Lecture 9 Rural Development in Vietnam from macro-policies to practices

CONCLUSION POLICY POLICY POLICY POLICY POLICY POLICY POLICY POLICY POLICY POLICY IMPROVE COMPETITIVENESS OF VIETNAMESE AGRICULTURAL COMMODITIES IMPROVE FARM INCOME COMPRE- HENSIVE [r]

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AGRICULTURAL AND RURAL

DEVELOPMENT IN VIETNAM:

FROM MACRO POLICIES TO

PRACTICES

Lecture 9 Rural Development

Tran Tien Khai

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AGRICULTURE – RURAL

-FARMERS

Improvement of farm livelihood

in the context of globalization

and economic integration

Dr Trần Tiến Khai Faculty of Development Economics, UEH2

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1 Introduction

2 Characteristics of Vietnamese agriculture,

rural and farmer

3 Issues as joining to WTO

4 Questions for agricultural & rural

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1 Introduction

• Vietnam has become official member of the

World Trade Organization (WTO)

• Agriculture as an important economic sector

to the national economy

• Challenges to Vietnam in the context of

globalization and economic integration: how

to stabilize and improve farmers income and livelihood

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1 Introduction

Purpose:

Providing a comprehensive view

to the status and potential solutions for

agricultural and rural development

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2 Characteristics of three rurals (Agriculture, Rural and Farmer) in Vietnam

1 Some main characteristics of Vietnamese

agriculture

• The nature of economy is agricultural-based

economy (20% GDP, 70% population)

• Ensure food self-sufficiency and

competitiveness of some main agricultural commodities

• Slow and reducing growth rate

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• Serve for 70% of national

population; 72% of labor force

Service Agriculture, forestry, fishery Industry, construction

Role of agriculture in economy

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The Red River Delta Region

The South Central Coastal Region

The Central

Highland Re gion

The Northeast South Region

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Four important agro-ecological zones

1 Red River Delta: rice,

vegetables, maize, beans,

potato, litchi, longan, pigs,

fowls

3 Central Highland: coffee, rubber,

black pepper, tea

4 Northeast South: rubber, coffee,black pepper, cashew nut, maize, beans,cassava, banana, sugar cane, pig, cattle,poultry

2 Mekong River Delta:rice, beans, mango,orange, pomelo, durian,mangosteen, longan,rambutan, dragon fruit,water melon, pineapple, pigs, fowls, fresh water fishes

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Annual growth rates (GDP) by economic sectors (%)

Source: GSO, 2010

96 98 100 102 104 106 108 110 112

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

GDP Agriculture Construction-Industry Services

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Land resource has been fully exploited, agri growth by

expanding of production scale and reaches to frontier

Disparity in economic and agro-transformation among

economic regions and ecosystems

Low competitiveness of agro-commodities due to developed production technologies

low-Main characteristics of agriculture

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Land use status

I.1 Cropping land 8.977.500 42,87 9.415.568 37,93 438.068

A Annual crop areas 6.167.093 68,69 6.370.029 67,65 202.936

Of which: Rice land 4.467.770 72,45 4.165.277 65,39 -302.493

B Perennial crop areas 2.810.407 31,31 3.045.539 32,35 235.132

I.2

Forest land 11.575.027 55,28 14.677.409 59,13 3.102.382

A Cultured forest land 4.733.684 40,9 5.434.856 37,03 701.172

B Protection forest land 5.398.181 46,64 7.173.689 48,88 1.775.508

C Special use forest land 1.443.162 12,47 2.068.864 14,1 625.702

I.3 Aquacultural land 367.846 1,76 700.061 2,82 332.215

I.4 Salt production land 18.904 0,09 14.075 0,06 -4.829

I.5 Other agricultural land 402 0 15.447 0,06 15.045

Source: Đặng Hùng Võ, 200712

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Household income structure by regions (%)

Agriculture

in general

Industries Commerce

and services

Mekong River Delta 79,2 5,0 13,7 2,0

Source: GSO, VLSS 2004, cited in V.T.Binh, 200713

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Household income structure by regions (%)

