National Workshop on Agribusiness in Vietnam - Oxfam Blogs
National Workshop on Agribusiness in Vietnam - Oxfam Blogs
National Workshop on Agribusiness in Vietnam - Oxfam Blogs
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>Agribus<strong>in</strong>ess</strong> expansi<strong>on</strong><br />
<strong>in</strong> <strong>Vietnam</strong><br />
<str<strong>on</strong>g>Workshop</str<strong>on</strong>g> report, 27 March 2012
Introducti<strong>on</strong><br />
Agriculture has played and c<strong>on</strong>t<strong>in</strong>ues to play a central role <strong>in</strong> poverty reducti<strong>on</strong> <strong>in</strong> <strong>Vietnam</strong>. The current<br />
transformati<strong>on</strong> of the agricultural sector will create both opportunities and risks for poor people. This<br />
transformati<strong>on</strong> is be<strong>in</strong>g driven or <strong>in</strong>fluenced by a range of players, <strong>in</strong>clud<strong>in</strong>g but not restricted to government<br />
agencies, state-owned enterprises (SOEs) and private sector companies. In resp<strong>on</strong>se, <strong>Oxfam</strong> <strong>in</strong>itiated a<br />
project <strong>on</strong> <strong>Agribus<strong>in</strong>ess</strong> Expansi<strong>on</strong> <strong>in</strong> <strong>Vietnam</strong>. The aim of this project is to strengthen the livelihoods and<br />
enhance the security of small-scale farmers, agricultural workers and poor c<strong>on</strong>sumers through maximiz<strong>in</strong>g<br />
the benefits and m<strong>in</strong>imiz<strong>in</strong>g the risks from agribus<strong>in</strong>ess expansi<strong>on</strong>.<br />
To this end, <strong>Oxfam</strong> has commissi<strong>on</strong>ed several studies <strong>on</strong> agribus<strong>in</strong>ess expansi<strong>on</strong> <strong>in</strong> <strong>Vietnam</strong>, <strong>in</strong>clud<strong>in</strong>g<br />
studies <strong>on</strong> sector expansi<strong>on</strong> policies and targets, community resp<strong>on</strong>ses to land use c<strong>on</strong>versi<strong>on</strong>, SOE reform<br />
and c<strong>on</strong>tract farm<strong>in</strong>g. The study teams were asked to focus specifically <strong>on</strong> the impacts of agribus<strong>in</strong>ess<br />
expansi<strong>on</strong> <strong>on</strong> small-scale farmers, especially ethnic m<strong>in</strong>orities and women, and to formulate resp<strong>on</strong>ses which<br />
would maximize benefits and m<strong>in</strong>imize risks for the poor.<br />
These studies were undertaken between November 2011 and March 2012. The study teams presented their<br />
f<strong>in</strong>d<strong>in</strong>gs at a <str<strong>on</strong>g>Nati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Workshop</str<strong>on</strong>g> <strong>on</strong> <strong>Agribus<strong>in</strong>ess</strong> <strong>in</strong> <strong>Vietnam</strong> which was held at the Press Club <strong>on</strong> 27 March<br />
2012. The workshop brought together 69 participants from <strong>Oxfam</strong>, other INGOs, local NGOs, c<strong>on</strong>sultants,<br />
research <strong>in</strong>stitutes, government agencies, UN agencies, the media and the private sector.<br />
This report provides a summary of the presentati<strong>on</strong>s and ensu<strong>in</strong>g discussi<strong>on</strong> <strong>in</strong> each of the four areas of<br />
<strong>in</strong>quiry outl<strong>in</strong>ed above. Copies of the presentati<strong>on</strong>s, summaries of each of the studies and the m<strong>in</strong>utes of the<br />
workshop are available <strong>on</strong> request by send<strong>in</strong>g an email to oxfamhk@ohk.org.vn.<br />
The views reflected <strong>in</strong> this report are those of the research teams and other workshop participants.<br />
They do not necessarily represent the view of <strong>Oxfam</strong> <strong>in</strong> <strong>Vietnam</strong>.<br />
Photos rep<br />
2<br />
Pictures report: Le Thi Nguyet M<strong>in</strong>h, Anaïs Lopez,<br />
T<strong>in</strong>eke D’haese, Quốc Tuấn, Danielle Andela (<strong>Oxfam</strong>)
Table of c<strong>on</strong>tents<br />
Review of Key Sector Expansi<strong>on</strong> Targets and Policies <strong>in</strong> <strong>Agribus<strong>in</strong>ess</strong> Commodities ...................................................... 4<br />
Community and Grassroots Organizati<strong>on</strong>s and Acti<strong>on</strong> <strong>in</strong> relati<strong>on</strong> to the Defense of Access, Use and C<strong>on</strong>trol of Land . 7<br />
Case Studies of Agri-SOE Reform and its Impacts <strong>on</strong> Communities................................................................................. 11<br />
