Agricultural Renovation to further Reduce Poverty

 

The report affirmed that further investment in the agriculture sector in transforming economies, including Vietnam, would bring more benefits to poor farmers living in these countries. “The economic growth in Vietnam has so far brought benefits for both urban and rural areas. In 1993, up to two thirds of the rural population in Vietnam were listed among the poor. Currently, that figure has been reduced to one fifth,” said Mr Martin Rama, Chief Economist of the World Bank to Vietnam.

 

Low Investment and Subsidy for Agriculture
According to Mr Dang Kim Son, agriculture is always the priority sector for renovation policies of Vietnam. The most basic reason for this success is that the government helps people access the most important natural resources of the country, land and water. However, the resources for agricultural development, especially land and water resources of Vietnam, are now limited. Over the past 20 years, as many as 300,000 hectares of farming land has been lost due to industrialisation and many other reasons. Son added that the real figure is much bigger. In addition, the price of agriculture labour is rather high.

 

Son noted that the burden of accelerating inflation is disproportionately on the shoulders of the agriculture sector and farmers, especially poor people in rural areas. Determining the best policies to move more than 10 million poor farmers from small-scale production to large-scale agriculture is the key in reaching effective development for the agriculture sector, rural areas and farmers in Vietnam.

 

Also according to Mr Son, farmers and the whole agriculture sector and rural area are looking forward to the support of the state. In fact, the subsidy level for Vietnam’s agriculture is still low and public investment is limited, so big changes are difficult. Currently, subsidies for Vietnam’s agriculture sector account for about 20 per cent, mainly for sugar cane. Meanwhile, in Asia and other areas the subsidy level is much higher. For example, in China currently, the agricultural protection policy is carried out by imposing higher import tax on agricultural products from other countries, or offering reasonable prices to help Chinese producers and consumers access agricultural products at proper prices. In other countries, governments have applied supporting mechanisms to diversify products and introduced subsidy policies for the poor to boost consumption. This is a big challenge for Vietnam.

 

Currently, the country’s assistance in providing public goods is still limited. According to the WB development report, Vietnam has invested only 0.13 per cent of its total agricultural GDP value in research and development, while the average level in agriculture-based countries is 4 per cent. 

 

Raise productivity and training farmers
According to the assessment of Mr Martin Rama, when Vietnam becomes a medium-income country the development should benefit all people in the country. “It is necessary to improve agricultural productivity and create opportunities for the poor in rural areas and ethnic minority groups in order that no one is ignored in the development period,” Martin Rama noted.

 

“Vietnam will need a good agriculture promotion system. Apart from the local government and international organisations, it is essential to have a mechanism to facilitate non-government organisations to provide technical services and training programmes for farmers,” Mr Derek Byerlee, the report’s chief author said.

 

The report also said that agriculture can be the way for millions of people in rural areas to escape poverty, but if agriculture is not developed they will lag behind in the transforming economy. One way to eliminate hunger and poverty is through high-value agriculture revolutions. Mr Derek Byerlee emphasised, “Transforming economies, including Vietnam, must transform from a green revolution to a new agriculture system of high value, because the income of people in urban areas has been raised, and the increasing demand for high-value products in cities is stimulating agricultural growth and poverty reduction. On the global scale, countries have to create an equal playing ground for agriculture, while farmers’ associations and localities should have a strong voice in policy planning.”

 

World Bank experts proposed that Vietnam should invest more and better in public goods, including development research, infrastructure systems, and skills development. With developing countries like Vietnam, due to the limited state budget, governments have to invest efficiently for development. 

 

Reportedly, WB pledged to enhance financial support for agriculture and rural development around the world. In the fiscal year 2007, commitment for agriculture has reached US$3.1 billion, consecutively increasing over four years.