Lesson 1: The role of a "midwife" in rural economic development
With the development of a commodity-based economy in rural areas and the New Rural Development movement, and the implementation of the OCOP (One Commune One Product) program in Vietnam in general and Nghe An in particular, the development of collective economic organizations and cooperatives plays an increasingly important role.
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According to the International Cooperative Alliance (ICA):CooperativeIt is an autonomous organization of people who voluntarily unite to meet their common economic, social, and cultural needs and aspirations through a democratically owned and managed enterprise.
In light of the realities of Vietnam's rural economy, one might ask: Why do farmers in particular, and people with limited economic resources in general, need cooperatives when linking up for economic development? This is because when they enter commodity production, most are still being guided step-by-step. They need a close-knit economic organization that understands the specifics of rural production to handle matters such as "output," "input," capital, science and technology, etc. The cooperative model is the most suitable because it brings together a large number of members from the village, and provides mutual support and assistance in economic, cultural, and traditional aspects of life.
Therefore, cooperatives have developed increasingly as an essential need, firstly to serve the lives of the people, and secondly to comply with the law and the requirements of achieving the new rural development goals and developing rural areas.
Over the years, the Party and the State of Vietnam have paid special attention to the development of cooperatives. Cooperatives throughout the country in general andNghe AnSpecifically, the transition to the new model as stipulated by law has been basically completed. The number of newly established cooperatives and cooperative unions has increased significantly, developing more diversely in terms of industries, scale, and level; providing better support for members, creating jobs, and increasing regular income for workers.
However, while the number of cooperatives has increased, the average number of members per cooperative tends to decrease; many members participate in cooperative activities only formally, failing to fully exercise their rights and obligations as members.
The guiding principle of our Party and State clearly states:Collective economyCollective economic organizations are an important economic component that must be strengthened and developed alongside the state-owned economy to become a solid foundation of the national economy. Developing the collective economy is an inevitable trend in the context of international integration, consistent with the socialist-oriented market economy; stemming from practical needs, protecting interests, and creating conditions for members to produce and conduct business efficiently and sustainably. The development of the collective economy must respect the nature, values, and operating principles of the collective economy, and be consistent with the socio-economic conditions and characteristics of each locality, region, and the entire country. The State has a policy of prioritizing collective economic organizations in the agricultural sector, linking production and business activities with product value chains, applying science and technology, innovation, and digital transformation; prioritizing the development of collective economic organizations associated with the development of a green economy, a circular economy, and a knowledge-based economy.(Resolution 20 of the 13th Central Committee of the Communist Party of Vietnam).
With its immense social significance, the cooperative economy has played an indispensable role over the years, serving as a crucial link in production and life in rural areas. It acts as an intermediary, supporting members and workers in finding employment, increasing income, and fulfilling public service responsibilities.
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Cooperative economics is one of the "three pillars" that, along with other economic forms, forms a solid foundation for the national economy. Therefore, many important documents from the Party and State continue to be issued to support the development of the collective economy, with cooperatives as its core.
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National statistics up to the end of 2023 show there were 30,698 cooperatives, 137 cooperative unions, and 65,712 cooperative groups; Nghe An province had 899 cooperatives, an increase of 36 cooperatives compared to 2022. The number of members participating in cooperatives was 268,076. The province also had 3,035 cooperative groups by the end of 2023, a decrease of 20 groups compared to 2022, with 8,510 members.
Of the total number of cooperatives in Nghe An, 520 are operating effectively, with 65 units (12.5%) having young cadres as chairmen of the board of directors or managers. These are primarily agricultural cooperatives, an indispensable type of organization in regulating irrigation, planning agricultural activities, disseminating technical advancements, and ensuring the supply and demand of agricultural products.
Through innovative efforts and the sustained operation of cooperatives, Nghe An's agriculture and rural areas have flourished, developing steadily and achieving many notable milestones. Nghe An ranks third nationwide in the number of OCOP products. To date, the province has 567 products recognized as meeting OCOP standards of 3 stars or higher. Agriculture has yielded good harvests in recent years. The aforementioned figure of 520 effectively operating cooperatives demonstrates the quality and qualitative changes in this economic model in Nghe An today, closely adhering to the 2012 Cooperative Law. Nghe An cooperatives operate in almost all fields: agriculture, shipbuilding, technology products, garment manufacturing, mechanics, silk production, salt production, transportation, etc. Regardless of the field, the cooperatives have been and are striving their best for their own survival and for the benefit of their members.
In Nghe An, successful cooperatives, if traditional, have leveraged the brand value and intellectual contributions of young people, inheriting the experience of their predecessors and diversifying their business activities to survive. Younger cooperatives are also proficient in technology, skilled in applying science and technology, and possess sales skills to participate in online business. Such successful cooperatives not only develop the economy but also support each other by sharing jobs, income, and technological and scientific advancements.
