**5. Results and discussion**

greater economic efficiency will reduce the gap between D and H, and this will induce ad‐ justments in the commodity system in question, which may involve changes in the propor‐ tions in which resources are used and, at least in the short term, some contraction in the

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

Regarding indicators in the PAM, the basis PAM permits twelve indicators of economic effi‐ ciency, six of which are non-ratio indicators and six are ratio-indicators. Ratio measures are more useful for comparison of commodity systems which are dissimilar in the relative pro‐

The primary objective of constructing a PAM is to derive a few important policy parameters for policy analysis. Seven of the most commonly used parameters are private cost ratio (PCR), domestic resource cost (DRC), nominal protection coefficient output (NPCO), nomi‐ nal protection coefficient input (NPCI), effective protection coefficient (EPC),Profitability






Coefficient (PC) and Subsidy Ratio to Producers (SRP) explained as followings:

scale of operation.

Relationships

164

portions in which they use inputs.

competitive if PCR is less than 1.

that reduces the country's welfare.

cates a neutral situation.

neutral situation.

### **5.1. Cost and benefit analysis of soybean production**

The income is estimated by multiplying yield with price and the profit is calculated by using income minus the total cost of soybean production presented in Table 2.


Table 2 shows that harvesting the average yield of soybean production of 268kg per 10a, soybean farmers sell their product with the price of 5,200VND per kg. However, there is a big variation in soybean price among farmers in the sample. The minimum price is only 1,000VND per kg, while the maximum is 7,000VND per kg. The reasons for this may come from the differences in output quality, the time of selling and unstable markets. Normally,

the soybean price is fixed by purchasers while it is sometimes formed by the negotiation be‐ tween buyers and sellers. At harvesting time, the buyers come to the farm to buy soybean at the farm-gate. Very few farmers could sell their product at the market price because of the lack of market information. They even sell their soybean at a low price compared to the mar‐ ket price due to poor storage facilities and the lack of savings for daily living.

**Figure 1.** Yield, income and profit of soybean production

With an average soybean income of around 1,400,000VND per 10a, farmers could receive a profit of 521,000VND per 10a from their soybean cultivation. There is a big difference in profit among the surveyed sample. Some farmers could obtain the maximum profit of around 1,767,000VND per 10a while 20 percent of farmers had negative profits from soy‐ bean cultivation.

In rural areas in Vietnam, family labor is considered as the source of income. The ratio of profit to family labor means the earning of farmers received in their own land. This ratio of 106,000VND per day is three times higher than the hired labor price of 35,000VND per day, indicating that it is more profitable to do their own farming compared to working for other farmers as hired laborers.

The income-cost ratio of 1.6 indicates that farmers spent 1VND on soybean production costs and received an income of 1.6VND resulting in a profit of 0.6VND for soybean production performed by the profit to cost ratio. Although these ratios are rather high, the absolute amount of cash profit received by farmers is relatively low because of their small-scale pro‐ duction of soybean (the average soybean area of 0.68ha). In addition, the poor farming tech‐ niques and lack of market information result in unstable yields and prices that may not ensure sustainable income for soybean farmers.

### **5.2. Establishing the Policy Analysis Matrix**

the soybean price is fixed by purchasers while it is sometimes formed by the negotiation be‐ tween buyers and sellers. At harvesting time, the buyers come to the farm to buy soybean at the farm-gate. Very few farmers could sell their product at the market price because of the lack of market information. They even sell their soybean at a low price compared to the mar‐

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

With an average soybean income of around 1,400,000VND per 10a, farmers could receive a profit of 521,000VND per 10a from their soybean cultivation. There is a big difference in profit among the surveyed sample. Some farmers could obtain the maximum profit of around 1,767,000VND per 10a while 20 percent of farmers had negative profits from soy‐

In rural areas in Vietnam, family labor is considered as the source of income. The ratio of profit to family labor means the earning of farmers received in their own land. This ratio of 106,000VND per day is three times higher than the hired labor price of 35,000VND per day, indicating that it is more profitable to do their own farming compared to working for other

The income-cost ratio of 1.6 indicates that farmers spent 1VND on soybean production costs and received an income of 1.6VND resulting in a profit of 0.6VND for soybean production performed by the profit to cost ratio. Although these ratios are rather high, the absolute amount of cash profit received by farmers is relatively low because of their small-scale pro‐ duction of soybean (the average soybean area of 0.68ha). In addition, the poor farming tech‐ niques and lack of market information result in unstable yields and prices that may not

ket price due to poor storage facilities and the lack of savings for daily living.

