Promoting linkages along production value chains associated with agricultural product consumption in Vietnam current situation and solutions
13:57 - 12/03/2021
Econ. Hoang Thi Huong Lan
Vietnam Institute of Strategy and Policy for Industry and Trade
Currently, the linkage along the production value chain associated with the consumption of agricultural products plays a very important role in agricul
- Current situation of linkage according to the production and consumption chain of agricultural products in Vietnam over the past time
The linkage according to the chain of agricultural production and consumption in Vietnam has been formed and spontaneously occurred in the development of commodity agricultural production and the development of a market economy in Vietnam. However, this is a simple, loose and spontaneous form of a linkage under the influence of the laws of the market economy, depending entirely on the relationship between the related parties without any binding of specific responsibilities and interests, the parties can freely break the link when they feel no longer working. Besides, in these links, the responsibilities, obligations and interests of the parties are often disproportionate, the stronger side will often get more benefits and less damage, and when the linkage is broken, the most disadvantaged are often the disadvantaged, especially smallholder farmers producing agricultural products.
The linkage occurs spontaneously under the influence of the law of market economy, which can lead to the production and consumption of agricultural products in the market becoming unstable, supply and demand, prices often fluctuate, greatly affecting production and people's lives and greatly affecting the overall development of the economy. Not only farmers lose their jobs and income, processors are not active in the source of raw materials for production and processing, but trade in agricultural products, especially agricultural exports is also seriously affected, causing general economic damage and loss to the country...
Recognizing the importance and impacts of the implementation of the linkage along the value chain of agricultural production and consumption to the development of Vietnam's agricultural and rural production in the process of construction and modernization the economy, deep integration in the global economy and sustainable economic development, over the past years, the State has issued many mechanisms and policies to create a legal framework and give priority to and encourage the development of sustainable linkages along the value chain of agricultural production and consumption in Vietnam.
In practice, recently, with many policies to support and encourage businesses and cooperatives to link in production and consumption, more and more agricultural value chains have been formed under different linkages, such as the linkage of consumption of output products or services; capital contribution for production investment... According to a report from the Ministry of Agriculture and Rural Development, up to now, the country has more than 2,975 agricultural cooperatives involved in linking production and product consumption with 1,082 enterprises. For safe agricultural chains, there are more than 1,200 certified chains nationwide, with more than 1,400 products (mainly vegetables, fruits, sea fish, fruits, eggs, fish sauce). The country has more than 3,100 points selling agricultural products according to the value chain, of which more than 640 business addresses have been certified by the safe food supply chain...
The Ministry of Agriculture and Rural Development has also built a 3-axis link chain of agricultural products pillars of the restructuring of the agricultural sector, including a three-level pangasius chain, a chain of key forest products and a chain of rice products.
In particular, many places across the country have formed many links along the synchronous value chain from the production, processing and consumption of products with the participation of enterprises, cooperatives, cooperative groups, and farmers in agricultural, forestry and aquatic products, such as the closed chain model of VinEco Agricultural Investment, Development and Production LLC for vegetable products; a closed animal husbandry chain from supplying inputs such as breeds, animal feed, veterinary to production and processing products such as CP, Mavin, Dabaco... In particular, the sustainable rice value chain model cooperates between Loc Troi Group and Phoenix Group, facilitating the Vietnamese’s rice value chain to participate more deeply in the international rice value chain. This model links and benefits about 10,000 Vietnamese rice producing households, expanding the sustainable rice farming area to over 10,000 hectares in the Mekong Delta. In addition, a number of fruit and vegetable value chains are produced under the PGS process (a system of ensuring with the participation of households, federations, and inter-family cross-monitoring systematically and endorsed by chain actors such as producers, businesses, consumers, state managers ...) being formed and developed in Vietnam..
