Improving growth quality and economic restructuring

(Baonghean) - From a backward agricultural country, after 30 years of implementing the renovation process, Vietnam has become a low-middle income country; production has developed, economic life and social welfare of the people have been improved. Vietnam has an increasingly important position in the international arena. Contributing to those successes is a significant part of the agricultural economy, and that is also the content of the exchange between Nghe An Weekend and Dr. Nguyen Dinh Cung, Director of the Central Institute for Economic Management Research. Respectfully convey and introduce to readers.

In times of economic difficulties (especially due to the impact of economic crisis and external shocks), agriculture becomes a support although the agricultural sector itself is also affected by market fluctuations and adverse weather and natural disasters. Agricultural development has firmly ensured national food security, ensured domestic consumption, and agricultural export products occupy a high position in the world market.

Agricultural growth is slowing down

In recent years, Vietnam has paid special attention to promoting agricultural and rural industrialization, restructuring the agricultural sector towards promoting comparative advantages, improving quality and efficiency, and linking with sustainable development, which is considered the main direction in the agricultural restructuring program. However, in reality, Vietnam's agriculture is facing many difficulties, especially the growth of the sector is slowing down and the income of rural people is slowly improving. That raises the question: is investment in rural areas worthy of its stature and especially has the position of farmers been properly placed in the process of building new rural areas and developing the country's socio-economy?

The growth of the agricultural sector is slowing down, although it is more stable than other economic sectors. This shows that agricultural production has gradually reached its limit if it continues to grow in breadth without qualitative change. Vietnam's agricultural labor productivity is far lower than the general labor productivity of the entire economy and the lowest compared to labor productivity in the sectors of the national economy, lagging behind. Although in recent times, the productivity of crops and livestock in Vietnam has been gradually improved, even many Vietnamese agricultural products have high export positions in the world market. However, because most of Vietnam's agricultural products are produced in the form of raw materials or have just been preliminarily processed, they bring low added value. This is something worth thinking about in restructuring the agricultural sector.

There are many reasons for the low productivity of agricultural labor in Vietnam. In addition to objective reasons such as the negative impact of weather and climate, the erratic fluctuations in agricultural product prices, subjective reasons are also very important. That is, production still follows volume, has not increased product value, added value, small-scale production, has not promoted the advantage of large scale for agricultural commodity production, and especially there is still a large number of agricultural laborers, the withdrawal of laborers from agriculture is slow and faces many obstacles. In addition, the quality of agricultural laborers is still limited, when the rate of trained laborers in 2013 in rural areas was only 11.2% compared to 33.7% in urban areas. Most rural laborers do not have technical expertise (accounting for 88.5%).

Harvesting rice in Nam Giang (Nam Dan). Photo: Phan Van Toan

Investment in agriculture and rural areas is not commensurate with the level

In addition to the above reasons, in my opinion, there is also a fundamental reason which is the small scale of agricultural production, which has been limiting the application of scientific and technological advances in agricultural production as well as the exploitation of advantages according to scale. Investment in agriculture and rural areas is not commensurate with the level. In recent times, especially since the implementation of Resolution 26/NQ-TW on agriculture, farmers and rural areas, with the efforts and participation of the entire political system for the cause of agricultural and rural development, the system of state management agencies and localities have issued many policies and proposed many practical measures to mobilize resources for agricultural and rural development. Although the total social investment capital has increased in quantity, there has been a strong change in the speed as well as the structure of investment capital.

According to the Report of the Ministry of Planning and Investment, in the period of 2004 - 2008, the total social investment capital grew by an average of over 20%/year; equal to 42.16% of GDP, in which the state investment capital including the state budget, ODA capital, and state-owned enterprise capital accounted for 42% of the total social investment capital, from the non-state sector including enterprises and private sector accounted for 36.6%, and from the foreign FDI sector accounted for 21.2%. In the period from 2009-2013, the total social investment capital increased by over 10%/year but compared to GDP it was only about 35.28%. In which, the state investment capital accounted for 34% of the total social investment capital, the non-state investment capital accounted for 45%, and the FDI sector accounted for 21.2%. Thus, the change in the structure of total social investment capital is taking place by reducing the proportion of state investment capital and increasing the proportion of domestic private investment capital; the FDI sector still maintains its contribution ratio in the investment capital structure.

