Báo cáo nghiên cứu khoa học " Developing an Agricultural Research and Development Priority Framework for Vietnam Economic & Policy Sub-Sector Workshop " docx

Developing an Agricultural Research
and Development Priority
Framework
for Vietnam
Economic & Policy Sub-Sector
Workshop
Data and Information Sheets:
Economic & Policy Research Opportunity
(EPROs)
EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS,
FORECAST & POLICY ANALYSIS
EPRO 2: NATURAL RESOURCES AND RURAL
ENVIRONMENT MANAGEMENT
EPRO 3: RESEARCH, TECHNOLOGY DEVELOPMENT
AND TRANSFER DELIVERY SYSTEMS FOR
AGRICULTURE AND RURAL DEVELOPMENT
EPRO 4: SOCIAL SECURITY FOR RURAL PEOPLE AND
SUSTAINABLE POVERTY REDUCTION
EPRO 5: CLIMATE CHANGE
EPRO 6: RURAL DEVELOPMENT
EPRO 7: IMPACT OF INTERNATIONAL ECONOMIC
INTEGRATION AND MARKET ACCESS TO THE
VIETNAM AGRICULTURAL TRADE

July 2010


EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS, FORECAST
& POLICY ANALYSIS
DATA SHEET
ARDO DEFINITION

1.1

National Goal or Purpose

To develop the capacity for market analysis and forecast, to improve competitiveness of major
Vietnamese products in domestic and international markets and to use that capacity as a basis for
providing commodity policy advice, including food security, to Government.
1.2

Research Scope
1. To construct an effective database and monitoring system for market information and
for food security for strategic agriculture commodities.
2. To built a group of agricultural commodity experts to do commodity market analysis
and forecast, especially for policy analysis of MARD, as well as to provide consulting
service for local authorities and business organizations
3. Conducting in-depth analysis and demonstration model of market change at macro
level in short term and long term, in order to help in forecasting and planning work of
MARD, local authorities and agri-business organizations.
4. Provide timely information and awareness of commodity analysis results via policy
discussion forum, market outlook conference, publications to assist the public and
private sector to develop stable and profitable markets.

1.3

Coverage

The priorities are for the domestic and export products are rice, coffee, rubber, and aquatic sector
(shrimp and catfish). To a lesser extent and mainly for the domestic market pig production could
be a lower level priority.
Introduction

Vietnam is an agriculture based country with more than 73 per cent of its population residing in
rural areas. In the past few years, owing to the special attentions of the Party and the
Government, together with the reform (Doi Moi), rural livelihood has been gradually improving
and the poverty rate decreasing. Vietnam is now the second largest rice exporting country in the
world. Rice is the main crop produced in Vietnam and its level of production is closely linked to
farm incomes and rural development. Rice production plays an important role in food security in
Vietnam.
During the economic reform process, the agricultural sector has grown at more than 4.5%
annually for many years. Vietnamese agriculture has been shifting to commodity production
based on the exploitation of advantages on diverse biological resources. Food, aquaculture
livestock, vegetable, fruit and industrial crop production has grown significantly. Food
production (including paddy, corn, cassava and sweet potato) has increased annually. In the
period from 1996-2001, total food production has increased from 31.48 million tons to 39.43
million tons (equivalent 5.05% per year). In 2002-2006, production rose further from 43.1 million
tons to 48.9 million tons (2.69% per year). At the same time there has been increased
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competition for land and water uses between rice production and industrial crops or other uses as
industrialization continues in the Vietnamese economy. Between 2001 and 2007, more than
500,000 hectares (1.2 million acres) of farmland had been converted into industrial parks. So far
in 2008, 125,000 hectares of rice fields have been lost.
According to MARD, the total export turnover of agricultural sector up to October 2008 is
estimated to reach 13.6 billion USD, up 25.7% over the same period last year, in which
agricultural products reached 7.4 billion USD, up 42.5%; fisheries reached 3.8 billion USD, up
24.2%; forestry products reached USD 2.46 billion, increased by 16.7%. In the same time, the
agriculture sector had 5 products with turnover of over 1 billion USD (fisheries, rice, forestry
products, coffee and rubber) out of 11 products that reached value of over 1 billion USD of the
country.
However, agricultural markets in 2008 also witnessed many unexpected changes. During mid

year, world food prices increased sharply and stayed at a peak of 300% over the same period of
2007 and then dropped. For example export rice prices reached a high of around US$800/ton in
2008 resulting in sharp increases in domestic rice to a high of about 20,000VND/kg (or
US$1.3/kg) in late April 2008. During 2009 export prices have declined. A similar situation
happened with meat products and industrial crops such as rubber, to early 2009, the price of
rubber (1,500 USD per ton) decreased almost 50% compared with the peak in 2008 (2900 USD
per ton). The stabilization of food prices is important because rapidly increasing food prices will
reduce purchasing power. In 2007 food prices have increased 14.6%. In early 2008, food prices
increased sharply, leading to the share of food reaching 43% in total household expenditure.
Among Vietnam’s agriculture products, rice (15%), aquaculture (30%), coffee and rubber
account for 80% of total annual export turnover. Together with meeting domestic demand,
agricultural exports have also grown quickly, both in quantity and value. For the past two
decades, Vietnam has become one of the world’s biggest agricultural exporting countries,
including rice, coffee, cashew nut, pepper, rubber, tea, aquaculture, etc. Exported agricultural and
forestry products account for 30-35% of total agricultural production. Exporting ratios by sectors
are about 20% for rice, coffee 95%, rubber 85%, cashew nut 90%, tea 80%, and pepper 95%.
Some Vietnamese agricultural products have confirmed their leading positions in the world
market (e.g. rice, coffee, cashew nut, pepper, and fishery products). Markets for Vietnam’s
agricultural products have been expanded, besides traditional markets (e.g. China, ASEAN,
Russia and Eastern European countries); Vietnam has initially entered such potential markets as
Middle East, EU, the USA and Africa.
Vietnam is moving quickly to market economy and integrating into global economy. Demand
and supply of agricultural products fully depend on market forces, rather than on top-down
decision as it was in central State economy. The change from planning based on centrally derived
production targets to producers, processor and exporters planning based on market opportunities
will take time, but without reliable market forecasts is unlikely to happen. Thus, it is necessary to
have study on market analysis and forecast, which would assess comparative advantages, then
provide guidance and create motivation for market forces to restructure the production and
market system based on comparative advantage.
While moving to market economy, Vietnam’s agriculture faces a lot of challenges, especially the

issue of supply surplus in many agricultural commodities e.g. coffee, dairy, vegetable, sugarcane
etc. Farmers are very vulnerable to price fluctuations caused by over-supply or poor quality and
in the absence of sound market forecasts cannot adjust their production systems to minimize risk
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of poor returns and capitalise on improving market opportunities. Many commodities (e.g. fish
products like shrimp and catfish, rice, coffee, pepper, and cashew nut etc.) fail to forecast market
demand and unexpectedly face surpluses or deficits. Farmers often follow short-term market
signals, shifting among commodities, causing big losses for themselves and for the economy. As
a result, investors have difficulties and uncertainties in investment in processing factories, for
instance in cases of tea, sugarcane, cassava and dairy processing.
Experience of leading countries in agriculture development e.g. USA, EU, Australia and Japan
provide valuable lessons. The USA has Economic Research Service (ERS) under Ministry of
Agriculture; Australia has Australian Bureau of Agricultural and Resource Economics (ABARE)
directly under the Government with thousand of staffs. Especially ABARE, which has 300
experts work on management and quality control issue of products. Countries like USA, EU and
Australia focus on quality control and increasing value added of agriculture products rather than
to stimulate supply.
Forecasting also includes prediction of total crop production, based on reliable on-farm data.
Collection of farm-based data could provide information on the health (input and output costs,
profitability, investment levels etc) of the agriculture sector. Analysis of this data and
information could provide valuable inputs into advice on policies for the agriculture sector
including policies relating to food security, both at the national and local level.
The five-year plan on agriculture and rural development (2006-2010) indicates an action plan
with focus on the development of high value commodity crops, livestock products and forestry
plants toward yield and production improvement. The plan also clearly states orientation on
growth rate, production, added value, the share of agricultural commodities, etc. in order to push
the development of these commodity sectors. This is considered the key task in the action plan on
the agricultural sector. Therefore, it can be said that commodity development with key solutions

of policy reform, institutional, organizational and public investment improvement are the first
important assignments of the sector. This project really matches with the above target.
Operational Environment
3.1

