PPP model successfully piloted in Vietnam's agricultural sector

Over the same period, agricultural production costs have fallen by an average of 2 per cent annually, thanks to technology transfers under the programme, Agriculture and Rural Development Minister Cao Duc Phat said during a recent interview with The Nation.

He said Vietnam had begun the project after participating in the “World Economic Forum (WEF)” in 2010, at which it was suggested that the PPP model be used in agriculture by Asian countries.

The goal of the PPP programme is to increase Asian agricultural output by at least 20 per cent, reduce production costs by 20 per cent, and lower carbon-dioxide emissions by about 20 per cent – all by 2020.

Vietnam joined with 12 global companies to launch a public-private task force to advance sustainable agricultural growth in the country, he explained.

Developed through discussions of the WEF’s “New Vision for Agriculture Initiative”, the task force has taken an innovative approach to improve food security and agricultural sustainability nationwide.

As the first of its kind in Vietnam, the task force works to coordinate and leverage public and private-sector investments in agriculture to increase high-quality production while benefiting farmers.

It operates both on a strategic level, exchanging best practice and addressing policy issues, and on an operational level, working to scale effective initiatives by combining public and private-sector capacities, said the minister.

“We have identified a number of ways in which we can work together more effectively towards that goal,” he added.

He said this approach formed part of the programme of “Growing Asian” demand for food, which meant the country must increase both production and quality to meet that growth, while operating within the constraints of climate change.

If companies combine efforts with the government and each other, the country can operate more effectively along the full value chain.

At present, Vietnam has selected six agricultural areas for pilot participation in the PPP programme: coffee, tea, vegetables, fishery, common commodities and finance.

Agriculture accounts for 18 per cent of Vietnam’s gross domestic product.

Vietnam is one of 11 countries around the world testing the PPP model in agriculture, with the participation of 20 leading groups and companies: Unilever, Nestle, Archer Daniels Midland, Bunge, Cargill, Dupont, Metro Group, Monsanto, PepsiCo, Swiss Re, Syngenta and Yara International.

 

Enhancing quality, productivity

For the PPP Coffee group, the objectives are to enhance coffee quality and productivity, and achieve sustainable production for greater income for all players in Vietnam’s coffee sector.

The group operates in Lam Dong, Dak Lak and Dak Nong provinces, where it focuses on enhancing the value chain of the coffee community and improving (re-growing) old cultivation areas.

Up to now, the group has invested in 50 coffee-garden samples in the three provinces.

The PPP model mobilises extension officers at local areas to participate in implementation of these garden samples, so that they can train farmers on techniques and cultivation methods. The officers play the role of team leaders, said the minister.

The group supports farmers in the application of new techniques, re-growing techniques, micro-finance and collection of products on site via the group’s representatives.

Meanwhile, the PPP Tea group’s objectives are to enhance exports via Unilever, and to improve the quality of Vietnamese tea from 3.6 to 4.0 standard under the brand name, Tea Made in Vietnam.

The group operates in Phu Tho province, with a focus on cooperation and strengthening the components of technology transfer, including harvesting, fertilising, caring, packaging, and forms of market development for tea businesses.

Unilever collects about 30,000 tonnes of tea a year, and 10,000 tonnes have to date been deemed in compliance with the international standard certified by the Rainforest Alliance, the mandatory standard for exporting tea under the Unilever system.

The PPP Vegetables group is developing methodologies and forms of technology transfer to farmers with a view to the enhancement of productivity and quality, and the direction for outcomes of core vegetable products, said Cao Duc Phat.

The pilot model of the group operates in the application of GAP (Good Agricultural Practices), including the provision of training for farmers and conducting impact assessments for new production models, quality and productivity.

Initially, the model focuses on potato growing in Lam Dong under one-hectare pilots. Replication models will then be expanded to 200-500 hectare sites.

Initial achievements are regarded as very promising after new breeds and local breeds have both given high productivity, attaining better economic efficiency than under current production methodology, he said.

Meanwhile, the PPP Fishery group, which operates in Can Tho province, is helping Vietnamese consumers access good fishery product sources from sustainable production, in compliance with international standards for food safety.

Metro Cash & Carry Vietnam and Cargill jointly spent €500,000 (Bt16.36 million) on conducting the PPP model for the development of aquaculture ponds in compliance with the METROGAP model for about 2,000 households.

The model focuses on identification of potential fish breeds and directs farmers to the designated model serving the domestic market.

Metro celebrated the opening of the centre for fishery products collection, processing and packaging in Can Tho in September 2011.

The PPP Common Commodities group’s objective is to strengthen the sustainable production of maize and soya bean to 50 per cent within three to five years, focusing on three prioritised issues: via the cultivation model, applying new breeds; biotechnology; and risk management via insurance.

Monsanto, in cooperation with Vietnam’s Institute of Policy and Strategy for Agriculture and Rural Development, is conducting a study on the benefits of developing GMO (genetically modified organism) products in the country.

The Common Commodities group has proposed to the Agriculture and Rural Development Ministry that it quickly complete the legislative environment for the registration, evaluation and trading certification within the state management duties of the ministry.

The group aims to strengthen communication and raise awareness among communities on the safety and socio-economic benefits of GMO products, continuously enhance experience-sharing via PPP, and contribute to capacity development for direct players in management, evaluation and certification issues for GMO products.

Lastly, in regard to finance and credit, it was agreed in September 2011 that the PPP agriculture programme should establish a group specialising in finance and micro-finance in order to further promote the participation of government agencies relating to credit and financial provision for the widening and diversification of agricultural products in Vietnam, said the minister.

 

International agencies involved 

The ministry’s PPP Finance group, which is co-chaired with the UN International Fund for Agricultural Development (IFAD), invited organisations such as the World Bank, the Asian Development Bank and IFAD to engage in bilateral cooperation with such bodies as the Japan International Cooperation Agency, the UN Food and Agriculture Organisation and the Dutch authorities, in order to mobilise more financial sources from these organisations.

Agencies involved in the process 

 within Vietnam include the Agriculture and Rural Development Ministry, the Finance Ministry and the State Bank of Vietnam.

The group’s first meeting discussed the best credit and financial mechanisms for operational activities within the five groups of agricultural products under the PPP.

Currently, banks such as the Vietnam Bank for Agriculture and Rural Development, Lien Viet, Kien Long, Techcombank and People Credit Funds are actively participating and expect to create a typical mechanism for credit provision facilitating the activities of the PPP agricultural groups, said Cao Duc Phat.

With the initial success of the PPP system in Vietnam’s agricultural sector, Thai Agriculture and Cooperatives Minister Peetipong Phuengbun na Ayutthaya said after visiting Vietnam last week that the ministry was interested in exploring the PPP model in Thailand.

“We will be studying this, and may introduce a pilot project for the programme,” he said.