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Agriculture hindered by major obstacles

Released at: 09:11, 05/11/2015

Agriculture hindered by major obstacles

Conference hears of issues besetting agriculture sector in competing regionally and internationally.

by Minh Tuyet

Vietnam’s agriculture sector is facing historic challenges, Deputy Director of the Department of Cooperatives and Rural Development under the Ministry of Agriculture and Rural Development Le Duc Thinh told the Vietnam Annual Agriculture Policy Forum 2015 held in Hanoi on November 4.

The TPP and ASEAN Economic Community (AEC) will both bring fierce competition to the sector. Although 70 per cent of Vietnamese enterprises are involved in agriculture only some 30 per cent are able to seize the opportunities from free trade agreements.

The forum heard of three bottlenecks for agriculture competitiveness from Deputy Chief Representative of the Japan International Cooperation Agency (JICA), Mr. Kakioka Naoki. Contract agriculture was the first bottleneck. “Transparency in food transport and the efficiency of farming are still issues,” he said.

Independent economic researcher Ms. Pham Chi Lan said it’s not fair for enterprises as if they break contracts with farmers they are criticized heavily while farmers are held less responsible if they do so. Professor Vo Tong Xuan even joked that Vietnamese farmers are the freest in the world as they lack discipline.

Secondly, low value per land area is a problem for Vietnam’s agricultural competitiveness. Lam Dong province, Mr. Naoki said, which is one of the most successful provinces in agriculture, earns only VND517 million ($23,166) per hectare of vegetables whereas the figure in the Cameron Highlands in Malaysia is VND840 million ($37,640). On average, in 2013 Lam Dong earned VND101 million ($4,525) per hectare of agricultural land while in the Cameron Highlands it was VND941 million ($42,166).

Agricultural finance, meanwhile, is considered the biggest problem. “Low asset valuations due to low government agricultural land price ranges results in loan demand for investment being unmet,” Mr. Noaki said. Banks value the land of enterprises at about 50 per cent of the actual market value, limiting the amount they can borrow.

Moreover, interest rates for agriculture enterprises in Vietnam are still high, Chairman of the Dong Nai Provincial Livestock Association Mr. Nguyen Tri Cong said. “The rate in foreign countries is about 4 per cent but in Vietnam it is about 10 per cent,” he said.

Insufficient loans for the agriculture sector impede the introduction of high-technology, which is necessary for Vietnam to produce higher value-added products efficiently, Mr. Naoki stressed. “Insufficient loans, investment, and production output are bottlenecks for Vietnam in developing the food value chain.”

The forum also heard of solutions to address the difficulties, such as government planning for planting and breeding in each region and the provision of more incentives to agriculture enterprises.

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