Competitive advantage #1: Agriculture
To transform the country's economy and increase national competitiveness, we cannot abandon the task of "industrialization of Vietnamese agriculture" and must start again immediately with the national education system.
In the short term, for example, 10 years, if Vietnam does not leverage its competitive advantages in agriculture to reach the world market, then once again, we will miss an opportunity.
Next year (2015), we will celebrate the 40th anniversary of national reunification. So, during those four decades, what have been our most significant achievements, and what will be the major challenges ahead? It's impossible to list all the achievements in this short article. The next challenge is how to optimize those achievements to develop the economy sustainably.
In our opinion, let's first talk about the most sustainable competitive advantage, which is agriculture. Why?
Despite being a densely populated country, Vietnam remains an ideal location for developing agricultural exports. In the last 10 years, products such as rice, coffee, cashews, and pepper are clear examples of Vietnamese agricultural products gaining a strong foothold in the global market.
The majority of Vietnamese people, accustomed to hard work and diligence, understand the laws of nature and always desire peace to build a better life. With a literacy rate of up to 98%, many of these farmers should ideally have the basic education to access new technologies, new seeds, and new equipment.
Many renowned agricultural professors from around the world, when visiting Vietnam for research or technology transfer, have shared a common observation: Vietnamese farmers are intelligent and diligent learners, compared to farmers in other developing countries, including Africa. Professor Vo Tong Xuan even took elderly Vietnamese farmers to Africa to teach rice cultivation! However, as Professor Vo Tong Xuan, a respected agronomist, noted: In reality, the 98% literacy rate is not accurate; the quality of general education is declining. The general education curriculum is too demanding, focusing primarily on passing exams and then forgetting the knowledge rather than applying it in practice. If that's the case, then this 98% literacy rate won't produce many farmers with the basic cultural foundation for modern agricultural development. We still need to do much more for Vietnam's agricultural education policy.
Meanwhile, Vietnam's weather isn't harsh enough to support a large-scale agricultural sector with the available resources. The two agricultural powerhouses at opposite ends of the country – the Red River Delta and the Mekong Delta – could even pull the entire Vietnamese economy along if we knew how to operate them optimally. However, the Red River Delta currently suffers from food shortages, meaning farmers won't become wealthy unless they cultivate high-value crops suited to the climate and soil of the North. According to the economic theory of "development engine," policymakers should focus most resources on the Mekong Delta, a more practical approach.
Currently, labor costs in agriculture are no longer low (to create an advantage). Professor Vo Tong Xuan stated: "Labor costs are very high today, so farmers have to rely on mechanized labor to cover the costs. For example, harvesting rice by hand costs about 5 million VND in labor, while harvesting and threshing with a machine only costs 2.5 million VND." Therefore, the industrialization of agriculture is a major solution to create a competitive advantage for Vietnamese agricultural products in the international and domestic markets. Related to this is the issue of having sufficient land for large-scale production – a strategy that agricultural policymakers must address within the current legal and regulatory framework.
Meanwhile, rural infrastructure has improved significantly over the past two decades. Political stability at the local level is also a strength, and could be even better if corruption and bureaucracy were reduced...
Although there is still much criticism of the government's policies on agriculture and rural areas, the trend is that the government is promoting agricultural development. However, in reality, investment has not lived up to its potential. The worrying aspect is that the proportion of investment from all sources is steadily decreasing over the years, along with the alarming decline of the country's agriculture. According to reports, agricultural investment currently accounts for about 3% of GDP, but even that investment is not clearly aimed at increasing the added value of agricultural products and improving the lives of farmers; sometimes it even results in "more harm than good." Professor Vo Tong Xuan gives an example of ineffective investment: "The saline areas of the Ca Mau peninsula were desalinated with excessively large investment costs, which harmed the potential for fish and shrimp farming, and also damaged rice production."
Agricultural growth rate
Period of Annual Growth Rate
1995-2000 4%
2000-2005 3.7%
2006 2.8%
2007 2.3%
2011 2.4-2.6%
(Source: Communist Magazine)
Investment rate in agriculture
Period of Agricultural Investment/Total Social Investment Ratio
2000 13.85%
2005 07.5%
2008 06.45%
2009 06.26%
(Source: Communist Magazine)
We also built a global reputation for rice, coffee, pepper, cashew nuts, and seafood during the early stages of our integration into the world market. However, this reputation was based on quantity, not quality, and we were sometimes even sued for low prices. "In other words, the intellectual content in each of Vietnam's agricultural products is low. This is a characteristic that needs to be improved in the future if we want to enhance our competitiveness in the integrated world and free trade," Professor Vo Tong Xuan emphasized.