In the agricultural and rural areas, investment in agriculture, forestry and fishery in the total social investment capital has also increased steadily over the years (correspondingly in the period 2004-2008 it was 17%/year, in the period 2009-2013 it was 5.8%/year). Although the amount of investment capital for agricultural, forestry and fishery production in the period 2009-2013 increased by 67% compared to the 5 years 2004-2008, the proportion of investment in agriculture, forestry and fishery has gradually decreased. Investment in agriculture, forestry and fishery accounted for 8.5% of total social investment capital in 2003, and decreased to 5.3% in 2013. Especially in recent years, when implementing the policy of increasing capital sources from the State budget for investment in agricultural and rural development, investment capital from the State budget and Government bonds have always been prioritized by the National Assembly and the Government for allocation to agricultural and rural development tasks. As a result, the proportion of investment capital from the State budget for rural areas has increased continuously in recent years. According to the Ministry of Planning and Investment, in the period of 2009-2013 (since the implementation of Resolution 26/TW to date), the capital source from the State budget for investment in the agricultural and rural sector was 520.5 trillion VND, equal to 51.67% of the total development investment capital from the State budget and Government bonds, 2.62 times higher than the capital allocated for the sector in the 5-year period before the Resolution.

Production organization model is not suitable and slow to innovate.

From another perspective, it can be seen that in our country today, small-scale production households are still the main production and business units in rural areas. Currently, with over 10 million small-scale farming households cultivating and producing agricultural products, there is a lack of cooperation between households. Therefore, the level of mechanization, technological innovation, change in management skills and self-structuring is very limited. The cooperative economy develops very slowly, not playing the expected role in supporting the production activities of farming households. The activities of cooperatives are still very poor, mainly providing services for input factors that are not competitive for agricultural production of households. The farm economy develops very slowly and accounts for an insignificant proportion in agricultural production activities as well as the rural economy.

In general, the level of mechanical equipment and application of science and technology of these farms is also very weak. The ability to connect with the market is limited, the ability to compete is poor. State-owned enterprises in agriculture (mainly models converted from former state-owned farms and forestry farms) have outdated technology, low management level, weak labor skills, weak competitiveness but are slow to innovate, leading to business losses and loose resource management. Industry associations have been established in some industries but have not connected producers with traders, have not connected according to industry chains, and have not protected the interests of producers.

Must innovate production management organization model

Faced with such changes in both the internal and external environment, the need to innovate the production management organization model in agriculture is inevitable. Only then can we improve the efficiency and competitiveness of Vietnamese agricultural products in the world market. In my opinion, the solutions to promote agricultural industrialization in the coming time must be: perfecting the institution for agricultural and rural development; liberating and promoting resources for agricultural and rural development; building a modern agriculture, large-scale commodity production, promoting production restructuring to improve quality, efficiency and competitiveness; promoting labor restructuring associated with economic sector restructuring, reducing labor from the agricultural and rural areas; increasing investment and technical and technological assistance for sub-sectors with high added value in agriculture to strongly promote labor restructuring within the Vietnamese agricultural sector to meet the requirements of a modern and effective agriculture; Promote land accumulation and concentration for agricultural commodity production; create an open and transparent business environment to attract enterprises to invest in the agricultural and rural sectors. The State plays a supporting role, creating a favorable environment for the activities of economic sectors; build and consolidate key agricultural product lines with competitive capacity.

In particular, it is worth noting that it is necessary to continue to improve incentive policies to attract investors to agriculture and rural areas within the framework consistent with the provisions of the WTO, TPP and other agreements that Vietnam has committed to. The State needs to gradually shift the provision of some public services to the private sector and social organizations. Because the agricultural production sector is a risky sector, in addition to policies to create an open and transparent environment, the Government needs to have incentive policies that are strong and attractive enough to attract social resources to invest in agriculture, farmers and rural areas; attract both ODA and FDI capital, first of all, investment in production...

Red River