These are forms of close linkage, with the sharing of benefits and risks between businesses and farmers. At the same time, in recent years, there have been several agricultural value chains that have successfully applied new technologies such as information technology, blockchain (decentralized databases store information in linked information blocks. with each other by coding and expanding over time) in supply chain management such as the application of information technology to connect production and consumption, traceability of agricultural products to add value.
Notably, in the past few years, our country has been forming development chains in 3 levels: national key products, provincial products and local products. To focus resources on developing the value chains of key agricultural products in the country, the Ministry of Agriculture and Rural Development has issued a list of key agricultural products at the national level to prioritize the attraction of businesses to invest in the agricultural and rural sectors according to Decree 57/2018/NĐ-CP with 13 main products including rice, coffee, rubber, cashew, pepper, tea, vegetables, fruits, cassava and cassava products, pork, meat and eggs, pangasius, shrimp and wood and wood products.
Also, the province-level key product value chain group is gradually formed with the special attention of the People's Committees of provinces in quickly identifying and promulgating a list of key agricultural products at the provincial level to attract investment and promote linkages between businesses and cooperatives, cooperative groups and farmers. Bac Giang province is one of the leading provinces with 4 main agricultural product chains including Luc Ngan litchi, Yen The hill chicken, Ven village tea, and Chu noodle. Bac Giang Provincial People's Committee has implemented the Project of building and developing commodity agricultural products to reach the provincial level in the period of 2019 - 2021 to support enterprises and cooperatives to link in production and consumption, connect markets and special Pay special attention to building product branding and traceability for products. Currently, many provinces across the country have issued key product groups at the provincial level such as An Giang, Son La, Kon Tum ...
The development of a chain of local specialty products (One commune one product of Vietnam - OCOP) has also been promoted since 2013 with Quang Ninh province being the leading province to implement this program systematically. After 5 years of implementation, Quang Ninh has developed 339 products with nearly 139 participating economic organizations, of which 131 products were rated. Economic organizations meeting OCOP product criteria are supported by the province to build collective marks, geographical indications and domestic and foreign trade promotion. From the initial results of OCOP product development, to promote this program, on May 7th, 2018, the Prime Minister issued Decision 490/QĐ-TTg approving the National Program for One commune one product in the period of 2018-2020 (OCOP Program). According to the Ministry of Agriculture and Rural Development, specific targets to 2020, standardize at least 50% of existing products, equivalent to about 2,400 products; consolidating and perfecting production organization in the direction of linking production households with cooperatives and enterprises ...
- Current status of policies to promote linkage along the value chain of agricultural production and consumption in Vietnam over the past time
2.1. Complete the legal framework to promote the linkages in the production chain and the consumption of agricultural products
Regarding promoting horizontal linkages, at the same level in the value chain of agricultural production and consumption, The State issued the Law on Cooperatives in 2012, the Civil Law 2015 (on cooperative groups) and Decree 45/2010 on the Association, creating a legal basis and prioritizing the implementation of links between cooperatives, cooperative groups and associations.
Regarding vertical linkages and linking the whole chain of horizontal, vertical, network, the State has issued the 2015 Civil Law on civil contracts, Decree 98/2018 on policies to encourage the development of cooperation and association in the production and consumption of agricultural products, Decree 57/2018 on policies to encourage investment in the agricultural sector...
The enactment of these legal documents has created an important legal basis and directly regulates the linkages along the value chain of sustainable agricultural production and consumption among actors involved in chain links. At the same time, it also shows the strong commitment of the Government and local authorities at all levels to promote the development of these links, through priority policy measures, to encourage state support for investment, credit, infrastructure development support, training support, human resource development, support for research and application of high technologies and green technologies, clean in the chain... upstream, as well as support for information, market development, product branding... contribute to expanding links downstream to directly connect with domestic and foreign consumers.
2.2. Enhance the improvement of the business environment institutions, promote the reform of administrative procedures, actively international integration, creat e a favorable environment and conditions for the development of value chain linkages in agricultural production and consumption.
