Liên kết doanh nghiệp và nông dân để phát triển ngành trồng trọt tỉnh thái bình trong bối cảnh hội nhập quốc tế tt tiếng anh

VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES

NGUYEN THI THUY

LINKAGE BETWEEN FIRMS AND FARMERS IN FARMING
DEVELOPMENT IN THAI BINH PROVINCE IN
INTERNATIONAL INTEGRATION CONTEXT

Major: Economic development
Code: 9. 31. 01. 05

SUMMARY OF ECONOMIC DOCTORAL THESIS

Ha Noi – 2019


Thesis is completed at:
Graduate Academy of Social Sciences

Supervisor:
1. Dr. Tran Ngoc Ngoan
2. Prof. Dr. Nguyen Van Song

Master Reviewer 1:…………………………………………..
Master Reviewer 2:…………………………………………..
Master Reviewer 3:…………………………………………..

The thesis will be denfended at the Doctoral dissertation council in the
Graduate Academy of Social Sciences at ….day…..month….. year
2019.

Thesis can be found at:
- Library Graduate Academy of Social Sciences
- National Library, Hanoi, Vietnam.


INTRODUCTION
1. The urgency of the subject
Vietnam is gifted with various advantages in agricultural production, and
its agricultural products are of high economic value. With the rural population
of "60.8 million, accounting for 64.9% of the total population" (GSO, 2017).
Our country has a variety of export items to countries in the region and around
the world such as rice, coffee, pepper, cashew and tea, etc. In 2018, GDP
increased by 7.08%, specifically, agriculture, forestry and fishery sectors
reached a significant growth with a rise of 3.67% (GSO, 2018).
Vietnam is a member of the ASEAN Economic Community (AEC),
successfully negotiates the Comprehensive and Progressive Agreement
for Trans-Pacific Partnership (CPTPP) and joins AFTA, etc. By taking part in
the international integration these, Vietnam has been given with a great
number of new opportunities: increasing volume of goods consumption,
facilitating attraction of foreign direct and indirect investment, promoting
better economic development to efficiently exploiting its economic potentials,
strengthening the trend of global integration and enhancing socio-economic
life.
Thai Binh has a special geographical position (the only plain province that
isn't surrounded by hills and mountains). Especially, with its main strengths in
the farming sector, the average food output is over "1 million tons / year, rice
productivity in 2017 reached over 59.4 quintals / ha / year" (GSO, 2017) , Thai
Binh province particularly pays big attention to linkage models in rice
production and consumption as commodity for residents. Specifically, Thai

Binh keeps maintaining a pilot model based on the linkage of enterprisebusiness household-farmer and the linkage of enterprise-cooperative-farmer, in
which firms play a pivotal role.
However, farming development in Thai Binh is still monoculture and in
fragmented type, facing various difficulties including “commodity production
still at a low level, fragmented and small-scale production status, lack of
capital, traditional farming practices, lack of production experience, failure of
forming a stable and sustainable economic development model, especially
backward processing and storage.” Therefore, in order to overcome
limitations, challenges and obstacles to comprehensively develop the
agricultural economy as well as to the farming sector with the orientation of
international integration, it is necessary to establish and strengthen such
linkages. It has to be done to achieve large value of goods, high-quality goods
with brands to meet demands in international integration, participating in the
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regional and global development network. Therefore, promoting linkage in
farming development proves to be necessary in the current period in our
country as well as in Thai Binh province.
From the above considerations, I have chosen the topic "linkage between
firms and farmers in farming development in Thai Binh Province in the context
of international integration" as my research topic.
2. Objectives of the thesis topic
a. General objective
The general objective of the thesis is to find certain solutions and proposals to
promote the linkage between firms and farmers in farming development in Thai
Binh Province in the context of international integration.
b. Specific objective
Firstly: systematizing and clarifying theoretical and practical basis regarding
the linkage between firms and farmers in the context of international integration.

Secondly: Assessing the situation and factors affecting the linkage between
firms and farming households in farming development in Thai Binh Province in
the context of international integration.
Thirdly: proposing certain solutions to promote the linkage between firms and
farmers in farming development in Thai Binh Province in the context of
international integration.
3. Object and scope of the study
- Research subject of the thesis: Theoretical, practical issues and current
situation of the linkage between firms and farmers in farming development in
the context of international integration.
- Research scope:
+ Scope of location: districts and communes engaged in agricultural
production (mainly farming) in Thai Binh province
+ Scope of time: Within the research scope, the PhD candidate only focuses
on solving theoretical and practical issues to propose solutions to promote the
linkage between firms and farmers in farming development in Thai Binh
Province in the period of 2010-2018 and development orientation of farming
sector in Thai Binh province until 2025.
4. Research Methodology
Approach: The thesis uses certain approaches: system approach, policy
approach, history approach, sustainable development approach to study the
linkage between firms and farmers in farming development in Thai Binh
Province in the context of international integration.