Political and Legislative Environment

Apart from Decree No. 7 issued at the central government meeting in July 2008 on the target of
developing comprehensive agriculture orienting to modern, sustainable and massive commodity
production, Vietnam has not yet issued policies or comprehensive strategies on a particular
agricultural commodity or on the investments in commodities related to future or stable or
sustainable markets. Policy intervention is mainly through related policies which may directly
and indirectly affect the commodity sector. These include 3 major policy groups on production
support, land and trade and supporting agriculture production policies such as science and
technology, credit and agricultural extension. Much of the legislation relates to Vietnam’s
obligations to international agreements. These are important, but they relate to the ability to trade
(export and import) rather than what to trade and how to empower producers, processors and
exporters of Vietnamese product to be competitive while being profitable. Examples of related
policies include:
Policies on production support
 Decree No. 225/1999/QD-TTg dated December 10, 1999 on crop and forestry varieties and
breeding during the period 2001 – 2005 and Decree No. 17/2006/QD-TTg dated January 20,
2006 on continuous implementation of Decree 225/1999/QD-TTg till 2010
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 Decree No. 129/2003/ND-CP (2003) relates to exemption of agricultural land use and the
latest Decree 115, 2008 allowed the abolishment of irrigational fees.
 Decree 05/2005/QD-BNN dated January 20, 2005 sets standards of agricultural commodities
or agricultural products which are produced and traded under MARD’s supervision.

 Decision No. 391/QD-TTg (April 2008) on the review and inspection of the management and
use of land for the five years to 2010, with a focus on rice fields in particular.
 National Food security of Vietnam and vision to 2030: (Pending)
 Government’s Decree of Rice Land Management: (Pending 2008)
Land policies
The Land Law 2003 stimulates that all land area belongs to the entire people, representing by the
State with five main responsibilities: (i) Formulate land use zoning and land use plans; (ii) Decide
land use quota and duration; (iii) Grant land use rights to land users; (iv) Collect taxes related
land use; and (v) Determine land prices. Land users are allocated with land for long-term and
stable use and are granted seven rights of land use: transfer, exchange, lease, inheritance,
mortgage, donation, and use of land as capital contribution. Besides, land users have to (i) farm
appropriate crops and rotations; (ii) pay attention to land fertility maintenance; and (iii) pay taxes
and fees on agricultural land. Current taxes related to agricultural land in Vietnam include (i) tax
on agricultural land use, (ii) tax on land use rights transfer, and (iii) tax on land over the land
limit. In 2003, the Government promulgated a legal regulation exempting most farmers from
paying agricultural land use tax until 2010.
Specifically, the following land policies are related to agricultural production:
 Decree 09/2000/NQ-CP of the Government issued in June 2000 stipulates the stabilization of
about 4 million ha of irrigated for rice production and ineffective rice land types (compared to
the national average level) are allowed to transfer to other more effective crops.
 Decree No. 03/2000/NQ-CP of the Government dated February 2, 2000 on farming economy
stipulates policies on land allocation, lease, transfer of land use right in order to encourage
cultivated land concentration, agricultural development toward farming scale, facilitating the
development of material production for focused commodities.
Trade policies
To meet requirements of the Agreement of Agriculture (AoA) the Vietnamese Government has
issued the following policies aimed at formulating a certain discipline in agricultural trade and
support policies and avoiding the use of policies that distort the world trade of agricultural
products.
 Decision No. 1042/QD-BTM issued by the Ministry of Trade on 29 June 2007 on lifting

bonus for export achievement. This decision is to implement Vietnam’s WTO commitment to
remove export subsidies.
 Law No. 20/ 2004/ P L- UBTVQ H11 on 29 April 2004 on anti-dumping of goods imported
into Vietnam.
 Decision No. 02 /2008/QĐ-BCT dated 21 Jan 2008 on the plan on development of machinery
industry for agriculture in 2006-2015 with vision towards 2020.
 Decision No. 104/2008/QD-Ttg dated 21 July 2008 on export tariff on rice and fertilizer.
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 Decree No. 39/2006/QĐ-BTC dated 28 July 2006 on tariff on export and import goods. This
decree mentions all kind of goods imposed with export tariff, of which only some agricultural
products are included in compliance with AoA.
Sanitary and Phyto-sanitary Agreement (SPS): Relevant international organizations or WTO
members are responsible for the definition of SPS measures and Vietnam is obliged to meet
importing countries SPS requirements. The following legal documents and policies have been
issued:
 Decision No. 04/2008/QD-BNN on 10 January 2008 on the functions and cooperation of
Vietnam’s SPS enquiry points.
 Law No. 12/ 2003/ P L- UBTVQ H11 dated 26 July 2003 on food sanitary measures.
 Decree No. 149/2007/QD-TTg dated 10 Sep 2007 on the implementation of a national plan
for food sanitary measures.
 Law No. 18/2004/PL-UBTVQH11 dated 29 April 2004 on animal health service.
 Decree No. 33/2005/ND-CP dated 15 March 2005 on the implementation of Law No.
18/2004/PL-UBTVQH11
 Law No. 36/2001/PL-UBTVQH10 dated 25 July 2001 on plant protection and inspection.
Technical Barriers to Trade Agreement (TBT): The TBT agreement is relevant for technical
regulations covering all specific characteristics of a product, such as size, design, operation,
package, and label. Decision No. 0975/QD-BTC issued by the Ministry of Finance on 15
February 2008 is on the approval of a project on technical support after WTO entry- phase 1.

This is to evaluate current status and give solutions to obstacles and difficulties in implementing
WTO commitments on distribution, franchise, goods inspection, logistics, and trade agencies.
Trade related Aspects of Intellectual Property Rights (TRIPS): The agreement obliges members
to protect inventions of products and processes. It covers all intellectual property rights with
instruments to protect authors, investors, brands and names against imitation and reproduction.
Plant varieties and geographical indications relating to agriculture are also covered in this
agreement.
The following provisions oblige WTO members to introduce intellectual property rights for plant
varieties and geographical indications.
 Law No. 50/2006/ QH11 dated 29 November 2006 on intellectual property rights
 Decree No. 104/2006/ND-CP dated 22 September 2006 on intellectual property rights for
plant varieties, wine and spirits
 Decree No. 54/2000/ND-CP dated 13 October 2000 on trade secrets, geography
Besides WTO agreements, Vietnam has signed the some regional agreements that can affect
agriculture, such as AFTA/CEPT, US bilateral trade agreement, AFTA- China, and AFTAKorea. All these agreement basically focus on reducing import tariff and other trade and nontrade barriers to bind all members open up their markets for imported goods.
General documents at central level relating to agricultural production and export
 Decision No. 69/2007/QD-TTg issued by the Prime Minister on 18 May 2007 on the
development plan on processing industries for agricultural and forestry products until 2010
and vision towards 2020
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 Decision No. 27/2007/QD-BNN of the Ministry of Agriculture and Rural Development dated
12 April 2007 on management regulations of the national plan on the development and
implementation of bio-technologies in agriculture until 2020.
 Law No. 05/2007/QH12 dated 21 November 2007 on product quality. This provides
regulations on quality of export products in general and binding that all exporters have to
follow this law and other international and regional commitments.
 Decree No. 151/2006/ND-CP dated 20 December 2007 on regulating national credit for
investment and export.

