Suggestions for agricultural restructuring

On November 9, the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) in collaboration with NNVN Newspaper organized a consultation workshop on restructuring the agricultural sector in accordance with the content of Decision 899/QD-TTg dated June 10, 2013 of the Government. Minister of Agriculture and Rural Development Cao Duc Phat chaired the workshop.

The workshop was attended by many experts inside and outside the agricultural sector such as Dr. Dang Kim Son, Director of the Institute of Policy and Strategy for Agricultural and Rural Development, Dr. Tran Dinh Thien, Director of the Vietnam Economic Institute, Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management Research and representatives of Dong Thap and Vinh Phuc localities, the Food and Agriculture Organization of the United Nations (FAO), the World Bank, the United Nations Development Program (UNDP)...

Minister Cao Duc Phat chaired the workshop.

Solving the problem of thinking and the market

Speaking at the opening of the workshop, Minister Cao Duc Phat affirmed: The project to restructure the agricultural sector after more than a year of implementation has received support from the international community. Localities have developed comprehensive projects. Many localities have developed projects to adjust and promote development, prioritizing the agricultural sector, which has impacted and created a difference in agricultural growth this year.

However, the Ministry of Agriculture and Rural Development found that there are still problems in awareness and approach. The restructuring project is built on a theoretical foundation, so the theoretical basis needs to be clarified to be effective. Clarifying the theory will help create common awareness in society, relevant agencies and farmers.

The purpose of this workshop of IPSARD and NNVN Newspaper is to seek expert opinions to clarify the theoretical basis. NNVN Newspaper will convey, create a common forum, and common awareness about restructuring the agricultural sector. And should we propose a set of criteria similar to the new rural areas on restructuring so that localities can orient their implementation?

With a frank and open spirit, most experts, local representatives, agencies and organizations have made enthusiastic comments and speeches with the aim of giving advice for the implementation of the agricultural restructuring project.

Dr. Dang Kim Son used the model of an “agricultural house” for his presentation on the agricultural restructuring project at the conference. In that “house”, development-oriented thinking is the foundation, the production organization system is the pillars, and the roof is the legal policy system. From there, Dr. Son dissected and concluded: The key issue is the need to change the thinking and development orientation of the agricultural “house”.

Specifically, regarding the "foundation", Dr. Dang Kim Son said that it is necessary to have the mindset of turning Vietnam into an agricultural powerhouse, promoting competitive advantages, applying science and technology and improving management, thoroughly following the market mechanism, producing large-scale and efficient goods, improving quality and food safety...

At the “rooftop”, the relevant legal policy system needs to comply with market rules and international commitments. It needs to be long-term, transparent, decentralized, and empowered…

Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management, also affirmed: Restructuring the agricultural sector cannot be separated from restructuring the economy, but separate steps are needed. Institutions must change for the market to operate better.

In other words, we need to have a mindset and definitely make the market better in the agricultural sector. Where there is no market, we must create a market, and where there is distortion or error, we must correct it.

According to Dr. Cung, the inefficient use of resources has led to the fact that the economy has not been able to generate significant growth. Economic restructuring means reallocating national resources according to market mechanisms.

“The purpose of restructuring the agricultural sector, in my opinion, is to overcome the failures of the State and make the market better. The restructuring content must go into the sector, into each product, to find out where the market for that product is distorted in order to fix it.

Take rice, for example. We have state-owned enterprises that distort the rice market due to state intervention, making it impossible for us to transform the Vietnamese rice market. I personally believe in the market. If there is state intervention, it must make the market operate better, not distort the market.

The story of land accumulation is the same. Currently, we do not have a land market because the market is distorted by administrative intervention. Without a market, there can be no accumulation, no concentration on large-scale development. Land must be the property of farmers, a foundation for them to pursue other occupations.

On the other hand, without a land market, people have no motivation to invest in the long term, creating bottlenecks that cannot be broken through. If we continue to maintain this, it means that the more we produce, the more failures we will have, and the lower the added value will be. We must change our thinking to break through the institutions and overcome the current bottlenecks," Dr. Cung analyzed.

Agreeing with Dr. Cung’s point of view, Minister Cao Duc Phat affirmed: “Economic reform is essentially about creating conditions for the market to operate. There was a time when I had to direct the restraint of rice production and pepper production.”

Mr. Nguyen Tien Phong, UNDP representative, further analyzed: "In general, I see that our agricultural sector is letting the market go too much, not necessarily lacking a market. In other words, it is a market that lacks the regulatory and guiding role of the State. The fertilizer market and the pesticide market are almost loose and unmanageable, which is an example.

Another example, why do foreign enterprises dominate the market in the animal feed sector so much? I think it is because they are supported by the Government to be able to take care of inputs and ensure outputs for farmers. The Vietnamese Government, on the other hand, does not seem to have such a "midwife" role."

Need the pivotal role of enterprises

Most of the presentations and speeches at the workshop pointed out that one of the core issues of agricultural restructuring is thinking and market. So what policies can solve this problem? Is the role of enterprises the solution?

Dr. Tran Dinh Thien analyzed: "Why is the market so distorted and unstable? It is because the way we develop the market system, especially in the agricultural sector, is very vague. A market where each input is different makes farmers unable to react.

It is all because our agricultural sector is still following the "what if" policy. What if there is famine, what if there is crop failure... We only worry about supply, productivity, output, but do not pay attention to the core of added value. Therefore, we need to immediately change our awareness, vision, change and reposition the resource structure."

According to Dr. Thien, there are 3-4 structural lines that need to be done. Products need to be associated with technological level, associated with production scale, and must follow the chain. Enterprises need to become pioneers and pillars in agriculture. They are the ones who bring farmers to the market and bring high technology into production.

Although agreeing with the view of promoting the role of enterprises, Dr. Nguyen Dinh Cung said: "With the current institution, private enterprises cannot grow. The current opening up of business is creating opportunities for foreign investors. The current institution and motivation are extremely restrictive, enterprises can only do business informally."

Mr. Le Minh Hoan, Secretary of the Dong Thap Provincial Party Committee, also affirmed: “The Minister asked why businesses are not interested in investing in agriculture? That is because private businesses do not have confidence and policies for them are still unstable. Private businesses are hesitant to invest because the State is protecting State-owned enterprises too much.

I once heard a leader of the banking sector declare in a meeting that they would only support state-owned enterprises. I would like to affirm that investing in agriculture by enterprises would be good because they understand the market, see the market demand and will proactively conduct scientific research when they see profits. Restructuring needs to increase the connection between farmers and enterprises.

After listening to all the opinions of the delegates, Minister Cao Duc Phat concluded: The goal of restructuring is not only to build a strong agriculture but also to improve the lives and increase income faster for farmers and the whole society.

“First of all, it is necessary to change the way of thinking and promote market development, improve the role of the State in the market, overcome distorted markets and change the way of allocating resources according to market mechanisms.

It is also necessary to change policy mechanisms, review key market groups (land, labor, intellectual property, goods) to ensure the market chain operates well, review the product market chain. Change the environment for businesses to operate, so that businesses can play a leading role...

Institutional reform requires focus. Focus on institutional reform to create change, shape the activities of farmers' organizations and enterprises. State units can research and develop theories, creating a basis for restructuring programs, but the focus in creating change must be enterprises," Minister Cao Duc Phat concluded.

According to NNVN