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Research method:: To solve research tasks, the thesis uses a number of
specific methods including: (1) Qualitative research method, quantitative
research method; (2) method of descriptive statistics and (3) General method

of economic analysis.
5. New scientific contributions of the thesis
(1) What is the actual situation of the linkage between firms and farmers in
farming development in Thai Binh Province ? What is the mechanism for linkage
implementation (2) What are the benefits of the participants in the linkage
process? (3) In the context of “international integration” today, what role does
the linkage play? 4) What are main methods of linkage between firms and farmers
in the farming sector in Thai Binh Province? (5) What factors can influence
participation in the linkage between firms and farmers in the farming industry?
How much do those factors influence? (6) What measures need to be taken to
strengthen the linkage between firms and farmers in the farming sector in Thai
Binh Province in the coming time?
6. Theoretical and practical significance of the thesis
6.1. Scientific significance
- The thesis theoretically clarifies the linkage between firms and farmers in
farming development in the context of international integration. In the context
of integration, how will it impact agricultural development? The thesis
systematizes and clarifies the nature of linkage between firms and farmers in
farming development in the context of integration.
- The thesis analyzes and assesses inadequacies and factors affecting the
linkage between firms and farmers in farming development. The thesis also
presents points of view, objective certainty, role and develops criteria for
finding evaluation.
6.2. Practical significance
- The thesis uses qualitative research and quantitative survey findings to
analyze and make assessments on the situation of linkage between firms and
farmers in farming development in Thai Binh Province in the context of
integration.
- Based on those evaluation criteria as well as findings on causes of limitations
and shortcomings upon implementing the linkage between firms and farmers in

farming development in Thai Binh Province in the context of international
integration.
- Based on theoretical and practical analysis, the thesis proposes certain
solutions to promote linkage between firms and farmers in farming
3


development to meet demands upon international integration of the agriculture
throughout the country and in Thai Binh province in the coming time.
- The thesis is also a significant information channel for policy makers,
managers, departments and divisions in Thai Binh province, advisory agencies,
socio-economic research organizations and for personal reference.
7. Structure of the thesis
In addition to the preface, the thesis's conclusion consists of 4 chapters:
Chapter 1: Literature review
Chapter 2: Theoretical and practical bases on linkages, linkages between
firms and farmers in international integration
Chapter 3: Current Situation of Firm And Farmer Linkage, Factors Affecting
Firm And Farmer Linkage In Development OfThai Binh Farming Industry In
International Intergration Context
Chapter 4: Some solutions to enhance effective linkages between firms
and farmers in farming development in Thai Binh province in integration
context
CHAPTER 1: LITERATURE REVIEW
1.1. Foreign situation of research:
a. A. Linkage and cooperation between firms and farmers (contract
farming)
Western economists assume that “economic linkage is an objective and
inevitable phenomenon and is a form of market administration under
capitalism that minimizes transaction costs. The theory on transaction costs of

firms associated with the theory on contractual relationship is part of the newly
established theory on new institutional economics in the US ”, mentioned by
Coase (1960), Demsetz (1964). , William (1985), and Kleinet al (1978) argue
that: "In a market economy, institutional improvements will lead to cost
reduction"
b. Vertical land horizontal linkages
“Vertical linkage is based primarily on transactional relationships but also
includes voluntary assistance or transfer of resources and technology to local
partners” (Pack and Saggi, 1997; Saggi, 1999). “Horizontal linkage relates to
cooperative arrangements between foreign and domestic firms in the form of joint
ventures and networking between firms” (Pack and Saggi, 1999; Saggi, 2002;
Giroud and Scott- Kennel, 2006).
c. Context

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International economic integration is an inevitable development trend of
the global economy in the current period. Especially, it is significantly
impacted by the 4.0 industrial revolution.
The phrase "hội nhập quốc tế”" in Vietnamese rooted from foreign
languages ( "international integration" in English and "intégration
internationale" in French). This concept is mainly used in the fields of
international politics and economics.
1.2. Domestic situation of research:
a. Research works related to production linkage through contract.
Economic linkage through contract is the most basic form. “Since the
Prime Minister's Decision No. 80/2002 / QD-TTg dated June 24, 2002, a
number of agricultural products such as rice, coffee, sugarcane, sugar, seafood
and pork have been sold by sales contracts"(Nguyen Thi Quynh Hoa, 2005),

or" a contract between sugar-cane manufacter and sugar-cane company"(Ngo
Thi Thuy, 2004). However, these topics have not yet shown specific findings
of the linkage results achieved by farm households linked to firms. “The
linkage between farm households and state-owned firms is the strength to
facilitate the economic development in farming. At the same time, a favorable
economic environment will be created to develop the market-oriented
commodity economy. However, this research has not shown the real benefits
of the parties involved in the linkage yet. ”(Tran Van Hieu, 2005).
b. Research works related to linkage forms
Linkage means in produce consumption of farm households is construed
as “the form existing and developed of cooperative relationships between
farm households and other agricultural production, processing and trading
entities in order to save time, costs and achieve greater efficiency in
agricultural production and business, enhance competitiveness, share
capabilities and open new agricultural markets in certain conditions"(Ho
Que Hau, 2012)
c. Research works related to economic linkage
“Economic linkage in the market economy and economic integration is the
initiative in awareness and implementation of objective economic linkages
among economic entities in the social economy in order to implement the
relation of labor division and cooperation to achieve common socio-economic
benefits”(Ho Que Hau, 2012). Therefore, "economic linkage is an objective
category that reflects the coordination relations between production and
business entities in order to save time, costs and achieve greater efficiency in
5


production and trading of agricultural products, enhance competitiveness,
share capabilities and open new markets ”(Vu Duc Hanh, 2015).
e. Context

