Out of slumber

Vietnam’s agriculture sector continues to undergo a restructuring process that is clearly bearing fruit.

Out of slumber

Figures from the General Statistics Office (GSO) reveal that GDP in the agriculture, forestry and fisheries sector saw significant growth in 2018, of 3.6 per cent; exceeding the target set in Resolution No. 01/NQ-CP from the government of 2.8 to 3.0 per cent and higher than the average increase over the last decade. The result reflects the major efforts of the sector as a whole in agricultural restructuring, the close attention paid by the Party, the government, and the National Assembly, and the full participation of localities and enterprises, cooperatives, and farmers.

After five years of implementing the Agricultural Restructuring Scheme, aimed at improving added value and sustainable development, the sector’s structure has shifted towards promoting its advantages in line with market demand and responding to climate change. The consumption market for agriculture, forestry and fisheries has been expanded, increasing the proportion of high-quality products and advantages. Vietnam’s agriculture, forestry and fishery products are now exported to more than 180 countries and territories, with five-year export turnover standing at $157.49 billion, up 51.2 per cent compared to the previous five-year period.

Export turnover reached about $40 billion in 2018. Ten commodity groups recorded export turnover of over $1 billion and five over $3 billion, including wood and wooden products, shrimp, vegetables, coffee, and cashew nuts. Such figures prove that the focus on restructuring the sector and the efforts of stakeholders remain on the right track.

2018 was a milestone year, with many reviews and studies conducted relating to the agriculture sector, such as: Summarizing ten years of implementing Resolution No. 26 of the 10th Party Central Committee on “agriculture, farmers and rural areas”; Preliminarily summing up seven years of implementing the national target program on new rural construction; and Preliminarily summing up five years of implementing the Agriculture Restructuring Scheme.

The most impressive result in the past decade has been the increase of rural people’s incomes, which averaged some VND32 million (over $1,300) per person in 2017; a 3.5-fold increase compared to 2008 and exceeding the target. The result also expressed the interest shown in the comprehensive development of the rural economy to improve livelihoods. Farmers can live on the land or switch to non-agricultural jobs and earn even higher incomes.

 

FDI projects in agriculture and rural areas over recent years have contributed substantially to higher overall investment capital in the economy and in the agriculture sector. The total number of FDI projects in effect as at the end of 2018 in agriculture was 491 with total capital of $3.45 billion. Projects in the sector are quite diverse and found in all areas of agriculture, forestry and fisheries production and processing, and have brought a host of advanced equipment and technology and plant varieties with high productivity and quality that meet international standards.

Despite the positives, the number of FDI projects in agriculture is still not commensurate with potential and the competitive advantages from natural conditions, land, workforce, product diversity, and major purchasing power. In implementing the policy on restructuring the sector, the government and the Ministry of Agriculture and Rural Development (MARD) are expected to promote the development of green and clean agriculture to meet demand in domestic consumption and exports. Senior leaders in the Party and the National Assembly as well as the Prime Minister have given the sector a great deal of attention and directed it to restructure towards increasing added value and sustainable development, with many resolutions, laws, and other legal documents introduced to facilitate and attract social investment capital and FDI capital.

Vietnam, including its agriculture sector, is now deeply integrated into the global economy, with many new-generation free trade agreements (FTAs) signed, in particular the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was ratified by seven member states and become effective on December 30. Japan is Vietnam’s largest strategic partner in many fields, ranking first in 2018 with total FDI of $8.5 billion, accounting for 24.2 per cent of the total. The De Heus affiliate chain is one of the country’s major projects, including the Bel Ga JSC as seed supplier, the De Heus Group as feed supplier; the Hung Nhon Group representing standard chicken farms; and Koyu & Unitek in purchasing, slaughtering and exporting in a closed production line, exporting clean chicken meat meeting strict quality standards and the first Vietnamese chicken to be exported to Japan.

The above-mentioned factors have contributed to attracting many foreign investors, including from Japan, in particular high-tech projects with value chains in agriculture, forestry and fisheries products, to increase competitiveness, added value, and food safety.

Maintaining growth

Minister of Agriculture and Rural Development Nguyen Xuan Cuong shares his thoughts on Vietnam’s agriculture sector with VET.

■ What are the effects of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Vietnam’s agriculture sector

The CPTPP will reduce import duties in the eleven member countries, which have a total GDP of more than $10 trillion, accounting for 13. 5 per cent of global GDP and 15.2 per cent of global trade. With nearly 500 million people in its member countries, the CPTPP is one of the largest trade agreements in the world.

For the agricultural sector, the CPTPP will bring both opportunities and challenges. Vietnam possesses comparative advantages in agriculture. If advantage can be taken of opportunities to expand markets, Vietnam’s agriculture sector will continue to maintain a trade surplus especially in advantageous goods such as seafood, wood and wooden products, and vegetables. This would promote the contribution of the agricultural sector to social growth and stability in Vietnam.

Some member countries, however, may reduce tariffs but introduce or raise non-tariff barriers to protect domestic production. If Vietnam does not address such matters, it may be very difficult to penetrate into high-value and large-scale CPTPP markets.

■ What are the prospects for Vietnam’s agriculture sector this year? Will it maintain the impressive growth recorded in 2018?

Following the 2018 results, the agriculture sector will have the opportunity in 2019 to maintain its growth but will also face a range of difficulties and challenges.

The most pressing risk currently is African hog cholera. The Prime Minister has directed all ministries and local branches to focus on preventing and combating the epidemic. MARD has has also issued documents and organized a conference on preventing and controlling the epidemic.

Most scientists predict that meteorological patterns will move towards El Nino this year. The ministry has therefore directed localities to actively monitor the weather in order to coordinate production. We must be conscious not only of matching the results in 2018 but also adopting a group of solutions to reinforce the achievements and provide momentum in 2019.

According to forecasts from the World Bank, Vietnam’s economy could grow 6.6 per cent in 2019 and 6.5 per cent in 2020, while growth in emerging and developing economies is expected to be 4.7 per cent this year. The UN Food and Agriculture Organization (FAO) forecasts that global food prices will continue to increase in 2019 due to strong demand.

Vietnam has signed FTAs with many countries and economies, including the CPTPP and the EU-Vietnam Free Trade Agreement (EVFTA), and joined the ASEAN Economic Community, so the markets for agriculture, forestry and fishery products are expanding. However, the sector also faces difficulties in competitiveness and technical barriers in importing countries.

The main objectives for the sector in 2019 is to record growth of 2.9-3.1 per cent, with export turnover reaching about $42-$43 billion, have some 48-50 per cent of communes reaching new rural standards, have 70 district-level units reaching standards and completing the task of building new rural areas (finishing a year earlier than the Resolution from the National Assembly and the government), and forest coverage standing at 41.85 per cent.

■ What mechanisms and policies will be introduced this year to attract private enterprises into agricultural development and restructuring the sector towards increasing added value and processing?

The compiling of legal documents in the field of agriculture and rural areas has never received the level of focus seen recently. Over the past to years, five laws relating to agriculture have been developed and submitted to the National Assembly for approval, including the Law on Irrigation, the Forestry Law, the Fisheries Law, the Law on Livestock, and the Law on Cultivation, together with dozens of decrees and documents guiding these laws.

VN Economic Times

 
 
 
 
 
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