 Decision No. 08/2007/QĐ-BTC dated 2 March 2007 on interest for credit for investment and
export.
In general, besides positive effects, policies related to agricultural commodities are mainly
situational and passive, often issued at time of crises (rice crisis, coffee, food safety, animal
inputs, etc.). Commodity policies are mainly support for production, and specific regulations
relating to Vietnam’s international agreements which impact largely on access to global markets,
agricultural subsidies, product quality and specific sanitary and phyto-sanitary requirements.
There is little comprehensive policy along the chain of a specific commodity: planning, forecast
for investment, production organization, input materials, production, processing, trade, quality
control, risk management, and support for end consumers. Policy formulation process is reactive
and is generally not on a scientific basis and does not have proper consultation of many relevant
stakeholders such as policy makers, researchers, private sector, farmers, etc. As a result, market
forecast of agricultural commodities as the basis for policy formulation is really necessary.
Economic Environment
Planning based on production areas and yields with a focus on exports risks creation of an
imbalanced sectoral structure. Farmers are encouraged to invest in strong export commodities
such as coffee, pepper, cashew nut, rice, and tiger prawns. Weaker sectors such as livestock,
poultry, and forestry products, with large and often unfulfilled domestic markets do not seem to
receive sufficient support. Investment in strong export sectors are large often without due regard
to markets. Supply, often of low quality, has quickly exceeded demand for some crops with
surpluses in crops such as coffee, rice and catfish in recent years having significant impacts on
producer’s livelihoods. At the same time, investment and competitive advantage in local
consumption-oriented sectors/product is reduced increasing the risk of loss of domestic markets
through intense competition from imported goods.
Farmers are the weakest actor in the value chain: Compared to other market actors, farmers
benefit the least from the value chain. Though current policies all give priority to farmers, no
policy is really suitable. Some policies give “in-kind” support rather than method support to
encourage farmers. Value added along the value chain mostly comes from processing, packaging,
advertising and marketing stages while almost Vietnamese farmers can access to raw production.
This is particularly true to small-scale farmers or those living in remote and mountainous areas.

Social Environment
 Transfer of agricultural land for industrial purpose impacts on poverty and labour as farm
families are forced to look for non-farming jobs. According to estimates of the Ministry of
Social, War Invalids and Labour, on average, 1.5 labour of one farmer household is
unemployed as their production land is revoked while most of them are not well educated and
vocationally trained.
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 Farmer’s decisions on farming systems they use and the mix of farm products is restricted by
designation of land use for specific crops, such as rice. While this may provide some
assurance of food security, it is also likely to significantly impact farm household income,
through inability to switch to higher value production systems.
 Modelling work will identify impacts on income distribution of agricultural land use and
transfer as well as trade liberalization at regional and sectoral levels, will assist in identifying
vulnerable groups and the development of policies to support them. This will help the
Vietnamese Government clearly identify problems and purposively select social welfare
policies, avoiding expenditures on ineffective sectors.
R&D Information
Main Research Areas
Research on demand – supply of agricultural commodities
 A study on methodology for supply and demand of the rice sector1 describes the application
of geographical information system (GIS) and modelling in analysing the balance of supply –
demand of rice for seven ecological zones of Vietnam. The important outputs include (i)
identification of areas of comparative advantage for rice production; (ii) methodologies for
improved estimation of rice yields and total production and forecasting demand for each
ecological region including some provinces; (iii) estimation that with a rice area of 4 million
hectares, and projections of domestic demand that Vietnam can maintain exports of 2-4
million tons/year with a price decline by 20% resulting in exports close to the 2m tons/year;
(iv) Household demand for rice in 2010 with the rate of urbanization of 33% will be about

13.8 million tons. Price variation of rice will increase or decrease consumption of rice by
about 1 million ton.
 Trends for livestock development in Vietnam2 are impacted by instability and high prices of
meat, high cost of animal feed, high price of breeding, and ineffective veterinary services.
Output is limited by low income, low meat quality, incomplete standards and system, lack of
information, and lack of distribution system for consumption. It also indicates the role of
government in creating a legal corridor, management of quality standards, safety and hygiene
of food that are very important and necessary to be improved to strengthen their role in
supporting the promotion of the livestock sector.
 Domestic consumption of coffee3 sector, using survey data based on standard of living
indicate an increasing demand for coffee, especially in urban areas of Vietnam.
Research on competitiveness
 In 2002, Nielsen3 conducted a research on rice sector of Vietnam on the international market,
summarizing the production, structure and commercial trends of the international rice market
and an evaluation of current policies for rice, especially the policies relating to market access,
export subsidies, use of GMOs and domestic support in other countries.

1

Chu Thai Hoanh (IRRI), Dang Kim Son (ICARD) and the colleagues from the University of Wagenningen.

2

Vu Trong Binh and Lucy Lapar (ILRI) (2203) "Hinders for participating in input and output markets of livestock in
Southeast Asia: the case of Vietnam."
3

2005, Tran Thi Quynh Chi and Muriel Figue

8

 Research on the competitiveness of Robusta coffee industry of Vietnam4 concluded that the
competitiveness of Vietnamese coffee in the past is based on cheap labour, high productivity
through more fertilizer and irrigation, and infrastructure development policies for all
stakeholders involved in production, processing and consumption of coffee. Recent trends in
the coffee market have shown that it will be hard to maintain the high competitiveness of
Vietnamese coffee as the market trend is towards high quality, organic and clean products
together with increasing concern for GAP and environmental impacts.
Research on the impacts of world trade integration
 Nielsen (2003)5 listed 3 trade policies which have direct impacts on Vietnamese rice sector:
(i) Removal of the quota on rice export and import of fertilizer is likely to increase the
effectiveness of resource allocation within the economy.
(ii) Land policy and land allocation - measures which restrict the change of agricultural land
use purposes create obstacles for production and export and control of agricultural
diversification activities through adjustment of land use allocation will reduce comparative
advantage and the socio-economic benefit of different partners.
(iii) Preferential trade agreements with EU – potential trade partners of Vietnam are unlikely
to be beneficial for rice production and export of Vietnam as they place Vietnam in a
competitive playing field with all exporting countries to the EU.
 A Study on trade liberalization in the livestock industry6applied general equilibrium
modelling to assess the impact of trade liberalization indicated that (i) In general, trade
liberalization would not have negative impacts on Vietnamese livestock industry as the
volume of meat trade internationally would be low; (ii) impacts of international trade
liberalization, such as price shocks are likely to be low as Vietnam is self-sufficient in pork
and poultry with relatively low consumption of beef; (iii) exemption and reduction of import
tax on materials for animal feed processing on the development of the industry, especially pig
and poultry raising is likely to benefit the domestic livestock industry.
 One of the negative impacts of trade liberalization and increasing dependence on export is the
variation in domestic price7.as price uncertainty not only makes farmers vulnerable but also

affects those in processing industries and some traders. Coffee prices peaked to a historic high
in 1990, causing overproduction and thus dropping prices which resulted in a serious impact
on the livelihood of coffee growers, particularly those in Daklak province – the biggest coffee
area in Vietnam. With low world prices and evolving globalization and trade liberalization,
farmers especially the poor, will be the most vulnerable.