According to Pham Quoc Tru (2011): “International integration is
construed as the process of countries carrying out activities to
strengthen their linkage with each other based on their common
benefits, goals, values and sources and power (decision-making
authority) and compliance with general rules within the framework of
international institutions or organizations ”. He said: “The subject of
international integration is all of the nations; the main subjects of
international relations have full competence and capacity to negotiate,
sign and implement international commitments. Besides those main
subjects, the other entities form a combined force to participate in the
process of international integration. ”
Nguyen Van Song (2009): “Joining integration, especially after
entering the WTO, we must adapt to direct changes in terms of prices,
and types of crisis from markets and world situations.
Chapter 2: THEORETICAL AND PRACTICAL BASES ON
LINKAGES, LINKAGES BETWEEN firms AND FARMERS IN
INTERNATIONAL INTEGRATION
2.1. Agriculture and linkage issues in agricultural development
2.1.1. Some concepts
2.1.1.1. Concept of farm household
Frank Ellis, the University of Cambridge (1988), defined: “Farm households
are those working in agriculture, making their own livelihoods on their lands,
mainly using their own family labor in production, usually belonging to the larger
economic system, but being primarily characterized by local participation of
markets and operational tendency with a high degree of imperfection.”
2.1.1.3. Concept of farming industry
Farming is an important industry in agriculture. Farming industry can
provide food for humans, feed for cattle and poultry and raw materials for
industry, but also its products are also used for export...
2.1.1.4. Concept of linkages and economic linkages

The link originates from "Intergration" which economically means "unity,
coordination or merger of many parts into one whole". The old-era authors
called the same as"Intergration", but as "linkage" by the new-era ones (Nguyen
Nhu Y, 1999). According to Be’la Balassa (1961), "Economic linkages are
6


closely understood as the institutional cohesion between economic
organizations and economies."
2.1.1.5. Concept of enterprise and farmer linkages
According to Ho Que Hau (2012): The linkages between firms and
farmers is a part of economic linkage, in which the parties involved in are
firms and farmers who implement certain constraints to stabilize and improve
economic efficiency. According to Eaton, Charles and Andrew (2001):
Contractual agriculture is an agreement between farmers and firms based on
the principle of future binding: price, quantity, and term ...
2.1.2. Content on business and farmer linkage in production and
development
2.1.2.1. Regarding forms of agreement
a. A. Oral contract (Unofficial contract)
An oral contract is a compromise between parties not in writing. The
parties can discuss, exchange and reach agreement on certain issues by
themselves. Despite this, oral contracts are also agreed by the parties on
"quantity, quality, price, time and place of delivery". This type of contract is
based on the belief and credibility among the contractual parties.
According to Le Xuan Sinh (2013): “The linkage between farm households
and agribusinesses is mainly done through contract and agreement. The
legality of this contract is doubtful, the responsibility for contract performance
is loose. Most oral contracts between businesses and farm households lack
binding terms, just as a memorandum of understanding between the parties.

They have not been an economic contract yet".
b. Contractual linkage (Cooperative linkage between businesses and
farmers)
According to Eaton and Shepherd (2001) "Contract farming is an
agreement between farmers and processing businesses or firms trading in
production and provision of agricultural products based on future delivery
agreements in which prices are pre-determined. According to Sykuta and
Parcell (2003) "Contract farming in agriculture sets out the rules for the
allocation of three main elements: benefits, risks and decision-making power".
2.1.2.2. Regarding the linkage expression
a. A. Vertical linkages
Vertical linkage is a form between entities and economic actors at different
levels. According to Gulati et al. (2007): “Farmers can join a vertical linkage
7


by participating in the value chain, and vice versa being consumers of the
output of firms. Such linkage is to ensure the quantity and quality of product as
well as the harvesting time managed and monitored for the best benefits to the
participants. ” According to Bijman, Jos and Meike Wollni (2009): "Linkage is
a solution to control food safety". As reported by the World Bank (2007):
“Many organizations perceive that contract farming is one of the main
solutions to link farmers and markets at home and abroad, thereby contributing
to poverty reduction.”. “Vertical linkage is based primarily on transactional
relationships but also includes voluntary assistance or transfer of resources and
technology to local partners” (Pack and Saggi, 1997; Saggi, 1999).
b. Horizontal linkages
“Horizontal linkage relates to cooperative arrangements between
foreign and domestic firms in the form of joint ventures and networking
between firms” (Pack and Saggi, 1999; Saggi, 2002; Giroud and Scott Kennel, 2006). Or "horizontal linkage shows the interaction between

foreign and local firms in the production of goods and services in the same
production stage" (Unctad, 2001). The authors also "distinguish the
linkages and their effects. The most important effect is called the spillover
effect, arising as a side effect from the actions of foreign firms to the
domestic economy ”(Coe and Helpman, 1995; Coe et al, 1997; Giroud and
Scott-Kennel, 2006; Dieppe and Mutl, 2013). And the linkage is seen as a
direct mechanism for spillover effects to take place. In a research by
Stockbrige et al. (2003): “Cooperation between farmers for production
communities have helped them to have better negotiation ability in input
purchasing as well as market information accessing”. Horizontal linkage
can be done in 3 forms with increasing levels: mutual-aid team, cooperative
groups and cooperatives.
c. Mixed linkages
According to Rome. Lazzarini, S.G (2008): “It is a linkage included
vertical and horizontal linkages. This form appears in the process of
development and integration when the relationship between households,
establishments and production and business firms is a combination of
cooperation and competition. These units, on the one hand, associate
horizontally with each other to form teams, or cooperatives ...for the better
competition among them, for limiting price squeeze. On the other hand, those
teams or cooperatives vertically link with processing firms, or are suppliers of
products for the next actor in the production and business process.”
Figure 2.1: Relationship between components in a link chain
8