Currently, in Nghe An province, in the agricultural sector, alongside traditionally effective cooperatives such as: Minh Thanh, Tho Thanh, and Lien Thanh Agricultural and Construction Service Cooperatives (Yen Thanh); 19/5 Cooperative (Nghia Dan); Nghi Lam and Nghi Van Agricultural and Agricultural Service Cooperatives (Nghi Loc)... many new and effective production and business models have emerged, such as: Dai Hue Agricultural Cooperative, Sen Que Bac Cooperative, and Chanh Thien Nhan Cooperative (Nam Dan); Dien Quang and Dien Phong Agricultural Service Cooperatives (Dien Chau); Chi Khe Seedling Cooperative (Con Cuong); Tan Thanh Cooperative and Tinh Sang Duong Cooperative (Quy Hop); and Nghia Dan Medicinal Herbs Cooperative (Nghia Dan). Hung Tay Agricultural Service Cooperative (Hung Nguyen)... Many agricultural service cooperatives, in addition to serving the needs of their members well, generate annual profits ranging from hundreds of millions to billions of dong.
In the industrial, handicraft, and trade/service sectors, there are 91 cooperative households with 1,695 members; total revenue is estimated at 600 billion VND/year; the average income of regular workers in cooperatives is 4.8 - 5.6 million VND/month. These cooperatives have also actively innovated, formed joint ventures and linkages, and sought new markets for their products; gradually reorganizing their structures to suit the realities of production and business, improving productivity and product quality. Products from these cooperatives have initially gained market acceptance, such as handicrafts, wood processing, stone carving, household furniture, and seafood processing. Examples include the Thang Loi Handicraft Cooperative in Tho Thanh commune (Yen Thanh); the Hoa Tien Brocade Weaving Cooperative (Quy Chau); and the Pu Mat Medicinal Herbs Cooperative (Con Cuong). Phu Quy Medicinal Herbs Cooperative (Thai Hoa), Song Lam Production and Service Cooperative, Hai Giang 1 Seafood Processing and Service Village Cooperative (Cua Lo town); Ben Thuy Market Cooperative (Vinh city)... In addition, many cooperatives with new investment directions and promising prospects continue to emerge in the province, actively participating and coordinating the effective implementation of vocational training for workers, such as: Thang Loi Handicraft Cooperative (Yen Thanh), Mon Son General Service Cooperative (Con Cuong), Sen Vang Cooperative (Vinh city)...
In the transportation sector, there are currently 40 cooperatives providing transportation services. After the Covid-19 pandemic, these cooperatives gradually adapted and innovated by investing in infrastructure and improving management quality. Many cooperatives are now operating effectively. This sector has 7,950 members participating in cooperatives.
In the credit sector, there are 59 People's Credit Funds operating in 16 districts, cities, and towns, with a total capital of 10,800 billion VND, of which mobilized capital reached 9,684 billion VND. The total outstanding loan balance of these funds reached 7,930 billion VND, with non-performing loans amounting to 67 billion VND, accounting for 0.8% of the total outstanding loan balance.
Currently, according to the assessment of the Nghe An Provincial Rural Development Sub-Department, the support policies for cooperatives are pilot programs implemented in short phases, and the support content has not comprehensively addressed the difficulties and obstacles in the operation of cooperatives. Therefore, they have not truly supported and promoted the development of agricultural cooperatives in the province to operate more effectively in the direction of linkages, application of high technology in production, and aimed at improving the value and quality of products. In addition, the internal capacity of cooperatives remains weak, leading to many difficulties. Despite this, many cooperatives have made breakthroughs and found new, highly effective directions.
The national strategy for sustainable agricultural and rural development until 2030, with a vision to 2050, is based on the overarching principle that "Agriculture, farmers, and rural areas hold a strategic position in the cause of industrialization and modernization. Agriculture is a national advantage and a sustainable foundation. Rural areas are important economic development zones and serve as a cultural and social foundation. Farmers are a vital labor force and human resource." Accordingly, cooperatives act as crucial facilitators in organizing economic production in rural areas. Where there is adequate attention paid to the development of the collective economy and cooperatives, those cooperatives will thrive, and vice versa.
Evidence of this is the fact that many people who had gone to work in other provinces decided to return to their hometowns to engage in economic activities after the Covid-19 pandemic. Starting businesses through cooperative models and collaborative groups demonstrates the importance of this type of economic activity, which is the initial step in realizing creative ideas, highlighting the strengths of the village, and unleashing the immense potential and labor force in rural areas.
According to Clause 1, Article 3 of the 2012 Law on Cooperatives, a cooperative is a collective economic organization, jointly owned, with legal personality, established voluntarily by at least 7 members who cooperate and assist each other in production, business, and job creation to meet the common needs of its members, on the basis of autonomy, self-responsibility, equality, and democracy in cooperative management.
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(To be continued)