Besides the legal documents that directly affect the value chain links mentioned above, The State continues to promulgate many policies to develop the market economy, modernize the country's agricultural sector, and policies on land planning and forming concentrated, intensive and large-scale agricultural production zones to put into application advanced scientific and technological achievements,... Multi-purpose policies, programs and projects aimed at developing and modernizing Vietnam's agriculture and rural areas and realizing the goal of sustainable economic development all focus on prioritizing and encouraging sustainable value link in agriculture because this is the basic area, the root of the economy, it is a sensitive area, vulnerable to the challenges of climate change, natural disasters, and epidemics, poverty...
2.3. Some general and specific policies to promote linkages along the value chain of agricultural production and consumption
The 2011-2020 socio-economic development strategy approved by the 12th Party Congress has provided a strategic orientation for comprehensive agricultural development towards modernity, efficiency and sustainability. Accordingly, exploiting the advantages of tropical agriculture to develop large commodity production with high productivity, quality, efficiency and competitiveness. Increasing agricultural output and export turnover, raise income and farmers' lives, firmly ensure national food security. Building a business model suitable for each type of tree and animal. Encouraging the concentration of land; developing farms and agricultural enterprises suitable to the sizes and conditions of each region. Closely and harmoniously link benefits between producers, processors and consumers, between the application of technique and technology to production organizations, between agricultural development and new rural construction. Renovating fundamental methods of organizing agribusiness, first of all, rice trading; ensuring the rational distribution of benefits in each stage from production to consumption. Developing a system of storing agricultural products, contributing to regulating supply and demand. Continuing to innovate and build an organizational model to develop a cooperative economy in line with the market mechanism. Controlling of the conversion of agricultural land, especially rice land to other uses, go hand in hand with ensuring the benefits of rice growers and rice-growing localities. Based on regional planning, arranging crops, animals, seasons and varieties to suit market needs and reduce damages caused by natural disasters and epidemics. Developing suitable insurance forms in agriculture. Speeding up the application of modern scientific and technological advances in production, processing and preservation; give priority to the application of biotechnology to create many varieties of plants and animals and the production process has high productivity, quality and efficiency, rapidly increasing the added value per unit of cultivated land. Supporting the development of high-tech agricultural zones. Promoting animal husbandry according to industrial, semi-industrial methods, ensure quality and disease safety...
Sustainable forestry development. Planning and developing appropriate development policies for production forests, protection forests and special-use forests with improved quality. The State invests and adopts comprehensive policies to manage and develop protection forests and special-use forests, and at the same time ensures that the people contracted to care for and protect forests have a stable life. Encouraging organizations and individuals of all economic sectors to invest in production afforestation; linking raw material afforestation with the processing industry right from the planning and investment projects; get income from forests for forest development and get rich from forests
Sustainable and efficient exploitation of aquatic resources, developing offshore fishing, associated with national defense and security and protection of the marine environment. Developing aquaculture according to planning, focusing on products with strengths and high value; constructing synchronous infrastructure in farming areas; promoting the application of scientific and technological advances to production and processing, improve productivity, quality, competitiveness and meet food hygiene and safety requirements. Building Vietnam's fisheries sector to reach the regional advanced level.
- On February 2nd, 2012, the Prime Minister issued Decision No. 124/QĐ-TTg on approving the master plan on agricultural production development up to 2020 and vision to 2030, in which the goal of comprehensive modern and sustainable agricultural development and large commodity production is determined base on promoting comparative advantages; applying science and technology to increase productivity, quality, efficiency and high competitiveness, firmly ensure national food security both in the short term and in the long term, meeting diverse domestic and export needs; improving the efficiency of land, water, labor and capital use; improve income and livelihood of farmers, fishermen, salt farmers and foresters. At the same time, also orienting land use planning and agricultural production development by commodity to 2020 and vision to 2030 and proposed major solutions to ensure the implementation of the planning objectives.
