"Going forward, Viet Nam needs to improve its policy environment, to enable investments that will allow the farm sector to continue to adapt to the opportunities created by rising demand and the challenges of climate change and limited resources," Ash said. — File Photo

HA NOI (Biz Hub) — Viet Nam has made remarkable agricultural progress, but further policy action is needed to address new and emerging challenges, the Organisation for Economic Co-operation and Development (OECD) said in a report released on Wednesday.

Economic reforms have generated impressive results in the Vietnamese agricultural sector, as farm production more than tripled over the 1990-2013 period, lifting rural incomes, reducing poverty, combating under-nourishment and sending agro-food exports soaring, the report said.

Viet Nam should now seek to build on these achievements while addressing long-term challenges posed by slower rates of production growth, declining commodity prices, limited land for further expansion and increasing evidence of negative environmental impacts from farming, the OECD said.

Production growth contributed to a decrease in the number of undernourished people from 46 per cent of the population from 1900-92 to just 13 per cent from 2012-14. That is one of the strongest improvements worldwide, the report said.

The report said Viet Nam radically boosted its place in global agro-food markets, becoming the world's largest exporter of cashews and black pepper, the second largest exporter of coffee and cassava, and the third largest exporter of rice and fisheries.

"Viet Nam's agricultural transformation over the past two decades has been nothing short of remarkable," OECD trade and agriculture director Ken Ash said at yesterday's seminar in Ha Noi on the OECD review of agricultural policies in Viet Nam.

"Going forward, Viet Nam needs to improve its policy environment, to enable investments that will allow the farm sector to continue to adapt to the opportunities created by rising demand and the challenges of climate change and limited resources," Ash said.

Rising labour costs will open opportunities to adopt new technologies and encourage larger farms, but they may also reduce the sector's overall competitiveness, particularly if newer labour-saving technologies are not readily accessible or adaptable to the dominant small-scale farming, he said.

The OECD Review highlighted the need to reduce constraints on private investment, including land fragmentation, which limits economies of scale, and various restrictions on land use rights, which raise costs.

Andrzej Kwiecinski, an agricultural policy analyst in the Agro-food Trade and Markets Division of the OECD's Trade and Agriculture Directorate, said limitation in financial access, fragmentary infrastructures, troublesome trade procedures and exhaustion of natural resources are enduring problems.

Large investors at times have difficulty accessing long-term financing, while small-scale producers continue to rely mostly on informal credit, he said.

Basic rural infrastructure has significantly improved over the past decade, but investment has not kept pace with economic growth, resulting in serious infrastructure bottlenecks, he noted.

He said the agricultural sector needs to have more policies to solve these challenges.

At the seminar, Tran Kim Long, director-general of the Agriculture and Rural Development Ministry's International Co-operation Department, said the report is the result of co-operation between the ministry and OECD in two years.

Long said the report will assist in implementing the agricultural restructuring plan and guide policy makers who are dealing with new challenges in the agricultural sector, as well as strengthen close co-operation with OECD in researching agricultural policies. — VNS