Vietnam maps 3-stage farm shield against Middle East fallout

Vietnam has unveiled a three-stage response plan to cushion its agricultural sector against the growing fallout from the Middle East conflict, as policymakers try to keep the country’s 2026 farm growth targets on track despite mounting pressure on energy, transport and trade.

According to a report published on the website of Thailand’s Department of International Trade Promotion, citing the Thai Trade Center in Ho Chi Minh City, the conflict in the Middle East is increasingly affecting Vietnam’s agricultural sector. In response, Vietnam’s Ministry of Agriculture and Environment has drawn up a response scenarios framework built around three time horizons, one month, three months and one year, to help manage policy risk, limit negative impacts, stabilise supply chains and preserve agricultural growth in 2026 amid volatility in the global economy and trade.

The pressure is being felt first through higher input costs, driven by rising global energy prices. Oil prices have had a direct impact on transport charges and the cost of agricultural inputs such as fertiliser, fuel and animal feed materials, adding to the strain on producers.

Logistics costs have also risen sharply. Sea freight rates are now trending 25-35% higher, while shipping times have lengthened as vessels avoid high-risk routes including the Red Sea and the Suez Canal. For time-sensitive agricultural exports such as seafood, fresh fruit and vegetables, that has translated into higher storage costs and greater risks to product quality.

On the trade side, some export products with greater exposure to Middle Eastern markets, including cashew nuts and pepper, are facing the prospect of weaker demand and a more sluggish market. At the same time, the indirect effects of a slowing global economy are fuelled by uncertainty over energy prices, transport systems and the risk to oil shipping through the Strait of Hormuz. These factors are expected to weigh on purchasing power in key markets and feed back into Vietnam’s agricultural export performance.

Although the Middle East accounts for only around 2-2.2% of Vietnam’s total agricultural export value, the broader impact from rising energy and logistics costs is far wider, weakening the competitiveness of Vietnamese goods in global markets. That is why the three-stage time framework has become central to Vietnam’s planning, with each scenario reflecting different levels of potential damage to exports in key markets including the Middle East, Europe and North Africa.

In the short term, the government is focusing on market stability. Measures include controlling the prices of production inputs, building strategic reserves of key products such as rice to maintain domestic price balance, improving logistics early-warning systems and setting up emergency communication channels so that problems affecting businesses can be addressed more quickly.

Financial and credit support is also part of the immediate response. Vietnam is using debt restructuring, longer repayment periods and support for storage costs to ease liquidity pressure on businesses. At the same time, export market diversification has been elevated into a core strategy, with Vietnam accelerating efforts to expand into South Asia, Africa and Latin America while making fuller use of free trade agreements to raise market share and reduce dependence on more volatile destinations.

Over the longer term, Vietnam is seeking to restructure its agricultural sector towards higher-value and more sustainable production under a green and ecological agriculture model. That includes a stronger focus on science, technology and innovation, alongside a more systematic digital transition. The strategy also prioritises higher quality standards, traceability, stronger global branding for agricultural products and greater self-reliance in production inputs to reduce vulnerability to external shocks.

At the same time, Vietnam is also trying to strengthen demand at home. Expanding the domestic market, promoting trade through e-commerce channels, and maintaining price stability and food safety are all being positioned as important tools to build a stronger internal demand base that can better balance the export sector.

The Thai Trade Center in Ho Chi Minh City said the same pressures are likely to affect Thai businesses operating both in Thailand and in Vietnam. With energy and logistics costs rising, Thai operators are expected to face heavier production costs and higher international freight bills, particularly in agricultural and food products that are highly sensitive to delivery times. Global demand volatility and supply chain disruption are also making order management and inventory planning more complicated.

Against that backdrop, Thai businesses have been urged to adjust their strategies quickly and take a more proactive approach to risk management. Suggested measures include diversifying raw material sources, improving logistics and warehouse management, and making greater use of financial tools to support liquidity. Businesses should also make use of free trade agreements and keep track of Vietnam’s support measures, including credit policies, tax measures and trade facilitation, which could help reduce costs and open market opportunities.

At the same time, the shifting landscape may also create openings for Thai firms to expand their role in regional supply chains, particularly in products where Vietnam still faces constraints in raw materials or production technology, as well as in higher-value processed agricultural goods. Vietnam’s longer-term shift towards greener and more ecological agriculture may also support more joint investment and technology cooperation between Thai and Vietnamese businesses, helping both sides improve competitiveness and build more sustainable trade links over time.