VIETNAM: STRUGGLING WITH FOOD SHORTAGES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00100R000201320001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 27, 2016
• Document Release Date: December 19, 2012
• Sequence Number: 1
• Publication Date: June 20, 1988
• Content Type: MEMO

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Central Intdtgence Agency
DATE (~'~~~ OU
DOC NO -A
3S-24077
OIR 5
P& PD
DIRECTORATE OF INTELLIGENCE
20 June 1988
Vietnam: Struggling With Food Shortages
Summary
Vietnam, with its ailing economy, faces difficulty raising and
distributing enough food for its rapidly growing population. Acute
shortages of rice have been reported this year in some northern provinces,
with Hanoi claiming that bad weather, insect infestations, and its own
ill-conceived policies are primarily responsible. To cope, Hanoi is
transporting rice from the. agriculturally more productive south to the
north, liberalizing its policies to stimulate production, and appealing for
emergency Western aid. Although Vietnam is suffering through a serious
food shortfall, in our judgment, Hanoi, is exaggerating the need to help
break down the ASEAN-US embargo on foreign aid.
This memorandum was prepared by I I Office of East Asian Analysis.
Information available as of 20 June 1988 was used in its preparation. Comments and
queries are welcome and may be directed to the Chief, Indochina Thailand Malaysia,
Southeast Asia Division, OEA,
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Worsening Food Situation
The Vietnamese economy, already near collapse, (see Box), is being hit hard by a
grain shortage. Grain production declined almost 5 percent from 18.5 million tons in
1986 to 17.6 million tons in 1987, while Vietnam's population of 65 million continues to
increase at an annual rate of 2.5 percent. Nationwide, per capita grain consumption fell
from just over 300 kilograms in 1985 to less than 280 kilograms in 1987 (see graph).
Local shortages, especially in the north, are more severe than the national average
because it is difficult to grow food there due to the harsher weather conditions. US
Embassy Bangkok sources report that this year's winter-spring crop, harvested in June
or July will be at least 20 percent below the 1987 level--a shortfall of at least 500,000
tons--in some northern provinces and malnutrition is becoming increasingly evident.
The winter-spring crop is the most important of Vietnam's three rice crops, usually
accounting for 40 percent of production. Agricultural experts estimate that Vietnamese
grain output is unlikely to exceed 18 million tons.
Vietnam: Economic Malaise
Vietnam's economy is dismal. Per capita income is less than $200 per
year, Vietnamese economists estimate that
more than 1 million people enter the labor force each year, with less than half
finding full-time jobs. Vietnamese industries are operating at less than half
capacity, according to press reports, due to shortages of spare parts, fuels, and
raw materials while the agricultural sector suffers from a lack of fertilizers,
insecticides, and farm machinery. Hanoi has little foreign exchange to import
items to upgrade its industries and increase its food production. Furthermore,
with exports largely limited to agricultural products and handicraft items,
Vietnam's ability to generate foreign exchange is poor. Nor can Hanoi secure
Western loans or aid, because of an economic embargo imposed against
Vietnam following its invasion of Cambodia in 1978.
Hanoi's piecemeal attempts to address its economic woes have in some
cases only aggravated the situation. For example, it issued large denominations
of currency last March to facilitate handling substantial sums of money; but
instead the measure created panic as inflation-sensitized consumers unloaded
their currency in favor of dollars, gold, and commodities. Overall, consumer
prices are rising at an annual rate of 1,000 percent for the third straight year.
Although the dong's official rate remains 368 to the US dollar, the black market
rate, on which the .economy really operates, has gone from 1 100 d n in
January, to roughly 3,000 dong to the dollar this month.
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Vietnam: Per Capita Grain Consumption
1981 1982 1983 1984 1985 1986 1987
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Poor weather conditions, insect infestation, and a shortage of fertilizer have
.caused the decline, according to the Vietnamese press. By Hanoi's admission, its
agricultural policies have also discouraged production. Peasants, who are required to
turn over surplus production to cooperatives, for example, often produce. only enough to
support their families. Low state-set prices have both discouraged production and
encouraged farmers to leave the land for better paying jobs in industry.
