February 16, 2017 7:00 pm JST

City slickers lend hand on Vietnam's farms

Automakers, steel mills and IT companies see promise in agriculture

ATSUSHI TOMIYAMA, Nikkei staff writer

HANOI -- Vietnamese companies are speeding up their "agritech" investments in a push to modernize a promising farming sector.

Truong Hai Auto Corp., Vietnam's largest carmaker, commonly known as Thaco, plans to start selling farm machinery in October.

In mid-January, it formed a technical tie-up with LS Mtron, an agricultural machinery maker from South Korea. Thaco wants to tap LS Mtron's technologies and existing production facilities to make tractors and combine harvesters, using parts produced in Vietnam.

Farm equipment made by Japanese companies like Yanmar has proven popular in Vietnam. Thaco's idea is to gain market share by undercutting Japanese makers on price.

Established in 1997, Thaco assembles Mazda Motor  and other brands' vehicles. It has been seeking to expand the scope of its business.

In 2016, the company overtook Toyota Motor to become Vietnam's largest seller of domestically assembled cars. It has 42% of that market and is one of Vietnam's few leading companies that is 100% privately owned.

Vingroup, the country's biggest property developer, meanwhile, will spend money equivalent of about $22.8 million developing a 213-hectare farm in the central province of Thua Thien Hue as early as April.

The company and an Israeli partner will transfer agritech from Israel for use on the farm.

It will grow leafy vegetables, fruits and premium flowers that are susceptible to pests and disease. It expects to combat these risks with good sanitary and efficiency standards.

The company plans to obtain Global GAP certification. A Good Agricultural Practice certificate says that a farm's output has met an international standard for food safety.

Vingroup also aspires to export produce.

Vingroup entered agriculture in 2015. Under the VinEco brand, it grows organic fruits and vegetables. It also offers other produce grown with reduced amounts of pesticides. The output is sold at the group's VinMart supermarkets and other outlets.

VinMart Plus convenience stores -- which the group began opening on a full-scale basis in urban areas in 2016 -- also carry the stuff.

The fruits and veggies are becoming more popular among consumers, who like the brand's hygiene ethic.

It is not Vietnam's only food producer to get serious about safety. Vietnam Dairy Products(Vinamilk), the country's largest dairy company, in June began selling milk that meets standards set by the U.S. Department of Agriculture. To comply with these standards, makers must follow strict sanitary codes in managing their barns and eliminate the use of genetically modified feed and growth hormones.

Vinamilk became the country's first dairy to satisfy these criteria.

The company is apparently mulling plans to export the milk to Cambodia and Laos.

Elsewhere, FPT, Vietnam's largest information technology company, last February teamed with Fujitsu to open a research center to study how IT could be used on the farm. The facility, near the capital, will grow produce indoors using IT to control temperatures, humidity and other conditions.

Perhaps more incongruently, Hoa Phat, a Vietnamese steelmaker, in June moved into the pork industry. It began by importing a highly coveted breed of pigs from Denmark and eventually plans to introduce a luxury pork brand.

Also, Hoang Anh Gia Lai, a leading real estate developer, in the first half of fiscal 2016 began raising cows and beef cattle.

All these companies see the same thing -- great growth potential in Vietnam's agriculture sector.

Agriculture and fishery industries constituted 16.3% of the nation's gross domestic product in 2016. Of the nation's 92 million or so people, 60% are farmers or have family members who are.

But the country's agriculture sector lags the modernized industrial farms of more advanced countries, and many Vietnamese farmers go about planting crops in a haphazard manner.

Now they will face competition from farms with newfangled machinery, technology and sanitation standards as the corporate sector moves in.

But they will also get a hand from this sector. "Just a little injection of machinery and technologies," said an official from the Japan International Cooperation Agency, "would drastically increase yields."

Mazda Motor Corp.

Japan

Market(Ticker): TKS(7261)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 8,203.14M
Shares: 599.87M

Toyota Motor Corp.

Japan

Market(Ticker): TKS(7203)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 174,545.65M
Shares: 3,262.99M
Asia300

Vingroup JSC

Vietnam

Market(Ticker): STC(VIC)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 4,656.00M
Shares: 2,637.70M
Asia300

FPT Corp.

Vietnam

Market(Ticker): STC(FPT)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 996.77M
Shares: 530.88M

Fujitsu Ltd.

Japan

Market(Ticker): TKS(6702)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 15,071.15M
Shares: 2,070.01M

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