VN needs agricultural reform: WB

Wednesday, Sep 28, 2016 09:35

Strawberry harvesting in Da Lat City in the Central Highlands province of Lam Dong. Viet Nam's agriculture has achieved remarkable growth in recent years, according to a World Bank report. — VNA/VNS Photo Phuong Hoa
HA NOI (Biz Hub) — Viet Nam's agriculture has achieved remarkable growth in recent years but needs reforms and policy shifts to overcome major economic and environmental challenges, according to a World Bank report made public yesterday.

The Viet Nam Development Report 2016, titled "Transforming Vietnamese Agriculture: Gaining more from less", finds that over the past quarter century, Viet Nam's agricultural sector has made enormous progress.

As a country once suffering from hunger, Viet Nam's per capita food availability now ranks among the top tier of middle-income country.

"Viet Nam has over achieved its food security objectives," said Steven Jaffee, Lead Rural Development Specialist at the World Bank and co-author of the report, at the event to present the findings.

The country's average rice yields trail only behind those of China among Asia's emerging economies, according to the report.

The country also ranks among the top five global exporters of products like shrimp, coffee, cashew, rice and pepper.

Between 2000 and 2012, Viet Nam's agricultural value-added grew at a yearly average rate of 3.7 per cent, higher than anywhere in Asia except for China, Mongolia and Cambodia.

However, according to the report, performance in terms of efficiency, farmer welfare and product quality has been much less impressive.

The sector is experiencing a low quality of 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. Viet Nam also lags behind regional peers in terms of agricultural land, labour, and water productivity.

Most of the country's agricultural trade is in the form of raw commodities, sold at lower prices than those of leading competitors, due to quality or other differences, the report says.

Although Viet Nam has emerged as a powerhouse in terms of commodity trade, "much of that trade is in sort of lower quality segment of the market," Jaffee said.

He said the label-value of Vietnamese agricultural exports was low, adding that most consumers outside Viet Nam did not know they were consuming Viet Nam's products.

"You can see Vietnamese restaurants everywhere but most people don't know they are drinking Vietnamese coffee, eating Vietnamese shrimp. That invisibility means that a lot of money from your export is really earned abroad by those doing repackaging, branding under their own names," he said.

Besides, the report finds that over-intensive use of inputs such as land and other natural resources, fertiliser and pesticides in production have resulted in an increasing environmental cost.

The environmental consequences of Viet Nam's agricultural success have ranged from deforestation and fishery resource depletion, to a growing incidence of land degradation and water pollution, it says.

"The country's agricultural output is exacting a price on the environment," said World Bank Country Director for Viet Nam, Ousmane Dione. "‘Business as usual' is no longer an option for the sector - growth has slowed, it is vulnerable to climate hazards and leaves a large environmental footprint."

The report suggests it is time the country's agricultural sector to "generate more from less", which means generating economic value, as well as farmer and consumer welfare, using less natural and human capital. The sector will also need to increasingly compete on the basis of reliable supply, predictable quality and assured food safety.

The report suggests that Government needs to play an important role in facilitating a more active agricultural land market, the development of a market for mechanisation services and the revitalisation of the agricultural innovation system.

The Government will need to deploy an effective combination of regulations, incentives and facilitative services to stimulate and monitor a greener agriculture and a system for food safety and consumer protection.

The Government should also improve educational and vocational training services for farmers in order to accelerate the adoption of improved farm and post-harvest technologies, the report says.

Speaking at the event, Luong Van Tu, Chairman of the Viet Nam Coffee and Cocoa Association, suggested that attention should also be paid to increasing multi-functional value of the agricultural section, such as values relating to environment, landscape, and tourism.

"Many coffee farms are earning money from providing tours to the farm, besides earning from production," he said.

He also urged the Government to create a more favourable capital market for agricultural enterprises to invest in agro-product processing and support enterprises in seeking foreign markets for processed products, which are often highly protected and hard to access. — VNS

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