Nor have the market-type agricultural reforms, which Hanoi introduced with some
success in 1981, proved capable of stemming the decline. Tax incentives, a hike in state
agricultural procurement prices, policies enabling farmers to lease unused cooperative
land, and the introduction of the "product contract" system--allowing peasants to sell
above-quota production on the free market--led to a 20 percent increase in grain
production between 1980 and 1983. By 1984, however, the gains were already being
offset by mounting economic and weather problems.
Attempts To Cope
The, government is attempting to move grain northward to the most severely
affected provinces (see map) from the agriculturally more productive south. With motor
vehicles and rolling stock in short supply and poor condition, roads in disrepair and
cargo handling capacity at ports extremely limited, movement has been slow and
difficult. To speed shipment of 138,000 tons of rice during March and April, for example,
the authorities canceled almost 20 local train runs, according to press reporting.
Nevertheless, only 10 carloads of grain depart southern Vietnam daily rather than the 29
intended.
An indication of the severity with which Hanoi views the shortage is its
willingness to expend critically short foreign exchange to acquire rice on the
international market to soften the impact of its roduction shortfall. Recently Vietnam
urchased 18,000 tons of rice from Hon Kong.
having difficulty finding enough ships to handle small rice cargoes of 5,000 tons.
Requests for Assistance
Hanoi's appeal to its Socialist allies for assistance has gone largely unheeded.
After repeated requests to Moscow for 200,000 tons of rice, the Soviets in March
acquired 60,000 tons of Thai rice for Vietnam, Other
Bloc countries have so far failed to provide an
y assistance.
As was the case during the last major food crisis in 1978-79 (see Box), the West
is also being asked to provide emergency support. We believe this request is as much
an effort to weaken the US-backed ASEAN economic embargo as to meet a critical
need. In April, Hanoi approached Australia, Thailand, West Germany, and., the United
Kingdom for fertilizers and insecticides worth more than $122 million. Unlike food relief,
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Provinces Most Affected by Food Shortages, 1988
Boundary representation is
not necessarily authoritative
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which could be provided in an emergency without violating the embargo, aid donors
consider fertilizers and insecticides developmental assistance that is expressly
prohibited. Thailand rejected the request outright, and' succeeded in getting the other
countries to follow suit, So far, Hanoi's requests have
brought only 10,000 tons of grain from the European Community, 1,200 tons of rice from
Australia, and a pledge of $4 million in emergency aid from Sweden.
Vietnam: 1978-79 Food Shortage
Severe weather in the fall of 1978 caused a serious food crisis in
Vietnam that forced Hanoi to turn to the international community for assistance.
Vietnamese officials claimed that floods and insects destroyed an estimated 2.6
million metric tons of rice. Peasants were mobilized to drain affected rice fields,
patch dams and dikes, and replant subsidiary food crops destroyed by flood
water. Faced with millions of citizens in 17 of Vietnam's 38 provinces on the
brink of starvation and the next harvest season still seven months away, the
government appealed to the international community for emergency relief aid in
the form of food, medicine, seeds, fertilizer, insecticide, and agricultural
machinery. Several countries and. international organizations responded. The
Philippines sent 1,500 tons of rice, the Netherlands 8,600 tons of rice, the World
Food Program provided 11,380 tons of wheat flour, and Australia gave 500 tons
We believe, Vietnamese officials have attempted to pressure potential Western
donors by exaggerating the severity of their agricultural problems. In early May, Hanoi
requested that the United Nations Development Program (UNDP) and Food and
Agriculture Organization arrange immediate shipment of 120,000 tons of rice, claiming
that 250,000 people in several northern provinces had died, and that another 3 to 8
million were "near starvation." Perhaps recognizing the requests as perfidious,
representatives of the international organizations in Hanoi argued that the Vietnamese
bureaucracy had waited too long to ask for food, and that, even if the requested
amounts were provided, Vietnam's weak infrastructure and poor distribution system
made it unlikely that food would arrive in time to help anyone facing immediate
starvation.
