From a success story
From being an importer of rice and other essential agricultural products in the late 1980s, Vietnam became one of the world’s leading exporters of farm produce in the 1990s.
Since late 2010 the Vietnamese agricultural sector has become an exemplary role model for other developing countries to follow suit. Despite poor infrastructure, outdated technology and modest investment, the country has not only ensured national food security but gained an annual agricultural export surplus of US$25 billion.
At the recent 2012 World Economic Forum in Davos, Switzerland, Vietnam was one of the five countries selected to report its achievements in agricultural production. Delegates were surprised that such a small-scale agricultural sector as in Vietnam had established direct contact with multinational companies.
However, the Vietnamese agricultural sector has only applied traditional production modes based on its available resources such as soil, water, and abundant labour, and targeted producing quantity for low-end markets.
Vu Quang Tuan from Nestle Vietnam, which has been cooperating with farmers to develop the coffee industry, says with its small scale, and less technologically advanced and mechanised agriculture, Vietnam is finding it hard to develop a commodity production economy.
There is no denying that agriculture remains a major economic sector, but its production is in a vicious circle. When farmers have a bumper harvest, farm produce prices fall dramatically, and vice versa. Diseases also cause heavy losses in the sector.
In addition, domestic agricultural production is facing external challenges, including high consumer demand and the influx of imports.
Specialists warn that Vietnam’s leading agricultural status will be threatened and its farm products will lose out to imports unless traditional production modes are changed.
“We cannot follow the old ways of thinking about agricultural production which concentrates on the quantity rather than the quality of products,” says Dr Dang Kim Son, director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) under the Ministry of Agriculture and Rural Development.
“Instead, we must now develop a commodity production economy and prioritise product quality by shifting from exploiting natural resources to applying advanced technology and mobilising intellectuals, while at the same time enhancing the distribution system’s management capacity.”
New practices will help Vietnamese farm products gain a firm foothold in both domestic and foreign markets, and create opportunities for them to be part of the global chain of high quality products, says Son.
What to do?
Pham Thi Thu Hang, Secretary General of the Vietnam Chamber of Commerce and Industry, calls on businesses to get involved in developing highly valued and distinctive products.
Hang cites tao meo – a type of apple grown and harvested in Sapa in the northern border province of Lao Cai as a typical example. This fruit is believed to treat many illnesses when it is soaked in wine.
She recalls that she often used to buy these apples from Sapa for their delicious taste, but now she will not buy them because they have allegedly been mixed with imported apples. This is a reason that Sapa apples are beginning to lose their brand name.
Hang wonders why no businesses have invested in developing this fruit in Sapa.
In addition to Sapa apples, many other high value Vietnamese farm products are also losing their reputations.
Dao Duc Huan, a specialist from the Ministry of Agriculture and Rural Development, suggests that Vietnam select typical products from different areas and build their brand names as their geographical indication.
“Only when the products are branded internationally, will they stand out from others and avoid any trade disputes,” says Son.
According to Dr Son, director of the IPSARD, Vietnam should promote its agriculture as a competitive advantage.
“First of all, the country should invest in infrastructure and science-technology to create a foundation for attracting resources,” says Son. “The State should also offer incentives to attract investors, scientists, economists and engineers to the agricultural sector to help increase the value of its farm products.”
This would be a positive step toward restructuring the national economy, with agriculture playing an important role. However, Son says whether or not this plan is realised successfully depends heavily on the government’s political resolve to renew its institutions and policies, as well as people’s determination to master the business aspect of agriculture and new production modes.