- On June 10th, 2013, the Prime Minister issued Decision No. 899/2013/QĐ-TTg approving the project of agricultural restructuring in the direction of increasing high added value and sustainable development, emphasizing 3 economic, social and environmental pillars in agricultural development
To implement Decision 899/2013/QĐ-TTg, the Government has set out three groups of policies. The first group regulates directly related to green agriculture including land use planning and zoning, requirements for environmental assessment, monitoring and control of pesticide fertilizer use, and monitoring of food safety and hygiene standards, sanctions for environmental violations. The second group of policies is market tools to help agricultural producers implement environmentally friendly agricultural practices. The tools of this policy group include carbon emissions permits, subsidies to support research and application of green technologies, payment for environmental services, the establishment of Environmental Protection Funds, environmental protection fees, and resource use tax. The third group of policies related to technology and awareness-raising education includes the development of database systems on green agriculture, green technology research and transfer, and publication of harming the community, educating and raising awareness, forming eco-labels based on environmentally friendly processes (VietGAP, UTZ ...)
Vietnam has established the National Council for Sustainable Development of Vietnam and the Office of Sustainable Growth to realize and promote national green growth. For the agricultural sector, the Ministry of Agriculture and Rural Development also established a Steering Committee for Sustainable Development in 2013 to develop programs/action plans for sustainable development in the agricultural sector restructuring plan for the period 2015-2020 and integrate the content of the sustainable development strategy for the period 2011-2020 into the policymaking process
- Decision No. 1600/QĐ-TTg dated August 16th, 2016 of the Prime Minister approving the National Target Program on Buiding New Rural areas for the period 2016-2020.
- National Program for One commune one product (OCOP), which has just been deployed since May 2018, has achieved many positive results. By May 2020, there are 61/63 provinces have approved and implemented OCOP projects and plans; 32 provinces and cities assessed, classified and approved for 1,711 OCOP products of 986 program participants. In particular, the awareness of the society, authorities at all levels, the business community, and cooperatives about the position of OCOP on rural economic development is increasing.
- Circular 37/2018/TT-BNNPTNT on the list of national key agricultural products effective from February 8th, 2019. Accordingly, 13 major national agricultural products supported under Decree 57/2018/NĐ-CP dated April 17th, 2018 include: Rice; coffee; Rubber; Cashew; Pepper; Tea; Vegetables; Cassava and cassava products; Pork; Poultry meat and eggs; Catfish; Shrimp; Wood and wood products ...
From general agricultural development policies to legal documents directly regulating the linkages along the value chain of agricultural production and consumption, all show strong efforts and commitments of The state promotes production value chain linkages with agricultural product consumption through major orientations and supportive policies that encourage the development of these linkages to create sustainable value chains for Vietnamese agricultural products.
The policies have initially promoted efficiency and created a fairly dynamic development of links along the production chain and agricultural product consumption in recent years. With the strong implementation of these policies in the coming time, it will inevitably lead to a new development both in terms of quantity and quality of these linkages, helping to develop Vietnam's agriculture more effectively and sustainably.
- The main solution to promote the linkage of the value chain of agricultural production and consumption
Reorganizing production according to the value chain of product groups. Developing a national key product axis. Ensuring that an area has a high level of natural and socio-economic adaptation, is convenient to direct, has conditions to organize production, can protect production, protects the environment, landscape, and is suitable for natural resource supply. Building large-scale concentrated commodity production areas, balancing supply and demand of the entire commodity industry across the country to maintain a cost-effective level of production. Reorganizing production. Coordinating with large enterprises capable of leading national key product value chains to review all planning strategies, planning areas, building and proposing synchronous value chain investment and following the model of industry clusters; promoting large enterprises to connect with local SMEs, local authorities, and farmer organizations to invest in value chains in the form of PPP.
