At a recent seminar on poverty reduction through agricultural development and macro economics held by the Central Institute for Economic Management (CIEM), Vietnamese and international economists expressed their concern over investments in Vietnam’s agricultural development.

According to the Institute of Policy and Strategy for Agricultural and Rural Development (IPSARD), the agricultural GDP helps increase poor people’s incomes by 2-4 times compared to the GDP from non-agricultural activities. In the 21^st century, agriculture continues to be seen as a primary tool for sustainable development and poverty reduction.

Agricultural benefits are very important but Vietnam still finds itself in a difficult position to seek an appropriate orientation for agricultural development.

Improper investment

Not only in Vietnam but also in other Asian countries, State investments in agricultural development are decreasing rapidly. The sharp fall in the agricultural proportion of the GDP has led to a slow growth in agricultural output. Growth in the agricultural sector fell to 3.6 percent in the 1980s to 3 percent in the early years of the 21^st century.

In addition, inequity between rural and urban areas is widening. Farmers are suffering great pressure from many sides including natural disasters, crop failures and low market prices for agricultural produce.

Dr. Vu Trong Binh from the IPSARD’s Centre for Rural Development said that investment in agricultural development are still far from matching agricultural contributions to the national economy.

From 1995 to 2000, the agro-forestry-fishery sectors made up approximately 26 percent of the GDP but investment given to these sectors accounted for merely 14 percent of the total social investment from the non-State economic sector.

Meanwhile, the State’s capital resources allocated to agriculture rose by an average of 2.1 percent in the 2001-2005 period but there was no increase in some years. As a result, GDP growth in agriculture stood at just 38 percent in the 2001-2005 period, 2.8 percent in 2006 and 2.3 percent in 2007.

Large tracts of fertile agricultural land, particularly in rice-growing areas have been lost to urban and industrial sprawl. The wet rice-growing acreage was reduced  to only 4.2 million hectares in 2005, 302,500 hectares less than in 2000.

From 2000-2005, Vietnam lost 366,000 hectares of agricultural land, an average loss of 73,000 ha per annum for non-agricultural purposes. The loss of agricultural land means that farmers are gradually losing their means of production.

Vietnamese and foreign economists warn that if Vietnam doesn’t pay attention to developing agriculture and preserving arable land, especially land for growing rice, food shortage will come sooner or later. Meanwhile, the high demands for material for livestock and rice exports are exerting great pressure on Vietnam’s food security.

Recent storms, draughts, and cold spells have damaged the rice crops, doubling rice prices, affecting the economy and pushing poor people in some areas into hunger.

Rice shortages and hunger have threatened social stability.

The Mekong delta is the granary of the country but up to 29 percent of the farming households here do not have land for production. The reason behind this situation is the expansion of industrial parks, which forced farmers to sell their land, thus driving them back into poverty.

Agriculture needs a midwife?

World Bank experts say that agriculture is a way to escape poverty for millions of people in rural areas because without it, they are likely to lag behind in the transformed economies. High-value agriculture is a solution to eradicate poverty.

Derek Byerlee from the World Bank said that economies being transformed, such as Vietnam, must move to high-value agricultural production. On a global scale, he said, nations should create a fair playing ground for the agricultural sector.

The government’s investment in rural areas has a positive impact on both agriculture and poverty reduction, but accounts for a small percentage of the state budget. Meanwhile, high-percentage investment in commercially-purposed commodity production is believed to negatively impact on both agriculture and farmers’ lives.

Dr Le Xuan Ba, Vice Head of the Central Economic Management Institute, said that despite a tight monetary policy, the State should maintain investment in agriculture, rural areas and other public sectors. Agrarian growth must be on par with the growth of non-agricultural sectors. He said there should be vocational training for farmers who have lost land during the process of economic transformation.

Therefore, in the future, agricultural policies should focus on scientific research, technological transference and training, epidemic control and prevention, credit loans, processing industries and marketing activities.