Vietnam’s Agriculture Be Powered up by External Resources

Recently, the Vietnamese and Japanese governments have signed agreements to promote bilateral agricultural cooperation. Along with that, the Japanese government is reviewing the reducing of subsidies for domestic rice cultivation - meaning this country will start steering itself toward becoming an importer. 

 

In fact, the "preparation" of Japan for Vietnam's agricultural development started a couple of years ago. Mr Tsuno Motonori, Chief Representative of Japan International Cooperation Agency (JICA) in Vietnam said that so far, Japan had supported the agriculture and rural development sector more than 25 technical assistance projects, non-refundable aid, emergency assistance of about US$120 million; four big loan projects of about US$450 million in the field of irrigation and forestry to help Vietnam improve infrastructure and stimulate sustainable agricultural and rural development. 

 

Analysing this trend, Dr Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development, said that over the past 50 years, the GDP share of Japanese agriculture had been falling sharply, from nine percent to one percent. Meanwhile, the workforce had become "too old", at the same time decreasing from 28 percent to less than three percent. Together with that, 25 percent of arable land had shrunk into small, scattered fields. Japan then did not have much potential for agricultural development. The state can protect agriculture but in the long run, food security will always be a major issue for the land of the rising sun. 

 

So according to Mr Son, Japan will have to resort to some form of using "outside resource" to exploit land, labour, production scale from countries of high agricultural potential such as Vietnam. 

 

The increasing investment in agriculture from Japanese investors will open up an attractive prospect for Vietnam's agriculture which is facing many challenges under the impact of factors such as the market economy, technological weaknesses and unstable production output. 

 

If everything goes right, the current weaknesses in quality, branding, supply processes of the Vietnamese agriculture will soon be overcome by using advanced technology of the second largest economy. Then the Vietnamese agricultural products will become internationally well-known for high quality and reputable brand. The Vietnamese farmers will have higher income; get rid of the "nightmare" of cheap agricultural sector. The significant increase of foreign capital flows in Vietnam's agriculture will likely create a "moment of integration" - as predicted in a study by Mr Vu Thanh Tu Anh, Director of Research, Fulbright Economics Teaching Programme. As analysed by this expert, out of four "wheels" to promote economic development, including state-owned enterprises, private enterprises, agricultural sector and foreign investment enterprises, right now only the fourth wheel is running smoothly. 

 

Vietnam's agriculture sector right now has both "benefits" and "opportunities" for foreign investors. Benefits here means agricultural strengths including favourable climate and land conditions, abundant labour resources while "opportunity" referring to encouraging policies toward foreign investors in agriculture field. 

 

According to Dr Dang Kim Son, Vietnam cannot "close out" foreign investors if we want to develop. Sluggishness and slowness will only obstruct domestic businesses, even leads to bankruptcy. Therefore, Vietnam should take advantage of the opportunity, meaning the "foreign brain" and proactively pouring more effort into the country's agricultural production to go beyond employee positions and developing our inherent strengths. 

 

To do this, Dr Son believed that it's necessary to have breakthroughs in selecting strategic sectors, manufacturing along the value chain to create market products based on selected potential and strengths of each locality. These strengths are divided into three categories: national strength (competitive and exportable), regional strength (can deliver to other regions), local internal strength (specialty and strengths of each commune, district and province). 

 

After figuring out the strengths, it will be used to build commodity chains. For example, the rice industry chain consisting of three parts: The intensive rice production, processing industry and trade system (including marketing system to bring products with the best, stable price to the safest markets without intermediaries). 

 

Borrowing international strengths to develop is a strategy which Vietnam's agricultural sector has been using for many years. Yet "potential and opportunity is one thing, the important is to take advantage of opportunities and potential to promote the sector's position to have a sustainable agricultural development" - Dr Son affirmed. 

 

In a recent speech, Minister of Agriculture and Rural Development Cao Duc Phat also said that with experience and valuable lessons of integration accumulated in recent years, "agriculture is totally capable of taking initiative to overcome new challenges in the integration process today", and "if success neutralize challenges from both inside and outside, the agricultural sector will certainly reap even more success in integration process, performing the role of national economy's supporting pillars in all conditions and circumstances."