In the heyday of Vietnamese feudal dynasties such as the Le and Nguyen, agricultural promotion policies were valued (see Chapter Three), which elevated land reclamation, agricultural growth and trade expansion.
In the Mekong Delta, a number of busy commercial centers were formed by the end of the 18th century (see Chapter Two). A commodity economy was highly developed in many regions in the delta due to the increase of abundant agricultural products, especially rice production, enlargement of merchants, and transportation development. In the convergence of the above conditions, My Tho, well known as the Great City (Dai pho) in Tien Giang Province, provided an excellent example of a commercial center formation:
The economy of My Tho was prominently characterised by an agricultural economy. With natural and social favourable conditions, the commodity economy was developed very early in the combination of both domestic and international trade. Commodities from My Tho were shipped throughout the Southern Vietnam’s market, to the capital of Phu Xuan, Cao Mien (former Cambodia) and even China, Japan, and Europe. The activeness of the My Tho’s commodity economy significantly contributed to the vigorous shift of the Dang Trong’s (present-time South Vietnam) economy from self-sufficient to market oriented, and integration into the zealous East- West trade currency of the 16th and 17th centuries. The development of the commodity economy in My Tho provided local people with improved living standards and supportive access to national and international technologies and civilisations. This East-West economic and cultural interaction is the foundation for the development of My Tho and the Mekong Delta in the following centuries (Tran Thuan 2010, author’s selective extract and translation).
Under the French colonialism (1861-1954) and American war (1965-1975) periods, agricultural and rural development was penetratingly influenced by profit-driven exploitation and economic dependency policies of the rulers. Through the so called civilising mission, whatever economic growth and transformation were made in Vietnam and its Mekong Delta, during colonial rule, only benefited the French colonists and their supporters (Burlette 2007; Nguyen Van Khanh and Nguyen Lan Dung 2006; Pham Cao Duong 1985). The huge and increasing American economic assistance, frequently under strict control and conditions, for Southern Vietnam with a boom during the period 1965-1975, was a feature of neo-colonialism (Pham Thi Hong Ha 2012). What is considered “positive” of economic change under the Vietnam Democratic Republic regime is that a relatively dynamic market economy was formed (Pham Thi Hong Ha 2012).
After national reunification in 1975, agricultural and economic production policy of the North was adopted by the South and the Mekong Delta region, through two main instruments of the New Economic Zones (NEZs) and State farms (Le Meur and Leurent 2006). While NEZs had successfully reallocated
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nearly 1.4 million households in 1961-1987 within and inter provinces (Trinh Huy Quach and Hoang Thi Tay Ninh 2004), efforts of collectivisation were not always welcomed, even resisted by farmers in the Mekong Delta provinces57 (Pingali and Vo-Tong Xuan 1992). It is through locally broken “fences”
towards agricultural collectivisation and centrally planned economic policies in the delta that contributes to the country’s history of transition to economic reforms and development renovation since the late 1980s.
Kerkvliet (2005) precisely describes counterproductive contracting with collective cooperatives:
After a few years of the product contract arrangement, many villagers in the [Mekong] delta were frustrated. They had their own fields, which they had long sought, but they did not really have them.
They wanted to farm those fields as their own, but they could not really do so. They and their fields were in an organization that they should have run but did not, an organization that was meant to help them farm but usually did not or could not. That organization, the collective cooperative, was not only often useless but cost them a significant proportion of what they produced. To some extent this quandary was their own making. Few did their collective work well, thereby contributing to the organization’s problems and thwarting leaders who tried to make the product contract arrangement effective. But, people wondered, how could they work diligently when they could not rely on everyone else – including their own leaders – to do the same, when they received but a small fraction of the increases they produced, and when the cooperative and state agencies took sizable amounts but gave them little in return? (Kerkvliet 2005, 208; italics in original)
After doi moi (renovation) was announced in 1986, Resolution 10 and 2003 Land Law promoted agricultural restructuring and diversification by permitting land transactions and granting households long- term land use rights and greater production freedom (Nguyen Thanh Binh 2008; Ravallion and van de Walle 2001). Further, the last two decades, with Vietnam’s expansion of international economic relations (see Sepehri and Akram-Lodhi 2005) and privatisation policies (Pingali and Vo Tong Xuan 1992; Truong Dang Loc, Lanjouw, and Lensink 2006) (see Table 5.1), there has been a boom of private sector in both enterprise and capital registration (Phan Dinh Khoi, Truong Dong Loc, and Vo Thanh Danh 2008). Over the past 20 years, the agro-economic development in the Mekong Delta has made a huge contribution to poverty reduction and improved local living standards (Benedikter et al. 2013).
