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WB: Agriculture at a turning point

Released at: 16:40, 27/09/2016

WB: Agriculture at a turning point

Photo: Duc Anh

World Bank's Vietnam Development Report 2016 shines spotlight on Vietnam's agriculture sector and offers recommendations for future prosperity.

by Tue Lam

Vietnam’s agriculture sector and overall food system are at a turning point, according to the Vietnam Development Report 2016, “Transforming Vietnamese Agriculture: Gaining More from Less”, released by the World Bank on September 27.

While having a strong track record and ample opportunities for future growth, both at home and abroad, the sector faces major demographic, economic, and environmental challenges.

To remain competitive in the international market, the report says that Vietnam needs to improve supply, quality, and food safety with added value. It outlines an agenda of short- and long-term strengthening of public and market institutions that will be needed to achieve the ambitious goals for Vietnam’s agriculture and overall food system.

“The country’s agricultural output is exacting a price on the environment,” said Mr. Ousmane Dione, World Bank Country Director for Vietnam. “Business as usual is no longer an option for the sector, growth has slowed down, it is vulnerable to climate hazards, and it leaves a large environmental footprint.”

He also affirmed that change will help overcome these challenges, ensure the future of agricultural growth, and better meet the expectations and aspirations of the people of Vietnam.

“GDP in Vietnam’s agriculture sector and productivity growth are slowing down. In some aspects, agriculture development has affected the environment, such as deforestation, loss of biodiversity, land degradation, water pollution, and greenhouse gas emissions. In most localities, agricultural growth is based on increased cultivation areas and using more fertilizers and natural resources. Therefore, input costs become higher and make environmental costs increase.”

Mr. Steven Jaffee, Lead Rural Development Specialist, Agriculture Global Practice at the World Bank Group

The report notes that Vietnam’s agricultural sector has made enormous progress. The country has emerged as one of the world’s leading exporters of agro-food commodities and is among the Top 5 in seafood, rice, coffee, tea, cashew nuts, black pepper, rubber, and cassava.

Vietnam’s agro-food exports have grown six-fold since the early 2000s, with the ratio of these to agricultural GDP tracking the same pattern as in the economy overall, going from about 50 per cent in 2000 to 75 per cent in recent years. Still, until the last two years agrofood export growth was outpacing import growth.

However, the sector is experiencing low quality growth, as shown by low profits for smallholder farmers, considerable under-employment among agricultural workers, unreliable product quality and food safety, and limited technological or institutional innovation. Agricultural growth has mostly involved an increase in cropping areas or more intense use of inputs (such as fertilizers) and natural resources (such as water).

The report offers various policy recommendations to address the challenges. The government could deploy an effective combination of improved regulations, better incentives and streamlined services to stimulate and monitor a greener agriculture sector and a more effective food safety and consumer protection system.

It could help with policy instruments to better manage agriculture-related risks as well as create and maintain a favorable enabling environment for agribusiness.

In a more flexible, market-driven, and knowledge-based agriculture system, reducing direct State involvement would make the modernization of Vietnam’s agro-food system smoother.

The Vietnamese Government has played a major and, in some areas, a leading role in the past development of agriculture, according to the report. Some of its past functions, including those as land use planner, manager of farms, commodity trader, and technology provider will be less important or even detrimental in the movement towards a more flexible, market driven and knowledge-based agriculture sector. The government could undertake less direct investment in agriculture if it is effective at facilitating private investment, including through public-private partnerships. That should free up resources to achieve excellence in the application of important regulatory services.

Overall, according to the report, the modernization of Vietnam’s agro-food system will occur more smoothly if the government’s approach involves leading less and facilitating more.

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