4

5

Cao Bang Hoang, Tran Thi Quynh Chi, et al (2004)
Chantal Pohl Nielsen, University of Copenhagen and Dannish Food Economic Research Institute, “Vietnamese

rice policies: reform and opportunities for the future”, Asian Economic Journal, No. 17, 2003
6
Institute of Agricultural Economics and the Agricultural University (2005) funded by the Capacity building
Enhancement Fund for Vietnam (CEG), Australia.
7

ICARD and Oxfam (2002)

9


Commodity value chain research
 A comprehensive study of the rice value chain in Vietnam8 concluded that (i) Vietnam suffers
from a lack of and infrastructure environment and policy mechanism to enhance food
security, decrease rural poverty and increase income from exports; (ii) Methods for creating
value for the rice industry include increase productivity, especially in the mountainous areas,
remote areas and increasing production and export of special rice with high quality. The role

of the state sector in direct investment in productivity increase should be only limited to
irrigation supply, infrastructure strengthening and policies and the private sector should
develop specialty and high value markets. In addition, investment in the rice industry should
be combined with policies on crop diversification to solve the problem of rural poverty.
 A comprehensive study9 on livestock market actors such as producers, feed traders and
processors, meat traders, meat processors, consumers, retailers and veterinary agencies
analysed demand for meat and calculated price elasticity in Hanoi and Ho Chi Minh City.
Research on commodity supply forecast
 A study10 on forecasting long-term supply of 5 main coffee regions in Vietnam using
Vintage model a analysed the impacts of various factors (coffee prices, inputs prices, tree
age and productivity etc.) on coffee supply. The research makes specific predictions of
coffee supply of each province in the research area
Key issues
 Lack of data sources (data and image) to fully analyse the market by time series and to
regularly update. Although there have been a number of sources of market information this
is only conducted under projects, hence it is not possible to maintain long-term stability and
research units do not have a mechanism to exchange and use information effectively.
 Market information is merely on price – mainly retail price – other important information
for market analysis such as market differentiation, comparative advantage, trends in markets
and future opportunities is often available, but rarely incorporated into commodity research.
 Information collected has not met all the demands of commodity market research,
particularly the information needed to assess supply and demand of the goods.
 Timeliness of information on strategic commodities collected by the down-to-commune
vertical hierarchy General Statistics Office often means that prediction of crop yields are not
available until well after harvest time, which does not support sound investment decisions
by producers, processors and exporters.
 Vietnam has not yet been able to build scheme and development planning based on the
study of the competitiveness and comparative advantages of the main commodities – among
the local regions as well as between Vietnam and other countries.
 Research for market analysis of some strategic goods is available but not yet comprehensive

and does not come into details of the international market, tastes of the potential markets,
8

Agrifood Consulting International (2002)

9

International Food Policy Research Institute (IFPRI) and the Ministry of Agriculture and Rural Development
(MARD) (2001) "Selecting livestock policies to promote rural income diversification and growth in Vietnam”
10

Tran Thi Quynh Chi et al (2007)

10


and competitiveness of Vietnamese goods etc. This is especially true for research conducted
within projects, which are usually not updated continuously and systematically.
 Market outlook for Vietnamese agricultural commodities is almost left untouched by
researchers. Although the Institute of Policy and Strategy for Agriculture and Rural
Development has done some researches to analyse the economic forecast for coffee sector,
few researches applied the balance model, which are partly for rice and animal-feed sector;
these researches are merely experimental and primitive. Other strategic sectors have not had
similar researches.
 In order to carry out similar researches in other commodities, there should be a system of
standardized research methods applied synchronously to all sectors. However, this
standardized system has not been established yet.
 Our industry experts are not so good at modern and high-level research method serving
market analysis and forecast; in addition, these people are scattered in various research
agencies, not yet gathered into a united and effective organization.

 Therefore, in general the market research for agricultural strategic commodities in Vietnam
has not met strict requirements in terms of quality and update level of a consultancy product
for both policy makers and agricultural businesses.
 Industrial organization at macro scale to the individual strategic commodity is still a new
concept for Vietnam. United mechanism for a sector, which results in the best cooperation,
advantage taking and cost minimization among the stakeholders in the value chain of the
sector, has proved itself as an effective way in many countries. In particular, if a commodity
organization is established, it will perform the following functions: (i) sector management;
(ii) research organization, experience exchange, performance improvement; (iii) policy
proposal; and (iv) investment consultancy, etc.
 Information is not available to farmers, extension workers and the beyond-the-farm-gate
stakeholders in a timely manner so that they can make forward plans and investments to
improve returns and profit.
 There is no information on the “heath” of the smallholder farming sector. This information
and data could be collected routinely through development of monitoring systems for the
most important farming systems. Such information would greatly assist development of
agriculture and rural policies that address financial and social issues important to
sustainability of rural households.
 Weaknesses in planning, market information, quality control, agricultural crop and food
safety management, input and output price stabilization, etc have reflected poor capacity of
the management of formulation and implementation of agricultural commodity policies.
However, capacity of agricultural policy research, implementation and management is still
very poor. It is necessary to work out large-scale and long-term programs which can
sufficiently meet production requirements. Therefore, support from this project is really
precious and necessary; however, this is just initial step. Further efforts and investment are
required to catch up with that great demand.
Research providers
MARD does not yet have any organizational systems or processes for development of up-to-date
analysis of commodity markets. Commodity research and information is often project related,
11

short term and lacks an organizational framework. Development of these skills will take time
and will require international technical assistance.
IPSARD is currently one of a few agencies that are doing policy research on agricultural
commodities in Vietnam. IPSARD researchers are weak and insufficient in terms of the number
in analysis and forecasting work using advanced economic models. Therefore, capacity building
in this area is very necessary to implement the project. Information sources and forecasting
experts using economic models that IPSARD is focusing on for learning experiences include:
-

Economic Research Service - ERS under United States Department of Agriculture;

-

Australian Bureau of Agricultural and Resource Economics - ABARE;

-

International Food Policy Research Institute – IFPRI; and

-

International Livestock Research Institute – ILRI.

SWOT analysis
Strengthens

Weaknesses



Study methods (market
models) are now available.

forecast



There are not many market studies which apply
international standard methods.



Established relationships with international
agencies experienced in commodity analysis





There are many professional commodity related
reports that are becoming increasingly available
through the internet

Commodity market studies, if any, haven’t
followed united standards and are generally the
result of short term projects.



Experts of MARD mainly focus on production
fields like: varities, agricultural expansion and
irrigation, while there are few experts on
commodity and agricultural market.



Practical experience of reseachers at IPSARD or in
other agencies in Vietnam is relatively weak.



Domestic data is not sufficiently updated in
accordance with variables for market analysis and
forecast.



There are not enough international data from big
markets and exchanges and access too much of this
data and analysis is costly.



The studies usually use old data, and take long
time; therefore, they haven’t been able to response
quickly to urgent requests of policy makers and
businesses.



Lack of funds and statistics expertise to establish a
production monitoring system.



Lack of relationship and network with provincial
officials.



Policy makers are lack of scientific information for
market forecast, therefore policy recommendations
from scientific studies haven’t really been taken in
decisions making.

analysis,



Professional, enthusiastic experts
research are gathered in IPSARD



IPSARD with its policy consultancy function
will be the best bridge to
MARD and
Government .









of market

Priority commodities play a key role in economy
and export turnover, and need for market
research and forecast is huge
As part of the Government, it will be easier to
obtain technical support from Statistics Office of
Vietnam in design and establish the monitoring
system.
As an official economic research organization, it
will be easier to get the approval for establishing
such a monitoring system and the cooperation of
local governments.

12


Opportunities


Market forecast plays more and more important

role policy making decisions.



Threats

Data with sound analysis could provide
information that would improve investment
decisions by producers, processors and
exporters and assist in development of policies
including food security









Through IPSARD, this EPRO can get
cooperation with international organizations
who are experienced in agricultural market
monitoring.



Vietnam’s Government and MARD consider the
issue of food security as a national priority.



There are more and more relevant parties
interested in market forecast study, and give
prominence to market study impact to ecosocial development of agri region and rural and
the whole economy.



“Tam nong” Decision just out expresses the
Government’s concern of agriculture.



Promotion and regular updating of commodity
information will assist in developing a longer
term planning approach to agro-industry
development



Development of commodity analysis and
continuous monitoring will address policy
makers needs for quick and continuously
updated comments



A mix of short and longer term forecasts will
better meet business investment decisions

13

Inability or unwillingness of other government
departments or institutions with significant
experience in farm surveys and agricultural market
forecasting will jeopardize the ability to provide
sound commodity analysis and advice.



A shift from production target driven planning
to planning based on commodity research will
provide a scientific base for decision making

Lack of long term financial support for
development and maintenance commodity
forecasts will mean that any short-term funding is
likely to be wasted.

Final products need to be able to satisfy the
demand from MARD, other stakeholders and
industries.


