Agricultural production according to value chain: Links are still loose

Agricultural production according to the value chain is currently considered a sustainable direction to help improve production efficiency and income for farmers and businesses. This form ensures that actors participating in the value chain share benefits and responsibilities with each other, regulate market supply and demand and trace the origin of products.

Inevitable trend

According to Mr. Nguyen Nhu Tiep, Director of the Department of Quality, Processing and Market Development (Ministry of Agriculture and Rural Development), Vietnam's agricultural value chain has recently made great strides, building more than 2,500 large chains. Many Vietnamese agricultural products have significantly improved in quality to join the value chain. Vietnam's export turnover this year is likely to increase compared to last year, reaching 55 billion USD or more.

To best promote and increase the value of Vietnamese agricultural products, the effective and sustainable development of the agricultural value chain is a vital issue in agricultural restructuring. This is to create conditions for continued market expansion for Vietnam with signed and negotiated FTAs, as well as to meet the needs of the domestic market with a population of more than 100 million people.

However, the linkage and development of the agricultural value chain still has some bottlenecks. According to Mr. Tiep, it is the problem between producers and enterprises. The biggest limitation at present is the loose linkage between actors in the same stage (horizontal linkage), as well as between stages (vertical linkage) in the value chain.

In a more specific analysis, Prof. Dr. Tran Duc Vien, former Director of the Vietnam Academy of Agriculture, said that most agricultural enterprises do not invest in production but only invest in purchasing and processing to make a profit, so the linkage chain is weak and not strong. According to calculations, currently only 6% of farming households and 4,000 cooperatives participate in the linkage chain (accounting for less than 1/4 of the cooperatives). In addition, the number of enterprises investing in agriculture is very small, accounting for only about 1-1.3% of the total number of enterprises. The rate of enterprises participating in the linkage chain is also low, only about 25% (equivalent to 1/4). Notably, only 14-20% of agricultural products participate in the linkage chain, the remaining 80% are floating.

Dr. Can Van Luc - member of the National Financial and Monetary Policy Advisory Council assessed that the scale of supply chain financing activities in Vietnam is still very small, while import-export turnover has increased quite well (about 10%/year in the period 2013-2023).

Agricultural production according to the current value chain is considered a sustainable direction.

Strengthening cooperation and linkage

In order for Vietnamese agriculture to develop sustainably towards increasing added value, Mr. Tiep proposed that it is necessary to innovate agricultural production through strengthening cooperation and close linkage in the value chain from production to consumption between farmers, cooperatives, cooperative groups and enterprises. According to him, enterprises must have deep linkages from when farmers plant, raise livestock and provide technical support and supervision, which will be much more sustainable, ensuring productivity, quality and efficiency in the agricultural value chain linkage.

To overcome the above difficulties, Mr. Luc proposed to complete the legal framework, speed up the progress of building a legal corridor for new business models (sandbox mechanism for Fintech, peer-to-peer lending, data sharing mechanism, etc.). In particular, it is necessary to summarize and evaluate and have a follow-up plan for agricultural insurance. Continue to complete the information system, forecast data on the market and agricultural product prices to help farmers and businesses have a stable production and consumption orientation. Mr. Luc said that it is necessary to have a marketing strategy and expand the agricultural export market, focus on building brands, take advantage of new generation FTAs, etc.

On the part of agricultural enterprises, it is necessary to proactively learn about supply chain financing solutions and benefits; increase information transparency to be able to access supply chain financing products in particular and financial services in general; proactively research to shift to green agriculture and sustainable development to be able to access domestic and foreign capital sources for this field.

Source: https://thoibaonganhang.vn/san-xuat-nong-nghiep-theo-chuoi-gia-tri-lien-ket-con-long-leo-155437.html