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No closer to reality

Released at: 20:43, 17/05/2015 Agriculture Invesment

No closer to reality

The need is self-evident but enterprises and farmers alike continue to reject the application of high-tech agricultural practices.

by Tien Minh

While his former colleagues at Morgan Stanley may be busy making money on Wall Street and his fellow students at Stanford may be on the way to inventing something sensationally high-tech with their start-ups in Silicon Valley, Mr. Huynh Minh Viet has his own way of making money and creating high-tech start-ups, in choosing to become CEO of BioSpring - the first Vietnamese company to successfully produce bacillus spore (over 90 per cent) on an industrial scale for the pharmaceutics, food, and livestock industries. “Everything in the US has been standardized and I was just a small cog in a giant machine,” Mr. Viet said. “In Vietnam there are more opportunities to be the builder of such a machine but not so many have done it.” The talented young manager clearly sees great potential for the development of high-tech agriculture in Vietnam.

Vietnam has more than 70 per cent of its population engaged in agriculture but production scale remains insignificant and contributes just 20 per cent to GDP. The main issue is the sector’s fragmented production and its use of obsolete machinery and technology.

Despite lacking the favorable conditions for agriculture that Vietnam possesses, Israel has made miracles happen by creating a high-tech green agriculture industry on semi-arid land with a harsh climate. Israel is a small country with a surface area only slightly more than 20,000 sq km, but is known as the Silicon Valley of agriculture and water technology. Only 2.5 per cent of its population is involved in agriculture but they generate revenue of more than $3 billion each year by exporting agricultural products.

The decisive factor behind Israel’s success was its aggressive investment in science and new technology for agricultural purposes. In 1950, one Israeli farmer could only produce food for 17 people but the figure now stands at 90. For this reason, bringing high-tech to agricultural production may be a solution for Vietnam’s backward agriculture industry and may change the old ways of thinking. But various challenges await.

Suffer the farmer

Despite having been producing enough food for domestic consumption and even exporting for many years, Vietnam’s agriculture industry still has various problems and shortcomings. Science has helped improve the productivity of plant breeds and breeding stock and overall productivity has improved as a consequence, yet the methods of cultivation and breeding still follow traditional methods first introduced a thousand years ago.

The potential for agricultural development in Vietnam is huge but to be successful farmers must change their ways of thinking. “Agriculture nowadays should not rely on traditional experience but instead rely heavily on new scientific knowledge and technologies as well as careful research on the needs of consumers and markets, etc.” said Mr. Zafrir Asaf, Head of the Economic and Trade Mission at the Israeli Embassy in Vietnam. “This is the only way to meet the high demands of choosy markets, who are willing to pay higher for high quality products.”  
The arrival of new production methods and modern machinery has recorded certain achievements but results remain limited as land has been subdivided for rural households and, hence, the area of each household is too small for high-tech applications to exploit the full potential. In order to increase the value of agricultural exploitation, a solution is to encourage land accumulation to form a large farm for production with new machinery and technology. This solution, however, raises issues regarding the relocation of farming families and possible social unrest, among others.

An answer to this issue may be the formation of special regions with a particular focus on a certain crop, such as coffee, tea or sugarcane, with high-tech plant breeds but in a more labor intensive manner, to avoid any social unrest. This then raises another issue, as increases in output always result in lower sale prices, with farmers at times bearing considerable losses. Stories about Mekong Delta catfish and rice prices and central highlands’ coffee prices are evidence that large production areas with new technologies are an inadequate solution.

Its inability to generate stable incomes for farmers is the main challenge blocking the application of science and new technologies in agricultural production. A vicious cycle emerges, where without these applications the incomes of farmers will perhaps never be improved.

State and private enterprises not the savior

From the perspective of the overall economy, the total investment in agriculture in general ten years ago accounted for approximately 15 per cent of the State budget but is now a modest 6 per cent.

The involvement of private enterprises was once seen as a viable solution. Yet most Vietnamese enterprises view agriculture as an unattractive sector, as it requires large amounts of investment capital while generating a considerably slower return compared to other sectors.

Additionally, at the moment, the State intervenes in the market and stabilizes the price of strategic agricultural commodities like coffee and rice through administrative orders. Such a mechanism will only ever partially curb the falling momentum and losses to farmers and cannot guarantee them any profits, while transferring the risk to the State and to agricultural enterprises, who have their own issues to deal with. In certain circumstances, enterprises have been convicted of causing declines in agriculture product prices, but without them there is no distribution system for fertilizers, plant breeds, and production output, and less financial aid for farmers at the beginning of the harvest season.

While the State wants to build a strong agriculture industry of high value, enterprises, scientists and farmers should find common ground regarding the production of high-tech agricultural products. The cooperation model of farmers - enterprises - scientists and the State is still a fantasy. More specifically, Vietnam’s agriculture has not been able to identify a cooperative model with parties in charge of inputs, production, processing and distribution, on the basis of sharing profits fairly.

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