**Figure 1.** Yield, income and profit of soybean production

ensure sustainable income for soybean farmers.

bean cultivation.

Relationships

166

farmers as hired laborers.

The basic information needed for compiling a PAM are yields, input requirements, the ac‐ tual market prices and social prices of inputs and outputs. The major sources of data used for the private account in the PAM are from the data of the soybean farm household survey.

The first step is to establish a table of physical input-output relationships for soybean pro‐ duction. This numerical description of the soybean production function summarizes the technology used in this system. In this illustrative system, the inputs used by the representa‐ tive farmers are about 18kg Urea, 18kg NPK and 3.3 labor days for crop care per 10 a. The average yield of soybean is around 268kg per 10a. These input-output coefficients are drawn from the synthetic budgets and the farm interviews presented in Table 3.


**Table 3.** Physical Input-Output of soybean

The second step is to compile a table of private (actual market) prices for each of the inputs used and output produced in the system. These prices should be representative of the base year of the study. The private prices for the soybean system are presented in Table 4.


#### **Table 4.** Private Prices of soybean

The most difficult task for constructing a PAM is the estimation of social prices and the sep‐ aration of inputs into their tradable and non-tradable components. We use the world price as a reference price. In the study, the social price of soybean is the respective import parity price of soybean equivalents at the farm gate as an imported commodity. The CIF import price of soybean is listed on the website of the Ministry of Agriculture and Rural Develop‐ ment. The CIF price is adjusted at the farm gate by adding to it the transportation cost from the port of Ho Chi Minh City, one of the biggest ports in Vietnam. The value of transporta‐ tion is assumed to be equal to 1 percent of the CIF price of soybean. The social price of soy‐ bean at the farm gate is then calculated by subtracting the distribution costs to farm.

The second step is to compile a table of private (actual market) prices for each of the inputs used and output produced in the system. These prices should be representative of the base

**P-Price Quantities An Giang Can Tho Overall**

Urea (VND/kg) 3,302 3,401 3,352 NPK (VND/kg) 3,573 3,601 3,588 DAP (VND/kg) 3,990 4,101 4,049 Other fertilizer (VND) - - -

Herbicide - - - Fungicide - - - Insecticide - - - Other pesticide - - -

Hired labor 37,368 29,628 34,159

Irrigation - 26,277 26,277 Harvest 43,784 38,783 41,012

Land preparation 24,000 27,179 25,272

Other machinery (VND) - - -

Output (VND/kg) 4,975 5,334 5,159

The most difficult task for constructing a PAM is the estimation of social prices and the sep‐ aration of inputs into their tradable and non-tradable components. We use the world price as a reference price. In the study, the social price of soybean is the respective import parity price of soybean equivalents at the farm gate as an imported commodity. The CIF import price of soybean is listed on the website of the Ministry of Agriculture and Rural Develop‐ ment. The CIF price is adjusted at the farm gate by adding to it the transportation cost from the port of Ho Chi Minh City, one of the biggest ports in Vietnam. The value of transporta‐

Seed (VND/kg) 6,463 6,562 6,514

Fuel of Irrigation (VND/liters) 5,190 5,624 5,373

year of the study. The private prices for the soybean system are presented in Table 4.

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

Pesticide (VND)

Machinery (VND/day)

*Source: Own estimates, 2006; data appendix available from authors*

Tradable Fertilizer

Relationships

168

Factors Labor (VND/day)

**Table 4.** Private Prices of soybean

As for tradable inputs, Vietnam has been importing chemical fertilizer, pesticides, fuel and other major farm inputs from international markets. Thus, the tradable inputs for fertilizer, fuel, etc. are the respective import parity prices at the farm gate and the social price of soy‐ bean seed is assumed to be equal to 20 percent of the social soybean price. However, be‐ cause of complications for pesticide price, the social price of pesticides was not calculated in the study. Regarding domestic factors, since these factors are not tradable internationally and thus do not have world price, their social opportunity costs are estimated through ob‐ servations of rural factor markets. The domestic inputs in the study are hired labor, machi‐ nery etc. They are assumed to be equal to the maximum prices in the sample.

