Vietnam’s agriculture needs second period of reform

Developments in the agricultural sector have recently been a big concern of both society and the authorities. Do you think that agriculture will be able to retain its role as the pillar of the economy as it did for the past 30 years?

Dr. Dang Kim Son: Agriculture successfully reformed and gained important achievements in the past 30 years, and it will continue to promote the country’s development in the new period.

Agriculture is the solid foundation for economic growth. If agriculture is weak and broken, the whole economy will collapse and the society will shaky. Therefore, we must not let it happen.

Ultimately, agriculture and people are Vietnam’s advantages in the process of international integration and global competition. We cannot ignore our advantages. That is the mission and the role of agriculture in the new era of the country.

But how to maintain and develop agriculture? We have to aim at the picky markets that require agricultural products of high-quality and high price. This is the future of Vietnam’s agriculture in the new age.

Dr. Dang Kim Son

Currently, the world economy is recovering and growing. In the future, humankind will have two things that increase strongly: population and income. In Vietnam, millions of people enter the middle class annually. The figure is tens of millions of people in China and hundreds of millions of people in Asia-Pacific.

Worldwide, the urban population has exceeded 50%. The global trend is the reduction of rural population and the rise of urban population. Thus, the market is becoming a market of urban dwellers and wealthier people.

They do not eat much rice and corn but meat and fish, particularly poultry, beef, milk and saltwater fish. For utensils, they will use less iron, more plastic, leather, paper, furniture... That means the demand for agricultural products will focus more on hi-end products.

Thus, the structure of agriculture must be totally different in terms of types and quality, with higher added value. This is obviously a different agriculture from the current one and it is a big challenge for Vietnam to make that change.

With the extremely important mission, Vietnam’s agricultural sector is facing enormous challenges to make complete transformation in the nature, structure, product strategy and market. It is like the 2nd reform of agriculture. So what is the next step?

Dr. Dang Kim Son: To reach the target, we must successfully implement the process of "Restructuring of agriculture," with three major contents as follow:

The first is opening new foreign markets for our agricultural products. This is a very difficult task that needs the effort of not only the agricultural sector but also the trade, transport, and foreign affair agencies.

The second is making significant changes within the agricultural sector. The new markets need new products. To do so, we have to make breakthrough in science and technology. The inputs of the current agriculture are land, water, labor, materials ..., which have reached the limit already. The materials must be less, not as high as the current level. Science and technology is different from the traditional inputs because it is unlimited.

The entire system of services, infrastructure, investment ... must rely on science and technology. These are things that are not available in VN, and should be a huge breakthrough.

To do the above things, it is important to change the policy and organization of production and this is the third task. We must change the way of working between people, reorganize farms, link farms together into cooperatives, connect associations of enterprises with cooperatives of farmers into the same value chain. Of course the state management must be changed in the new model. The construction of a new business model and new rules can be called "Institutional innovation".

Dr. Vu Trong Khai: In my opinion, "agricultural restructuring" is not enough to make powerful change in requirements. This process needs to create new elements, combining them together in a new body, operating it under a management mechanism suitable with its structure.

The quality of the new body after reconstruction is shown by the criteria that reflect its objectives. That is the criteria of enhancing the quality of life of people physically and mentally, ensuring social justice, and protecting the natural environment and humanities.

Thus, we have to rebuild agriculture and not just "restructure" it.

Rebuilding agriculture must start from the development strategy and planning, in which we have to rebuild the product strategy on a national, regional, and sub-regional scope based on forecast of domestic and international markets, and based on the competitive advantages of the country of of each region.

On that basis, we will rebuild development planning of infrastructure, from irrigation to transportation, ports, warehouses, and logistic facilities, in the whole country and each region.

At the same time, we have to design the strategy on science and technology development and human resource training to implement the product development strategy and rural infrastructure construction under regional planning.

On the other hand, we must develop institutional agriculture, meaning the application of the management model based on the value chain of agricultural commodities; and reorganization of agricultural production based on contracts in each region and sub-region, in which businesses take the leading role.

So, the role of the farmer will be very different from the first renovation or reform. In the first innovation, farmer households were autonomous, independent units but in the second renovation, they will be part of the value chain?

Dr. Vu Trong Khai

Dr. Vu Trong Khai: Even the best farmers cannot exist in the globally competitive market economy without participating in the value chain.

Legally, farmer households are autonomous units, who have the right to produce the products they want, decide the prices and who to sell to. Economically, farmers, farmer households and farms must be the processing units for businesses and the elements in networks of enterprises.

Under the law of development, the new appears to replace the old but it always has to cope with resistance and obstruction. It was the same for Doi Moi (Renovation) that began 30 years ago. For agriculture, renovation started from thinking. What difficulties will there be for the "Second Renovation”?

Dang Kim Son: Like the first renovation, the starting point of the second renovation will also be the thought. 

The first renovation took place in the context of the whole people who saw the truth that cooperatives must be broken to give land and production materials back to farmers. In the political system many people understood that, but many did not. They were afraid that the switch from collective to individual production would break the fundamentals of socialism. Finally this was done after decades.

This time there are controversial issues such as how to perform public ownership of land and the economic role of the state in corporate governance... The old thinking has delayed the process of equitization and the renovation of state farms.

But overall, the sympathy for this renovation is wider, and importantly, not only the people but leaders and society all realize the problems and the need to change.

But the difficulty now comes from economic conflict of different groups in society in the market economy. 

Thank you very much, Dr. Vu Trong Khai and Dr. Dang Kim Son, for joining our talks!