EPRO 2: NATURAL RESOURCES AND RURAL ENVIRONMENT
MANAGEMENT
DATA SHEET
1. EPRO DEFINITION
1.1. National goal or purpose

To develop a legal framework and policy environment to enhance (i) the sustainable and efficient
use and management of natural resources in the agricultural sector and (ii) healthy environment
in rural areas to ensure the sustainable agriculture and rural development; and (iii) to reduce the
adverse impacts of agricultural production on natural resources and the rural environment.
1.2. Research Scope


To construct an effective database and monitoring system for natural resources use in the
agricultural sector and rural environment;



To conduct research to estimate the mutual relationships between agricultural production and
natural resources use and the environment in short term and long term through quantitative
techniques such as experiments, environmental evaluation, cost benefit analysis, bioeconomic models, general equilibrium models and qualitative techniques such participatory
rural assessment, case study, etc.



To study strategy/approach for the MARD and the government to maintain optimal natural
resources use and management and healthy rural environment; and



To provide timely information and knowledge of these above research results via policy
discussion forum, conference, publications to assist the public and private sector to develop
their working plan and strategy.

1.3. Coverage
The focus includes:



Land use and management in agricultural sector and rural areas;



Water use and management in agricultural sector and rural areas (irrigation and drinking
water);



Agro biodiversity conservation; and



Rural environment protection.

2. POLICY OVERVIEW
2.1. Introduction
Following a series of reforms, the Vietnamese economy grew rapidly during the 1990s. The
agriculture also witnessed remarkable development with the annual average rate of four per cent.
Despite this creditable performance, concerns are being raised as to whether this development
can be environmentally sustainable. There are two main problems: first, uncontrolled pollution
from agricultural production activities; and two, the over-exploitation of natural resources. These
dangers in turn seriously affect the whole agricultural and rural ecosystem, reduce production
capacity of physically environmental elements, decrease productivity of crops and animals and
threaten farmers’ health.
14

Although the government has formulated series of policy to address these issues, the impacts
have been limited. It seems that no single solution can be found to remove the problems in
natural resources and rural environmental management. Instead, a careful mix of integrated and
consistent policies, supported by strong quantitative and scientific arguments, is needed.
2.2. Political and Legislative Environment
2.2.1. Land use and management
Land ownership and administration.
The Land Law 2003 states that all land belongs to the entire people with the State as the
representative owner with five main responsibilities: (i) Formulate land use zoning and land use
plans; (ii) Decide land use quota and duration; (iii) Grant land use rights to land users; (iv)
Collect taxes related land use; and (v) Determine land prices.
The state administration on land in Vietnam is executed at four levels: central, provincial, district
and commune. While retaining ultimate control over legislation and policy, the central state has
devolved land management to People Committees at provincial, district and communal levels.
Land user, rights and duties of land users


Rights: Land users were allocated land for long-term and stable use and were granted seven
rights of land use: transfer, exchange, lease, inheritance, mortgage, donation and using land
use as capital contribution; and



Duties: Land users have to (i) farm appropriate crops and rotations; (ii) attend to maintaining
the fertility of the land; (iii) pay taxes and fees on agricultural land.

Land allocation.
The Land Law 1993 and the Decree 64 CP 27/09/1993 allocated agricultural land to farmers in
long-term with stable use. The most important principle of the land allocation was to maintain
equality. Commonly, many localities in the North allocated a certain amount of land to each

person. Other conditions that were taken into consideration during land allocation were social
policies, land quality, the irrigation system, distance to plots and capacity for crop rotation.
Land use planning.
The land use zoning and planning is a bottom-up process based on geographical condition. The
process begins at the commune level. At this level, land use zoning and planning is formulated in
detail on the basis of parcels of land. Local production and investment plans will be formulated
based on this physical planning framework. Then, they have to submit the formulation to the
people councils at the same level and to district people committees. From the commune, the
process then moves up to the district, provincial and national levels. The periodic cycle for land
use zoning is ten years and for land use planning is five years.
Agricultural land is classified by six categories: (i) Land for planting annual crops; (ii) Land for
planting perennial crops; (iii) Forest land (production, protective forest, specialized use forest);
(iv) Land for aquaculture; (v) Land for salt production; and (vi) Other agricultural land stipulated
by the Government.

15


Land use duration and quota
Land use purpose

Duration Land quota

Plant annual crop, aquaculture, salt production

20 years

2 ha (Central and Northern)
3 ha (Mekong River Delta)

Plant perennial crop

50 years

10 ha

Additional land to plant perennial crop

50 years

5 ha

Forest

50 years

30 ha

Additional land for protective forest and production forest

50 years

30 ha

Tax on agricultural land
Current taxes related to agricultural land in Vietnam include (i) tax on agricultural land use, (ii)
tax on land use rights transfer, and (iii) tax on land over the land limit. In 2003, the Government
passed legislation exempting most farmers from paying agricultural land use tax until 2010.
Agricultural land market
Land transactions: There are nine transactions related to land including transfer, exchange, lease,

inheritance, mortgage, donation, tender, lend and using land as capital contribution. These
transactions must have the approval of the state to be conducted. Then, the state will issue a new
land use right certificate to land users.
Land pricing: The government determines land prices on an annual basis but these prices have to
be close to the market level. People committees of provinces and cities under central authority
shall establish specific land prices within their localities and submit them to the people councils
at the same level for comments prior to decision-making.
Land mortgage: There are two ways that households can borrow money from the Bank using land
use right: (i) collateral value of the land use right certificate (around 50–70 per cent of the land
value); and (ii) ‘trustable mortgage’ (the land use right as the trust for a loan with support of local
government and socio-political groups). Based on current regulations, the amount that can be
borrowed from the Vietnam Bank for agricultural and rural development is not larger than VND
10 million for household farms and VND 20 million for commercial farms.
2.2.2. Water use and management
Law on Water Resources 1998 indicates that ‘water resources belong to entire population under
the unified management of the State’. Before 2002, MARD was in charge of overall management
of the country’s water resources, but the government can delegate authority for specific water use
purposes to other ministries. However, when the Ministry of Natural Resources and Environment
(MONRE) was established in 2002, the state management function of water resources was
handed over from MARD to MONRE.
Irrigation
At the provincial level, there are irrigation management companies (IMC) under MARD and
provincial people committees, managing headworks, main canals, secondary and tertiary canals
of medium and large scale irrigation schemes. Some provinces have equitized their IMC based on
Decree 95/2006/ND-CP by the government.
At commune level, there are water user organizations (WUO) which manage tertiary canals and
16


on-farm canals to provide full or partial irrigation services as required by farmers. There are six

types of WUO: agricultural cooperative (main type), water user group, water management board,
village’s water management board, water user association, and villages.
Irrigation supply fee is collected from organizations and individuals using water resources for
growing rice, vegetables, winter crops, short-term industrial crops, and salt production. A fee
frame is set by the government and each province can determine a particular rate based on reality.
Fee is in Vietnamese Dong (VND) charged based on the area of their irrigated crop land and type
of crops instead of volume of water they use.
Fees are typically collected by water user groups, which retain a part of the fee for their
collection efforts. The remainder is forwarded to the IMC. However, fees cover typically not
more than half of the operation and management expenditure of the IMCs. If natural disaster
mitigation and large-scale rehabilitation are included, the fees only cover about a quarter of total
operation and management costs. Most recently, Decree 154/2007/ND-CP of the Government
exempts the irrigation supply fee for farmers in the canal served by IMC. Nevertheless, farmers
still have to pay on-farm irrigation. This policy has raised many concerns about its social
economic impacts and efficiency.
Drinking water in rural areas
At central level, the National Centre for drinking water supply and rural hygiene of MARD is
responsible for: (i) design national strategy and plan of drinking water supply and rural hygiene;
(ii) Formulate technical standards for constructing drinking water supply works; (iii) monitor
water quality. At provincial level, there are centres for drinking water supply and rural hygiene
under the management of Provincial Department of Agriculture and Rural Development. Each
year, these centres select some communes in a province constructing drinking water works
(including community water supply work, small reservoir, deep well, and private water supply
work) for rural population. The budget for water work building is shared by national budget,
provincial budget and water users. The contribution of water users is at least 25 per cent of total
cost. They can apply for credit from banks (the National Program’s total fund for credit is 5649
billion VND). When the construction of water supply works is completed, they will be
transferred to and managed by rural communities. Apart from the public system, in some
provinces, there are also private companies supplying drinking water in rural areas. Water users
have to pay water supply fees for these companies.