By source of income during the previous 12 months

Agriculture

Of which

Industry – Construction Service Others Cultivation Forestry Fishrery

Whole country 67,83 62,94 0,30 4,59 11,29 15,20 5,68 Red River Delta 52,79 50,87 0,03 1,89 19,43 17,42 10,36 Northeastern 80,85 79,20 0,61 1,03 4,90 10,71 3,54 Northwestern 90,52 89,73 0,62 0,17 1,22 7,13 1,13 North of Central 72,02 67,51 0,67 3,84 6,90 12,51 8,57 South of Central 66,27 58,09 0,39 7,80 11,91 16,03 5,79 Entral Highland 88,68 88,46 0,15 0,07 2,11 8,05 1,16 Northeast South 54,25 51,08 0,22 2,95 19,45 23,23 3,07 Mekong River Delta 72,94 61,39 0,20 11,35 8,46 16,00 2,60

Source: GSO, 2006 survey14

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Main characteristics of agriculture

• High competitiveness: rice, coffee, rubber, cashew

nut, pepper, aqua-cultural and sea-food products and wooden products

• Low competitiveness: meat, vegetables and

fruits, and maize

• Non competitive: milk and milky products, cotton, oil

seeds, sugarcane and sugar, etc

Low competitiveness of agro-commodities due to

low-developed production technologies

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Public investment in rural and agricultural

infrastructure is not adequate

Low-developed status of agri-business and market

information systems

High risk of economic integration: technical barrier, quality and safety of export goods; low-price imp

goods

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Epidemic diseases, natural calamities are not controlled; reducing growth rate & farm income

Agricultural environment degradation and exhaustion

due to misuse and over-exploitation

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Main characteristics of Vietnamese rural

Living infrastructure is worse, because of low investment, Technical facilities for agriculture activities are under-

developed Support services for agriculture are still not developed

Processing industries using agricultural-based raw materials are

developed in main productive regions only

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Agriculture is still main income source of rural inhabitant, lacks of

non-farm and non-agricultural activities as handicraft, food and agro-product

processing industries

Real income of rural inhabitants remains at low level in comparison to

urban areas

Agricultural transformation and urbanization: chance and risk

Non-agricultural activities are not well prepared

Main characteristics of Vietnamese rural

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Vietnamese farmers: Poor Why?

Land: too scarce, too

small for farmer

household to earn

living

Labor: relative surplus;

lack of jobs and

non-agricultural activities

Skills, education level: relative low, lack of education fundamentals; lack of scientific

knowledge, economic and farm management

Isolated, non-cooperated

Capital: lack and inefficient use;

difficult to access capital market

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The tendency of rural transformation in Vietnam

• Production specialization and accumulation of resource

• Structural agriculture transformation towards increasing

animal husbandry, aquaculture and high valued cultures as industrial crops, vegetables and fruits

• Increasing competition in use of production resources

(land, labor, capital) among agricultural sectors as

cultivation, husbandry, aquaculture and among

agriculture, industry and services

• Formation of contract farming in parallel to the

establishment of agri-business, especially in the Southern region

• Income disparity between household groups is increasing

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3 Issues of Vietnamese agriculture as

1 Cost price and production efficiency;

2 Application of international sanitary and phytosanitary (SPS)

measures and

3 Application of international technical standards to overcome

technical barriers to trade (TBT)

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Weaknesses:

1 Low competitiveness of many Vietnamese

agricultural commodities

2 Lack of applicable, effective and

international-recognized SPS; lack of GAPs and application

3 Lack of information and knowledge on international

trade and technical standards and regulations

4 Lack of effective technical standards and

regulations to protect domestic production from

unfair imports

3 Issues of Vietnamese agriculture as

joining to WTO

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4 Rural development: Resolution No 26-NQ/TW dated Aug 5 th 2008 of the

Politburo

• Measures:

1 Modernization of a comprehensive agricultural

economy and development of industry and service in rural areas

• Land use planning

• Re-structure agricultural economy towards processing and market

• Encourage import-substitute agri-commodities

• Apply advanced technology

• Build specialized areas for main crop and livestock commodities; ensuring food security

• Comprehensively develop of forestry, fishery and

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Politburo

• Measures:

