat requirements if it
can displace some North American wheat demand. Indeed, in
2009 and 2010, Australian wheat supplied almost all of Vietnam’s
food wheat requirements. The Vietnamese milling industry has a
preference for higher quality Australian wheat, such as the APH
class, when they can obtain it, for both baking bread and
making noodles (see Figure 17 and Figure 18). North American
wheats are less preferred than some classes of Australian wheat
but, they are still more preferred than Black Sea wheat.
Table 5
Average value (US$ per tonne) of wheat imported by Vietnam from Australia and selected regions. Note that the average value
figures were imputed by dividing the gross value of wheat imported by the total tonnes
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Australia 264 444 264 271 334 307 351 317 276 236 233 272
North America 291 401 277 312 396 394 357 324 254 246 209 272
Black Sea 408 192 222 363 292 313 208 190 199 223
South America 237 498 233 240 234 191 190 207
Source: : MARD 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia 25
It is expected that greater quantities of other Australian wheat
classes may also be supplied when it is competitively priced
against Black Sea or South American origin wheat that is
currently used in blending or other lower value uses, such as
feed. Indeed, Australian wheat has some quality advantages that
make it a preferred choice when prices are competitive for these
purposes. For example, Black Sea or South American wheat
imported into Vietnam often has higher moisture content and
longer supply lines with multiple handlers compared to
Australian wheat, leading to increased risk from higher
mycotoxin levels and other storage problems.
It is also possible that the quantity of Australian wheat supplied
to Vietnam may decline if it fails to meet the growing quality
requirements of consumers. Indeed, in recent years, Vietnamese
importers have expressed a strong preference for wheat sourced
from some regions in Australia over others because of
perceptions about declining wheat quality in some regions.
Recent feedback to AEGIC’s researchers from Vietnam-based mill
technicians and purchasers was that Australian wheat is
currently not consistently meeting the textural firmness required
for premium yellow alkaline noodles. In some cases, the texture
attributes and targets for noodles in Vietnam do not appear to
be fully understood by the Australian industry.
As incomes rise and consumption patterns change, the demand
for higher quality noodle products and baked goods is likely to
increase. The need for specific functional requirements in wheat
to meet the changing requirements of consumers may partly
explain the steady rise in the import of North American wheat
into Vietnam since 2009. Understanding the changing trends in
consumption of wheat-based food products in Vietnam and the
implications this may have for the functional characteristics of
Australian wheat will be important to support its demand in the
Vietnamese market.
Ranking
012345678910
Australian APH
Australian AH
Australian APW
Australian ASW
United States DNS
United States HRW
Canadian CWRS
Canadian CWHWS
Russian wheat
Ukranian wheat
Ranking
012345678910
Australian APH
Australian AH
Australian APW
Australian ASW
United States DNS
United States HRW
Canadian CWRS
Canadian CWHWS
Russian wheat
Ukranian wheat
Figure 17
Average ranking
(0 – low to 10 – high)
by Vietnam-based mill
technicians and
purchasers for
imported wheat
classes when
processed for instant
noodles
Source: AEGIC
Figure 18
Average rankings
(0 – low to 10 – high)
by Vietnam-based mill
technicians and
purchasers for
imported wheat
classes when
processed for
Vietnamese banh mi
(bread rolls)
Source: AEGIC

Wheat and barley markets in Vietnam: their strategic importance to Australia26
Consumption trends in wheat-based
foods
Wheat is an important staple food in Vietnam, being consumed
mainly as bread, noodles and sweet biscuits (see Figure 19).
The wheat noodle segment is dominated by instant noodles
(90–95 per cent). On a per capita basis, Vietnam is one of the
highest consumers of instant noodles in the world with an
average consumption rate of 53.5 servings per person in 2017
(World Instant Noodle Association 2018). Vietnam consumed
substantially less than South Korea, which stands out as the
highest consumer in the world with 73 servings per day.
However, Vietnam consumed about the same as Indonesia,
Japan and Thailand, which all consumed about 45–50 servings
per person. Since 2013, total consumption of instant noodles in
Vietnam has remained static at about 5 billion servings per year
with some flour mills reporting to AEGIC that they expected total
consumption to decrease by about 3.5 per cent over the medium
term. In contrast, Euromonitor (2018) stated that both the
volume and retail value of noodles and pasta will continue to
grow in Vietnam over the next five years with an expected
annual growth of more than 5 per cent.
Euromonitor (2018) estimated that most of the increase in value
over the past two years was contributed by higher inflation and
improved packaging resulting from growing consumer awareness
of food safety and hygiene, and that this trend is set to continue.
This tendency towards premiumisation, resulting from higher
incomes, may also indicate a willingness of consumers to demand
higher quality noodle products. Currently, however, premium
noodle products are mostly imported from countries like Thailand,
Japan and Korea and target the middle to high income market
segments (Euromonitor 2018). Domestically produced noodle
products mostly focus on the lower income mass market.
Banh mi — a baguette-style bread roll commonly sold in Vietnam
Figure 19
Main uses of wheat in Vietnam
Source: AEGIC
10%
10%
45%
Confectionary
Noodles
Aquafeed Bread
35%

