A Bridge Linking Entrepreneurs and Farmers

During more than 20 years of Doi moi, together with industrial and service sectors, agricultural sector made a not small at all contribution to socio-economic development process. Our country’s agriculture makes strong development steps, creating large volumes of farming products, guaranteeing food security, reserves and accelerating export; living standards of farmers in almost areas get improved significantly… To gain such considerable achievements, besides efforts made by farmers, it is necessary to mention the important role of entrepreneurs. The economic relationship between farmers and entrepreneurs is a bilateral one between buyers and sellers. Farmers sell materials and farming products to entrepreneurs. Entrepreneurs both produce and process farming materials and sell materials for farming to farmers. Also from the economic relationship, there still exists a quite large gap between farmers and entrepreneurs. Farmers, a class and working force which makes up a large majority in the society, but generally speaking, they have a certain distance from other social classes in terms of their income, living standards and educational level, etc.

 

According to statistics, our national annual economic growth pace is high. However, the agricultural sector just witnesses a growth rate of 3.5 percent while the price increase is 8 percent. With such a high inflation rate, over 70 percent of people in rural area are subject to negative influences, even being left behind in the nation’s general socio-economic development. According to the survey of CIEM (Central Institute for Economic Management), by the end of 2002, the number of enterprises operating in the agricultural sector accounts for about 14 percent of the total number of enterprises all over the country. This number decreases to over 11 percent and 10 percent in 2003 and 2005, respectively. Currently, there are about 16,000 enterprises, most of which are S&Ms. In addition; new agricultural enterprises registering for establishment are mainly allocated in cities and towns. Rural areas are still less appealing areas for entrepreneurs. Currently in our country, there is only one enterprise operating in the agricultural sector out of every 57,000 farmers. This is an uneven ratio, reflecting the loose connection between farmers and entrepreneurs.

 

Global economic integration is bringing both benefits and challenges to Vietnam, especially to agricultural sector and rural development. Becoming a WTO member creates more favourable conditions for Vietnam’s farming products to enter more markets and enjoy equal treatment status. Reduction in import tariff of farming products, investments into agriculture and rural areas, support for farmers, and preferential treatment for enterprises operating in the agricultural sector, etc. will create conditions for Vietnam’s farming products to further penetrate into global market.

It is necessary that the government, enterprise associations and the association of farmers further improve their role of being a bridge between enterprises and farmers. They also need to set stricter and more specific regulations on the economic relation between entrepreneurs and farmers. In order for enterprises to have strong attachment to farmers, it is vital that an optimal mechanism for every agricultural enterprise to establish an insurance fund be present so that farmers get supported in their production process, etc. International experiences show that in countries which agriculture makes up a large proportion, industry can only enjoy strong development unless purchasing power of farmers is strong. As such, making investment for agriculture and farmers is indirectly making investment for industry. When agricultural sector and rural areas develop and farmers’ living standards get improved, socio-economic development and social equality will also increase. It is, therefore, necessary to put strong mechanisms into the constructional and developmental strategy of agriculture, rural areas and farmers of Vietnam. The position, the role and the responsibility of entrepreneurs need to be clearly identified in such strategies.

 

Also according to experts, from the side of entrepreneurs, when having their farming products collecting and processing enterprises privatized, they should allocate a certain amount of preferential shares to farmers. This is one of active moves to enhance the relationship between entrepreneurs and farmers… According to statistics, the poverty rate of our nation is currently about 14.7 percent. 90 percent of this rate falls on farmers. A vast majority of farmers only spend some 60 percent of their time on farming work. The remaining time gets spent on other activities of low productivity. It is necessary that enterprises research to exploit the large potentials of the idle working force in the countryside as well as establish and recover traditional trade villages, have policies to attract and use idle labour in rural areas…

 

In the initial stage of industrialization and modernization career of the country, farmers are still the major working force and potential market of the society. We cannot let farming output decrease as it does in some other countries in their industrialization process. In the global integration trend, competitiveness of enterprises, entrepreneurs and brand names does not only come from the abundant source of materials, cheap labour or preferential policies, it also comes from high productivity and sustainable product quality which is based on the tight connection between production stages.