2 Building rural economic and social infrastructure

inline with urban development

• Improve irrigation system (irrigation, water reservoir, dike, water drainage)

• Develop rural road system, waterways, ports

• Develop electricity system, telecommunication system, market centers and wholesale terminals

• Invest concentratively to research and laboratory systems, extension stations, healthcare systems at grass-root level

• Project and plan rural settlement areas linking with industrial service and urban development

• Phòng chống, giảm nhẹ thiên tai; environmental protection 25

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Politburo

• Measures:

3 Improving spiritual and physical living standards of

rural inhabitants

• Create employment and ensure job training for farmers;

foster labor export

• Narrow gaps between rural and urban

• Focus into poverty reduction policy

• Enhance healthcare practices and insurance, reduce birth rate, prioritize education & training for remote rural, improve community linkage

• Build social security system in rural

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Politburo

• Measures:

4 Renovate and establish effective production and

service organization in rural

• Encourage vertical linkage and new types of cooperatives

• Privatize land use in state-own agri- and forestry plantation

• Develop rural enterprises, esp processing ones

5 Push up research, transfer, and application of

sciences and technology to modernize agriculture and industrialized rural

• Increase public expenditure for agri-research; diversify and socialize participation of multi-stakeholders

• Conduct job training for farmers and rural young generation

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Politburo

• Measures:

6 Renovate administrative mechanism and policy to

make use of resources to develop quickly rural economy

• Lift up land holding limit; encourage land accumulation

• Ensure fair compensation for people in eminent domain process

• Provide more public capital investment in agriculture

• Encourage financial institutions to increase credit lines, and enterprises to invest to rural and in agriculture

• Ensure international harmonization of laws and regulations; protect domestic market; and fair pricing for agro-

commodities; increase national reserve capacity 28

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5 Potential solutions to strengthen

rural development

1 Solution packages to liberate and improve efficiency in use of production factors

Increasing land ceiling •Low degree of society’s unanimity

•Concerns about livelihood of poor farmers

and landless people

Upgrading technology • Limitation of farm budget to apply

• Difficulty in technology adjustment to meet

local conditions

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Raising dominant role of

formal credit

• Contradiction between business purpose of

banks and public welfare policy

• Contradiction between business purpose of

banks and public welfare policy

• Limited power of banks on collateral

liquidation, especially farmer’ land use right

• Land-valorized collateral is difficult applied

due to low-developed land market and stagnation of agricultural land productivity

Diversification of informal

credit

• Need to have appropriate support policies

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Shifting agricultural labor

to non-agricultural sector

• Lack of basis and chance to diversify

non-agricultural jobs in rural regions

Linking job training

program with poverty

alleviation and rural

development policy

• Need to identify, specify and streaming job

training activities into national and local programs of poverty alleviation and rural development

Attracting investment to

rural regions

Need to have appropriate support policies Rural regions are not attractive enough for external investment

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Re-training and improving

agricultural and

non-agricultural knowledge

and skills to farmers

• Difficult to change approach and realization

of agricultural extension program and policy

• Psychological and legal environment for

contract farming are imperfect

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Increasing public investment to

social and technical infrastructure in

rural region

National budget is limited

Expanding and developing SMEs,

processing industry, industrial park in

Support job training and introduction

for rural laborer

Lack of demand of trained agricultural jobs

non-2 Comprehensive rural development

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More policies for rural laborer and

Reviving traditional professions and

developing new economic activities

Increasing labor export Labor demand of labor-import

countriesQuality of Vietnamese laborer

2 Comprehensive rural development

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Industry is concentrated in urban regions

2 Comprehensive rural development

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3 Improve competitiveness of Vietnamese

Enhancing food quality Low-developed and applied situation of

appropriate technology Low-developed post-harvest technology Human and capital shortage, low application of appropriate manners in quality control

Monitoring and control of Gov Organizations are weak

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3 Improve competitiveness of Vietnamese

agricultural commodities

Applying and satisfying

international technical

standards and regulations

Low-developed and applied situation of appropriate technology

Low-developed post-harvest technology Lack of market information

Low-developed agri-business Enforcing training and

extension activities

Human resource shortage and unskilled Production-oriented activities, not market- oriented activities

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