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2.2. Role of linkage in agricultural development.
Regardless of any linkage form, the benefits brought about by them play a
great and very diverse role. Le Xuan Ba (2003) and Le Dinh Giam (2007)
point out in their studies some of the key roles of economic linkage in socioeconomic development as follows:
Firstly, “economic linkages help achieve economies of scale. Secondly,
"economic linkages reduce costs and resources consumption, increase
efficiency and respond quickly to development requirements.
Thirdly, economic linkages help adapt quickly to changes in the business
environment.
Fourthly, “economic linkages help minimize risks. When joining a
linkage, the risk will be allocated to the participating partners, not just
focusing on one subject, then the ability to overcome difficulties will be
higher.
Fifthly, “economic linkages help market subjects quickly access to new
technologies. The parties involved can transfer technology to each other, at
reasonable costs and in quick time, due to their mutual trust."
Sixthly, "economic linkages create endogenous strength, limit external

negative impacts, and create an effective environment to attract investment".
Seventhly, "Economic linkages increase the specialization division and
general economic development, eliminate unipolar, localized, closed
development, expand international cooperation and division and broaden
market. Economic linkages help firms conquer new markets due to their
financial capacity, taking advantage of low-cost advantages (product supply
contracts, franchise contracts ...) ".
9


2.2. 2.2. Role of and promotional conditions for firm and farmer
linkages for farming development
2.2.1. Role of firm and farmer linkages for farming development.
2.2.1.1. For farm households
Joining the linkages helps farmers to overcome the disadvantages of scale
such as small-scale production, dissatisfaction at the market demand for
quantity of agricultural products ... This is the only way for small farm
householders to participate most effectively in the production chain and work
cooperatively to form an organization in the market. This will contribute to the
best favour and lowest level of risk to material purchase and output sales.
Production by an organization helps farmers take advantage of market
opportunities. Opportunities to integrate their agricultural products into the
world market. Because when participating in the linkages, the households must
comply with the terms, conditions and production requirements as required by
the firms. They must be produced in accordance with the process with clean
technology and safe chemicals and pesticides.
2.2.1.2. For firms
In the context of international integration today, the agricultural sector must
apply CNC in production to be competitive, and linkage is a must for
agricultural development accordingly. In this case firms play a central role.

By linking with farmers, firms purchasing agricultural products are able to
take initiative in production plans with stable input sources. Meanwhile, their
costs for intermediaries in the process of purchase or distribution will also be
reduced much. Linkage helps firms demonstrate the role of household
economy leading in the development process.
2.2.1.3 For managers
The linkage between firms and farmers in agricultural development in
general and farming in particular contributes to promoting the development of
collective economy, thereby speeding up the process of specialization in
agricultural production and forming a professional farmer community, well
implementing the economic and political orientations of the Party and State.
Hence, each agent in the consumption of agricultural products will be facilitated
in promotion of their advantages, creating high-quality and large-quantity
products satisfactory to the market needs, creating specification and cooperation
of each actor in the linkage and also throughout the society.
2.2.2. Conditions for forming firm and farmer linkages for farming
development.

10


Firstly, “there must be a system of legal documents and institutional
organizations for the chain."
Secondly, "there must have agents to form the management of all linkages".
Thirdly, "such linkage will contribute to increasing the scale"."
Fourthly, "there must be good communication to create awareness in
the social community, especially in the producer and consumer
community."
Fifthly, "authorities from central to local levels must have consensus on
support in and formation of linkages."

2.2.3. Factors affecting the formation of firm and farmer linkages for
farming development in integration context.
2.2.3.1. Internal factors
a. Awareness factor
b. Production resource factor
c. Motive for linkage
d. Linkage capacity
2.2.3.2. External factors
a. Market factor
b. Regulatory environment
c. Integration context
2.2.4. Analytical and evaluative indicators of firm and farmer linkage
process
2.2.4.1 Reflective indicators of results of firm and farmer linkages
- Area, productivity and output of crops grown in the area.
- Value of farming products in the area
-Quantity of products consumed of farm households in the area
- Selling prices of farming products in the area.
2.2.4.2. Reflective indicators of linkage situation and results of firm
and farmer linkage in the farming industry.
- Percentage of firms and farmers participating in the linkage.
- Volume of input supplies and raw materials supported through the linkages.
- Volume of products consumed through the linkages.
- Product selling price through the linkages.
- Number of firms and households violating the linkage content.
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2.2.4.3. Reflective indicators of impact of linkage participation
- Selling price before and after linkage participation.

