Why is the rate of enterprises investing in agriculture in Nghe An low?

Leading enterprises

To change the face and production mindset, to build a modern and concentrated commodity agricultural production, high-tech agricultural production is a necessary, even inevitable step. And to create this "step", the presence of enterprises is one of the prerequisites.

In recent years, from the potential, advantages as well as efforts, incentive and support policies, the province's agricultural investment attraction sector has achieved many remarkable results. In the period 2016-2020, Nghe An has attracted 39 investment projects in the agricultural sector, with a total investment of 3,757 billion VND; from 2020 to now, there have been 27 projects, with a total registered capital of 3,730.70 billion VND.

Tuna processing line at Fescol Tuna Processing Factory. Photo: Thu Huyen

Notably, large enterprises with strong economic potential have emerged, investing in the construction of concentrated raw material areas, building large-scale processing factories, playing the role of "locomotive" in developing modern agriculture. 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 province.

Not only creating jobs for tens of thousands of workers, but during its operation, TH's concentrated dairy farming project also contributed significantly to stimulating economic growth in the project area, changing the face of the province's agricultural production. This is also the first livestock model in Vietnam to apply high technology, pioneering the implementation of 4.0 technology in dairy farming with the integration of digital technology and automation. After the success of the project, TH continued to enter other fields such as the production of clean vegetables, tubers, fruits, purified water...

Dairy cows are raised using a high-tech concentrated model of TH Group. Photo: Thu Huyen

In addition, some localities have also made progress in attracting investment in agriculture. For example, in Yen Thanh district, promoting the strengths of the 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.

Deputy Director of the Department of Agriculture and Rural Development, Ms. Vo Thi Nhung shared: From the province's efforts, 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...

High-tech agricultural production model in Hung Thanh commune (Hung Nguyen). Photo: Thu Huyen

Why do few businesses invest in agriculture?

In 2022, Nghe An province granted new licenses to 116 projects, with a total registered investment capital of VND 32,090.4 billion; adjusted 118 projects, of which the total investment capital of 38 projects was adjusted, with a total investment increase of VND 13,674.1 billion. The total newly granted and adjusted capital increased by VND 45,764.5 billion. Nghe An is in the top 10 localities attracting the largest FDI in the country. In the first quarter of 2023, the province granted 30 new projects, with a total registered investment capital of more than VND 4,937 billion, the total newly granted and adjusted capital was more than VND 5,435 billion. However, among the 116 newly granted projects in 2022 mentioned above, there were only 4 agricultural projects.

The first reason why businesses are not interested in investing in this field is because of the high risk and slow capital recovery. In particular, with the harsh climate typical of Nghe An, along with the increasingly severe climate change, agriculture always faces uncertainty.

In 2022, floods washed away the entire area of ​​melons, vegetables and strawberries at the beginning of harvest of Phu Thinh Agricultural and Service Cooperative (Hung Nguyen). Photo: Thu Huyen

Investing more than 500 million VND to build a greenhouse, applying high technology in production on an area of ​​2,500 m2 in Hung Thanh commune (Hung Nguyen), up to now, Mr. Nguyen Van Son - Director of Phu Thinh Agricultural and Service Cooperative has achieved remarkable results. The greenhouse area is 1,100 m2 wide and the surrounding land area is planted with valuable vegetables and fruits. Currently, he hopes to be facilitated to rent more land to expand the production scale, however, 2 years have passed, that wish is still just a hope. "In the immediate future, I hope the commune will create conditions to rent an additional 1.5-2 hectares of land, 5% of which people are currently producing peanuts, with the purpose of both agricultural production and "welcoming" the trend of developing agricultural tourism", Mr. Son shared.

In addition to the "barrier" of land, Mr. Son also encountered difficulties in finding labor, the business had to train, guide, supervise, and work together. Not only that, starting production in 2018, up to now, Mr. Son has experienced two major losses due to natural disasters. In 2020 - the first year of production, floods washed away the entire area of ​​melons, vegetables, and strawberries when they started to harvest, causing a loss of over 100 million VND; most recently, in the flood season of 2022, nearly 1,000 newly planted strawberry plants were also swept away by floods, causing a loss of nearly 60 million VND, and the automatic irrigation machine was damaged. Mr. Son said: "The flood season is the season when if you can do it, the economic efficiency will be very high because people rarely produce vegetables. However, natural disasters are very unpredictable, so although I know it is valuable, I usually only dare to produce about half of the area."

Workers of Nghe An Rubber Investment and Development Joint Stock Company tap latex at a garden in Thanh Chuong. Photo: Phu Huong

Not only vegetables and fruits, but businesses growing other crops such as rubber and tea have also suffered many times due to drought and storms.

In addition to the objective factors that many businesses have reported, despite having many policies and mechanisms, businesses still face many difficulties that need to be resolved when investing in agriculture, especially in accessing credit capital and tax incentives. A cassava starch processing enterprise said that although it is exempted from export VAT, the procedures for checking and settling tax refunds are very slow. Income tax refunds are not implemented immediately but are only gradually deducted, causing difficulties in ensuring operating capital.

In addition, the difficulty of land accumulation and high land rents also lead to a situation where businesses lack land to build raw material areas and processing zones. In the province's approval decision, Nghe An Rubber Development Investment Joint Stock Company was planned to have 8,700 hectares of land for rubber planting, but up to now, after 13 years of project implementation, the business has only been able to plant 4,500 hectares of rubber, due to lack of land. This has led to the failure of project progress and the plan to build a processing factory in the raw material area, causing many difficulties and losses for the business.

Doi Choi farm model applies high technology for effective production in Do Luong. Photo courtesy of PV

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...

In the coming time, Nghe An province will focus on attracting projects to exploit the potential and strengths in the regions, areas and localities of the province; in which, it will pay attention to attracting projects in the field of processing agricultural products and medicinal herbs in mountainous areas. Focus on large-scale agricultural projects, deep processing, forming value chains from farming, harvesting, preserving, processing to organizing consumption; Projects applying scientific and technological advances, applying high technology, clean agriculture, organic agriculture in a modern direction with high efficiency and sustainability.

Ms. Vo Thi Nhung - Deputy Director of Nghe An Department of Agriculture and Rural Development

Nghe An continues to mobilize capital sources to implement irrigation projects and important raw material transportation routes. There are orientations for each field, focusing on a number of specific projects such as: Beef breeding and processing; Peanut product processing factory; Medicinal plant development and medicinal plant processing factory... In the forestry sector, the construction of high-tech forestry zones will be accelerated, attracting investment projects in processing factories and manufacturing all kinds of wooden furniture for export; processing artificial boards from bamboo, rattan, etc.