About PAN

Awakening of the potential

The conversation between the journalist Tran Cao, Head of News, Politics, Society at The Vietnamese Agriculture Newspaper and Mrs. Tran Kim Lien, Chairman of the Board, General Director of Vietnam Seed Corporation (Vinaseed Group) somewhat explains the barriers, and constraints of agriculture sectors

Mrs Tran Kim Lien:  Everyone discussed restructuring, but the question was, “How to do it?”

Journalist Tran Cao:  Hello Mrs. Tran Kim Lien, 2018 can be considered a very successful year for the agricultural industry as it has reached the highest growth milestones in many years, and the value of many commodity sectors with multi-billion USD exports continues to be the brightest spots in the country's economy. However, in general, there are still difficult problems. Some potential sectors are still “sleeping” and the “barriers” to development have made it difficult to reach their estimated potential.  As a Head of a leading business in this industry, what do you think?

Mrs Tran Kim Lien:  First of all, we can be excited because of the fact that in 2018 the agricultural industry has achieved a very good grow rate, it can even be considered the best ever. We have experienced growth in all areas from rice, to fruits, to seafood.  This growth is partly due to the Ministry of Agriculture and Rural Development restructuring the agricultural industry in the direction of improving value-added and sustainable development. However, in undertaking this, as you can see, there are still things that are not really clear. Everyone said that restructuring was essential, but many people don’t know where to start.  For me, our orientation within the market, outline strategy, and goal setting were the most important factors that had to be taken into consideration.  Recently, I have participated in the International Forum in Taiwan, and this has led me to place considerable emphasis on the importance of market orientation. 

The Taiwanese Agriculture Committee drew out a picture for the research institute and found companies in Taiwan that had potential for development.  First, they discovered that they didn’t have enough land for rice production and focused their efforts on producing higher quality fruits and vegetables utilizing technology for creating products not only for domestic consumption, but for the world market as well. According to their analysis the international vegetables and flowers market is currently valued at over 100 billion USD.  Added to that was research into which products are most financially advantageous in the scope of 100 billion USD, and which countries were dominant in those markets.  Finally the analysis identified which markets were still most likely to be open to further exploitation.  For example, in the flower market their analysis showed that by focusing on research in the technology transfer of flower production for tropical countries it was possible to orientate and build their businesses in this field. This shows the Taiwanese government is very aware of developing trends and guides research and the development of careers which enhances business in agriculture.  Information and support from the government is focused on developing growers’ orientation, planning and support. 

As we can see, rice farming has now reached its potential for productivity, production, and technology usage. There are many varieties of rice that have yields of 9 tons/ha.  However, following productivity without focusing on quality or other factors in building a global value chain will lead to market difficulties. We analyzed the global rice market and realized that the demand for rice imports is about 17 billion USD. For coffee and rubber it’s about 10 million USD, and for pepper iit’s 2 billion USD.

The Government as a Companion 

Journalist Tran Cao:  It can be seen that the growth of the agricultural industry come from exports, the international field, bigger markets, and this is opening up many opportunities, but has resulted in more intense competition.  So, what must businesses do to have “enough power” to join? 

Mrs Tran Kim Lien:  The world is an open playing field, and our country must have a plan to deal with the fragmentation, spontaneity and chaos related to these areas of production.  For example, it is not prudent to grow only sweet potatoes when they have a high price because there’s always a risk of over supply, in which difficulties in offloading stock profitably can be caused by price reductions.  If this continues we will fall into a spiral of devaluation.  In some developed countries, the government plans production areas very clearly. For example, in New South Wales, Australia there are favorable natural and climate conditions for breeding livestock.  The government has set up a research institute, imported the best breeds of cows, and transferred grass seeds to maximize returns for farmers.  In the dry environments, they grow crops. Their method is agricultural value chain development, linking research institutions with the value chains, thereby transferring technical advances to benefit businesses.  In Taiwan, they aim to become an important player in vegetable production centers, and are taking advantage of genetic resources to turn their seed production units into some of the best in the world.  They have already developed 32 different varieties of cauliflower, and some small-scale farmers could produce 30 tons of cauliflower each year to export.