- Stability in production before and after linkage participation.
- Income of farm households before and after linkage participation.
- Value of exported goods.
2.3. Practical experience and lessons for Thai Binh province
2.3.1. A number of policies related to firm and farmer linkages
The Party and the State have issued many guidelines, orientations,
strategies and policies to promote agricultural development, such as
Resolution No. 26-NQ/TW, dated August 5, 2008, on "agriculture., farmers
and rural areas ", Decision No. 80/2002/QD-TTg, dated June 24, 2002 of the
Prime Minister on "policies to encourage the contractual sale of commodity
farm produce", Directive No. 25/2008 / CT-TTg, dated August 25, 2008 of the
Prime Minister on "strengthening the direction of consuming agricultural
products through contracts".
2.3.2.1. Experiences from China
Firstly, firms apply a management model: firms + standard livestock farms
+ farmers and build a stable and reliable partnership with farmers. They
conduct separate livestock and provide unified services to contracted farmers
including provision of breeders and feed, technical assistance and disease
prevention.
Secondly, cooperative model between farmers and firms is mainly applied
in three aspects: (2) circulation of agricultural land, (2) construction of
infrastructure and (3) expansion of science and technology in agriculture.
Thirdly, in recent years, firms as agricultural product processors, have
followed the path of agricultural modernization and effort development of
large scale, standard, intensive farmming and green materials. Stable raw
material production and increase in farmers' income are achieved by
forming a linkage with farmers. Thence, it is possible to establish the
Association of Farmers and Specialized Cooperatives.
Fourthly, Farming contracts are operated by firms in three forms: (i)
leasing to farmers to operate themselves in large quantities and executing

contracts with them, (ii) executing contracts with village committees and
(iii) executing contract with farmers on their own thing.
2.3.2.2. Experiences from Thailand
Contract farming is a fairly successful integration model in agricultural
production in Thailand. The form of contract is quite diverse and it all comes
12


from the actual demands of processing firms. Among them, the linkage value
chain of rice is the most typical. The Thai rice value chain has the following
characteristics: “(1) small farms must sell paddy to traders, (2) farms directly
link with exporters or traders of supply, (3) brokers play an important role in
connecting between processing plants and distributors, (4) private firms
directly participate in export: exports focus on a number of particular private
firms, (5) the government only interferes with the purchase of rice at the
minimum price, not too deeply into the market”.
2.3.3. Domestic experiences
2.3.3.1 Experience from "a large sample field" in An Giang
To improve the efficiency of the rice production chain, An Giang province
has built a large sample field according to the 4H motto (Cooperation Modern - Harmony - Effectiveness).
- Collaboration is required: “Farmers in the region are gathered into
cooperative groups or involved in cooperatives. Cooperative groups or
involved in cooperatives act as intermediaries, representing farmers to execute
contracts on production and consumption linkage with firms; guiding farmers
to produce according to plans and providing services for production and
consumption."
-Modern is required: "modern scientific advances and information
technology must be applied to production and distribution. The recommended
technical process, production diary record are also applied”.
- Environmental harmony and friendliness are required: “Participants must

be assured of harmonious interests of society and avoid damage to third
parties. Attention should be paid to environmental protection such as waste
disposal, protection of ecosystems, etc. according to the principles of safety for
producers, consumers and the environment."
- Effectiveness is required: "Consumption firms have specific product
strategies and stable consumer markets. The State performs well the
management role, supports in many aspects of the mechanism, policies and
implementation environment ”. Accordingly, firms and farm households in An
Giang have established 3 new types of cooperatives with higher economic
efficiency. (Nguyen Van Xuan, 2016).
Experiences from Dong Thap province
Linkage in production and consumption is the key to help Dong Thap
successfully implement the rice production value chain. Before linkage, the
consumption completely depends on the purchasing market, on the price at the
time of purchase, sometime leading to devaluation that makes farmers worry.
However, since joining the linkage model under "large sample fields", farmers
13


may completely keep their mind on their production. Because agricultural
products and rice has been committed by firms to pay off at a stable price.
Tam Nong district of Dong Thap province has successfully implemented this
model.
2.3.3.3. Experiences from Ninh Binh province
From the success of Ninh Binh in linkages between firms and farmers in
processing agricultural products, it can be acquired the forms of linkages in
Ninh Binh province:
(1) Nuclear estate linkage: “The basic feature of this linkage is that the
product buyer is an firm owning or using the land or plantation and the seller is
a dependent farmer, only producing to create products and reselling them to

the firms.
(2) Multipartite or 4-house linkage: “This is a form of contract on
agricultural production and product consumption involving many different
entities such as the State, scientists, firms, cooperatives, farm households.
(3) Intermediary linkage: “This linkage is usually suitable for small and
medium-sized companies with limited human resources and scattered material
areas. The form of intermediary linkage is shown in the linkage of production
and consumption of edible mushrooms between mushroom production
households and Huong Nam firm through cooperatives in Yen Khanh district,
Ninh Binh province.
(4) Informal linkage: “This is the main form of linkage through oral
agreement between production farm households with collectors or collecting
agents or small processing facilities.
2.3.4. Lesson on firm and farmer linkage inThai Binh province
Firstly, “The State plays an important role in linking agricultural
product consumption of households, not only in encouraging but also
deepening into the organization and coordination of forces in the linkage
models with participation of farm households and other entities.
Secondly, “Practices of Thailand, China…. all highly appreciate the role
of centralized form, center core form and intermediary form through
cooperatives in linking farm product consumption of farm households."
Thirdly, “The economic linkage will actually grow when it is linked to
the market development, and the processing technology industry, at the
same time, the development of processing firms will give rise to the
inevitable demand for economic linkage between farm households and
export processing firms, typically for rice, cotton, sugarcane and seafood
products in Vietnam".
14

