Why Is Farm Produce, Food Processing Unattractive to Investors?

Source: Pano feed


According to economic experts and companies, Dak Nong province has advantages in geographic terrain, climate, hydrology, water and especially abundant and diverse soil resources for developing food crops, industrial crops, forestry, livestock and poultry husbandry – inputs for agricultural product and food processing. However, as a poor province with a low starting point, complex terrain, deteriorated roads and difficult and costly infrastructure development, Dak Nong is yet to tap its huge potential values to develop agricultural product and food processing.

Dak Nong has a total cultivated area of 318,444 ha, including ​​103,416 ha of coffee (harvesting 220,380 tonnes a year), 16,205 ha of cashew (16,090 tonnes), 31,739 ha of rubber (19,759 tonnes of latex), and nearly 11,466 ha of pepper (15,238 tonnes). The province has rich and stable input supplies for processing industries like coffee, cashew and rubber processing. Besides, climate and soil are suitable for growing other crops used for processing industry like soybean, peanut, corn, tapioca, lemon and cocoa. Livestock and poultry husbandry is developing strongly. The province now has 22,251 buffalo and cows, 135,242 pigs and 1,444,409 fowls. With climatic and natural conditions, Dak Nong has rich potential for developing large-scale farms, and establishing centralised specialised production zones for processing industry.

Bien Van Minh, Director of the Dak Nong Department of Industry and Trade, said Dak Nong province finds it hard to draw investment capital for agricultural product and food processing due to its distance to major economic centres, low economic starting point, small-scaled production, weak and insufficient social infrastructure, and poor technical infrastructure. In addition, agricultural products are low-quality and uncompetitive. Trade promotion agencies lack professionalism and quality. Mechanisms, policies and regulatory framework for business support are not strong enough. Low-quality industry planning is a major concern of enterprises.

Remarkably, local businesses mainly rely on bank loans to fund their operations but the access to this source is not easy. Furthermore, they still have to import inputs from other localities because of its unstable supply. There are seven reasons attributed to the unattractiveness of agricultural and food processing to consumers. Due to low economic and social starting point, low educational level and low labour level fail to meet larger production scales. Degraded transport systems and mountainous steeply terrains make infrastructure and factory investment very expensive. Limited local budget source cannot provide significant support for investors. The central government lacks specific policies for provinces with special difficulties. Local authorities, officials and industries lack coordination in business support. Slow-recovering domestic and international economies, tightened credit and restricted public investment are adversely affecting investors’ investment expansion intensions. Unstable input supply and volatile prices usually cause farmers to change crops to seek for better incomes. Tending techniques and pest control are not effectively introduced to farmers. Due to their reliance on bank loans to fund operations, companies are shy of expanding investment.

According to Mr Minh, to attract investors of agricultural product and food processing, the province needs to address existing problems and rearrange material zones to ensure stable supplies for enterprises. Specifically, Dak Nong needs to gradually restructure the network of agricultural product and food processing and raise the added value of processed products to serve domestic and export markets. The province gives priority to units using locally sourced materials like coffee, rubber, cashew nut and sugarcane, units using advanced technologies to manufacture consumer products like ground coffee, instant coffee, pepper and cooking oil. It supports existing processors in industrial zones and relocates improperly located units to industrial zones for easier management.

Dak Nong has further focused on administrative procedure reform and applied the single-window mechanism to assist investors and businesses to reduce the time and expenses when they deal with administrative procedures relating to tax, environment, land and other issues. It also set up a specialist panel to support them to quickly handle their emerging issues. The province has also accelerated investment and trade promotion to help them to seek customers inside and outside the province, concentrated on connecting product selling, creating sustainable distribution channels and supporting businesses and citizens to bring their products to supermarkets and trade centres, financially supported them to boost exports and attend trade fairs in the country, and mobilised social resources for infrastructure development, particularly traffic networks and industrial zones. It also has specific mechanisms and policies to encourage commercial banks to invest in the province, expand their operations, increase credits for SMEs engaged in agricultural processing, and provide soft loans for enterprises.

Moreover, Dak Nong needs to provide technical support for seedling and breeding techniques, control pests and diseases to obtain high productivity and value and grant certificates of origin and compliance to local companies. It also assists them to train human resources and builds a market database system for them to look up necessary information.

Thanh Tam

Đăng ký: VietNam News