The 5Ps in agriculture:If we adopt the 5P model, we would venture to offer the following ideas:
a/P1 - ProductsAgricultural extension agencies can help farmers strictly apply GAP (Good Agricultural Practices) techniques, avoiding outdated practices (experience) to increase the intellectual content of their products. Agricultural policymakers must develop a roadmap for this, along with certain funding. This is within the government's reach. Farmers and agricultural investors need advice from the Ministry of Agriculture and Rural Development's agricultural extension agencies on selecting new seeds with higher yields, better quality, and greater sustainability (using less water, faster growth, and able to thrive on less fertile soil). They should also adhere to global standards such as green production parameters. Furthermore, building a brand for the finished product is crucial. Exported rice has few brands because most food companies lack their own raw material areas and instead purchase raw rice from hundreds of traders, resulting in inconsistent quality.
b/ P2 - Price:How can we reduce production costs by applying GAP (Good Agricultural Practices) to minimize fertilizer and pesticide use, reduce labor costs, and minimize greenhouse gas emissions from rice fields that exacerbate climate change? The government and industry associations can help improve farmers' profitability by finding ways to lower logistics costs and potentially sell at higher prices without increasing production costs.
c/ P3 - LocationThe distribution process must be drastically improved to reach the market faster, at lower costs, and with better quality.
d/P4 - Promotion:The government and specialized agencies for national promotion can help implement marketing and PR campaigns. Of course, the prerequisite is to have branded, high-quality products. Trade promotion agencies must be proactive in finding or opening new markets for processed agricultural products of Vietnam. For example, the OTOP stories of Thailand (1).
e/P5- The people here are farmersThe government must create conditions for farmers (with a strong desire to escape poverty) to participate in the production of market-appropriate products using new technologies and new varieties. Farmers must have greater access to information, including information on land planning, compensation prices, etc.
Currently, we are discussing the TPP (Trans-Pacific Trade Agreement) with our partner countries, and we hope that our negotiators will soon reach an agreement with stronger economies and larger markets that can accommodate Vietnam's unique agricultural products.
Instead of a conclusion, this short paper offers focused suggestions, namely, where to begin?
a/ We must start with education, with training strategies focused on agriculture. The sad reality today is that students with low academic abilities often choose to apply to agricultural universities.
How can we change that perception in society? The answer is that we must start with national education policymakers. Initially, the government could create preferential scholarships for students at agricultural, forestry, and fisheries schools. The curriculum at the primary and lower secondary levels should be improved to instill in children the understanding of a poor agricultural country with development potential, where the younger generation plays a central role. Educational communication policies need to be more frequent; for example, the frequency of news coverage on policies, visits by leaders, and guidance in the agricultural sector should correspond to other political events in state media. This should include information about job opportunities in agricultural investment programs.
Nowadays, whenever there is a natural disaster or flood, the media extensively reports on the field trips of leaders and the Central Flood and Storm Prevention Committee. Certainly, people hope that the highest-ranking leaders will regularly appear at other normal events (not during crises) related to agriculture and rural development. For example, during a bumper harvest or the planting season, etc. This is not "propaganda" but rather a message encouraging action, giving farmers—the majority of the population—and investors in agriculture (including state-owned capital management agencies in this sector) more confidence and leading to more decisive and effective action.
b/ Re-evaluating the production strategy: With available resources, the government (specifically the Ministry of Agriculture and Rural Development) can fully support and promote agricultural growth and improve farmers' lives. Professor Vo Tong Xuan argues that we need to emphasize the market factor. This means that planning should no longer be based on subjective targets but must follow market demands or newly opened markets.
c/ To increase competitiveness (domestic or global), we need national marketing campaigns. Initially, we need to regularly participate in regional and international agricultural exhibitions with the clear objective of promoting established local brands. Too many articles have discussed the wastefulness or inefficiency of investment promotion programs over the years. Let's allocate that budget to marketing Vietnamese agricultural products.
d/ Promote the role of associations such as coffee associations, rice associations, etc., in protecting farmers' income and prices. As Mr. Dang Le Nguyen Vu, General Director of Trung Nguyen Coffee, once suggested: Why doesn't Vietnam, the world's second-largest coffee exporter, host a world coffee conference with the aim of establishing a "World Coffee Association" with Vietnam as the rotating chairman?
"Agriculture is Vietnam's fundamental economic advantage. No one should turn their back on their advantage" - (UNDP Director-General Helen Clark).
One point we want to reiterate here is: Although our recent development resolutions have shifted the economic structure towards increasing the proportion of services and decreasing the proportion of agriculture, this does not mean reducing investment policies aimed at increasing the added value of agricultural products. In simpler terms, we need to increase the value of services in the agricultural production sector. Because, as Helen Clark, Director-General of the United Nations Development Programme (UNDP), stated at the Vietnam Economic Reform Workshop in Hanoi on March 24, 2014: "Agriculture is Vietnam's fundamental economic advantage. No one should turn their back on their advantage."
All the information above is intended to add another voice to the national chorus about the role of agricultural economics, aiming to change the face of the Vietnamese economy, and above all, to "give back to Caesar what belongs to Caesar." More than 70% of Vietnam's population comes from farming backgrounds, and only when agriculture is industrialized can Vietnam hope to achieve its dream of industrialization, whether by 2020 or beyond.
According to Chinhphu.vn