Fourthly, “The mode of economic linkage between farm households and
actors is done mainly through contracts, which is legal basis for binding
linkage-evolving entities to performance of their responsibility and benefits
in the spirit of self-awareness and respect".
Chapter 3: CURRENT SITUATION OF FIRM AND FARMER
LINKAGE, FACTORS AFFECTING FIRM AND FARMER LINKAGE
IN DEVELOPMENT OF THAI BINH FARMING INDUSTRY IN
INTERNATIONAL INTEGRATION CONTEXT
3.1. Situation of farming development and process of forming firm and
farmer linkage in Thai Binh province
3.1.1. Overview of Thai Binh province
Thai Binh is a coastal province in the Red River Delta. Thai Binh borders
five provinces and cities: Hai Duong in the North, Hung Yen in the Northwest,
Hai Phong in the Northeast, Ha Nam in the West, Nam Dinh in the West and
Southwest, and the South China Sea in the East (Gulf of Tonkin). According to
the economic development plan, Thai Binh belongs to the northern coastal
region. ”(Open source Encyclopedia Dictionary)
3.1.2. Assessment of advantages and disadvantages of Thai Binh province
and factors affecting the linkage between firms and farmers.
3.1.2.1. Advantage assessment of Thai Binh province
Firstly, Thai Binh has advantages in topography, land and climate.
Secondly, Thai Binh is a province with a fast and synchronous pace
of mechanization in agriculture. Thirdly, the priority policies on agricultural
development of the province and districts have achieved unexpected results in
recent years.
3.1.2.2. Disadvantages and obstacles
Firstly: Farmers in Thai Binh still have maintained habits and thinking
about spontaneous production.
Secondly: There are still many obstacles in the process of agricultural land
accumulation.

Thirdly: There are many issues regarding the work of verifying, amending
and adjusting the plans for agricultural development in Thai Binh that have not
been overcome.
Fourthly, restructuring the economy and rural labor towards reducing the
proportion of agricultural sector and of agricultural labor remains slow.
3.1.2.3. Factors affecting the linkage between firms and farmers in Thai
Binh
a. Internal factor
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- Awareness factor
+ Awareness of farmers
+ Awareness of firms
- Motive for linkage
b. External factors
- Market factor
- Regulatory environment
- Integration context
3.2. Current situation of firm and farmer linkage for farming
development in Thai Binh province in recent time.
3.2.1. Process of developing and forming the firm and farmer linkage
for farming development in Thai Binh province
Agricultural production in Thai Binh develops quite comprehensively,
positively changes by the commodity production model and maximally
exploits the potential and advantages of the delta province and the intensive
farming tradition. “The average 5-year agricultural, forestry and fishery
production value (in the 2013-2017 period) increases by 3.3%/year; in which:
farming increases by 0.76% per year on average, livestock by 5.54% per year
and aquaculture by 6.2% per year”(Thai Binh Statistical Office, 2017). The

process of industrialization and modernization of agriculture and rural areas
has been increasingly strengthened; the facilities, infrastructure, science and
technology have been applied better in production, and the technology has
been improved.
3.2.2. Assessment of factors affecting level of firm and farmer linkage for
farming development in Thai Binh province in international integration
context
3.2.2.1. Descriptive statistical analysis of current situation of firm and
farmer linkage for farming development in Thai Binh province in
international integration context.
In fact, when participating in the linkage, firms will conduct discussions
and democratic agreements with farmers. Financial resources are public,
profits and risks are shared.
3.2.2.2. Assessment of reliability of scale
The verification and evaluation of the scale is carried out in 2 steps: Step 1
is to perform Cronbach’s Alpha analysis to eliminate the observed variables
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not contributing to the description of the concept with a need of measure; the
second step is to conduct exploratory factor analysis (EFA) to check the
validity of scale of study concepts.
Cronbach’s Alpha Analysis
Cronbach’s Alpha analysis results for the observed variables are described
in the following table:
Based on the results of scale verification, it can be shown that most of the
scales have Cronbach Alpha coefficient in the range of 0.7-0.8 so the scales in
this study are highly reliable. Results in the above table also indicates that
there are 3 observed variables NT04, MTCS05, GC03 excluded because they
fail to meet the condition of Cronbach Alpha coefficients and total correlation