Standards of drinking water for rural area are regulated by Ministry of Health. Water quality
monitoring implement by MONRE, MARD and Ministry of Health. However, the collaboration
between these ministries is not close.
2.2.3. Agro biodiversity conservation
The first document is the Biodiversity Action Plan 1995 which designed of action for
conservation and sustainable use of the country’s biodiversity. In 2007 and 2008, the National
Biodiversity Action Plan 2007-2010 with the vision up to 2020 and the Biodiversity Law were
approved with the target of setting up policy framework for biodiversity conservation and
sustainable development to harmonize regulations of different documents. Besides, biodiversity
issues were also included in main strategies and plans at national level such the Comprehensive
Poverty Reduction and Growth Strategy for 2001–10, the Socioeconomic Development Plan for
2006–10; the National Agenda 21 on Orientation strategy for advancing toward sustainable
development(2002) and different laws: Environmental Protection Law 2005, Forest Protection and
Development Law 2004, Law on Fisheries 2003, Commercial Law 2005, Criminal Law 1999 , Ordinance
17


of Veterinary 2004, Ordinance of Plant Protection 2004.
The issues related in agro biodiversity protection are as following:
Agro biodiversity management system
MONRE is responsible to coordinate activities of relevant ministries, agencies and localities
about biodiversity protection in general. MARD has responsibilities to collaborate with MONRE,
relevant ministries, agencies and local authorities to implement relevant legal documents on agro
biodiversity issues such as plant seed protection, animal breed protection, fisheries protection,
modified genetic agricultural products, forest and irrigation.
Conservation of ecological system diversity
The ecological system diversity protection includes two types:
Inside protected areas (national park, natural reserved zone, species – landscape conserved zone
and landscape protective area). Over the past 40 years, the national system of protected areas has
increased in size dramatically. It includes 126 approved special-use forests (SUFs), comprising

28 national parks, 59 nature reserves, and 39 landscape-protected areas, with a total area of
2,541,675 ha.
Outside the protected areas (buffer zones, landscape, planning, and mainstreaming conservation
in production sectors).
Conservation of species diversity
MARD collaborates with other ministries, agencies to examine, assess endangered endemic plant
seeds, husbandry animal breeds to include in the List of endangered valuable species and races
that need to be protected.
Custom agencies have to check, identify and address illegal imports of invasive exotic species.
Provincial People Committees have to prepare the lists of invasive exotic species to report to
MONRE and MARD. The production of exotic species is only permitted after the examination
result shows that this species is harmless to biodiversity.
Conservation of genetic diversity
Ministries and agencies have to preserve and protect in long term the heredity elements of species
and the List of endangered plant seeds and husbandry animal breeds for the purpose of research.
The state encourages organizations and individuals to conserve and protect heredity elements to
establish gene bank systems contributing to the biodiversity conservation. Until now, many
research institutes of MARD have their own gene banks for their research field, such as Maize
research institute, Food crops research institute, etc.
MONRE manages the database on modified genes and heredity elements of genetically modified
species related to biodiversity. Organizations and individuals conduct research to create
genetically modified species have to register with Ministry of Science and Technology.
2.2.4. Rural environment protection
In general, the rural environment protection is encapsulated in legal documents such as the
Environmental Protection Law 2005, Degree 67/2003/ND-CP on environmental protection fee
for waste water, and Degree 174/2007/ND-CP on environmental protection fee for solid waste,
etc. Apart from those, this issue has been also regulated in strategies (Strategy for national
environmental protection up to 2010, the National Agenda 21 on Orientation strategy for
18

advancing toward sustainable development 2002), National program of the government for clean
water and rural hygienic development (NPCWRHD), and MARD’s directives such as Directive
36/2008/CT-BNN on promoting environment protection activities in agricultural and rural
development sector.
In the NPCWRHD, rural households have been partially financially supported to construct
hygienic toilets. In 2005, 50% of rural households had hygienic toilets.
MARD collaborates with MONRE, provincial people committees to instruct, monitor the
environmental protection in agricultural production. For plantation, MARD issues the list of
permitted plant protection chemicals (pesticide, herbicide, insecticide). Departments of
agricultural and rural development collaborate with local authorities to randomly or periodically
check the trade and use of these products of farmers and organizations. MARD also sets up
standard procedures of using plant protection chemicals to ensure the safety of the products and
good health of farmers. However, as lack of monitoring system and effective rewardingpunishment mechanism, the compliance of these regulations is limited.
For husbandry and aquaculture, MARD also issues a list of permitted veterinary medicines and
sets up the production process (food, cage construction, etc) to maintain the rural environment.
Besides, extension service’ projects invest a lot to promote the biogas system. However, in 2005,
there are only seven per cent of livestock cages having waste treatment system compared to the
MARD’s target of 30 per cent. Coping with disease in husbandry sector is an important policy
component recently with many adhoc policies such as Decision 719/QĐ-TTg 2008 of the Prime
minister about the supportive policy to prevent and cope with livestock and poultry diseases.
For craft village, until now there is no document to instruct the environmental protection in craft
village. Some documents such as Degree 66/2006/ND-CP on craft village development have
mentioned this issue but lack of specific regulation on waste treatment system. Consequently, in
2005, less than one per cent of craft villages have waste treatment system compared to MARD’s
target of 10 per cent.
3. OPERATIONAL ENVIRONMENT AND KEY ISSUES
3.1. Land use and management
Land fragmentation. Egalitarian land allocation makes land holdings very fragmented. Until
now, in Vietnam there are only 700 communes in 20 provinces where plot exchanges have been

implemented (MARD 2002). In Vietnam, it is estimated that there are 70–100 million parcels or
plots of land, with around 10 per cent of these plots having an area of only 100 m2 or less (World
Bank 2003). This situation leads to low productivity, and puts constraints on agricultural
commercialization, application of modern technology, hence affecting efficiency in agricultural
production for all farm households. Accompanied by imperfect land tenure and
underdevelopment of land market institutions, land fragmentation creates disincentives for good
farmers to invest in agriculture. Though policies to promote land consolidation and accumulation
may lead to certain level of landlessness and rural differentiation, such policies are expected to
accelerate agricultural commercialization and mechanization, and create incentives for
technology innovation, which are critical for sustainable growth in Vietnam’s agriculture.
Inefficient land use by state-owned farms. At the moment, in Vietnam there are 314 agricultural
state-owned farms, and 353 forestry state-owned farms who manage about 4.6 million ha of
agricultural land, mostly concentrated in remote and mountainous areas. However, the efficiency
of their land use is very low because the management mechanism of these farms does not create
19


the incentives for farm households to increase productivity. In 2006, about 70 per cent of the
state-owned farms experienced business losses.
Frozen land market. In reality, apart from the official price system regulated by the state, there is
another ‘underground’ land price system reflecting true market prices which is usually higher
than regulated prices of the state. This failure of the land-use-rights market to accurately reflect
market values restricts the ability of efficient farmers to take advantage of market opportunities to
increase production, and encourage inefficient farmers to leave the sector.
Land use tax exemption. The Government exempted agricultural land use tax in 2000. In fact,
this tax contributes insignificantly to the government budget at only around 2-3 percent. Though
releasing financial burden on farmers, land use tax exemption policy might lead to a relaxed
approach to land management and have negative impacts on land use (Anh 2007). Low
productivity agriculture with tax exemption and land fragmentation creates low incentives for
farmers to utilize and investment on small plots of land. In addition, in order to cover their