Wheat and barley markets in Vietnam: their strategic importance to Australia 27
The fresh noodle segment in Vietnam is dominated by rice
noodles, consumed most often as phó, a type of Vietnamese
soup where meat and vegetables are typically added with
noodles. Fresh noodles represent only about 5–10 per cent of the
wheat noodle market and are consumed mainly in restaurants
and as street food.
The bakery segment in Vietnam is dominated by banh mi, a
Vietnamese-style baguette. Banh mi are often consumed as a
midday meal, filled with meat and salad. As such, the banh mi
has a less dense structure than a French baguette. Other baked
goods using wheat flour include sandwich bread, sweet rolls,
cakes and steamed buns.
It difficult to determine the relative expenditure on noodles and
bread in Vietnam and how this compares with other Australian
wheat markets because wheat-based foods constitute a low
proportion of the household budget in Vietnam, and so
individual items are rarely specified in consumption studies.
Bakery outlets and stalls can easily be found across the country
and banh mi is a common food, well known by most
Vietnamese. The World Bank (2018b) in its global consumption
database provides some information that allows a comparison of
household expenditure on various cereal products between
countries, although the standardisation of data makes it difficult
to make comparisons with confidence.
Nevertheless, a general comparison
between Vietnam and Indonesia
suggests that household expenditure on
bread is higher than on noodles in
Vietnam, whereas in Indonesia the
opposite is true, with a higher
proportion of the household budget
being spent on noodles than bread. In
both countries, the importance of bread
increases in urban areas compared with
rural areas. The proportion of household
expenditure devoted to bread for urban
households was more than double that
of rural households for both Vietnam
and Indonesia, whereas for noodles it
was only about 30 per cent higher.
In general, wheat-based foods are a relatively minor part of
household expenditure in Vietnam. The Vietnam urban food
consumption and expenditure study at the University of
Adelaide (Umberger et al. 2018) showed that the average urban
household spends only between 2 and 3 per cent of their budget
on processed cereals, which included maize products as well as
other grains, flour, pasta, noodles, bread and breakfast cereals.
This was about one-third of household expenditure on rice.
Interestingly, in this study, as incomes increased, the proportion
of the household budget spent on processed cereals increased
marginally and that on rice decreased — but only in Ho Chi Minh
City. The effect of income on rice and processed cereal
expenditure was not clear in Hanoi (see Table 6).
In contrast, Hoang and Meyers (2015), when modelling food
demand in Vietnam to 2030, projected expenditure on rice will
occupy a declining share of the household budget while
high-value foods such as meat and drinks will occupy a higher
proportion. They projected that rice consumption will decrease
both on a per capita basis and in total while overall
consumption other foods will increase. Both urbanisation and
income growth have a strong effect on predicted consumption,
with urbanisation having a stronger effect on rice than other
food groups.
Fresh noodles are mainly consumed in
restaurants or as a street food

Wheat and barley markets in Vietnam: their strategic importance to Australia28
Table 6
Percentage of monthly food expenditure for each adult male equivalent on different food types by income groups in
Ho Chi Minh City and Hanoi, Vietnam
Foods Low income Low–middle income Middle–high income High income
Ho Chi Minh City
Rice 6.6 6.5 6.0 5.6
Processed cereals 2.1 2.3 2.6 2.4
Pulse, nuts and beans 1.4 1.4 1.6 1.5
Oils and fats 1.1 1.7 1.6 1.5
Sugar, spices and sauces 4.3 4.5 4.2 3.9
Vegetables 14.0 14.1 13.4 13.3
Fruit 7.7 7.7 7.9 7.6
Meat and eggs 35.4 36.9 37.4 38.2
Milk and milk products 5.5 7.3 7.4 7.7
Beverages 9.3 7.1 7.6 7.3
Processed foods 7.4 7.9 7.7 7.2
Food consumed away from home 5.1 2.5 2.6 3.8
Hanoi
Rice 7.1 6.7 5.9 7.4
Processed cereals 2.5 2.5 2.4 2.2
Pulse, nuts and beans 2.9 2.4 2.0 1.7
Oils and fats 1.8 1.6 1.5 1.5
Sugar, spices and sauces 2.8 2.5 2.2 1.9
Vegetables 12.5 10.8 9.8 9.0
Fruit 10.0 8.6 9.0 8.8
Meat and eggs 38.8 39.9 39.1 39.4
Milk and milk products 4.0 6.7 7.4 8.0
Beverages 6.1 5.4 7.1 7.4
Processed foods 7.2 7.1 7.2 7.2
Food consumed away from home 4.5 5.9 6.4 5.7
Source: Umberger et al. 2018

