Roadmap for agriculture in Vietnam

Viet­nam, like Chi­na, is using WTO acces­sion as a means of ‘forc­ing the pace’ on tran­si­tion from a social­ist econ­o­my to a mixed-econ­o­my, still under the guid­ance of the Par­ty (or that’s the the­o­ry). In oth­er words, Viet­nam will use an exter­nal pol­i­cy trans­for­ma­tion to lever­age the domes­tic agen­da: I can’t help admir­ing their ambi­tion. Last year I worked with the Min­istry of Agriculture’s pol­i­cy ana­lysts on a ‘roadmap’ for Agri­cul­tur­al pol­i­cy after WTO acces­sion The trans­for­ma­tion could result in a rapid expan­sion of eco­nom­ic growth or it could be a train-wreck as the for­mer rigid con­trols on land, labor and cred­it give way to the pres­sure of mar­kets orga­nized on mar­ket prin­ci­ples. The out­come depends on adjust­ment plan­ning: a smoother adjust­ment depends on man­ag­ing the intro­duc­tion of com­pe­ti­tion based on trans­par­ent pric­ing for inputs and out­puts and, cru­cial­ly, on the avail­abil­i­ty of pri­vate cred­it to enable small entre­pre­neurs to make the mil­lions of deci­sions that give a mar­ket liq­uid­i­ty, dynamism and … growth. At the same time the state dis­trib­u­tive appa­ra­tus, notion­al­ly at the heart of social­ist agri­cul­ture, has to be sharp­ened up to act as a safe­ty-net for those who can’t make the trans­for­ma­tion. The offi­cial Viet­namese news agency has begun to report more open­ly on the chal­lenges: bq. The eco­nom­ic devel­op­ment scale of rur­al areas is still lim­it­ed which pre­vents the appli­ca­tion of sci­ence and tech­nol­o­gy. The pro­cess­ing and preser­va­tion process still lags behind pro­duc­tion and devel­op­ment growth. In addi­tion, Vietnam’s processed farm pro­duce will face tough com­pe­ti­tion domes­ti­cal­ly when WTO and AFTA com­mit­ments on tar­iff cuts are imple­ment­ed. Rur­al and agri­cul­tur­al infra­struc­ture is still poor while stor­age and trans­porta­tion charges are high­er than those in region­al coun­tries. (“VOV News”:http://www.vov.org.vn/2005_06_18/english/kinhte1.htm#AgriculturalsectorfaceschallengesonthethresholdofWTOaccession) The chal­lenges in Agri­cul­ture are stun­ning. Although Viet­nam is the largest rice and pep­per exporter in the world and the sec­ond largest exporter of cof­fee and cashew nuts, the real prof­it in these still-large­ly-state-run indus­tries is ques­tion­able. There is a major prob­lem with land own­er­ship (titles are not eas­i­ly trans­fer­able) which leads to bar­ri­ers to exits and entries and puts mort­gage cred­it beyond the reach of many farm­ers. Labor laws need reform to allow move­ment of labour between sec­tors (a more pro­duc­tive agri­cul­ture sec­tor will have to shed labor). Whole­sale mar­kets are poor­ly devel­oped … The “Roadmap”, as you can imag­ine, points in the desired direc­tion but much of the ter­ri­to­ry out there is still unknown. This week, Viet­nam com­plet­ed it’s eighth round of nego­ti­a­tions on acces­sion with the U.S. My guess is that they are work­ing even hard­er than before for acces­sion at the Hong Kong Min­is­te­r­i­al meet­ing in Decem­ber.

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