budgets from tax exemption, local governments may need to order farmers to pay additional fees
or face a degradation of public service provision.
Land accumulation and rural differentiation. Vietnam faces a dilemma about this issue. On the
one hand, policy makers agree that land accumulation is beneficial because it helps raise the
efficient use of land and promotes agricultural commercialization. On the other hand, land
accumulation may lead to landlessness, which in turn may be a source of economic and social
instability.
Industrial zone development and sustainability of farmer’s livelihood. The government strives
to fill up all the area of established industrial zones and is considering establishing new industries
in a selective manner in Vietnam to increase the total area of industrial zones to about 40,000 to
45,000 ha in 2010. At the moment, industrial zones usually compensate a large amount of money
to farmers and promise to recruit them to work in their companies. However, due to their low
quality of education and professional skills, most farmers have not been qualified to work in
industrial zones. After a certain time, they will run out of compensation money and become
landless farmers.
Forest protection and poverty reduction. Forest land is mostly concentrated in the remote and
mountainous areas, where ethnic communities live. Communities are hesitant to receive allocated
forest land because their livelihood is not guaranteed when they receive forestry land for
protection purpose. It can be seen that apart from timber which need a long time to be benefited,
other benefits including non-timber forest products and government’s support are small.
Land quality degradation. Aiming at increasing their income, farmers have applied strongly
intensive farming practices to improve the production of agricultural land. However, these
practices have also degraded the land quality and productivity, including:


Overuse of chemical fertilizer and pesticides in cultivation;



Land erosion due to intensive cultivation on sloping land; and



Land salinity due to transformation from agricultural land to aquaculture land and
unsustainable use of ground water for irrigation and subsequent intrusion by salt water.

Climate change and food security. According to IUCN (2007), Vietnam is one of the five
countries will be affected most seriously from climate change. It is estimated that the Mekong
river delta will lose 40 per cent of agricultural land. Moreover, the total output of food production
20


of Vietnam will decrease by 12 per cent (approximately five million tons). Yet, it seems that
Vietnam has not prepared comprehensive land zoning and planning to cope with this danger.
3.2. Water management
Water use inefficiency. As water for irrigation and drinking is free or under-priced, it is likely to
be used wastefully by farmers. Some case studies in Red River Delta indicate that too much water
in used for irrigation in rice production.
Lack of financial budget for maintaining and upgrading irrigation schemes and drinking
water supply works. Because fees collected for water use are insufficient to cover the proper
maintenance of water storage and distribution systems, the performance of this system declines
seriously. This in turn increases the inefficiency for water supply. Water users may thus achieve a
'false economy' in which they pay little or nothing for their water directly, but as a consequence
are subject to declining income resulting from deteriorating water supply services. According to
MARD (2006), due to degradation, the current irrigation system only operates at 55 to 65 per
cent of designed capacity.
Governmental budget deficit for water supply services. At the moment, as both irrigation and
rural drinking water supply are subsidized, the government has to spend a large amount of budget
to maintain these services.
Services

Amount

Irrigation

Governmental budget: from 2000 to 3000 billion VND yearly

Rural drinking water supply

Governmental budget: 4500 billion VND in 2006-2010
Local state budget: 2300 billion VND in 2006-2010

Lack of drinking water supply for rural living. Lack of drink water for rural living has led to a
problem causing the inequality between rural and urban population. UNICEF and Ministry of
Health (2008) show that while 76 per cent of urban population has obtained fresh water, only 48
per cent of farmers can access fresh water and drilled-well water. Although Vietnam is
acknowledged as a country redundant in water, about 60 to 70 per cent of water sources is
derived from outside. That upstream countries like China and Thailand are preparing to construct
large-scale hydropower dams may seriously change water regime and volume in Vietnam.
Water quality degradation. As both MARD and MONRE do not have effective policy to monitor
and control pollution sources discharged to water, the water quality is deteriorating. Dung of
poultry and pig has been used to feed fish. This results in pollution in ponds, rivers and
reservoirs. Moreover, the overuse of chemical fertilizers and pesticides also seriously degrades
both surface and underground water resources. Moreover, due to dyke system planning and
management, salt water intrusion has become a serious problem particularly in Mekong River
Delta.
Impact of climate change. According to World Bank (2007), Vietnam will be affected seriously
by climate change. The sea level might increase by 0.3 – 1 meter, and then many low areas in
Mekong River Delta, Red River Delta and Central Coastal will be underwater. If the sea water
rises by 1 meter, the flooded areas will be 40000 square kilometres, mainly in Mekong River

Delta and about 17 million people would be adversely impacted. There is no plan or zoning for
water resource to cope with this danger.
3.3. Agro biodiversity conservation
21


Conversion of forest to agriculture is a major cause of biodiversity loss throughout the region. In
Vietnam, 50,000 hectares per year of forest are lost to unplanned agricultural clearances, the
same amount to forest fires, and the rest to fuel wood and timber harvesting. In response, a largescale reforestation program is under way. Unfortunately, most of the land that is being deforested
is natural woodland, while the reforestation is largely made up of industrial forest plantations of
pines, rubber and eucalyptus that add little in terms of ecosystem restoration. Despite worthy
government efforts for biodiversity conservation, existing programs for protection of forests and
watersheds have not met the need for integrated and sustainable approach to forest and
community development.
Conversion from farm to non-farm land. Due to the industrialization and urbanization, the
agricultural land has been reduced. This seriously damages the agro biodiversity.
Switching to new varieties and species. This poses a danger to traditional
Varieties and species adapted to local conditions, which may have long-term rather than shortterm benefits. Modern farming practices that rely heavily on pesticides and chemical fertilizers
seriously affect the conservation and use of biodiversity. In many parts of the region, such
practices have displaced traditional rice paddies where fish, frogs, and other species once
supplemented local diets. Few of these species can survive with inputs of pesticides and chemical
fertilizers. Issues such as genetically modified organisms are relatively poorly regulated and may
pose a risk, especially if Vietnam is used as a testing ground for GMOs.
Rice monoculture. The predominant farming system in Vietnam is rice-based agriculture. The
intensive rice production has degraded the soil quality, reduce water volume and increase the
capacity of harmful insect and diseases against plant protection chemicals.
Wild animal trade. There is increasing trade with neighbouring countries in human and animal
food, medicinal plants, and raw materials for handicrafts and industry, which is difficult to
manage sustainably.
Limited definition of agro biodiversity. A major weakness in interpreting agricultural

biodiversity issues is that national documents appear to restrict the definition of agro biodiversity
to crop and livestock species and their wild relatives, rather than the broader ecosystems in which
these exist. Such views exclude wild species that provide services to agriculture, such as
pollinators, natural enemies, soil organisms, and other species that make up the agro ecosystem.
3.4. Rural environmental protection
Lack of monitoring system. There is no clear distinction between MARD, MONRE and Ministry
of Health’s responsibilities related to rural environmental management regarding: water quality
control, solid waste management, disease control, etc.
Lack of rewarding – punishment mechanism. Currently, there is no effective mechanism to
control the farmer’s practices that affect the environment, such as chemicals and fertilizer use,
livestock waste treatments, etc.
Lack of land fund for pollution control. Due to intensive agricultural development policies, the
pollution from pesticides, husbandry wastes and handicraft industries has become serious in
many localities. It is reported that local governments cannot implement public-health related
policies, such as relocating animal husbandry and handicraft industries, because no land is
available for these purposes.
Industrialization. Industrial zones have increasingly caused serious pollution to rural
22


environment and degradation of farmer’s health.
Climate change. Mekong River Delta and coastal areas will be flooded in the future due to
climate change. This would dramatically damage the rural environment due to lack of fresh
water, epidemic, etc.
4. RESEARCH AND DEVELOPMENT INFORMATION
Main Research Areas
4.1. Land use and management
Farm size and productivity
Some studies using survey data in a number of locations show that small and scattered land
holdings distribution hampers technology adoption, leading to more time and labour costs for

