New Mechanism for Agricultural Coordination

The 12 provinces involved are Lao Cai, Son La, Bac Giang, Hai Duong, Nam Dinh, Thai Binh, Thanh Hoa, Lam Dong, Binh Thuan, An Giang, Tien Giang and Dong Thap.

 

Hung Cuc Co., Ltd is a small business in Thai Binh specialising in agricultural product business like maize flour production, animal feed production and rice export. When the company joined in the experimental model “enterprise, cooperative and farming household consume agricultural products and supply agricultural materials” initiated by the Ministry of Industry and Trade, it created a material zone, purchased and processed agricultural products what he strived a lot but could not do it previously. Remarkably, the company exported 3,000 tonnes of high-quality rice to Taiwan, China and other countries. His product was highly appreciated by foreign partners and his company won more export contracts from them.

 

Thus, by December 2012, Hung Cuc Co., Ltd had signed contracts to deploy the above model with 10 agricultural service cooperatives and expanded this model in order to increase his export volume to 8,000 - 10,000 tons from 2013. “This model will the company’s material zone development strategy in the coming time,” said the director.

 

The success story of this company is just one of many success stories of the model of linking enterprise, cooperative and farmer that the Ministry of Industry and Trade adopted in a bid to expand this model nationwide to promote enterprise - farmer cooperation to build and develop the chains of consuming agricultural products and supplying agricultural materials.

 

Notably, although this model was implemented when export markets were in difficulty, agricultural input prices soared, and most companies were in a predicament, it initially generated key exports of high quality in many provinces. For example, An Giang province chose rice and pangasius, Bac Giang province selected cucumber and tomato, Dong Thap opted for rice, Son La picked up sugarcane and maize.

 

Enterprises also have their own input sources for export production and thus they avoid breaching contracts with their partners. They control the quality and origin of products, enhanced their corporate prestige, expand markets. Meanwhile, farmers feel secured in farming when enterprises are committed to buying their products.

 

Mr Nguyen Quoc Cuong, Chairman of Vietnam Farmers Association, said that this model was good and beneficial. However, in this model, enterprises must be active players. He analysed that enterprises are active from input supply to product purchase. This means that companies keep both inputs and outputs. Nonetheless, to make enterprises the lead in the chain, the State must introduce preferential policies which should be interpreted as a channel of investment for agriculture, farmers and countryside, not only for enterprises although it is correctly for them in form.

 

To help enterprises perform their roles in this model, the State should have preferential policies and supports for them to actively deal with problems arising from the connectivity. For example, they will be lent at soft rates, granted tax exemptions, or head office construction. These supports will encourage them to join in the chain and feel secured with the model. In addition, the State should have insurance mechanism to cover wide price volatility to ensure harmonious interests for both enterprises and farmers. “In the end, benefits of enterprises are also those of farmers," Cuong stressed.

 

Le Thanh Khiem, Deputy Director of Tien Giang Food Company, added that the State should play directing roles in this linking model. It should orient and organise pro-community management. Especially, it should support planning large-enough production zones, ensure easy market access and ensure output consumption. Besides, it must have policies and sanctions on enterprises signing contracts with farmers. It must be in witness to ensure the contract enforcement.

 

Admittedly, this model has initially developed connectivity of all stakeholders, asserted and enhanced the prestige of Vietnamese agricultural products. Perhaps, the Ministry of Industry and Trade should allow foreign enterprises to join the model to create the market perfectness, especially agricultural products - key exports of Vietnam.