Wheat and barley markets in Vietnam: their strategic importance to Australia 29
Beer consumption
The Vietnamese like their beer. With rapid growth in the
production and consumption of beer over the past decade,
Vietnam is fast becoming one of the largest beer markets in
Asia. In 2007, Vietnam produced about 1.4 billion litres of beer
(only about 20 per cent of that produced by Japan) and was
ranked 25th among the top 25 beer-producing countries
worldwide (see Table 7). By 2017, only 10 years later, Vietnam
had risen 16 places up the global rankings, overtaking Thailand
and South Korea to become the 9th top producer with more than
4.3 billion litres produced (83 per cent of that produced by
Japan).
Production has increased to meet the rapid rise in beer
consumption driven by rising incomes and an increase in the
proportion of the population drinking. Between 2002 and 2016,
the proportion of adults drinking in Vietnam rose from 46 to 77
per cent among men and from 2 to 11 per cent among women
(WHO 2018). Per capita beer consumption in Vietnam has more
than doubled since 2008, increasing from 21.4L to 43.5L in 2016,
which puts consumption on par with the other major per capita
beer consumers in Asia – Japan and South Korea. Given this
rapid increase in beer consumption, how likely is it that beer
consumption and production will continue to rise in Vietnam
and how will this affect demand for malting barley?
Barley
Per capita beer consumption in Vietnam has more than doubled over the past decade

Wheat and barley markets in Vietnam: their strategic importance to Australia30
Table 7
Beer production (‘000kL) for the top 25 beer-producing countries in 2007 and 2017
2007 2017
Rank Country Production
(‘000kL) Rank Country Production
(‘000kL)
% change
since 2007
1 China 38,907 1 China 39,788 2.3
2 United States 23,288 2 United States 21,775 -6.5
3 Russia 11,469 3 Brazil 14,000 34.9
4 Mexico 10,559 4 Mexico 11,000 4.2
5 Germany 10,397 5 Germany 9,301 -10.5
6 Brazil 10,380 6 Russia 7,440 -35.1
7 Japan 6,309 7 Japan 5,248 -16.8
8 United Kingdom 5,132 8 United Kingdom 4,405 -14.2
9 Poland 3,550 9 Vietnam 4,375 209.4
10 Spain 3,435 10 Poland 4,050 14.1
11 Ukraine 3,156 11 Spain 3,720 8.3
12 Netherlands 2,726 12 South Africa 3,232 21.8
13 South Africa 2,653 13 Nigeria 2,600 92.6
14 Venezuela* 2,491 14 Netherlands 2,480 -9.0
15 Canada 2,392 15 India 2,250 150.0
16 Thailand 2,170 16 Thailand 2,234 2.9
17 Romania* 2,020 17 Canada 2,208 -7.7
18 Colombia 1,900 18 Colombia 2,189 15.2
19 Czech Republic 1,863 19 France 2,130 41.1
20 Belgium 1,857 20 Belgium 2,120 14.2
21 South Korea 1,789 21 South Korea 2,000 11.8
22 Australia* 1,736 22 Czech 1,910 2.5
23 France 1,510 23 Argentina 1,886 30.0
24 Argentina 1,450 24 Ukraine 1,780 -43.6
25 Vietnam 1,414 25 Philippines 1,780 30.9
*Figures for Venezuela, Romania and Australia are for 2008
Source: Kirin 2018
Euromonitor (2018c) forecast a 5 per cent compound annual
growth rate in the volume of beer consumption in Vietnam for
the next five years. In addition, they projected that the growth
in dollar value should be higher because of an ongoing trend
towards premium beer products. The World Health Organization
similarly projected an increase in alcohol consumption in
Vietnam of 3L per capita by 2025 (WHO 2018). By contrast, Dezan
Shira & Associates (2018) projected that per capita beer
consumption in Vietnam will reach 52L by 2035, which is a
compound annual growth rate of only about 1.5 per cent.
Continued growth in beer consumption at 3–5 per cent to 2030
will see Vietnam substantially pass other major Asian nations in
beer consumption to reach about 70L per capita, similar to
Australia’s current consumption and about 70 per cent more
than Japan and South Korea currently consume. Such a high rate
of consumption, however, is reasonable, given that almost all
alcohol consumed in Vietnam is as beer. WHO (2018) estimated
the percentage of alcohol consumed as beer in Vietnam as 91
per cent compared to 40 per cent for Australia and about 20 per
cent for Japan and Korea. Furthermore, most beer consumed in
Vietnam has a relatively low alcohol content (2–4 per cent).
Therefore, even with growth in beer consumption at the upper
end of projections, total alcohol consumption in Vietnam would
only be 3.5–4.5L1 of alcohol per capita, which is 40–60 per cent
lower than Japan, South Korea and neighbouring Thailand.
1 It is likely the current estimates for per capita alcohol consumption for Vietnam of 8.3L developed by ESCAP (2018) and reported in the Global Status Report on
Alcohol and Health 2018 (WHO 2018) is substantially overestimated. We used estimates in the WHO Global Information System on Alcohol and Health, which estimates
recorded alcohol per capita levels at 3.1L for Vietnam.

