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ECONOMY

Vietnam agricultural firms would lose competitiveness in long-run without proper linkage

Updated at Tuesday, 08 Oct 2019, 18:32
The Hanoitimes - The application of technologies and creation of value chain in production are key for sustainable agricultural development, said an expert.
Vietnamese agricultural firms would lose competitiveness in the long-run without proper linkages for greater added value in production, according to Park Hyang Jin, CEO of South Korean company Dreamfarm. 
 
Overview of the conference. Source: Ngoc Thuy.
Overview of the conference. Source: Ngoc Thuy.
Park made the assessment in a conference jointly held by Vietnam’s Ministry of Agriculture and Rural Development and the Vietnam Chamber of Commerce and Industry (VCCI) to discuss the possibility for Vietnam’s agriculture to further integrate in global value chain on October 8.

In addition to form a strong linkage in production, Park suggested Vietnamese enterprises to apply technologies throughout their operation, from production to processing, packaging and distribution, ensuring the whole process is under control.

Hoang Quang Phong, vice chairman of VCCI, said Vietnam is among the world’s major agricultural exporters, however, the sector’s competitiveness remains limited, due to most products having low added value. “The reason is that major phases in value chain production such as processing or packaging have not been focused on,” said Phong. 

Moreover, financial incentive policies for investors joining the agricultural value chain remains flawed, Phong added. 

Pham Thi Thanh Tung, head of the Credit Department for Agriculture Sector under the State Bank of Vietnam (SBV), said the application of technologies and creation of value chain in production are key for sustainable agricultural development. 

However, such production chain models still have shortcomings, due to the inefficient and weak linkage among farmers, producers and distributors. 

“This causes difficulties for credit institutions in monitoring the cash flow after lending to production chain,” said Tung. 

Moreover, the sector is exposed to potential risks from natural disaster and epidemic, while most agricultural companies lack transparency and collateral to apply for loans from the banks, added Tung. 

To widen access to credit for agricultural companies, Tung said more efficiency in credibility assessment is necessary, especially for those without collateral. 

Nguyen Quang Toan, director of Agro Processing and Market Development Authority (Agrotrade), informed as of September, Vietnam has a total of 1,478 production chain models, up 660 year-on-year; 1,462 products and 3,267 location selling safe products under production chain models in 63 out of 63 provinces and cities; over 7,000 large-scale processing facilities of agriculture, fishery and forestry; 25,000 farming households forming linkages with agricultural producers qualified with Vietnamese Good Agricultural Practices (VietGAP).

As of present, Vietnamese agricultural products have been available in 185 countries and territories, ranking 2nd in Southeast Asia and 15th in the world in terms of farm exports. Vietnam is currently members of 16 free trade agreements, presenting opportunities for agricultural production, said Toan. 

In the first nine months of 2019, farm exports reached US$30.2 billion, up 2.7% year-on-year. 

“Greater integration into global value chain would help Vietnam’s agricultural sector fulfill its potential,” said Toan. 

World Bank specialist Pham Hoang Van Anh said global demand for food is projected to increase from 70% – 100% from now on until 2050, due to an increase in population and changes in people’s eating behaviors.  

For Vietnamese products to grasp this opportunity and Vietnamese agricultural sector further integrate in the global value chain, Van Anh suggested to focus on investing in modern agricultural infrastructure for greater competitiveness. 

“Quality infrastructure is key factor for a developed agricultural and food sector,” Van Anh stated. 
Ngoc Thuy
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