Corporate capital shortages in agricultural restructuring

Difficulties in land policy reform

Although agricultural exports such as rice, coffee, pepper, seafood, wood and wood products have brought high turnover, the number of businesses participating in its sector remains limited. The country had over 3,600 agricultural businesses by 2015, accounting for one percent of total numbers, with more than 90 percent of micro and small enterprises. Land policy and credit to support businesses are seen main challenges. According to Huy Long An-My Binh Limited Liability Company Director Vo Quang Huy, the development of the agricultural sector requires land expansion. However, businesses have faced many difficulties to negotiate, compensate and rent land from the state and farmers.

Land accumulation is seen as a main challenge in investing in the agricultural sector, Lam Son Sugar Joint Stock Corporation Chairman of Board of Directors Le Van Tam said. In Vietnam, land is owned by the state and farmers have no right to sell, but are able to make land lease. Therefore, specific land mechanisms and policies in addition to the amendment of the Land Law are needed.

According to statistics, the country currently has around 16.3 million of farm households. Around 60 million of people work in farming among 60.7 million living in rural areas. The sizes of these plots of field vary and are generally small with 1,150 cu.m per person. Although land accumulation has been implemented, it is still in small scale. The Ministry of Agriculture and Rural Development’s Head of Planning Department Nguyen Thi Hong said that many businesses have paid attention to invest in the agricultural sector. However they have faced difficulties in land accumulation as land has been assigned to farmers. Therefore, the Ministry of Agriculture and Rural Development is proposing to amend some policies in land.

Appropriate policies needed

Hoang Anh Gia Lai, Dabaco and Vingroup are some companies in the agriculture sector, contributing to establishing large value chains. However adding more mechanisms and policies to support businesses in the application of science and technology in agricultural production in order to improve the competitiveness in the context of deeper international economic integration is necessary.

Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said that strengthening land accumulation and promoting economic cooperation are needed to encourage businesses to invest in agriculture. However it must harmonize the benefits of businesses and the interests of farmers.

Reorganizing agricultural production towards modernization is important to help the restructuring project achieve success. And businesses must be a core in this process. The agricultural sector is promoting cooperation with localities to develop agricultural products at national, provincial and local levels, while building plans and policies to attract the participation of businesses.

According to Minister of Agriculture and Rural Development Nguyen Xuan Cuong, the ministry will build the legal framework to attract businesses and set appropriate sanctions to push up the restructuring process.

Businesses must be a core in building value chains and promoting agricultural production, contributing to improving the competitiveness in the context of international economic integration. Overcoming difficulties in land policy and adding strong mechanisms are needed to help the agricultural sector raise more resources from businesses in order to ensure the success of the agricultural restructuring project.

Nguyen Hanh