When the parity prices of soybean and inputs are estimated, the shadow exchange rate instead of the official exchange rate is used to convert the international prices in US\$ into VND. In the study, shadow exchange is assumed to be 16,000VND/US\$ for calculating the social prices of soybean and its inputs. The social prices of soybean is calculated by adjusting form the interna‐ tional price to farm-gate level presented in Table 5. Similarly, the social price of tradable inputs such as fertilizers and diesel are also estimated in Table 6 and Table 7.


\* The source from the website of Ministry of Agriculture and Rural Development, 6/4/2006 *Source: Own estimates, 2006; data appendix available from authors*

**Table 5.** Adjustment of International Price of soybean to Farm-gate Level


\* The source from the website of Ministry of Agriculture and Rural Development, 6/4/2006 *Source: Own estimates, 2006; data appendix available from authors*

**Table 6.** Adjustment of International Prices of fertilizers to Farm-gate Level


The Comparative Advantage of Soybean Production in Vietnam: A Policy Analysis Matrix Approach http://dx.doi.org/10.5772/51000 171


\* The source from the website of Labor newspaper, 19/10/2006\*\*The source from the website of Viet Nam trade promotion Agency, 21/4/2006 *Source: Own estimates, 2006; data appendix available from authors*

**Table 7.** Adjustment of International Prices of Diesel to Farm-gate Level

**Import Parity Prices Urea NPK DAP** CIF HCM port (US\$/ton) \* 147.19 161.77 199.33 Exchange rate (VND/US\$) 16,000 16,000 16,000 Exchange rate premium (%) 0.10% 0.10% 0.10% Equilibrium exchange rate (VND/US\$) 16,016 16,016 16,016 CIF in domestic currency (VND/ton) 2,357,352.0 2,590,913.3 3,192,442.8 Weight conversion factor (kg/ton) 1,000 1,000 1,000 CIF in dom.currency and weigh units (VND/kg) 2,357.35 2,590.91 3,192.44 VAT 5% 5% 5% CIF and VAT in domestic currency (VND/kg) 2,475.22 2,720.46 3,352.06 Transportation and handing costs (VND/kg) 230.0 230.0 230.0 Value before processing (VND/kg) 2,705.2 2,950.5 3,582.1 Processing conversion factor 1 1 1 Import parity value at wholesale (VND/kg) 2,705.2 2,950.5 3,582.1 Distribution costs to farm (VND/kg) 200.0 200.0 200.0 Import parity value at farm gate (VND/kg) 2,505.2 2,750.5 3,382.1 \* The source from the website of Ministry of Agriculture and Rural Development, 6/4/2006

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

Relationships

170

*Source: Own estimates, 2006; data appendix available from authors*

**Import Parity Prices Diesel** CIF HCM port (US\$/ton) \* 359 Exchange rate (VND/USD) 16,000 Exchange rate premium (%) 0.10% Equilibrium exchange rate (VND/US\$) 16,016 CIF in domestic currency (VND/ton) 5,749,744.00 Weight conversion factor (kg/ton) 1000 CIF in domestic currency and weigh units (VND/kg) 5,749.74 Luxury tax and transportation 10% CIF including luxury tax 6,324.72 VAT 10% CIF and VAT in domestic currency (VND/kg) 6,957.19 Transportation and handing costs (VND/kg) \*\* 500

**Table 6.** Adjustment of International Prices of fertilizers to Farm-gate Level


*Source: Own estimates, 2006; data appendix available from authors*

**Table 8.** Social prices of soybean

*Unit: VND/10a*


*Source: Own estimates; data appendix available from authors.*

**Table 9.** Private and social revenues, costs and profits of soybean.

Getting the results from these above tables (Table 5, 6, 7), the full set of social prices for the illustrative soybean system is presented in the following Table 8.

After the calculation of private and social prices for tradable, non-tradable inputs and soy‐ bean, Table 9 shows a farm budget. The table is divided into two blocks. The first block re‐ cords private prices, calculates the costs of inputs, and separates these costs into their tradable and non-tradable components. The second block is similar to the first block but all the values are calculated in social prices.