Wheat and barley markets in Vietnam: their strategic importance to Australia 31
Mass advertising of beverages with an alcohol content above 15
per cent is prohibited within Vietnam, which is likely to favour
the continuing emphasis on beer consumption as the preferred
alcoholic beverage. A slight shift in consumer preference to
alternative products, such as wine, is likely to occur as income
levels rise; however, a significant shift is unlikely soon given
that wine currently occupies less than 4 per cent of the market
and average incomes are still relatively low in Vietnam.
A stronger ongoing trend as incomes rise is the demand for
higher quality beers, which may mean an increasing production
of full malt beers. The affordable premium segment has been
the fastest growing in the past few years. By 2020, Dezan Shira
& Associates (2018) estimate that 10 per cent of the market will
be high-end beers, 62 per cent will be mid-range products and
28 per cent will be lower quality beers aimed at the low-cost
market. The market will continue to evolve with greater
representation of international brands, but with the beer
produced in Vietnam. High transportation costs generally greatly
limit the international trade of beer. Hence, multinational
brewers gain access to a market and develop economies of scale
by developing multi-plant operations within a country to
produce and distribute their leading brands.
A continuing rise in the special consumption tax has put
pressure on brewers’ margins and is one factor that may
dampen demand for beer if rates continue to rise. The special
consumption tax on beer increased from 45 to 55 per cent in
2016 and has increased a further 5 per cent each year since. If
this trend continues, it will be 70 per cent in 2019.
Barley and malt imports
Barley
Until 2017, Vietnam had limited malting capacity within the
country and therefore had relied principally on malt imports to
supply its brewing industry. In July 2017, Intermalt, an Interflour
subsidiary partly owned by the Australian grain handling
cooperative CBH, opened a new malting facility with a capacity
to process 140,000mt of barley annually. Before this, the Duong
Malt Company, established in 2002 with the capacity to process
50,000mt of barley, was the country’s main malt manufacturer.
From 2002 to 2016, barley imports to Vietnam have fluctuated
between 40,000 and 50,000mt, indicating that imported barley
was principally going into the malt market to service the Duong
Malt Company facility (see Figure 20). In 2010, when nearly
140,000t of barley were imported, it is likely that significant
quantities of barley were also imported for feed. Interestingly,
2010 also marked the start of significant quantities of wheat
being imported for feed into Vietnam (see Figure 15).
Between 2002 and 2016, Australia was consistently the main
supplier of barley to Vietnam, although overall, the origin of
supply of imported barley has fluctuated given the relatively
small size of the market. In different years, Ukraine, Denmark
and Argentina have all supplied significant quantities of barley
to Vietnam. In the two years since the opening of the Intermalt
plant, barley imports into Vietnam have increased by about
100,000mt to reach more than 150,000mt, with about 80 per cent
of this being supplied by Australia. However, even at the level of
120,000mt, the total exports of barley from Australia to Vietnam
represents less than 1 per cent of Australia’s total barley exports
and is still less than the total amount of malt Australia has
exported to Vietnam.
Barley imports (mt)
Percentage of imports from Australia (%)
Year
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
100
90
80
70
60
50
40
30
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Australia
Total imports
Figure 20
Total import of barley
by Vietnam, 2002–18
(left axis) and the
proportion of total
imports originating from
Australia (right axis)
Source: UN Comtrade
(2018); ABS (2018); USDA
(2018a)