Regarding the development of key product axis at the provincial level, the localities based on their advantages and market demand, choose this product group to plan specialized areas with favorable natural and socio-economic conditions, necessary and convenient transport technical facilities and support services to link with the main market. Identifying main markets for major agricultural products, prioritize local businesses as the leader of each category, connecting with large processors, distributors, and/or target markets. The State should act as a bridge for local businesses and farmers' organizations to market or large processing and consuming businesses through market information supply, market brokerage, investment brokerage. The State coordinates with large enterprises, Research Institutes, or Associations to transfer modern technology suitable for local SMEs and farmers; or developing an agricultural innovation incubator for local businesses or groups of farmers. Renovating agricultural extension, participate in this process as a technology brokerage agent
Development of local specialty products should be closely linked with the construction of a new countryside in districts and communes following the model "One commune one product". Determining the most suitable location and production object; building procedures and standards, technical standards; planning to organize production into a system. Focusing on incubating the governance capacity of farmer groups and craft villages for available specialty products. Attracting or building an intermediary organization to act as a financial broker or commercial broker to commercialize these products from the local market to domestic and international markets.
Researching to determine the position of the agricultural product industry on the global market to restructure the market for the commodity industry, manufacturing, processing, logistics, ... to prioritize development resources. Reviewing production planning and structuring to suit advantages, markets and climate change adaptation.
Strengthening research, application and transferring of agricultural science and technology, focusing on seed stages, production processes, processing, and value chain management. To adopt special preferential policies for the development of high-tech, green, clean and organic agriculture. Developing, completing and applying a system of technical regulations, standards and processes. Strengthening control over the management of growing areas, farming areas and exploiting areas, promotes the numbering of growing areas. Building a monitoring and evaluation system for farming areas to always ensure market requirements, especially standards of importing countries are increasing day by day.
Attracting investment in enterprises to form closed, high-tech processing clusters in the main cultivation areas, with infrastructure and logistics services to increase the efficiency of the production-market connection. Developing logistics service system applying technology 4.0 to serve key agricultural trade. Building and managing national brands for each major agricultural product.
Promoting international integration and market development: enhancing the capacity of information, forecasting, warning, negotiating, dispute settlement, branding, traceability, trade promotion for domestic and foreign markets.
Renovating and developing cooperative economy, farm economy; developing forms of value chain linkage, attracting private investment, promoting PPP models, reforming state-owned enterprises, reorganizing industry associations. State management innovation: consolidating the vertical management system; decentralization, increased local initiative; socialization of public services and public non-business units ...
References
- Ministry of Agriculture and Rural Development, 2018, “ Thông tư số 37/2018/TT-BNNPTNT về Danh mục sản phẩm nông nghiệp chủ lực quốc gia có hiệu lực từ ngày 8/02/2019”.
- Government, 2018, “Nghị định số 57/2018/NĐ-CP ngày 17/04/2018 về cơ chế, chính sách khuyến khích doanh nghiệp đầu tư vào nông nghiệp, nông thôn”.
- Government, 2018, “Nghị định số 98/2018/NĐ-CP ngày 05/07/2018 về Chính sách khuyến khích phát triển hợp tác, liên kết trong sản xuất và tiêu thụ sản phẩm nông nghiệp”.
- Ho Thanh Thuy, 2017, “Giải pháp tham gia vào chuỗi giá trị toàn cầu cho nông sản Việt Nam”, Journal of Political Theory, May 2017.
- Prime Minister, 2013, “Quyết định số 62/2013/QĐ-TTg ngày 25/10/2013 về chính sách khuyến khích phát triển hợp tác, liên kết sản xuất gắn với tiêu thụ nông sản, xây dựng cánh đồng lớn”.
- Prime Minister, 2016, “Quyết định số 1600/QĐ-TTg ngày 16/08/2016 của Thủ tướng Chính phủ phê duyệt Chương trình mục tiêu quốc gia xây dựng nông thôn mới giai đoạn 2016-2020”.
- Institute of Management for Agricultural and Rural Developement II, 2019, “Chuỗi giá trị nông sản, liên kết trong chuỗi giá trị và vai trò của Hợp tác xã”, Hau Giang, August 2019.