Over the past years, Vietnam’s agriculture production has made significant achievements, contributing to the national food security, economic development, poverty reduction, trade balance, reducing inflation, defending the territory as well as stabilizing socio-political situation in Vietnam. Although Vietnam has undergone obvious changes in economic and labor structure, so far, 70% of Vietnamese population lives in the rural areas. Therefore, agriculture production is their main livelihoods.

Significant achievements of Vietnam’s agriculture

After 27 years of reform, Vietnam’s agriculture has made significant achievements and developed into a very key sector in Vietnam’s economy. Despites market difficulties, natural disasters, diseases, agricultural production remain relatively good growth rate. Agriculture products have provided abundant food and alimentation, assured the national food security. Prices of agricultural products in Vietnam, especially food prices remain low, resulting in low labor cost, which helps attract foreign investment and therefore make important contributions to economic growth and social stability.

Agricultural exports have increased continuously. Vietnam is now one of top world exporters in rice, rubber, coffee, pepper, cashew nuts, wood products and fisheries. Vietnam poverty reduction rate has been improved unceasingly for a long period, with a very impressive rate of 2% per year. Vietnam is currently the second biggest rice exporters in the world after Thailand, and also the second largest coffee exporter following Brazil. The nation, in addition, is the biggest pepper exporter. This reflects Vietnam’s global agricultural potential and has constituted important foundation for social stability, political security, as well as for environmental protection. Although Vietnam has great natural advantages, its agricultural products are often eyed as being low-quality in comparison with other countries like Thailand.  Against the background of deeper integration into the world economy, Vietnam’s agriculture faces a number of challenges from inside and outside perspective.

Major challenges faced by Vietnam’s agriculture

In spite of the above mentioned results and active contributions to the socio-economic stability, agricultural development is fundamentally based on exploiting the natural resources (growing cultivating land surface etc) and consuming high quantities of input materials but low technology. The low development quality is exposed by the high loss level after harvest, uneven quality of products, unsafe food sanitation and low capability in creating new added values.

Secondly, the shift in agricultural products structure has been slow, which does not reflect the competitive advantages, nor meet the future prospect of demand. Cropping still occupies more than 50% of the agricultural sector and rice is the most important major crop. Fisheries and animal husbandry develop relatively fast but unsteadily. There have been more serious difficulties for Vietnam’s agricultural production due to emerging factors such as (i) degrading farmers’ ability to expand production; (ii) increasing risks in agricultural production; (iii) risks in market price volatility; (iv) pollution and risks of environmental degradation; (v) more pressing competition by regional investments in agriculture; (vi) the world economic recession, decreasing market demand resulting in entrepreneurs’ difficulties. Due to the slow economic growth rate, as well as lower demand on the world market, prices of Vietnam’s agricultural products have declined, for example, sharply falling rubber prices in the world market are hitting major listed domestic natural rubber enterprises hard. From the mid 2012 to June 2013, most of major exporting items have suffered lower prices.

Besides, wasteful management of surface and underground water resources, old-fashioned cultivation technologies and ineffective use of agricultural by-products are reasons to partial pollution as well as to the increase of greenhouse gas emission. Other shortcomings also include lack of advanced solutions and technologies.

The economy, both domestic and world, cannot recover fully and fast within a year or two. Also, the agricultural production slows down. Lower agricultural products prices, on the one hand, help to keep inflation low, but on the other hand lower the farmers’ incomes. Against such background, investment for agriculture does not make enough improvement (investment ratio for agricultural, forestry, fisheries products out of social investment decreases from 13.9 per cent in 2000 to 6.6 per cent in 2011). If agriculture continues to face such difficulties, the ability to expand agricultural production would shrink seriously.

Proposals for development in the next period

Although common demand in the world is now lowered because of the impacts by the world economic crisis, for long term, agricultural products with higher quality, safety and hygiene will always have market and enjoy good prices. In several decades to come, both domestic and exported markets will have rooms for agricultural products. Against the background of a much deeper integration, once agricultural production shifts to better quality and higher added values, there are great chances for Vietnam to connect with other nations and enterprises and expand mutual agricultural products market. By the end of 2015, AFTA which will have developed into full capacity as well as the TPP, now under negotiation, are opening up new waves of chances.

Technology advances have been applied more broadly in agricultural production and improved the agricultural productivity. This will help the agricultural sector adapt to the new developments and overcome the shortcomings. These will be important materials for a modern agricultural structure.

How to cope with challenges and difficulties as well as to explore opportunities are intertwined with the capability of Vietnam to reform its agriculture in the past years and upcoming years. The prospect to change fundamentally the current situation of the country’s agriculture but also with the national economy is obvious and Vietnam needs to spare no efforts to implement the reform plans.

Source: Vietrade