Economy

Lesson 3: Clearly identify difficulties and limitations in the processing industry

Thu Huyen - Hoai Thu • July 31, 2024 16:30

Although Nghe An has many potentials and advantages in agricultural development, the results of attracting investment in this field are not commensurate. Most of the enterprises operating in agricultural processing are fragmented, small or micro-sized, so it is difficult to increase the value of agricultural products.

Thu Huyen - Hoai Thu
31/07/2024

In recent years, from the potential, advantages as well as efforts, incentive and support policies, the field of attracting investment in agriculture of the province has achieved remarkable results.

With a high-tech concentrated dairy farming project with an investment scale of 1.2 billion USD, TH Group is a pioneer enterprise investing in high-tech agricultural production in Nghe An. This is one of the large enterprises with strong economic potential, investing in the construction of concentrated raw material areas, building large-scale processing factories, playing the role of "locomotive" in developing modern agriculture in Nghe An province in recent times.

Deputy Director of the Department of Agriculture and Rural Development - Ms. Vo Thi Nhung shared: From the efforts of the province, projects with investment capital up to hundreds of millions of USD have been implemented, bringing a new look, new production thinking, contributing to the formation of modern, high-quality agriculture with large scale and high value. In addition to Vinamilk's industrial-scale dairy farming projects, TH Group produces milk, processes purified water, fruit juice, grows clean vegetables, has had many more investment projects in the fields of forestry, tea, pineapple, orange growing, medicinal herbs, livestock...

In addition, some localities have also made progress in attracting investment in agriculture. For example, in Yen Thanh rice district, the locality has attracted many enterprises such as: TH Group, Central Seed Joint Stock Company, Thai Binh Seed Company, Bac Ninh Seed Company, Nghe An Agricultural Materials Joint Stock Company to cooperate with farmers to build models of rice production and high-quality rice varieties.

However, in reality, not many businesses invest in agriculture. According to the Department of Planning and Investment, up to now, there have been 114 projects in the agricultural sector out of a total of 1,828 projects that have been granted investment policies/certificates (only 6.2%); total capital of VND 21,991.2 billion/VND 492,959.51 billion (4.46%). From 2021 to now, there have been 24 projects in the agricultural sector out of a total of 373 projects that have been granted investment policies and certificates (also only 6.43%); total capital of VND 3,591.399 billion/VND 123,179.585 billion, accounting for less than 3%.

The first reason why businesses are not interested in investing in agriculture is because production depends heavily on the weather, so the risk is high and capital recovery is slow. Meanwhile, with the harsh climate typical of Nghe An, along with the increasingly severe climate change, agriculture always faces uncertainty. Not only vegetables and fruits, but businesses growing other crops such as rubber and tea have also struggled many times because of drought and storms.

Sharing about the current limitations in attracting investment in the agricultural sector, Mr. Phan Van Tuyen - Chairman of Yen Thanh District People's Committee said: Attracting enterprises to invest in agricultural production is difficult because raw materials for processing are not guaranteed and land procedures are entangled. The link between enterprises and farmers in production and consumption of products is still not sustainable; the role of cooperatives in linking and connecting enterprises and farmers has not been promoted, many cooperatives have poor capacity. Nghe An is a locality that is heavily affected by natural disasters, while agricultural insurance still has many shortcomings, making enterprises hesitant to invest...

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Nghe An is a locality heavily affected by natural disasters, while agricultural insurance still has many shortcomings, making businesses hesitant to invest...

Nghe An is one of the three provinces with the largest rice growing area among the 31 northern provinces and cities. Rice production is focused on by the province in directing and attracting investment. Currently, in the province, there are a number of rice processing and export enterprises with an industrial scale, with a total capacity of about 250,000 - 300,000 tons of paddy/year. For example, Nghe An Food Supplies Joint Stock Company has a processing line with a capacity of 10 tons/hour, and is associated with farmers to produce and purchase products with a scale of 3,000 - 4,000 hectares of rice/year, with the brand name of rice materials - NA 06. Vinh Hoa Science and Technology Company Limited has a processing line with a processing capacity of 4 tons/hour; with the brand name AC5 rice and herbal rice. In addition, in the province there are hundreds of small-scale household rice processing facilities. Rice output for processing according to the chain accounts for about 25 - 30% of the province's total rice output.

However, Nghe An has not really made breakthroughs, creating great value for goods, commensurate with its potential and expectations. The fact that businesses are not interested in investing in agriculture is also the reason why the agricultural processing industry is weak and lacking. Rice production in Nghe An is still mainly serving the consumption needs of the people, and is rarely consumed in supermarkets, large distribution systems and especially for export. That situation makes rice production in Nghe An not bring high value.