farming activities, higher production costs and disputes, which reduce productivity in agricultural
production (Hung et al 2004, Blarel et al 1992, Lan 2001, Bentley 1987).
Sally et al (2006), by using survey data in some Northern provinces, estimate the relationship
between productivity and fragmentation and farm size based on the approach of production
function. The empirical results show that the number of plots per farm has negative impacts on
crop productivity, increased family labour use and other farm costs. Furthermore, they also show
that fragmentation is a significant factor to force crop diversification.
Hung et al (2006) investigate factors affecting the net value of farm production. By using a
regression analysis, the study shows that the net value of farm production is positively but nonlinearly related to farm size, and positively influenced by a higher percentage of better quality
cultivated land and higher education levels of the household head. They suggest that policies are
needed to encourage the consolidations of land holdings.
Tarp et al (2007) use the household data from 2006 Vietnam Access to Resources Household
Survey to estimate the effects of crop specification on Vietnam's agricultural production. They
find that such restrictions are widespread and prevent crop diversification. Although they find no
direct effect of restrictions on cultivation income, the paper uncovers an indirect effect working
through the returns to land titling.
Efficiency versus equity of land structure and rural differentiation process.
Land loss is an issue of concern in Vietnam as landlessness or near landlessness is often
associated with poverty (ADB et al 2004; Lan 2001; World Bank 2000). Using qualitative
approach, Oxfam (1999) and AusAid (2003) identify eight reasons for landlessness in Vietnam
such as inability to return loans, production failures as a result of natural disasters, and health
problem, etc.
Using the Vietnam Living Standards Survey (VLSS) data, many researchers working for the
World Bank and mainstream international donors have argued that there is no clear signal that
land market has been developed sufficiently to promote strong land accumulation, and the
existing land distribution cannot create serious rural differentiation. Van de Walle and Cratty
(2003) claim that households that undertake rural non-farm activities have a significantly higher
probability of being non-poor.
Ravallion & van de Walle (2001) analyze VHLSS 1993 and conclude that the land allocation
process under Contract 100 in 1988 and the Land Law of 1993 was not dominated by the rich or

influential, and results in an egalitarian land distribution. However, they found some differences
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when using the 1997-1998 VLSS and suggest that some degree of land accumulation by more
wealthy and educated households was taking place.
Other studies show that land markets in Vietnam are pro-poor (Deininger and Jin 2003; Ravallion
and van de Walle 2003). These authors used VHLSS 1993, 1998 and 2002 to estimate impacts of
land allocation on rural differentiation in Vietnam. They claim that land distribution has
improved in favour of households in the relatively poorer per capita expenditure quintiles.
Similarly, Schipper (2003) finds evidence based on the VHLSS 1993 and 1998 to indicate
strongly that the distribution of land has become more equal over the 1990s. Moreover, this
conclusion seems to have been confirmed in a number of econometric studies of Vietnam’s land
market that have examined the panel data in the VHLSS (Joint Donor Report 2003; ADB 2002).
Ravallion and van de Walle (2003) argue that the land market serve to iron out some of the
inefficiencies in land allocation generated by initial administrative decisions. Deininger and Jin
(2003) reinforce this finding, and argue that in addition to the equity enhancements generated by
the land market, land transfer have improved efficiencies because the demand for land, either to
buy or to rent, is driven by those households who are more productive but have lower
endowments.
In contrast, Akram-Lodhi (2005) argues that rural differentiation in terms of access to land in
Vietnam proceeded during the 1990s. His argument is provided by the case studies conducted in
Northern, Central and Southern Vietnam between 1998 and 2002. He questions how rural
households were able to finance land purchases when the average price of crop land per hectare
jumped from VND 11.9 million in 1993 to VND 26.1 million in 1998. With unequal access to
credit, relatively poorer rural households would not be able to purchase land. Consequently, land
sales market might be segmented on the basis of wealth.
Akram-Lodhi (2004) also provides five findings regarding to land structure and rural
differentiation. First, overall land markets appear to have been pro-poor, but lack consistency.
Second, tenancy relations including sharecropping have returned to rural area. Third, landlessness

in rural area is rising. Land sales and mortgage losses, along with the growth of non-farm
household economy among relatively richer rural households appears to result in the
landlessness. Fourth, land fragmentation has increased significantly since 1988 despite the
emergence of land markets. Finally, there is a clear trend in land concentration in rural Vietnam,
which shows the increasing land stratification.
Akram-Lodhi (2005) argues that processes of peasant class differentiation are underway, with the
emergence of rich peasants with relatively larger land holdings, capital stock and resource to hire
labours. This is the key structural feature of the development of capitalism in agriculture, and the
evidence further demonstrates the rapid growth of a class of rural landless, who are separated
from means of production and survive by selling their labour and are the poorest segment of rural
Vietnam.
Operation of land market in the linkage with other markets
Most of the studies have covered the development of land-use-right markets in Vietnam. Marsh
and MacAulay (2002) show that although a land-use-right transfer is emerging in Vietnam in
response to reforms that have given a degree of security and tenure to land holdings, it is still
constrained. They claim that there are official restrictions for land-use-right transactions, which
control the circumstances under which, and to whom, land-use-rights can be transferred.
Humphries (1999), Kerkvliet (2000) and World Bank (2003) found that land transfers were
occurring, but many illegally. They show reasons for illegal transactions including costs with
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registering land-use-right transactions, time consuming, cumbersome procedures, unclear
regulations and opportunistic rent-seeking behaviours.
Mash et al (2006) also found that there was an active market for land-use-right but the level of
activity varies considerably between provinces. Rental transactions are reported more often in the
Northern provinces and sales more often in the Southern provinces.
Land is rented out for a variety of reasons, including a lack of capacity to invest in productivity
enhancements, fragmentation of holdings, lack of access to labour, economic shocks at the
household level such as illness, and because of income and asset diversification into rural nonfarm household enterprises (Deininger and Jin, 2003; Ravallion and van de Walle, 2003;

Haughton, 2000). Although fixed rents are more common than sharecropping, perhaps the most
interesting aspect of the land rental market is that in terms of both renting in and renting out it is
most common for land to be leased for free, a finding that requires further research but which
may be a consequence of the enhanced power of local officials to intervene in the land market as
a consequence of land market legislation (Ravallion and van de Walle, 2003).
4.2. Water use and management
Irrigation management
Participatory Management for Agricultural Water Control in Vietnam: Challenges and
Opportunities (Bryan Bruns 1997). After analysing strengths, weakness and opportunities and
challenges to improve the operation and maintenance mechanism of irrigation schemes in
Vietnam, the study recommends a participatory irrigation management including pilot projects
and its roadmap for implementing in some corresponding irrigation schemes.
A framework for improving the management of irrigation schemes in Vietnam (ACIAR 2004). By
investigating three case studies in Ha Tay province and Ho Chi Minh City, the project focused on
analysing the operation and management of publicly managed irrigation systems comprising:
system operation, asset management, system economics and institutional analysis. Findings
include:


Low water productivity: very low output of rice per unit volume of water; and



Sustainability of financial management for IMCs: (i) They are heavily reliant on government
subsidies to carry out their operations; (ii) the level of government subsidies is insufficient to
ensure the long-term sustainability of IMC assets; (iii) the level of expenditure on
maintenance is consistently below the standard needed to prevent the rapid decay of the
company assets.

Aligning Public Expenditure and Sectoral Institution to cope with Agriculture and Rural

Development Challenges (World Bank 2005). The report presents some key findings as follows:


The trend of irrigation expenditure decentralization, and shifts in emphasis from building new
structures to upgrading and completing existing works;



Capacity of irrigation and drainage is low; and



Funding for operating and maintenance irrigation system is not enough.

Studying the effective and sustainable irrigation management model for agriculture and rural
development (Economic Research Centre - Institute of Science Irrigation, 2007). In this research,
a survey was undertaken on organization and management status of irrigation schemes in 528
districts of 53 provinces in Vietnam. Main findings:
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