Numerous Barriers to Land Policy

9:40:13 AM | 4/11/2019

In the context of increasingly intensive and extensive international integration, for fast, strong and sustainable development; agricultural sector faces many barriers from the land policy.

Identifying barriers

For many years, the problem of land accumulation has been mentioned, but the expected goal has not been achieved. Speaking at the Autumn Agriculture Forum held by the Agricultural Union in late October, Mr. Nguyen Duc Thanh, Representative of Agriculture Union coordinating agency, Director of Vietnam Institute for Economic and Policy Research (VEPR) said, "One of the main causes of this situation is the underdeveloped agricultural land market due to the shortcomings in the current agricultural land policy."

Analyzing and dissecting this issue, Mr. Tran Cong Thang, Chairman of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), said the tax rates and fees related to the transfer of agricultural land are generally imposed at the same level with other properties (2% of personal income tax); domestic private enterprises are only allowed to hire land to invest in agricultural production without being assigned land with the collection of agricultural land use fee; households receiving rice land must be agricultural households.

On the other hand, the current policies, which are bottlenecks, are also pointed out that the limit of receiving land use right transfer, as stipulated in the 2013 Land Law, has caused many cases to be "tied", when implementing production expansion plans. In addition, property rights to agricultural land are not guaranteed like other land types. A fairly clear example was mentioned by Dr. Nguyen Huu Tho, Deputy Director of the Economic sector and field research, under Central Institute for Economic Management; that is: The Land Law does not allow the construction of solid structures for production on rice land, while large-scale agricultural production urgently require building large warehouses, hi-tech agricultural parks and also a large land fund. Such regulations are clearly hindering the enterprises’ goals of expanding the scale of production, Dr. Nguyen Huu Tho emphasized.

Without accumulating enough land, agricultural production will continue to be small and fragmented. The case of cashew industry in Binh Phuoc province is an example cited by experts for this situation. Dr. Hoang Thi Thu Huyen, Director of Center for Economics, under Southern Institute of Social Sciences, announced the survey results in Binh Phuoc, showing that the area of ​​cashew trees in the province currently ranges from 134,000 to 180,000 hectares, with a total of more than 77,600 scattered planting households. Another good example is that in order to have a large sample field, Loc Troi Group had to sign contracts with 30,000 households to get 93,000 hectares.

Proposed solutions

Vietnam is one of the countries with the lowest agricultural land area per capita in the world, the average agricultural land area per capita in Vietnam is 0.25 hectares, while this number of the world is 0.52 hectares and the region is 0.36 hectares. Vietnam's agriculture is mainly developed, based on about 10 million farm households with over 76 million agricultural lots and small, scattered plots. Land use capacity of Vietnam is also very low, only about US$1,000/hectare, equivalent to Laos and only half the Philippines, even 1/3 of Indonesia and Thailand. Income from agriculture is still low with the national average income of only about VND47 million per capita per year, leaving farmers not interested in agricultural production. The fallow rate of agricultural land has increased from 1.7% (in 2014) to 3.8% (in 2016), the average land use area per ​​household decreased by 0.9% in the period of 2014-2016. The restraints of current policies are hindering the development of organic, modern and sustainable agriculture on the basis of cooperation and links between businesses (especially economic groups) and farm households to build high-tech concentrated production areas.

The policy suggestions proposed by experts at the forum include: Removing the limit for receiving transfer of agricultural land use rights; strict regulations and monitoring of minimum area to avoid lot separation; having a specific mechanism to encourage businesses to invest in industrial zones, clusters, parks and centers - supporting services through hiring agricultural land or cooperating with farms and cooperatives; developing policies to support individuals registering to build farms and extending farms to accumulate agricultural land; supporting cooperatives and unions of cooperatives to rent agricultural land of farm households; abolishing the regulations on the time of allocating and leasing agricultural land; eliminating the discrimination of rights for land users; Replacing the transform and the transfer right with the right to buy and sell; piloting abolishing or extending the land limit before officially amending the land law.

Another proposed important solution is to activate the operation of the Land Development Fund in accordance with Article 111 of the 2013 Land Law, thereby building the market for agricultural land use rights and promoting property rights to future agricultural land; building an electronic management system to provide digital information on land use rights and transparent land market transactions.

Farm households play an important role in agriculture

In addition to the proposed solutions on land policies, experts also emphasized the role of households in the development of sustainable agriculture.

Dr. Vu Trong Khai, member of the Agriculture Union

To overcome the current policy problems that have arisen and are existing in order to promote the process of agricultural development to a new higher stage, it is necessary to apply new economic thinking, with the concepts of correct terminology to think properly. An individual farm (Solefarm) is an individual enterprise doing agribusiness (Vietnamese law mistakenly refers to it as a private enterprise). An individual farm is owned by an individual who directly manages all stages of the business process, mainly using hired labor. The form of household contract is essentially re-establishing family farms within the enterprise, which can be strong in promoting the advantages of family farms in the biological production and business advantages in the input-output service of agribusiness, thus not only overcoming the disadvantages of small-scale family farms and large-scale enterprises, but also eliminating intermediate management.

Ms. Dang Thi Bich Thao, Institute for Economic and Policy Research

The current government policies tend to encourage and support businesses to invest in agriculture, while not really paying attention to the role of farm households. A number of quantitative studies in the world show that farm households (family farms), characterized by mainly using the labor of family members, are productive and have higher economic efficiency than other types such as State farms, agricultural companies using intermediary management levels. The characteristics of the agricultural sector require workers to have high responsibilities for their crops and livestock; therefore, the farm households have superior advantages compared to other types of agriculture. It is necessary to encourage and have mechanisms for farmers to become professional ones in the future.

Dr. Nguyen Vinh Quang, Research Specialist of Forest Trends Organization

Linkage between households and businesses is a mechanism for land consolidation, but land consolidation is not always successful. The current poverty in Vietnam is largely due to the lack of productive land. Hence, it is necessary to pay attention to the households.

Dr. Tran Cong Thang, Institute of Policy and Strategy for Agriculture and Rural Development

In the 2006 – 2016 period, the number of agricultural enterprises increased rapidly but still accounted for only about 1.6% of the total number of enterprises, of which over 90% were small enterprises, even micro enterprises using 10- 50 employees; with the scale of capital from VND1-5 billion; and the average net revenue per enterprise per year of only VND3.6 billion. There should be a mechanism to encourage businesses to invest in industrial zones/clusters/parks/centers - services that support agriculture through hiring agricultural land or promoting linkages with farms and cooperatives. It is necessary to early develop policies to support individuals who register to build and extend farms in order to accumulate agricultural land, to support cooperatives and unions of cooperatives to rent agricultural land from farm households.

Nguyen Thanh