Ms. Vo Thi Nhung - Deputy Director of the Department of Agriculture and Rural Development said that although there is an increasing focus on producing quality rice, Nghe An's rice products are consumed in high-value distribution channels such as supermarkets and large distribution systems, and in particular, there is almost no exported rice, and the value of rice production is not commensurate with the potential and expectations. Farmers produce with the aim of self-sufficiency, providing food for their families and mainly for livestock.

Most of the province's rice area is still being produced using conventional production methods, the area produced according to safety standards such as VietGAP and organic is very small. Linking rice consumption for farmers still accounts for a small proportion of the total annual rice area; therefore, people often encounter difficulties in consuming products, mainly selling to traders. In addition, production still has many shortcomings, post-harvest preservation is still difficult, mainly by hand, sun-drying and using tools available at households; the rate of rice dried in drying systems is still very low, only a few cooperatives have built post-harvest rice drying systems.

In early June, Nghe An farmers are rushing to harvest spring rice. However, people are worried about preservation in the weather conditions of little sunshine and much rain. In the spring, some households harvest rice and dry it, but encounter less sunny weather. After packing or putting it in barrels, some of it is spoiled and sprouted... This is also a difficult problem for many other localities in the province. Nghe An is a locality located in the key storm and flood area, and is also a large agricultural production province of the country. In fact, the difficulty in preservation is causing agricultural products to decline in quality, causing great losses to farmers.

Or for peanut products, although Nghe An has a quite famous brand, this product has long been absent from the golden list of agricultural exports of the province. In the area, there are currently 2 cooking oil processing factories: Vinh Oil Factory with an average production and consumption of 25,000 - 26,000 tons/year and Nghia Dan Vegetable Oil Joint Stock Company's oil pressing factory with a pressing capacity of 1,000 tons/year. The average annual output is only 150 - 200 tons. In addition, there are businesses that purchase, process and export peanuts. Sy Thang Private Enterprise in Dien Chau District is considered the leading unit in processing and consuming peanuts with a capacity of about 7,000 tons/year. However, the product is mainly in the form of pre-processed peanuts for export and establishments and households that purchase, process and consume peanuts in the province.

Regarding tea trees, Nghe An is one of the provinces with the largest area and annual dry tea output in the country. For generations, tea trees have been associated with the people of Nghe An. All 21 districts, cities and towns in the province grow tea, forming large specialized areas for producing raw tea for processing such as Thanh Chuong and Anh Son tea areas. However, currently, the situation of tea production and processing is inadequate; many tea factories that were once golden are now covered with tarpaulins; some private establishments produce on a hit-or-miss basis. This situation is affecting the livelihoods of thousands of households growing, trading and processing tea in the province.

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For generations, tea trees have been associated with the people of Nghe An. All 21 districts, cities and towns in the province grow tea, forming large specialized areas for producing raw tea for processing...

Recently, vegetables, tubers, and fruits have also developed quite well in some localities. The fruit juice processing industry focuses on the Nafoods Factory - Nghe An Food Joint Stock Company producing passion fruit, gac fruit, and pineapple juice with a capacity of 35,000 tons of fruit/year associated with the passion fruit raw material area in Que Phong district, pineapple in Yen Thanh and Quynh Luu districts; Nui Tien - Nghia Dan Fruit Juice Processing Factory with a capacity of 40 tons of fruit/hour. However, the connection between factories is still sometimes and in some places not good, leading to contract breaches...

Most agricultural, forestry and fishery products have increased in both quantity and value compared to other sectors. However, the competitiveness of agricultural, forestry and fishery products is still not high, goods are mainly pre-processed, raw materials are scattered, some raw materials have to be imported from other provinces, the uniformity of raw materials is low...

It is also because the processing industry has not been invested in that the growth rate of total export turnover of agricultural, forestry and fishery products of Nghe An is very modest, growing only 2.9%/year in the period 2015-2020.

According to the Ministry of Agriculture and Rural Development, by 2030, Vietnam's agricultural, forestry and fishery processing industry is expected to be among the top 10 countries in the world, with sufficient processing capacity to meet the requirements of agricultural production. The general level of processing and preservation technology will be average or higher, with key agricultural product sectors reaching advanced and modern levels. Processed products will meet the requirements of the consumer market, be highly competitive, ensure quality and food safety, and contribute to increasing the added value and export turnover of Vietnamese agricultural products.

To achieve the above goal, the Ministry of Agriculture and Rural Development directs the need to organize production linkages in the value chain of production - processing and consumption of agricultural products to improve the ability to supply raw materials for processing, ensuring sufficient quantity and quality, reasonable and stable prices for all products. In particular, developing clusters of production - processing and consumption linkages of agricultural products in localities and regions with large agricultural output, convenient transportation, labor, logistics, with the potential to become growth drivers for the whole region. Selecting "locomotive" enterprises with sufficient capacity in terms of capital, science and technology and market to lead the value chain, operating smoothly and effectively. Innovating and perfecting policy mechanisms to create a favorable investment and business environment is considered one of the key solutions...

(To be continued)

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