Improving processing capacity for agricultural cooperatives

According to data from the Ministry of Agriculture and Rural Development, currently about 70% of agricultural products supplied to the market by agricultural cooperatives are in raw form. This not only shows that the processing capacity of cooperatives is limited but also creates a barrier to increasing the value of agricultural products and accessing international markets.

Packaging products after deep processing at Tan Thanh Agricultural Cooperative.

The Department of Economic Cooperation and Rural Development said that raw production only creates 15%-20% of value, the remaining value lies in processing and trading stages... Therefore, Circular production and deep processing are inevitable directions. However, to increase the economic value of agricultural products of cooperatives, in addition to land, there are also issues of capital and the level of application of science and technology of cooperative members...

Increase agricultural value

These days, the atmosphere at the factory is productive. Agricultural Cooperative Tan Thanh, Nong Thuong commune, Bac Kan city is very busy. From a small facility years ago, Tan Thanh has now become one of the leading cooperatives in building a chain of links and deep processing of turmeric products.

Ms. Nguyen Thi Hong Minh, Director of the Cooperative, said: Nong Thuong Commune in particular and Bac Kan Province in general have a large area of glutinous turmeric, but many farmers have difficulty consuming it because there is no turmeric processing factory. After researching, I realized that turmeric products are very good for health, so I established Tan Thanh Agricultural Cooperative. At the same time, I learned about the turmeric processing process and purchased machinery. The products have been well received by consumers, but the quantity is still small because the Cooperative lacks the resources to invest in modern machinery.

To solve capital for Tan Thanh Cooperative in particular and all agricultural cooperatives in the province in general, the People's Committee of Bac Kan province has deployed support for cooperatives with capital from the APIF Fund (Agricultural Business Promotion Investment Fund). Receiving support of more than 1.6 billion VND for the support period from 2019 to 2020, Tan Thanh has purchased equipment and production machinery. Thanks to that, from 10 initial products, the cooperative now has 23 products, of which two products have achieved 4-star OCOP certification and one set of products has achieved the National Outstanding Rural Industry certification. In addition, the cooperative's raw material area has met organic standards and has been granted a growing area code. This result has contributed to increasing the income of many turmeric growing households.

Embarking on deep processing to increase product value is also the direction of Phu Ngai Agricultural Cooperative, Phuoc Ngai Commune, Ba Tri District, Ben Tre Province. Currently, the Cooperative is recognized as one of the five key cooperatives in Ben Tre Province, successfully transforming from selling raw rice products to businesses to specialized products and directly selling rice products to consumers, bringing high economic efficiency.

Established in 2016, Phu Ngai Agricultural Cooperative initially had 22 members with a capital contribution of only 6.3 million VND. The cooperative's activities mainly involved growing rice and crops, but the output was unstable. By 2019, after the cooperative was consolidated, the number of members had increased to 101 with a capital contribution of more than 500 million VND, producing about 100 hectares of rice and 22 hectares of vegetables. Of which, 40 hectares produced organic rice with contracts signed with businesses. From 2023, the cooperative will switch to producing specialty rice with ST25 variety according to a closed process, milling, packaging, vacuuming, supplying directly to consumers, competitive prices, bringing great economic efficiency.

Farmer Ho Van Truong, a member who contributed 10 million VND to Phu Ngai Agricultural Cooperative, is cultivating 8 hectares of rice and said he was very excited when his profit increased more than twice compared to the previous traditional method. According to Mr. Truong, when participating in organic rice production, the Cooperative supports 100% of rice seeds, 50% of fertilizer and pesticide costs throughout the crop season. Other services such as hiring labor to plant rice are also reduced by 50% and the products are consumed, so the profits of the Cooperative members are much higher.

Chairman of the Board of Directors and Director of Phu Ngai Agricultural Cooperative Mai Van Khang said: “Currently, the Cooperative buys rice from members at a price of 10,500 VND/kg and supports low-cost agricultural services, so people's profits are much higher than before. Especially since investing in packaging and vacuuming machines to sell rice directly to consumers, the Cooperative has increased profits by about 4,000 VND/kg. In the 2023 rice crop alone, the Cooperative's output reached 45 tons of rice, not enough to sell to the market even though the price is very competitive."

The success of cooperatives such as Tan Thanh (Bac Kan) and Phu Ngai (Ben Tre)... in the strategy of developing specialized processing shows that this is the right and accurate direction for agricultural cooperatives today.

Support cooperatives to promote deep processing

The Department of Cooperative Economics and Rural Development said that in the two years of 2022-2023, the Department has allocated a budget of 3.5 billion VND and coordinated with institutes and schools under the Ministry of Agriculture and Rural Development to organize 21 training courses with 1,150 trainees on production and business development training, and participation in linkages for managers and members to improve management and business capacity for cooperatives. At the same time, it will advise and propose to localities to support funding and infrastructure for agricultural cooperatives to best perform deep processing of agricultural products. Thereby, maximizing the goal of increasing value per unit of cultivation.

To support the agricultural sector, the Government has also issued Decree No. 113/2024/ND-CP stipulating many State policies on supporting the development of cooperatives, cooperatives, and cooperative unions, including policies to support human resource development; policies to support the application of science and technology, innovation and digital transformation; policies to support market access and research; policies to support investment in infrastructure and equipment development; policies to support financial consulting and risk assessment; policies to support activities in the agricultural sector... This is considered a solution to help cooperatives improve their deep processing capacity.

Vice Chairman of the Ben Tre Province Cooperative Union Le Hoang Thanh added that to support cooperatives, the locality is implementing the project "Developing OCOP products for cooperatives in Ben Tre province", aiming to enhance the capacity to develop collective economy and implement the OCOP program for cooperatives. The goal is to build a model for developing cooperative collective economy; build 20 new OCOP products for 20 cooperatives; upgrade 7 existing OCOP products of cooperatives... At the same time, the locality continues to support cooperatives in building brands, product labels, product packaging for agricultural cooperatives, support cooperatives in designing models, registering product labels to increase competitiveness in the market.

Bac Kan province has also determined that in the 2022-2025 period, it will support human resources for 100 cooperatives in need of workers with college degrees or higher, with the support level equal to 1.5 times the regional minimum wage, and the maximum support period is 36 months (until December 31, 2025). In parallel with human resource support, Bac Kan continues to select and invest in supporting cooperatives with potential production and business plans associated with the value chain. From 2022-2024, the province will invest more than 31 billion VND to support the construction of production infrastructure for 14 key cooperatives in the province.

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