VietNamNet Bridge - Industrialization of agriculture is the major solution to create competitive advantage for Vietnam's agricultural products in the international and domestic market.

Dr. Nguyen Ba Hung, an expert in genetics from the National France Agriculture Institute, returned to Vietnam in 2014 to set up Dalat Organik Joint Venture, to help farmers adopt organic technology in producing fruit and vegetables.

The head of Hoang Anh Gia Lai Group - Doan Nguyen Duc – has invested in hundreds of thousands of hectares of land to grow rubber, maize, sugar cane, and palm in Vietnam, Laos, Cambodia, and Myanmar.

Recently he collaborated with Vissan to breed Australia cows, which he said would reap super profits more than real estate in its heyday.

Another tycoon, Vietnam’s first USD billionaire Pham Nhat Vuong, Chair of Vingroup, decided to apply Israeli technology to produce organic vegetables at cheap prices for Vietnamese consumers, starting from Quang Ninh.

Tran Dinh Long, the richest man in the steel industry, chairman of Hoa Phat Group, established a company producing animal feed in Hung Yen, with a capacity of 300,000 ton/year.

He expected to market the first batch of products in mid 2015, to solve the paradox that Vietnam has to import more than $3 billion of animal feed.

Investment of tycoons in agriculture has created more confidence for policy makers, farmers and the market.

Dozens of construction, transportation, wood processing and export businesses have come to provinces with large forest area to hire land for large projects on farming and animal husbandry.

Preparation for integration

Vietnam is a country with great advantages over land, climate and for centuries it has been considered an agricultural country in the tropical region, where plants can be grown throughout the year. In particular, Vietnam has many varieties of crops. The country holds a big advantage and Vietnamese enterprises can fully take advantage of this to develop.

Vinasoy is a typical case. When the company was on the brink of bankruptcy in the early 2000s, as Vinamilk and Dutch Lady occupied almost the entire domestic market, Vinasoy’s CEO Ngo Van Tu decided to focus on increasing the value of agricultural products, particularly soybeans.

Thanks to the right direction, taking advantage of the agricultural sector, Vinasoy’s revenue rose 150 times from VND20 billion to VND3,100 billion over 12 years, considered a major success in finding potential of soybeans. This shows that Vietnamese enterprises can still find economic benefits and growth opportunities with a wide variety of agricultural products in Vietnam.

According to Professor Vo Tong Xuan, a famous agronomist, with such opportunities, the challenges of businesses are not small. In the context of Vietnam joining the WTO and APEC, and the ASEAN Economic Community (ACE) in 2015, the deadline for Vietnam’s participation in the fair game with businesses in the world is not far off. If its agricultural products have not achieved high economic efficiency, Vietnam will face an extremely difficult situation.

A typical example is Vietnam’s sugarcane productivity. The cost for planting a ton of sugarcane is only $16 in Brazil, $20 in Australia, $30 in Thailand, but up to $55 in Vietnam.

With such poor performance, Vietnam agricultural enterprises need financial strength to apply high technology in agriculture in order to increase efficiency.

Advantages and challenges

The problem in the coming stage of economic integration is that Vietnamese enterprises need to invest more in high-tech agriculture, increase productivity to enhance competitiveness. Otherwise, Vietnamese enterprises will lose on the home yard, where we have many advantages.

In the last 10 years, Vietnam’s agricultural products such as rice, coffee, cashew and pepper have gained a foothold in the world market.

Most Vietnamese people are hardworking and always want peace to build a better life. With a literacy rate of up to 98%, many farmers have basic education to have access to new technologies, new varieties and new equipment.

To improve the performance of agriculture, the sustainable path that Vietnam must go through is professionalizing and modernizing agriculture, forestry and fisheries production forces.

In 2007-2008, the government spent VND313 billion to train 710,000 rural workers, but without clear results. In the 80s, tens of thousands of young people were sent to work in Eastern Europe but when they returned they were not effective. The government now plans to spend over VND320 billion for vocational training for farmers in the next 12 years.

Paradoxically, the agricultural engineers trained in universities are insufficient in knowledge and skills to carry out basic research. On the other hand, due to problems of training, they are very weak in the role of technicians using modern agricultural techniques. Agricultural engineers usually work for institutes, departments of agriculture or marketing companies selling seeds, fertilizers, and pesticides ... not involved in agricultural business and production. To meet the strategy on modernization of agriculture, agricultural engineers need to be retrained.

Some well-known professors of agriculture in the world visiting Vietnam for research or technology transfer said that Vietnamese farmers are smart and more eager to learn than farmers in other developing countries.

But now the cost of labor in the agricultural sector is no longer low to make an advantage, so Vietnam must rely on science and technology to reduce production costs.

Therefore, the industrialization of agriculture is the major solution to create competitive advantage for Vietnam's agricultural products in the international and domestic market.

Related to this issue is land accumulation for large-scale production - a strategy that agricultural policymakers have to face today.

Another advantage is the infrastructure in rural areas in the past two decades has significantly improved.

In a seminar on rural agriculture development recently, some investors said that political sustainability is an advantage and it would be better to reduce corruption and troubles for investors.

Although there are many critics of government policies on rural agriculture, business people admit that the government is promoting agricultural development despite the fact that investment is beyond its potential.

According to reliable data, the current agricultural investment is around 3% of GDP, but even that investment is not clear. The participation of many giants in fields in agriculture gives hope for the improvement of investment in this sector.

Vietnam is in the final stages of negotiations with partner countries participating in the Trans-Pacific Trade Partnership (TPP), which if passed, the big markets can purchase Vietnam agricultural products soon.

To increase domestic and global competitiveness, marketing campaigns are needed internationally to promote local agricultural brands.

DNSGCT