VietNamNet Bridge – While many moguls are pouring huge amounts in agriculture, some investors are quietly retreating from the field.

Collecting rubber latex.

In recent years, many large corporations in Vietnam have shifted their investment from real estate and industries to sugar, coffee, rubber, macadamia and vegetables.

If Vingroup, one of the largest real estate businesses in Vietnam, has been developing the organic vegetable brand of VINECO, Hoang Anh Gia Lai Group with its famous boss Doan Nguyen Duc has focused on planting and processing rubber, sugarcane, palm oil, corn and raising cows for meat.

The boss of Hoa Phat Group – Tran Dinh Long - recently revealed plans to invest in producing animal feed and raising pigs to meet the huge demands for these products in Vietnam.

Withdrawal

While the race of moguls in the agricultural sector has just started, some other businesses are withdrawing from this area.

Most recently, Gemadept’s divestment from agricultural projects surprised many people. This is a big corporation in ocean shipping, logistic services and real estate in Vietnam.

Gemadept’s CEO Do Van Minh previously told the media that planting rubber is the way to help the corporation gain high growth.

In 2013, this group won the right to use nearly 30,000 hectares of land in Cambodia for 70 years. This firm has also grown nearly 8,000 hectares of rubber. In addition, it has reclaimed approximately 10,000 hectares.

Early this year, Gemadept Board of Directors met and agreed to invest $27 million in 9,773 hectares of rubber in Cambodia. However, shareholders decided to withdraw from this field, saying that investing in agriculture is not as lucrative as Gemadept’s core businesses as ports and logistics.

A Gemadept manager, who wanted to be unnamed, said the corporation’s divestments in agriculture had potential, but required long-term investment and a lot of capital.

Less than a year ago, KLF International Investment Joint Venture inked a deal with HAI Agricultural Medical JSC, through which KLF would officially be involved in the agricultural sector.

But KLF recently completed the sale of 8.526 million shares of HAI, equivalent to 24.5% of stake in this company.

Previously, the State-owned State Capital Investment Corporation (SCIC) also sold 49.96% stake in HAI.

This firm, at the same time, withdrew its capital from many businesses in the agricultural sector such as the Central Seedlings Company, the Agricultural Packaging and Printing Company and the Can Tho Agricultural Technical Supplies Company.

Why?

Many experts said that the trend can be explained by the difficult circumstance for some agricultural products, of which the lack of outlets is the main reason.

In particular, many businesses investing in rubber are worrying as rubber prices have hit a five-year bottom.

The agricultural sector also faces unpredictable risks like epidemics, change of soil, weather and the risks from the environment and social problems.

Discussing the way for large corporations, Vietnam’s leading agronomist, Professor Vo Tong Xuan, said to effectively invest in agriculture, investors should build close links with farmers.

The authorities should promote linkages between enterprises and farmers in a closed, stable and mutually beneficial circle.

“The policies must be in harmony, to benefit both businesses and farmers," Professor Vo Tong Xuan stressed.

Tri Thuc Tre