Economic Sector

Last updated: Friday, February 15, 2019


Attracting Private Investors in Food Chain Development

Posted: Thursday, March 15, 2018

Recently, the Government of Japan has strengthened support for localities and businesses in Vietnam to build food value chains in the country in the form of public-private partnership and has obtained encouraging results.

Lam Dong is among the biggest recipients of Japanese agricultural investment. Determined to build a top-class high-value agricultural region in Southeast Asia, the province has carried out many projects, initially established centres for production and processing of vegetables and flowers of international standard and quality for export to Japan and other high-end markets.

At the same time, it has focused on attracting financially, technologically viable strategic investors to do business and cooperate with farmers and businesses in Lam Dong. By growing high-tech agriculture, people's incomes have increased and agricultural exports accounted for 80 per cent of the province’s total export value.

Japanese investment projects in Lam Dong province are mainly engaged in agriculture with six projects and a combined registered value of US$7.79 million, accounting for 50 per cent of total Japanese FDI projects. The average investment of a project is US$3.2 million. So far, most of registered projects have gone into operation.

In Nghe An province, the Technical Cooperation Project on Agricultural Development Planning has been deployed since 2016 to develop contract-based agricultural production and attract Japanese investors. The project is executing the master plan for agricultural development and action plans to establish food value chains by forming the Agricultural Market Forum and contract-based agricultural production model.

According to Mr Sakura Hiroyuki, Agricultural Advisor to the Japan International Cooperation Agency (JICA), a considerable disadvantage of establishing food value chains is that projects are located far from major consumption hubs like Hanoi and Ho Chi Minh City. Meanwhile, Vietnam lacks good infrastructure flows for agricultural production and product classification, product packaging, cold storage equipment and cold transport chain.

In order to tackle these shortcomings, authorities must firstly have close directions and at the same time formulate a mechanism for inter-agency coordination to quickly respond and solve emerging issues in a flexible manner. In particular, the cooperation with private enterprises is also important to update information.

Solutions put forth by Mr Sakuma Hiroyuki include strengthening operations of farmer legal support organisations such as farmer associations, agricultural cooperatives, and capacity building for agricultural extensionists.

Small-scale producers usually find it hard to apply scientific and technological advances. To do that, it is necessary to expand the scale of individual farmers, encourage large enterprises to engage in agribusiness, and link farmer households into an organisation to scale up operations.

Although Vietnam lacks legal regulations on agricultural investment incentives, many have still sought to invest in advanced technology, large-scale production.

In addition, the option of gathering farmer households into an organisation such as a cooperative to scale up production can be done on a large scale. The agricultural structure in Japan is similar to that in Vietnam, mainly small-scale agro-business households and the Association of Agriculture plays an important role.

Huong Giang

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