Case Studies <strong>on</strong> C<strong>on</strong>tract Farm<strong>in</strong>g Models and Their Impacts <strong>on</strong> Small-scale Farmers ................................................. 15<br />
Ways Forward ...................................................................................................................................................................... 20<br />
C<strong>on</strong>clusi<strong>on</strong>s ......................................................................................................................................................................... 21<br />
<str<strong>on</strong>g>Workshop</str<strong>on</strong>g> Agenda ............................................................................................................................................................... 22<br />
3
Review of Key Sector Expansi<strong>on</strong> Targets AND Policies <strong>in</strong> <strong>Agribus<strong>in</strong>ess</strong><br />
Commodities<br />
This study focused <strong>on</strong> the impact of sector expansi<strong>on</strong> policies and targets <strong>on</strong> small-scale farmers. The study<br />
team <strong>in</strong>cluded Dr. Nguyen Trung Kien (team leader) and Ms. Nguyen Thuy Hang (team member). The team used<br />
a comb<strong>in</strong>ati<strong>on</strong> of desk research, policy mapp<strong>in</strong>g and case studies <strong>on</strong> the coffee sector <strong>in</strong> Dak Lak and the<br />
cassava sector <strong>in</strong> Yen Bai.<br />
The study team identified three overarch<strong>in</strong>g policies and plans which will guide agricultural and rural<br />
development <strong>in</strong> <strong>Vietnam</strong> over the next two decades:<br />
<br />
<br />
<br />
the “Tam N<strong>on</strong>g” Policy<br />
the <str<strong>on</strong>g>Nati<strong>on</strong>al</str<strong>on</strong>g> Target Program <strong>on</strong> New Rural Development (NTP-NRD)<br />
the Master Plan for Agriculture and the Restructure of Agricultural Producti<strong>on</strong><br />
The overarch<strong>in</strong>g objective of these policies and plans is to speed up <strong>in</strong>dustrializati<strong>on</strong> and modernizati<strong>on</strong> <strong>in</strong><br />
rural areas and <strong>in</strong> the agricultural sector and to promote <strong>in</strong>clusive development. The policies and plans place<br />
a particular emphasis <strong>on</strong> <strong>in</strong>creas<strong>in</strong>g value-added producti<strong>on</strong>, improv<strong>in</strong>g liv<strong>in</strong>g standards, enhanc<strong>in</strong>g<br />
envir<strong>on</strong>mental protecti<strong>on</strong>, preserv<strong>in</strong>g <strong>Vietnam</strong>ese culture and enhanc<strong>in</strong>g capacity to prevent, c<strong>on</strong>trol and<br />
mitigate natural disasters.<br />
Through desk research and the case studies, the study identified developments <strong>in</strong> six key policy areas which<br />
were negatively affect<strong>in</strong>g small-scale farmers. The key c<strong>on</strong>cerns that were identified by the study team and<br />
raised <strong>in</strong> plenary discussi<strong>on</strong> dur<strong>in</strong>g the workshop <strong>in</strong> each of these policy areas are summarized below.<br />
Land use plann<strong>in</strong>g and restructure of agricultural producti<strong>on</strong><br />
These policies aim to optimize agricultural producti<strong>on</strong> <strong>on</strong> dedicated agricultural land, maximize comparative<br />
advantages and support the applicati<strong>on</strong> of technological <strong>in</strong>novati<strong>on</strong> for enhanc<strong>in</strong>g quality and productivity. In<br />
practice, land use plann<strong>in</strong>g focuses <strong>on</strong> specific commodities and areas. For both coffee and cassava, the<br />
government is plann<strong>in</strong>g to reduce the area under cultivati<strong>on</strong> whilst at the same time improv<strong>in</strong>g the volume<br />
and the quality of producti<strong>on</strong> from the rema<strong>in</strong><strong>in</strong>g area. In the case of coffee, this will require replant<strong>in</strong>g of<br />
coffee trees and greater use of <strong>in</strong>tensive farm<strong>in</strong>g techniques. The replanted trees will take three years to bear<br />
fruit which will have a significant impact <strong>on</strong> the livelihoods of small-scale farmers who do not have alternative<br />
means of generat<strong>in</strong>g a comparable <strong>in</strong>come dur<strong>in</strong>g this period.<br />