*Unit: VND/10a*

*Unit: VND/10a*

Relationships

172

**Quantities**

**Tradable factors**

Fertilizer

Pesticide

**Domestic factors**

Labor

Machinery

**Output**

Total costs (excluding land)

land)

**Table 9.** Private and social revenues, costs and profits of soybean.

*Source: Own estimates; data appendix available from authors.*

Profit (excluding

**Private values Social values An Giang Can Tho Overall An Giang Can Tho Overall**

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

*Urea* 61,188 57,957 59,543 46,425 42,690 44,508 *NPK* 58,730 69,740 64,373 45,213 53,264 49,346 *DAP* 51,210 54,472 52,898 43,410 44,923 44,187

Other fertilizer 13,462 4,205 8,711 13,462 4,205 8,711

*Herbicide* 45,665 22,231 33,637 45,665 22,231 33,637 *Fungicide* 17,754 6,887 12,177 17,754 6,887 12,177 *Insecticide* 151,778 122,718 136,862 151,778 122,718 136,862 *Other pesticide* 17,426 14,860 16,109 17,426 14,860 16,109 Seed 89,970 62,821 76,018 95,643 65,773 80,175 Fuel of Irrigation 24,327 14,944 19,589 34,018 19,285 26,456

*Hired labor* 179,692 56,251 113,236 351,033 138,596 241,994

*Irrigation* - 62,748 32,207 - 198,198 101,730 *Harvest* 199,272 161,483 178,500 364,102 333,103 348,191

*Land preparation* 26,142 80,851 51,996 38,124 104,116 72,012

*Other machinery* 364 8,298 4,402 364 8,298 4,402

Total Revenue 1,378,007 1,381,598 1,381,463 1,585,993 1,483,074 1,533,168

936,978 800,467 860,258 1,264,416 1,179,150 1,220,495

441,029 581,131 521,205 321,578 303,925 312,672


#### **Table 10.** Results of the PAM analyses of soybean

The summary information from Table 9 is extracted to form a PAM of soybean production as shown in Table 10.

The principal determinant of transfers to farm production activity is the difference between world and domestic prices. The study shows that farmers received the private soybean price of 5,159VND per kilogram. The CIF price of soybean is 5,725VND per kilogram equivalent to a farm-gate social price (after converting to social costs and subtracting the social value of transport costs). For 10a of soybean, the private profit is 521,205VND, while the social profit is only 312,672VND.

### **5.3. Comparative and competitive advantage of the soybean farming system**

The ability of an agricultural system to compete without distorting government policies can be strengthened or eroded by changes in economic conditions. Dynamic comparative ad‐ vantage refers to shifts in competitiveness that occur over time because of changes in three categories of economic parameters – long-run world prices of tradable outputs and inputs, social opportunity costs of domestics factors of production (labor, capital and land), and production technologies used in farming or marketing. Collectively, these three parameters determine comparative advantage.


#### **Table 11.** Output transfer of soybean farming system

Comparative advantage of an agricultural system, in the PAM table, is indicated by the val‐ ue of the Domestic Resources Cost Ratio (DRC). The DRC serves as a proxy measure for so‐ cial profits. Minimizing the DRC is equivalent to maximizing social profits. Comparative advantage is an indicator of potential advantage and will be fully received if there is no poli‐ cy distortion in the system. If a commodity has comparative advantage, its production is economically efficient.

Based on information provided in Table 10, the DRC of soybean-farming system is 0.71. This result indicates that the soybean system has a comparative advantage. Growing Soybean in Can Tho is as efficient as that in An Giang because DRC of the two provinces are nearly the same. In other words, soybean production in An Giang has the same comparative advantage to that in Can Tho.

The determination of profit actually received by farmers is a straightforward and important initial result of the PAM approach. The results indicate which farmers are currently compet‐ itive. In the PAM table, the competitiveness of a system is measured by the private profita‐ bility (D) or Private Cost Ratio (PCR). Based on information given in Table 10, the PCR of soybean production is 0.42. This result indicates that soybean cultivation is profitable and thus competitive.