between variables.
Exploratory factor analysis EFA
After assessing the reliability of scales, the author conducted an
exploratory factor analysis EFA to evaluate the convergent and discriminant validity
of scales.
Factor analysis for independent factors
Five factors were drawn from the implementation of the EFA analysis: “(1)
Commitments to and sharing of benefits and risks between farmers and firms
in the integration process, (2) Household awareness on the benefits from
linkage with the firms, (3) Policy environment - Institutions related to firm and
farmer linkage, (4) Issues related to management skills management and
business capacity of linked firms, (5) Price issues interested by farmers in the
process of linking with firms”. Thus, the results of exploratory factor analysis
EFA have changed a bit in comparison with the initial qualitative research
findings.
From the regression model findings, it can be derived the multiple regression
equation expressing the relationship between the independent and dependent
variables as follows:
Y= 2.102 + 0.732X1 + 0.091X2 + 0.231X3 + 0.222X4 + 0.281X5
Where: Y is the dependent variable representing the level of participation
of farm households in the process of linking with firms. The variable Y
assesses the level of household participation in linkage with firms. It is built on
2 levels: interest and willingness to participate
X1, X2, X3, X4, X5 are independent variables in the following order: “(1)
Commitments to and sharing of benefits and risks between farmers and firms
in the integration process, (2) Household awareness on the benefits from
linkage with the firms, (3) Policy environment - Institutions related to firm and
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farmer linkage, (4) Issues related to management skills management and
business capacity of linked firms, (5) Price issues interested by farmers in the
process of linking with firms”.
3.2.3. Assessment of current situation in the implementation of firm
and farmer linkage for farming development in Thai Binh province.
3.2.3.1. Assessment of advantages and disadvantages in the process
production linkage performance:
a. Advantages:
Firstly, agricultural production in Thai Binh develops quite
comprehensively, maximizing the region's strengths.
Secondly, land accumulation in Thai Binh brings high economic efficiency.
Thirdly, in the development structure of farming industry, Thai Binh has
focused on the production of food crops (especially rice), whose process has
been specialized.
Fourthly: The survey results show that Thai Binh farmers are very
interested in the benefits to farming output products, willing to participate in
the linkage due to realized benefits from such linkage
Fifthly, the policy environment in Thai Binh is considered democratic.
Sixthly: The regression model findings show that factors that farmers are
most interested in the process of linkage are: “Commitments to and sharing of
benefits and risks between farmers and firms."
b. Disadvantages:
Firstly, the production status is small and fragmented. Especially in the
process of production investment, there are also a number of disputes between
firms and farmers due to the lack of harmony on benefits and the
implementation of contractual commitments between firms and farmers is
negligent, leading to contract breakage as a popular reality.
Secondly, the large sample field area in the linkage-participating areas in
Thai Binh is small. Main characteristic is highly-productive rice.
Thirdly, with coastal terrain, Thai Binh is a province greatly affected by

climate change, extreme weather and saline intrusion. .... The weather is often
complicated; pests and natural disasters often occur during the production
process. Therefore, investment funding in production is almost completely
lost.
Fourthly, the market and market orientation for production and
development of the farming industry are still insufficient and weak, very few
firms invest in developing closed agricultural production, including from

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production to product consumption stages. New farming products are only
consumed as materials for raw processing and for other localities, etc.
3.2.2.2. Lesson on firm and farmer linkage from farming
development in Thai Binh province.
The above results are derived from Thai Binh's timely awareness and the
involvement of provincial local authorities, mass organizations and farmers in
the production linkage to create value added and develop sustainably.
Infrastructure for agricultural production is completed step by step to
facilitate the development of "commodity production", mechanization is
promoted and applied in farming production; idea of large-scale commodity
production is formed and from the situation of some difficult areas in farming
production, there are more and more forms of land accumulation to organize
production effectively.
Moreover, Thai Binh has many advantages in terms of land, climate and
intensive farming compared to other provinces in the RRD, so many firms inside
and outside the province want to invest in production with farmers.
However, there are still some obstacles such as: linkage in production and
product consumption is not really sustainable, the area of linked fields is small
due to the semengted production area. Although there are advantage in rice

and vegetables production and many good quality products but due to the
output is mainly in the raw and unprocessed form, their value remains low.
The number of farming-business firms is still low in both scale and quantity.
Chapter 4:SOME SOLUTIONS TO ENHANCE EFFECTIVE
LINKAGES BETWEEN firms AND FARMERS IN farming development
IN THAI BINH PROVINCE IN INTEGRATION CONTEXT
4.1 Current international and domestic context
The influential competition between big countries burdens countries in the
region, especially small- and medium-sized countries, with the great pressure
that forces them to adjust policies appropriately. Therefore, many countries are
facing challenges both internally and externally. Competition among major
countries also partly affects the results of cooperation, dialogue and solidarity
in ASEAN.
4.2. Perspectives and goals on firm and farmer linkage in farming
development in Thai Binh province in the coming time.
Developing "high-tech agriculture" is one of 5 new breakthrough directions
of agriculture determined to be implemented by Thai Binh province in 2017.
This is an inevitable trend to improve the quality of agricultural products and
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plays an important role in restructuring the industry towards large-scale
commodity agriculture. Despite being initialed, investment in "hi-tech
agriculture" in Thai Binh is a "golden land" for many agribusiness firms.
4.3. Some solutions to enhance effective linkages between firms and
farmers in farming development in Thai Binh province in integration
context
4.3.1. Some solutions to improve the policy environment and linkagerelated institutions mainly focusing on the process of land accumulation in
agricultural production.
Firstly, review of and supplements to the agricultural and rural,

