During the first half of this year, imports of pesticides and raw materials for producing pesticides cost $231 million, the Department of Plant Protection of the Ministry of Agriculture and Rural Development said.

The figures indicate an urgent need for companies to consider strategies to regain their lost market share as they now produce about a fifth of market requirements. Most imported ingredients, which come mainly from China, India, Switzerland, Singapore and Germany, are packaged under local trade marks before sale.

Department officials said up to 40 per cent of the necessary compounds came from China because they cost less than those from Europe.

Unless there are changes, Viet Nam will become heavily reliant on imports and be little more than a distributor for foreign pesticide manufacturers.

To encourage local production, the ministry has tried to simplify administrative procedures for business licences for companies producing pesticides.

Nguyen Quoc Chinh, a senior analyst on pesticides from the AGROINFO centre, an affiliate of the Institute for Policy on Strategy for Agriculture and Rural Development, said that with heavy dependence on imports pesticides, prices increased sharply in the first few months of this year.

The centre expected the pesticide market to return to normal in the second half, with the average price dropping 5-8 per cent compared with 2008.

Chinh said, by late in the year, prices could increase by about 10 per cent compared to June.

Technology investment

Department statistics show 75 manufacturers and 25,314 distributing agents and shops nationwide sell pesticides.

Vietnamese companies were expected to produce about 62,107 tonnes of agricultural pesticides this year, of which State-owned enterprises would contribute 19,336 tonnes, non-State enterprises 27,179 tonnes and foreign invested enterprises 15,592 tonnes.

The figures were too low compared to demand, so the target to reduce imports might not be met, officials said.

Nguyen Manh Tuyen, director of the Viet Nam Disinfectant Company, said the new generation of pesticides were less toxic than their predecessors. "They are safer for users and more friendly to the environment."

Tuyen said pesticide use per hectare of crops had fallen by up to 10gm. In order to produce safer and environmentally-friendly products, Tuyen said Vietnamese manufacturers should invest in modern technology and use more organic materials and pesticide molecules.

"My company has invested in technology using micro-organism and a compound using intermediary chemical agents to produce pesticides," said Tuyen, who expected his decision would help the primary industry develop through better crop protection.