#### **5.4. Transfers and impacts of government policies**

transport costs). For 10a of soybean, the private profit is 521,205VND, while the social profit

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

The ability of an agricultural system to compete without distorting government policies can be strengthened or eroded by changes in economic conditions. Dynamic comparative ad‐ vantage refers to shifts in competitiveness that occur over time because of changes in three categories of economic parameters – long-run world prices of tradable outputs and inputs, social opportunity costs of domestics factors of production (labor, capital and land), and production technologies used in farming or marketing. Collectively, these three parameters

 **Total Revenue NPCO**

0.87

0.93

0.90

**5.3. Comparative and competitive advantage of the soybean farming system**

Private 1,378,006.98 Social 1,585,993.28 Divergences -207,986.30

Private 1,381,598.04 Social 1,483,074.31 Divergences -101,476.27

Private 1,381,462.72 Social 1,533,167.61 Divergences -151,704.89

Comparative advantage of an agricultural system, in the PAM table, is indicated by the val‐ ue of the Domestic Resources Cost Ratio (DRC). The DRC serves as a proxy measure for so‐ cial profits. Minimizing the DRC is equivalent to maximizing social profits. Comparative advantage is an indicator of potential advantage and will be fully received if there is no poli‐ cy distortion in the system. If a commodity has comparative advantage, its production is

Based on information provided in Table 10, the DRC of soybean-farming system is 0.71. This result indicates that the soybean system has a comparative advantage. Growing Soybean in Can Tho is as efficient as that in An Giang because DRC of the two provinces are nearly the same. In other words, soybean production in An Giang has the same comparative advantage

is only 312,672VND.

Relationships

174

determine comparative advantage.

**An Giang**

**Can Tho**

**Overall**

economically efficient.

to that in Can Tho.

**Table 11.** Output transfer of soybean farming system

In the Policy Analysis Matrix (PAM), impacts of government policies can be identified by the divergences identity in the third row of the PAM table. Divergences cause private prices to differ from their social counterparts. A divergence arises either because a distorting policy intervenes to cause a private market price to diverge from an efficient price or because un‐ derlying market forces have failed to provide an efficient price. Divergences in PAM can al‐ so be indicated by the ratio between the values in the first row (private prices) and the values in the second row (social prices). The ratio's indicators are more frequently used be‐ cause of their ability to compare different systems producing unlike outputs.


Table 11 shows output transfers of soybean production. The ratio formed to measure output transfers is called the Nominal Protection Coefficient on Output (NPCO). The NPCOs of soybean in Can Tho and An Giang are slightly different. The NPCOs of Can Tho and An Giang are 0.93 and 0.87, respectively. Both values of NPCO are less than 1. This result indi‐ cates that soybean farmers received slightly lower prices than they would have received fac‐ ing world prices or that systems are receiving very slight protection. The positive output transfers are caused mainly by indirect quantitative restriction (quotas) on soybean imports.

Moreover, the value of NPCI is 1.06. This result indicates that soybean farmers are taxed when they buy tradable inputs. Details of tradable input transfers of soybean production are presented in Table 12.


**Table 13.** Effective Protection Coefficients for soybean farming system

The EPCs of the soybean farming systems are depicted in Table 13. Regarding the total ef‐ fects of government intervention in the output of soybean and tradable input markets, the study estimates the value of EPC=0.83. It indicates that there is no subsidy of soybean pro‐ duction in the soybean output and tradable input markets from government policies. The costs or profits of soybean producers are 17 percent less than they would have been in the absence of policy on output and tradable inputs.

### **5.5. Sensitivity analysis of soybean production**

The aim of sensitivity analysis in this section is to examine whether soybean production will have comparative advantage or not when the key factors vary and change in the future. The expected results will help answer the question "How sensitively are ratios of a PAM subject to the changes of the key factors?" In the study, based on the unstable market of inputs, and the changes of government policy, three possible scenarios are assumed as: the reduction of soybean tariff from 15 percent to 5 percent, an increase of 10 percent in fertilizer prices and in exchange rate of VND/US\$ of 10 percent. The results of sensitivity analysis of a PAM are performed in Table 14.

*- The decrease of the soybean tariff:* Vietnam officially jointed the WTO in November 2006. In compliance with WTO rules, the import tariff for soybean has to decrease from 15 percent to 5 percent. Table 14 shows that when the soybean tariff is reduced from 15 percent to 5 per‐ cent, soybean production in Vietnam still has a comparative advantage since the DRC be‐ comes 0.83 less than 1. Moreover, the NPCO = 1.01, indicating a neutral situation, meaning that there is almost no intervention of the Government in the soybean market.


