In its report, Review of Agricultural Policies in Vietnam, published today, the OECD said

economic reforms had generated “impressive results” in the country’s agricultural sector.

Farm production had more than tripled over the 1990-2013 period, resulting in a reduction in poverty.

Vietnam is now the world’s largest exporter of cashew nuts and black pepper, the second largest exporter of coffee and cassava and the third largest exporter of rice and fish.

The OECD is urging the Vietnamese government to start building on these achievements to address long-term challenges like slower rates of growth production and falling commodity prices.

“Vietnam’s agricultural transformation over the past two decades has been nothing short of remarkable,” OECD trade and agriculture director Ken Ash said.

“Going forward, Vietnam needs to improve its policy environment, to enable investments that will allow the farm sector to continue to adapt to the opportunities created by rising demand and the challenges of climate change and limited resources.

“Rising labour costs will open opportunities to adopt new technologies and encourage larger farms, but they may also reduce the sector’s overall competitiveness, particularly if newer labour-saving techniques are not readily accessible or adaptable to the dominant small-scale farming.”

The transfer of public resources to the farming sector was relatively low, averaging 7% of farm incomes between 2011 and 2013. However, this still amounted to 2.2% of gross domestic product, one of the highest for countries covered.

Even low levels of agricultural support can have relatively high costs for the economy in a country with a large agricultural sector and low GDP, the OECD said.

“Our analysis shows the high potential burden of Vietnam’s current policy mix on public finances, and reinforces the need to ensure that the money is spent effectively,” Ash added.