Building Infrastructure for Large-scale Agricultural Production

Source: Pano feed


Much progress has been seen in the process of building the foundation for the successful enforcement of Decision 899/QD-TTg of the Prime Minister dated June 10, 2013, approving the agricultural restructuring scheme towards improving added value and sustainable development.Forming big fields

Dr. Dang Kim Son, a pioneering researcher of agricultural and rural development policies, concluded, “In order to meet requirements of large-scale agricultural production and accelerate agricultural restructuring, land accumulation is a must.”

After quite a lot of controversies about land accumulation standpoints, the amended Land Law, effective on July 1, 2013, opens up the opportunity for farmers, organisations and businesses capable of conducting large production to accumulate land. According to the law, the term of agricultural land is extended to 50 years from 20 years earlier. Decree 43/2014/ND-CP dated May 15, 2014 on detailed regulations on the amended Land Law significantly increases the transfer limits of land-use rights. The limit of 30 ha is applied to each type of annual crop-farming land, aquaculture land and salt production land in centrally governed provinces and cities in the southwest region and the Mekong Delta region, while the limit of 20 ha is applied to each type of land in remaining provinces and cities.

As for perennial crop land, the limit of 100 ha is applied to communes, wards and townships in deltas, and the limit of 300 ha is applied to localities in the mountainous areas. As for forestland, the limit of 150 ha is applied to localities in deltas and the limit of 300 ha is applied to localities in mountainous areas.

The amended Land Law also provides regulations on treatment and revocation of land acquisition cases affecting the rights and interests of land users. The act also has strong sanctions to deal with cases of wasteful or improper use of reclaimed land.

Leveraged by science and technology

At a scientific and technological conference on agricultural restructuring and new countryside construction in December 2014, Minister of Agriculture and Rural Development Cao Duc Phat admitted that though the investment increases 11 – 12 per cent a year on average, and the agricultural scientific and technological research and transfer sector and the agricultural extension sector have attained remarkable achievements, the agricultural scientific and technological level of Vietnam is low and underdeveloped, far behind the region and the world.

According to Minister of Science and Technology Nguyen Quan, when agricultural land and agricultural workforce shrink and competition for water resources, natural resources and capital sources is fiercer and fiercer, science and technology must be considered a particularly important factor to enhance the competitiveness of key agricultural products and sustain agricultural growth.

To enable scientific and technological activities to create leverage for large-scale agricultural development, Minister Phat said the Ministry of Agriculture and Rural Development will expeditiously complete scientific and technological policy reform; complete the mechanism for placing orders for scientific and technological products; review and transform operational mechanisms of agricultural scientific and technological organisations from State fund to autonomy; promote the commercialisation of scientific and technological products in agriculture; and facilitate patent transfers.

The ministry will also ask localities to issue and implement normative legal documents, mechanisms, policies and strategies for science and technology development, and plan local agricultural scientific and technological organisation networks towards simplicity and efficiency; create a healthily competitive business environment, allow businesses to use land-use rights for their science and technology development funds to apply scientific and technological results and technological innovations.

Spurring value chains

In reality, some Vietnamese companies have applied large-scale production linking models based on value chains, like An Giang Plant Protection Joint Stock Company, Vinafood 1, CP Livestock Corporation, Green Food Community Joint Stock Company. In May, SBV Governor issued Decision 1050/QD-NHNN on pilot lending for companies engaged in connections and scientific and technological application models in agricultural production.

As of the end of 2014, three waves of credit contracts had been signed between commercial banks and enterprises involved in the pilot programme. Nearly 40 companies were lent a total of VND7,320 billion bearing the maximum interest rate of 7 per cent per annum in the event of short-term projects, 10 per cent in the event of medium-term and projects, and 10.5 per cent in the event of long-term projects. Borrowers were companies signing contracts concerning the connection in production, processing and consumption of agricultural products; companies certified to apply high-tech to agriculture by the Ministry of Agriculture and Rural Development; households and cooperatives representative of farmers to sign cooperation contracts concerning the connection in production, processing and consumption of agricultural products certified to specific projects by the State Bank of Vietnam and the Ministry of Agriculture and Rural Development.

Decision 1050/QD-NHNN allowed borrowers short of collateral assets to borrow loans if commercial banks can control cash flows of chain links. The loan value may reach up to 70 per cent of plan/project value.

The pilot lending programme based on Decision 1050/QD-NHNN is assessed very positively when the Government is supporting agricultural restructuring with the aim of creating a sustainable large-scale agricultural production sector.

Rationalising investment structure

According to the Ministry of Agriculture and Rural Development, agricultural and rural development investment reached VND520.49 trillion in the 2009-2013 period, an increase of 2.62 times over the previous five-year period. The State funded investment capital, administered by the ministry, was VND33,522 billion in the 2006-2014 phase. Proceeds from government bonds invested in irrigation development, managed by the ministry, reached VND36,096 billion during this period. Nearly 84 per cent of the fund was spent on urgent irrigation projects. Ms Nguyen Thi Hong, Director of Planning Department under the Ministry of Agriculture and Rural Development, said the investment structure in the 2011-2014 period was rationalised, with less money for irrigation works and more money for production.

Given limited public investment, to maintain agricultural growth, the Ministry of Agriculture and Rural Development has advocated adjusting investment structure and mechanism. “The private sector is encouraged to invest its resources to a maximum in agriculture and rural development. The investment must be based on economic, social and environmental efficiency principles,” said Minister Phat. Fisheries sector will gain added investment in the 2016-2020 period, with 8.7 per cent of investment value. The ministry will also adjust public investment allocations for regions to give more resources to regions with greater advantages like Mekong Delta, the southeast and the Central Highlands and reduce poverty in mountainous, coastal and offshore areas.

Nguyen Thanh

Đăng ký: VietNam News