concentrated areas and land accumulation planning are paid attention to.
Secondly, the leaders of the Department of Agriculture and Rural
Development of Thai Binh province need to have drastic direction in focusing
and accumulating agricultural land to convert to commodity production.
Thirdly, cooperation with organizations, firms and research institutes is
promoted to attract and call for investment in rural agriculture development
in Thai Binh province.
Fourthly, specific mechanisms and policies for firms and corporation
with high-focused and high-tech agricultural production projects
investing in rural agriculture development in Thai Binh province are
reviewed and promulgated.
Fifthly, administrative procedures to facilitate firms' investment in rural
agriculture development in Thai Binh province are reviewed and
simplified.
4.3.2. Solutions to improve management skills and business
capacity of linked firms.
There should be contracts including clear constraints and severe
sanctions to be executed with farm households. Improving business
capacity of firms will promote effective business processes and improve
productivity and economic value for firms.
4.3.3. Solutions to raise farm households' awareness on benefits
from linkage with firms.
For a closed linkage, sustainable and long-term development, in the
future, some solutions need to be focused on to raise the farm households'
awareness on benefits from linkage participation.
4.3.4. Solutions to promote development of value added chain model
Horizontal linkages are promoted.
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Vertical linkages are promoted.
Brands for products in the value chain are built and developed.
4.3.4. Some solutions to develop production linkages
Firstly, "propagation and mobilization" of localities for implementation of the
new policy as concentrating agricultural land, applying science and technology,
and organizing the formation and development of the province's farming industry
production under a linkage chain are maintained.
Secondly, organizations and individuals inside and outside the province are
attracted to invest in the production, processing and consumption of
agricultural products.
Thirdly, the form of production and development under the model of linkage
chain is promoted; provincial farmers are encouraged to develop economy under
the model of cooperatives and the formation of cooperative groups and
associations which produce under a linkage chain from the supply of input
materials, agricultural production process, business process, processing,
preservation and consumption of products, is mobilized.
Fourthly, the policies issued by the Government and the provincial
People's Committee should be implemented in a synchronized and proper
manner, especially the policy of supporting capital sources, helping firms,
organizations, individuals and farm households access loans for investment in
agricultural development under a linkage chain.
4.3.5. Some key solutions to develop agricultural cooperatives under
the 2012 Cooperative law in the coming time.
Firstly, propagation and mobilization of the 2012 Cooperative Law and
documents related to are continued to each district, commune and locality in the
province.
Secondly, training in the management and professional capacity for
agricultural cooperative management officials for each specific title is
strengthened.
Thirdly, local governments need to have mechanisms and policies to

expand and improve the quality of agricultural cooperatives services, with a
focus on centralized input supply services and centralized product
consumption services.
Fourthly, in the period of 2017-2020, "an effective cooperative model is
organized and developed" according to the 2012 Cooperatives Law in association
with production and consumption of products along the value chain.

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Fifthly, it is necessary to implement central support and provincial support
mechanisms for the development of agricultural cooperatives.
Sixth, market for agricultural products needs to be developed strongly. Trade
promotion activities and market development for agricultural products with the
aim of improving the quality, prestige and competitiveness of products are
carried out.
4.3.6. Some solutions to develop production linkages
Firstly, "propagation and mobilization" of localities for implementation of the
new policy as concentrating agricultural land, applying science and technology are
carried out.
Secondly, organizations and individuals inside and outside the province are
attracted to invest in the production, processing and consumption of
agricultural products.
Thirdly, the form of production and development under the model of linkage
chain is promoted; provincial farmers are encouraged to develop economy under
the model of cooperatives and the formation of cooperative groups.
Fourthly, the policies issued by the Government and the provincial People's
Committee should be implemented in a synchronized and proper manner.
4.3.7. Solutions to develop markets for agricultural commodities is
promoted for a stable and sustainable development of firm and farm

household linkage.
4.4. Proposals and recommendations
4.4.1. Regarding agricultural land accumulation and concentration
- It is proposed that the Ministry of Agriculture and Rural Development
should consult with ministries and branches to submit amendments and
supplements to a number of contents of the Land Law to the National
Assembly for facilitation of land accumulation and concentration.
- It is proposed that the Ministry of Agriculture and Rural Development
should introduce, attract or invite investment from agribusiness firms at home
and abroad in Thai Binh province.
- There are separate policies to support Thai Binh in piloting models of
large-scale land accumulation.
4.4.2. Regarding cooperatives
- With specific characteristics of agricultural cooperatives transformed
from old ones, the Government should have separate decrees for this type of
cooperative or amend the Decree 193 to add a separate chapter for agricultural
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cooperatives: “Participants , forms of capital contribution, model of
organization, management, production and business activities, service
administration of agricultural cooperatives, financial management, income
distribution in agricultural cooperatives .... "
- It is proposed that the Government should offer additional funding for
agricultural cooperatives under the Prime Minister's Decision 2261/QD-TTg.
- It is proposed that the Ministry of Agriculture and Rural Development
should advise the Government to remove regulations on the rate of supply,
consumption of products, services and employment.
4.4.3. Regarding development and linkage of production
- It is proposed that the Ministry of Agriculture and Rural Development should

submit amendments to regulation and new mechanisms and policies to support the
development of the province's agriculture sector to the Government.
- It is proposed that the Ministry of Agriculture and Rural
Development should introduce and invite firms inside and outside the province
to invest in Thai Binh agriculture so that Thai Binh has the opportunity to
attract "investment in developing agricultural production along the value
chain".

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