Regarding Vietnam, I think that in restructuring the agriculture program it is important to not consolidate production of one crop to one commune.  We need to avoid monocultures, and as I said before we have been too focused on the rice farming market which has denied us the chance to become competitive in other potential markets. Our Vinaseed Group has had to change. After market analysis, we decided to change the strategy of our corporation to focus on flowers and vegetables. The production of flowers and vegetables currently occupies about 1.5 million hectares, but the market for these products is huge and is experiencing high demand, especially in the processed foods sector.  The Ministry of Agriculture and Rural development needs to plan which areas are used for the production of these goods with regards to the area’s strengths and viability.  There needs to be a large investment policy equivalent to that which is invested in rice farming. We need to focus on developing commodities which have growth potential.  In order to increase the value of agricultural production a few hundred thousand hectares which are currently used to produce rice need to be turned over to the cultivation of fruit and vegetables.  The main thing that the government should doing is research, analysis, and forecasting that would be used to guide and plan future strategic decisions.  For example, in the drought area in Binh Thuan, growing dragon fruit is fine, but there should also be diversification into more drought resistant crops like grapes and watermelons.  The government must have support mechanisms so businesses can participate and have trade mechanisms for a wider variety of crops.  

Or as in Tay Nguyen, it has been determined the strength of this area doesn’t necessarily have to be confined to the production of coffee; it can also be used to grow bananas and passion fruit.  This sort of diversification must be clearly planned with policies to pull in processing businesses and support initiatives to allow new types of credit policy. Everything must be synchronized to proceed, but these plans mustn’t initially be too ambitious as the chain of goods must have the required fit to allow smooth growth in order to take advantage of our countries’ conditions. 

Allowing businesses to participate in these new initiatives requires institutional changes to be made first. According to Vietnam Chamber of Commerce and Industry (VCCI), 7% (about 7000) of businesses are registered in agriculture sectors, however only 3000 businesses are actually active. The Government must have the right policy for credit support, especially a risk protection policy for businesses. 

With the loan package of 100.000 billion VND, it is very difficult for businesses to access because the current interest rate of 10% is now 11%, and it can’t be helped. To invest in an agriculture project in Mekong delta, we have borrowed a loan of 260 billion VND with a floating interest rate. The maturity is 5 years and the interest rate now is about 15-16% per year. How can we bear this? There are some big businesses invested heavily in the sector; however they have to sell their business after all because of their inefficient investments.
Regarding agricultural insurance, we now have a decree on it, but the implementation is limited.

Journalist Tran Cao:  So, it’s all about the role of the government again? 

Mrs Tran Kim Lien: That’s right!  The role of the government is to invest in infrastructure. In Taiwan, a lot of roads to small farmers were paved.  As a result of this, delicate produce like fresh custard apples can be transported from the garden to the market without fear of bruising as the roads are no longer bumpy. I think the government must invest in facilities for new rural infrastructure to encourage businesses to participate more fully. Saying that doesn’t mean it is solely the government’s responsibility. Businesses must also invest themselves.  They need to invest in systems for preservation and processing.  

The government needs to adjust credit policy to help businesses invest in more complete production in infrastructure, processing and preservation.  At the moment there are problems relating to the credit policy. For example, according to the policy, if the businesses build preservation warehouses, or transplanting and plowing machines, then they do not have to pay the interest rate for the first 2-3 years or they can get grace period for their loans, etc. But when businesses apply for the loan, the banks do not offer them favorable conditions and they have to follow the normal loan terms. That means the implementation of the policy is limited. The credit policy of the government must be enforced across the banking sector, so that farmers can benefit from the policy.

Potential needs to be awakened 

Journalist Tran Cao:  It is many people’s opinion that the fruit and vegetable production is considered one of the most promising sectors of Vietnamese agriculture. However, businesses processing fruit and vegetables only occupied 2,19% of the businesses activity in the agricultural industry. This is a huge potential area for development. Is Vinaseed a business that has had many “diversification” strategies in this area? 

Mrs Tran Kim Lien: I think Vietnamese fruit and vegetables have many advantages, especially winter vegetables.  Our country has, in addition to the tropical climate, a temperate and cold climate in the winter in the North.  It is like a giant refrigerator, no need for greenhouses. It is a big advantage that not many countries have.

For example, in Holland, from now until April of the next year, all the onions have to stay buried under the snow, and only what is needed is taken. In the North of China from October to April the weather is too cold to grow anything due to freezing night temperatures.  In Zhejiang they have to build clay walls around their vegetables to prevent frost damage which is expensive and time consuming.  As we can see, Vietnam has an advantage in producing temperate vegetables that many other countries don’t have.  