Table 5.1: Critical momentum of agribusiness development in Vietnam
Year Critical events Main descriptions/impacts
1981 Directive 100CT/TW (“Contract
100”) Farmers had more rights to decide what to produce and
where to sell their products
1981-1987 Decollectivisation Transitional period from high centralisation and collectivisation to decollectivisation
1986 Doi moi (Renovation) launched by
the Sixth Party Congress Transformation from central planning to a market oriented economy with state management 1987 Enactment of Foreign Investment
Law Allowing 100 percent foreign ownership, tax holidays,
and other incentives for foreign investment 1988 Resolution 10 Farm household as the main unit of agricultural
production
1992 Equitisation process (co phan hoa) - Started in 1992 as part of State-owned Enterprise
57 Even in 1986, less than 6% of farmers from the Mekong Delta belonged to an agricultural cooperative (Pingali and Vo-Tong Xuan 1992, 107).
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Reform Programme - 1992-1996: Pilot stage -1996-present: Expansion stage
1993 Enactment of Land Law Land use rights can be transferred, leased, inherited and mortgaged agricultural restructuring and
diversification
1997 Enactment of Cooperatives Law Promotion of ‘new-style’ cooperatives based on voluntary membership, competitive factor markets, and no government financial support
1995 - 2000 Open to international trade 1995: Vietnam-US relation normalisation
1995: Member of the Association of Southeast Asian Nations (ASEAN)
1998: Member of the Asia-Pacific Economic Cooperation (APEC)
2007: Member of the World Trade Organisation (WTO)
Source: Input from Cuyvers and Tran Van Binh (2008); Marks (2010); Nguyen Thanh Binh (2008, 3); Truong Dong Loc, Lajouw, and Lensink (2006)
The development of agricultural enterprises in the delta has far outnumbered other regions in the country in terms of quantity and size (see Figure 5.1a). Yet (even micro,) small and medium enterprises (SMEs) are still prominent (see Figure 5.1b; Benedikter et al. 2013). Currently, the industrial sector which generates around 30% of the delta’s GDP, includes important agriculture related industries such as the processing of food (e.g. rice, fruit or aquaculture), the production of agricultural and aquaculture inputs (e.g. fertilisers, pesticides, animal feed, seeds, or fingerlings) and machinery (Garschagen et al. 2012, 110).
Figure 5.1: (a, left) Number of agricultural enterprises and cooperatives by regions in 2006 and 2011, (b, right) Percentage of agricultural enterprises by labour numbers by regions in 2011
Source: Data from GSO 2012
285
151 271 192 168
1069 3445
699
2277
138 111
567 359
215 368 321 324
949 3141
504
1994
83 45
535
0 500 1000 1500 2000 2500 3000 3500 4000
R ed R iver Delta Northern Midland and Mountain
Areas
Northern C entral and C entral
C oas tal
C entral Highlands S outh E as t Melong Delta
No of enterpris es in 2006 No of cooperatives in 2006 No of cooperatives in 2011 No of cooperatives in 2011
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Whole country Red River Delta Northern Midland and Mountain Areas
Northern Central and Central
Coastal Central Highlands
S outh E ast Melong Delta
1-3 labourers 4-9 labourers 10-50 labourers 51-100 labourers 101 and over labourers
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The most challenge for each enterprise and the sector’s sustainability within the intensive economic internationalisation (see Section 2.3) is internal transformation integrated with smallholder farmer developments. Sector’s internal transformation should aim to expand diversified global markets.
The majority of Vietnamese enterprises lack global market information and WTO strategised business planning. Our survey of small and medium enterprises in the Mekong Delta has shown that more than 50% of enterprise directors did not attend a business administration course. Many of them do not even have a high school graduation certificate. Their IT and English communication is extremely poor. The enterprise liquidation rate is quite high, over 10%/year. (Vo Thanh Thu and Cao Thi Viet Huong 2008)
It is evident from our field research that rural smallholder farmers are the main consumer of agricultural input sector and the main input supplier for food related processing industry, even large scale agri or aqua- cultural companies have developed their own specialised areas. What should be noted is that among 2.3 million households, including more than 6200 farms involved in agricultural production in the Mekong Delta, over 70% of them have less than 2 hectares of land and more than 98% have no formal training (GSO 2012). This insufficiency of qualified and trained work force largely hampers the progress of productivity, international trade and sustainable development of the region. If business development policies and plans focus only on “keeping the big, ignoring the small”, increasing inequality within the sector and in the societal level will become irredeemable. Hoang Ba Thinh (2008) suggests promotion of social responsibilities of business in protecting the local environment, employing local workers and contributing to the local social security fund. While this suggestion is important, engaging smallholder farmers into inclusive markets throughout value chain development is the core of sustainable commercialised livelihoods transformation in the Mekong Delta.