Wheat and barley markets in Vietnam: their strategic importance to Australia32
The further use of barley in animal feed rations in Vietnam and
other South East Asian countries is a vexed question. Barley is
used effectively in feed rations in North America, Europe,
Australia and China and presumably therefore could to be used
effectively in Vietnam. Chinese feed manufacturers understand
the relative value and potential of barley versus corn in the feed
rations for pigs and poultry and therefore import Australian (as
well as French and Ukrainian) barley to replace some of the corn
ration in their feed formulations. Given the continued expansion
of the feed industry in Vietnam, new demand for Australian
barley may be created if feed manufactures can become more
familiar with its use.
Malt
Total malt exports from Australian to Vietnam remained steady
at about 100,000–110,000mt from 2002 to 2014, despite the
increasing demand for malt to satisfy increased beer production
(see Figure 21). Malt imports from other suppliers (particularly
France) had increased, so the Australian market share halved
from about 60 to 30 per cent over this period. Since 2015, there
has been an upswing in malt export, so that in 2017 more than
450,000mt of malt was imported with about 170,000t of this
imported from Australia.
As highlighted above, beer production in Vietnam is likely to
continue to expand given the strong likelihood of continued
growth in beer consumption. Import of barley plus malt has
tracked increases in beer consumption reasonably closely over
the period where data is available (see Figure 22), so that
Malt imports (mt)
FranceAustralia China Belgium
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2002 2004 2006 2008 2010 2012 2014 2016
Year
Figure 21
Malt imports by Vietnam
from selected main origins,
2002–17. Note that only
data for Australia is
presented in 2017
Source: UN Comtrade (2018)
database; ABS (2018)

Wheat and barley markets in Vietnam: their strategic importance to Australia 33
Beer production ('00kL) or barley (mt)
Total barley equivalents Beer production
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Year
2001 2003 2005 2007 2009 2011 2013 2015
y = 26434x – 5E+07
y = 27013x – 5E+07
Figure 22
Relationship between the volume of beer production and barley grain equivalents imported by Vietnam, 2001–15.
Note that barley grain equivalents are calculated by multiplying total malt imports by 1.267 and adding this to
total barley imports
Source: UN Comtrade (2018); Kirin 2018
Beer production in
Vietnam is likely to
continue to expand
imported barley equivalents (calculated by multiplying total malt
imports by 1.267 and adding this to total barley imports) has
increased at a similar rate to beer production. Assuming this
relationship holds and beer production will increase by a
modest 3 per cent per annum (compound annual growth rate)
to 2030, the total barley equivalent imports by Vietnam will be
about 850,000mt by 2030. This will increase to 960,000mt if beer
production grows at 4 per cent, or reduce to 745,000mt if growth
slows to 2 per cent.
A doubling of Intermalt’s malting capacity to 280,000mt barley
throughput over this period, which has been suggested by
industry reports, would see total barley imports increase to
about 330,000mt leaving the total malt import requirement at
about 330,000–490,000mt by 2030, similar to the current
requirement.

