Strengthening the supply chain - agricultural leverage

Dialogue to strengthen the supply chain

Mr. Larry CYWong, Director of the Malaysian Institute of International and Strategic Studies, affirmed that supply chain management will share sustainable profits and increase value for producers. Producers when connected to the supply chain will grow exponentially. In particular, when participating in the supply chain, the value of agricultural products will promote structural transformation and rural-urban linkages, promoting overall growth.

Winter-spring rice harvest in Hau Giang.

Supply chain development is necessary, however, to develop a sustainable supply chain, Vietnam needs policies to promote the participation of localities, organizations and businesses in regional and global supply chains. These are the main contents discussed at the Policy Forum on enhancing the efficiency of agricultural production and agricultural supply chains in Vietnam recently held.

According to Mr. Giovanni Capannelli, Special Advisor, Asian Development Bank Institute, it is time for Vietnam to increase productivity not based on using old methods but on the supply chain, especially optimizing agricultural practices, improving efficiency, inputs as well as strengthening the organization of the supply chain. However, to strengthen the supply chain, Vietnam needs to improve the quality of governance and institutions, build policies, improve financial mechanisms, improve infrastructure... to promote the development of Vietnam's agricultural sector.

Sharing about policies to enhance the efficiency of the agricultural supply chain, Ms. Yumiko Tamura, Director of the Asian Development Bank in Vietnam, said that Vietnam's agriculture can only develop further through policy innovation, institutional reform, rapid technology application as well as increased investment, and close attention to agricultural product quality and food safety.

Regarding the development of supply chains in Vietnam and the issues of chain development policies, Mr. Larry CYWong said that it is necessary to reduce the participation of state-owned enterprises as well as the role of state-owned enterprises in government trade contracts. The government plays a supporting role but transfers to the private sector to implement, because the private sector plays an important role in transforming input-output segments as well as developing comprehensive value chains and each stage in the chain. In particular, there is a need for support in implementing service supply methods, agricultural product contracts, and supporting diversified agriculture to implement modern distribution chains...

In addition, policy dialogue should not only stop at the national level but also need regional dialogue to leverage ASEAN and the Mekong sub-region, forming a regional food supply chain and a comprehensive business-exploitation network, as well as taking advantage of cross-border investments and jointly exploiting emerging markets.

Pilot rice supply chain

Director of the Malaysian Institute of Strategic and International Studies, Mr. Larry CYWong, emphasized that competition in the future will no longer be between companies but between supply chains, so the development of supply chains plays a particularly important role.

Components along the supply chain do not need to belong to a single company or group of companies, but can build strategic alliances at different levels – from loose structures to dedicated suppliers and cross-investments. Therefore, Cambodia-Laos-Myanmar-Vietnam (CLMV) countries focus on developing value-added projects along the supply chain for rice products – the product with the greatest growth potential.

The supply chain reduces information asymmetry between stages, reduces transaction costs as well as increases information linkages between parties and improves the rate of response to changes in consumer preferences and tastes to gain exceptional profits. Although in the process of innovation and many challenges remain, Cambodia-Laos-Myanmar-Vietnam aims to improve the efficiency of the comprehensive rice supply chain and the “seed-to-shelf” business network; seeking to open up new markets in the region and internationally.

Currently, except for Myanmar, Cambodia, Laos and Vietnam are exporting rice and in the future these countries aim to export more rice but focus on the rice supply chain and "intra-bloc" business network.

In the Cambodia-Laos-Myanmar-Vietnam region, Vietnam exports about 30-40% of rice output, while the remaining countries in the region only export less than 10% of output. Therefore, in the future, these countries need to pay more attention to balancing rice among countries to ensure food security, maintain value and appropriate growth.

Regarding supply chain development, Mr. Nguyen Trung Kien, Center for Agricultural Policy Consulting, also mentioned public-private partnership and the role of the private sector in the supply chain. Private participation will create positive changes in the supply chain.

At the same time, Mr. Kien emphasized upgrading processes in the chain to connect the rice supply chain in the Cambodia-Laos-Myanmar-Vietnam region. In addition to proactively attracting foreign investment to transfer technology and connect export markets of the supply chain, countries in the region need to organize informal trade through strengthening connections and promoting strengths to access new markets with many incentives such as the EU, China, etc.

Each country in the region has its own advantages in terms of strategic location, political status and trade. Specifically, Myanmar's position is being enhanced as it implements an open-door policy, while Cambodia and Laos are given special privileges in accessing the European market (import tax exemption of 200 USD/ton). Therefore, the potential for developing rice, especially organic rice and branded green rice for domestic and foreign markets, especially in large supermarket chains, is feasible.

With increasing interconnectedness and interdependence in technology, productivity, trade and food security, Cambodia-Laos-Myanmar-Vietnam countries need to adopt multi-sectoral systems and approaches, and have flexible transformation to capture the potential of each country as well as the group, towards comprehensive supply chain management and “seed-to-shelf” business networks to enhance productivity in the rice sector.

This will help these countries orient their efforts to address integration issues, including the rice supply chain, in order to catch up with leading countries, ensure food security, and effectively and sustainably develop national and regional supply chains./.

According to (Vietnam+) - LC