Despite Hanoi's claims and its ongoing weather problems, we do not believe
Vietnam faces widespread famine this year. Local shortages often occur because
growing conditions differ throughout the country and because of the absence of a free
market to satisfy supply and demand. Indeed, 25X1
the rice shortage is not as severe as predicted, although Hanoi still needs large amounts
of foreign rice, Vietnamese authorities now claim that 25X1
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they will be able to ship 2 million tons of southern rice to.the north. Using Vietnamese
data, United Nations Development Program (UNDP) representatives estimate that Vietnam
needs 65,000 tons of food aid over July and August. Of that amount the World Food
Program could provide between 20,000 and 30,000 tons with the remainder provided by
other international donors.
Unconfirmed Vietnamese reports of deaths are extraordinarily high and are
suspect because Hanoi has made no apparent government mobilization to meet such a
crisis, by for example, consfiscating private rice supplies and using the military to
transport it northward. Furthermore, while travellers into Vietnam and fleeing refugees
confirm that certain regions are suffering from grain shortfalls, we have no reports
indicating mass starvation. Most likely some northern provinces, whose populations are
constantly near the subsistence level, are experiencing serious shortfalls that Hanoi is
unable to meet by purchasing and transporting rice supplies from the south.
Implications
Moscow's unwillingness or inability to meet Vietnam's grain shortfall is likely, in
our view, to increase Hanoi's skepticism about its heavy reliance on the Soviet Union.
Even before Moscow's latest cold. shoulder, Hanoi had been moving to end its diplomatic
isolation and to strengthen its ties to the West by initiating a unilateral withdrawal of its
forces from Cambodia; passing a foreign investment law permitting, for the first time
since the Communist takeover, foreign ownership of Vietnamese firms; and releasing
6,400 reeducation camp inmates including 1,000 officials of the former South Vietnamese
Government. We believe Hanoi's efforts to reduce its dependence on Moscow are likely
to accelerate.
Nor would a US refusal to provide aid, in our judgment, stem Vietnam's
diplomatic offensive, and its efforts to improve relations with Washington. Establishing
diplomatic ties with the United States remains a key goal of Hanoi's foreign policy.
During previous shortfalls, Hanoi has expressed displeasure with the United States over
its lack of food aid. In our judgment, however, Hanoi does not expect US food aid this
time, and is unlikely to play up a US rejection by temporarily suspending cooperation
with the United States on other issues such as MIAs, political prisoners, and emigration.
The food shortage may actually strengthen the position of reform advocates
within the government. Hanoi recently dismissed three vice premiers from the Council of
Ministers, in part because of poor performance in implementing agricultural reforms. The
dismissals and the extent of the current economic problems may give impetus to
additional change. In April, for example, the Politburo announced dramatic policy
changes to boost agricultural production in the longer run. One measure grants peasants
the right to use land for their own purposes for up to 15 years. Previously peasants
could hold land only for five years, which made them reluctant to invest money or effort
in irrigation or to improve land fertility. Another provision allows peasants to leave
state-run farm cooperatives, the cornerstone of Hanoi's agricultural system for three
decades, to undertake private farming. Local government organizations were also told to
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remove corrupt cadres from cooperatives and to no longer harass private farmers.
Looking ahead it is possible that Hanoi could use its promise of withdrawal from
Cambodia to bargain for additional food aid from Western nations. If Vietnam's food
supply is indeed precariously balanced between subsistence and malnutrition, Hanoi
faces a serious dilemma in feeding the troops it is in the process of withdrawing from
Cambodia. Since last November Hanoi has brought back 15,000 to 20,000 soldiers from
Cambodia and intends to remove another 50,000 this year. For the most part, these
soldiers obtained their food from Cambodian, rather, than Vietnamese, sources. Our
rough estimation is that the repatriated soldiers will add another 20,000 tons to
Vietnam's food demand this year.
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