Wheat and barley markets in Vietnam: their strategic importance to Australia34
The Australian wheat classes Australian Prime Hard (APH) and
Australian Hard (AH) are strongly preferred over wheat from
other countries for noodle manufacturing, providing superior
noodle colour and colour stability. Similarly, APH and AH are
preferred over wheat from most other countries for bread in
Vietnam, one of the few countries where Australian wheat is
highly valued for bread production. However, while Australian
wheat is well regarded in Vietnam, in recent years, variation in
functionality (gluten content and quality) for end products is
negatively impacting users’ opinion of Australian wheat quality.
Similarly, feedback from the Australian Export Grains Innovation
Centre’s (AEGIC) studies in Vietnam suggests that Australian
wheat does not consistently meet the textural firmness required
for premium yellow alkaline noodles and that texture attributes
and targets for South East Asian noodles appear to be poorly
understood by the Australian industry.
Vietnam is an important and dynamic market for Australian
wheat. It has the third largest population in South East Asia and
continues to grow but its growth is slowing and its population is
ageing. Its per capita incomes are improving, which will
eventually affect dietary preferences. But unlike many of its
contemporary South East Asian neighbours, which have
developed ahead of Vietnam, the country faces a low level of
urbanisation combined with a rapidly growing economy, in a
world that is now more heavily connected regionally and
globally. This is a unique combination of factors that will drive
changes in consumption patterns and levels over the next
decade. Already clear, given the low fertility rate and rising
incomes in Vietnam, is that its future demand for grain will be
driven less by population increase and more by income growth
than has occurred in the past. These changes will inexorably
lead to improved quality being the main source of market share
expansion in the longer term.
A range of opportunities for Australian cereals will start to
become apparent over the next 10 years with the emerging
middle class making up one-quarter of the population by 2030.
This segment of the population will demand a greater range of
food and beverages with higher quality. New consumption
preferences such as whole wheat breads, premium noodles and
full malt beer will become manifest within this group and will
help set the future trends for consumption that eventually move
to the broader population as the economy grows. The University
of Adelaide’s ongoing project on urban food consumption and
expenditure in Vietnam provides an example of where
monitoring dietary trends can facilitate a response from the
Australian grains industry.
Implications for Australia
Australia needs to carefully monitor and respond to the changing needs of
Vietnamese flour mills, food manufactures and consumers to ensure its
wheat remains a preferred choice for both noodle and bread manufacturing.
1

Implications for Australia
Wheat and barley markets in Vietnam: their strategic importance to Australia 35
From 1990 to 2018, the compound annual growth rate in per
capita wheat consumption for food in Vietnam averaged about
5.6 per cent a year, rising from about 5kg per capita in 1990 to
over 16kg per capita in 2018. However, this level of wheat use
for food consumption is still low compared to other Asian
countries so there remains substantial opportunity for further
growth in wheat consumption in Vietnam. This poses a market
opportunity for Australia. Wheat consumption for food is
expected to grow at about 3 per cent per annum to 2030 and
Australia is well positioned to benefit from this growth.
Wheat use overall in Vietnam has increased rapidly from below
1mmt in 2000 to 4.5mmt in 2018 with much of the marked growth
coming from greater imports of feed wheat. Australia initially
participated in this expansion by supplying wheat for both feed
and food uses but in recent years cheaper wheat from the Black
Sea and South America has replaced Australian wheat in the feed
sector. Future opportunities for Australian wheat in most years
are therefore likely to be in the food sector where it is preferred
for both noodle and bread manufacturing. Nevertheless, for most
Vietnamese people over the next decade income growth will be
off a low base and occurring as more people move to urban
areas. Therefore, time pressures will build as demographics
change and household budgets remain constrained.
Convenience and affordability will remain important factors driving
consumption patterns in Vietnam for the foreseeable future and so Australian
wheat for human consumption will need to be attractively priced despite its
preferred status in the market.
Annual growth rate in per
capita wheat consumption
for food in Vietnam
5kg
1990
16kg
2018
2

Implications for Australia’s wheat industry
Wheat and barley markets in Vietnam: their strategic importance to Australia36 Wheat and barley markets in Vietnam: their strategic importance to Australia36

Implications for Australia
Wheat and barley markets in Vietnam: their strategic importance to Australia 37
The feed sector continues to expand rapidly in Vietnam,
providing opportunities for a range of Australian feed grains.
Wheat has been the only grain from Australia to consistently
supply this market. However, opportunities for other grains
exported from Australia also may exist, particularly as the feed
formulation industry continues to industrialise. Australian barley
and canola meal are proven and reliable feed sources that can
be used in the Vietnamese feed industry. Neighbouring China
imports significant quantities of Australian feed barley each year
and shares some similarities with Vietnam (although there are
also many differences). A closer examination of the feed
industries in both countries may reveal pathways for entry of
Australian feed barley to Vietnam.
Other grains, particularly lupins, may have functional advantages
in aquafeeds that provide opportunities for further development.
While these grains are likely to have only niche uses, particularly
initially, building awareness of their benefits and supporting
their use in the Vietnam aquafeed industry may allow Australian
farmers to participate to a greater degree in this expanding
market.
The feed market in Vietnam has expanded rapidly over the past 10 years
but feed barley is not yet used. Providing technical assistance to
Vietnamese feed users that builds awareness of the advantages of feed
barley and other Australian feed grains may stimulate demand.
3

Wheat and barley markets in Vietnam: their strategic importance to Australia38
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