*Source: Own estimates; data appendix available from authors.*

**Table 14.** Sensitivity analysis of a PAM

Table 11 shows output transfers of soybean production. The ratio formed to measure output transfers is called the Nominal Protection Coefficient on Output (NPCO). The NPCOs of soybean in Can Tho and An Giang are slightly different. The NPCOs of Can Tho and An Giang are 0.93 and 0.87, respectively. Both values of NPCO are less than 1. This result indi‐ cates that soybean farmers received slightly lower prices than they would have received fac‐ ing world prices or that systems are receiving very slight protection. The positive output transfers are caused mainly by indirect quantitative restriction (quotas) on soybean imports.

A Comprehensive Survey of International Soybean Research - Genetics, Physiology, Agronomy and Nitrogen

Moreover, the value of NPCI is 1.06. This result indicates that soybean farmers are taxed when they buy tradable inputs. Details of tradable input transfers of soybean production are

> Private 1,378,006.98 531,508.89 Social 1,585,993.28 510,793.46 Divergences -207,986.30 20,715.43

> Private 1,381,598.04 430,835.33 Social 1,483,074.31 396,837.71 Divergences -101,476.27 33,997.61

> Private 1,381,462.72 479,916.49 Social 1,533,167.61 452,166.02 Divergences -151,704.89 27,750.48

The EPCs of the soybean farming systems are depicted in Table 13. Regarding the total ef‐ fects of government intervention in the output of soybean and tradable input markets, the study estimates the value of EPC=0.83. It indicates that there is no subsidy of soybean pro‐ duction in the soybean output and tradable input markets from government policies. The costs or profits of soybean producers are 17 percent less than they would have been in the

The aim of sensitivity analysis in this section is to examine whether soybean production will have comparative advantage or not when the key factors vary and change in the future. The

*Source: Own estimates; data appendix available from authors.*

**Table 13.** Effective Protection Coefficients for soybean farming system

absence of policy on output and tradable inputs.

**5.5. Sensitivity analysis of soybean production**

 **Revenues Tradable input costs EPC**

0.79

0.88

0.83

presented in Table 12.

Relationships

176

**An Giang**

**Can Tho**

**Overall**

*- The increase of fertilizer prices:* According to the annual statistics, the prices of fertilizer have been increasing steadily and it is likely that the upward trend will continue in the future. Thus, we assume that the price of fertilizers will go up about 10 percent in the future and then we investigate how the change of the PAM ratios is. The result shows that soybean farmers in Vietnam still have comparative ability when the prices of fertilizer increase 10 percent.

*- An increase in the exchange rate:* Recently, since the Vietnamese currency gradually has been losing value compared with the US\$ currency, the study assumes the US\$ currency increas‐ es about 10 percent compared with the currency of VND and considers what happens to the PAM ratios. The analysis indicates that there are no big changes for Vietnamese soybean in terms of competitiveness and soybean cultivation and that Vietnam would still have a com‐ parative advantage when the exchange rate increases 10 percent.

## **6. Conclusion**

Calculating the costs, income and profit of soybean production, we described and estimated briefly the current situation of soybean production in Vietnam. It revealed that with the aver‐

age soybean yield of 268kg per 10a, farmers obtained income of 1.38 million VND. After ex‐ cluding input costs such as fertilizers, pesticides, hired labors, machinery service etc., the soybean farm could receive a profit of 521,000VND. The financial ratios of soybean production showed if the farmer invested 1VND into soybean production, they could earn 1.6VND for in‐ come, thus receive a profit of 0.6VND. In addition, the ratio of profit to family labor indicated it was more profitable for Vietnamese soybean farmers to do their own farming than to work as hired laborers for other farmers. In other words, they could obtain the much higher amount of opportunity cost of around 107,000VND per day from soybean cultivation in comparison with the average hired labor of 35,000VND per day in the Vietnamese rural areas.

By applying the approach of policy analysis matrix (PAM) to analyze the competitiveness of soybean production in Vietnam, the study showed that soybean production had a compara‐ tive advantage since DRC was less than 1. Moreover, we determined that government policy had almost no positive impacts on the soybean farmers. It even reduced the competitiveness of Vietnamese soybean. Because PAM analysis could not capture the potential changes in prices and productivity, the results of scenarios in Table 14 are subject to changes in market conditions. Some sensitivity analyses were estimated to catch some potential changes. The simulation results showed that if any of the following forecasts became true, soybean pro‐ duction still had a comparative advantage: the decrease of soybean tariff from 15 percent to 5 percent, the increase of fertilizer prices of 10 percent, an increase of 10 percent in the ex‐ change rate.