Another example right now is sweet corn, which has a large export market. Winter in China doesn’t allow them to compete in this sector so we must make use of our favourable conditions.  It would be great if we could develop our processing, canning, and frozen food industry so that we could make use of our potential more fully.  There is also the possibility to expand our pickling industries as the demand for these goods in both Japan and Europe are considerable.  The fact that Vinaseed has repeatedly been unable to buy enough raw materials such as  Japanese sweet potatoes and bell peppers for their production to export to Japan may illustrate the high demand of temperate vegetables produced in Vietnam.

Vietnamese flowers have a similar advantage; we are currently selling a bunch of daisies for over 10.000 VND in Japan, each year they need millions of bunches, though we have yet to enter the Korean market,  it is important that our produce must be qualified. 


Mrs Lien suggested that Vietnam has a significant advantage in producing temperate vegetables. 


Vinaseed is currently cooperating with Japan in producing research in the field of tropical flower seeds and vegetables for production in Lam dong.  We also have a plan to spend 150 billion VND to buy a vegetable company, so that it can replace produce from more expensive imported sources. Secondly, there are plans to build a complete chain of large-scale rice exports, aimed at the high-end rice segment in the market. Automation and closed technology are used in the processes of seeding and harvesting to cold syrup preservation. Vinaseed's total investment in 2019 will be about 400 billion VND which will be used for research and development of the fruit and vegetable market.  Modernizing technical facilities will complete the closed value chain of high quality rice in the Mekong Delta by advanced automation technology based on cooperative models and land accumulation. The Group will also set up a plant research institute on the basis of consolidating three existing research centers. For the first time, we have partnered with Taiwan to build the production area of F1 sweet corn varieties, making it a center for supplying sweet corn varieties at home and abroad.

Journalist Tran Cao: Does this mean that science and technology need to improve in alignment with the policy changes that are being made?  

Mrs. Tran Kim Lien: I have just attended some international conferences and I am a little worried and sad. Our farmers are very creative, but businesses are not interested in investing in them?  Without technology transfer, it is very difficult to keep pace with global competition.  The reality is that participation of businesses in the use of research and technology transfer has up to this point been very limited.  

Some quality rice varieties of Vinaseed Group.
Concerning restraints of seed technology, post-harvest technology and processing technology… In order for agriculture to take off there must be renewed focus on science and technology. Because science and technology itself is a decisive factor, not something else. Science and technology now is not simply about creating new breeds because this is already an age of varieties that have been labeled and publicized about their nutritional content, already internationalized. Countries have gone on to produce nutritious food at a very high level. Meanwhile we still go after productivity, chasing after reality. In the past, we did not care about climate change varieties, but now when it comes, we have just started to research, but reality has shown that the latency of science and technology is huge.
The main problem of science research is the genetic source, background knowledge, international cooperation, and management methods. Our problems are outdated machinery, small investment, and The main problem of science research is the genetic source, background knowledge, international cooperation, and management method. Our problems are outdated machinery, small investment, and limited bio technology usage. We are the latecomers that can benefit from advanced countries but this has not happened frequently. For example: in Australia, they do not directly produce breeds but mostly import breeds, then they improve and select progressive varieties to receive all the advances available to them.  That means we must have a short-term strategy to take the lead, but this is very limited, in terms of technology, product quality, productivity and technology of the breeds

Journalist Tran Cao: Thank you very much! 




 

 What do farmers need?

 

When we asked the question, how to help farmers awaken their potential when joining WTO, beside the policy, large scale orientation and government’s role, or the science researching of institutes, Mrs Tran Kim Lien identifies: “To participate in the WTO, each and every Vietnamese farmer must fulfill the following criteria: first, have enough quantity of the product at the sufficient quality. If there is not enough quantity, they cannot have autonomy. If we want to do it, we could not let land and soil be fragmented into pieces. Secondly, when participating in the global market, the farmer’s produce must reach a high level. Their products have to meet global standards such as such as Viet GAP, Global GAP and have the certificate of origin. Thirdly, the WTO is a fair playing field and all countries are free to trade. However, each country has different technical barriers, especially concerning the use of pesticides. Farmers are not currently aware of these so it is therefore necessary to have initiatives set up to inform and train the rural labor market”

 

 



 


Back to Top