In additi<strong>on</strong>, the time-bound nature of agricultural land use rights (typically 20 years, with many expir<strong>in</strong>g <strong>in</strong> the<br />
com<strong>in</strong>g years) acts as a dis<strong>in</strong>centive for producers when they are c<strong>on</strong>sider<strong>in</strong>g whether to <strong>in</strong>vest <strong>in</strong> agricultural<br />
improvement. In the case of cassava, the focus <strong>on</strong> reduc<strong>in</strong>g the area under cultivati<strong>on</strong> and shift<strong>in</strong>g to<br />
susta<strong>in</strong>able cultivati<strong>on</strong> is undercut by the c<strong>on</strong>comitant promoti<strong>on</strong> of cassava roots for bio-fuel producti<strong>on</strong>.<br />
This will drive up the price of cassava and - <strong>in</strong> the absence of <strong>in</strong>creased <strong>in</strong>vestment <strong>in</strong> technological<br />
<strong>in</strong>novati<strong>on</strong> and extensi<strong>on</strong> services - will lead to the sp<strong>on</strong>taneous and unsusta<strong>in</strong>able expansi<strong>on</strong> of cassava<br />
producti<strong>on</strong>. As noted <strong>in</strong> the discussi<strong>on</strong>, land is central to agricultural producti<strong>on</strong> and land use plann<strong>in</strong>g must<br />
respect and enhance farmer’s land use rights, promote envir<strong>on</strong>mental protecti<strong>on</strong> and ensure equitable<br />
access to land resources.<br />
Credit assistance<br />
The number of people access<strong>in</strong>g credit is <strong>in</strong>creas<strong>in</strong>g but is still <strong>in</strong>sufficient, am<strong>on</strong>gst small-scale farmers <strong>in</strong><br />
general and ethnic m<strong>in</strong>orities <strong>in</strong> particular. This is due to the low level of awareness about credit services<br />
am<strong>on</strong>gst the rural poor, the wide-spread requirement for land use certificates as collateral for loans,<br />
complicated applicati<strong>on</strong> procedures and relatively high <strong>in</strong>terest rates. This marg<strong>in</strong>alizes small-scale farmers<br />
and facilitates elite capture of credit services. As noted <strong>in</strong> the discussi<strong>on</strong>, ensur<strong>in</strong>g access to credit and that<br />
4
the credit is used to buy productive assets such as seeds, is of particular importance for ethnic m<strong>in</strong>ority<br />
people.<br />
Infrastructure <strong>in</strong>vestment<br />
The policies aim to support growth <strong>in</strong> the agricultural sector through public spend<strong>in</strong>g <strong>on</strong> public goods such as<br />
irrigati<strong>on</strong> systems, roads and markets. However, the limited scale of this <strong>in</strong>vestment to date and the low<br />
quality of the result<strong>in</strong>g <strong>in</strong>frastructure acts as a brake <strong>on</strong> private sector <strong>in</strong>vestment <strong>in</strong> the agricultural sector.<br />
This is <strong>in</strong>c<strong>on</strong>sistent with the government’s emphasis <strong>on</strong> value-add<strong>in</strong>g and quality improvement <strong>in</strong> both the<br />
cassava and coffee sector. As noted <strong>in</strong> the discussi<strong>on</strong>, ensur<strong>in</strong>g people’s participati<strong>on</strong> <strong>in</strong> the design,<br />
c<strong>on</strong>structi<strong>on</strong> and ma<strong>in</strong>tenance of <strong>in</strong>frastructure is of critical importance.<br />
Research and development and technology transfer<br />
These policies are designed to <strong>in</strong>crease producti<strong>on</strong> and quality through the <strong>in</strong>troducti<strong>on</strong> of high-yield<strong>in</strong>g<br />
varieties, customiz<strong>in</strong>g breeds and producti<strong>on</strong> techniques to local c<strong>on</strong>diti<strong>on</strong>s and promot<strong>in</strong>g susta<strong>in</strong>ability.<br />
However, the level of <strong>in</strong>vestment <strong>in</strong> research and development and technology transfer is <strong>in</strong>sufficient overall,<br />
limited to specific commodities and products, primarily focused <strong>on</strong> <strong>in</strong>creas<strong>in</strong>g producti<strong>on</strong> rather than quality<br />
and susta<strong>in</strong>ability and, <strong>in</strong> the case of coffee, focused <strong>on</strong> realiz<strong>in</strong>g nati<strong>on</strong>al quality standards that are lower<br />
than <strong>in</strong>ternati<strong>on</strong>ally certified coffee producti<strong>on</strong> standards.<br />
As noted <strong>in</strong> the discussi<strong>on</strong>, the extensi<strong>on</strong> system <strong>in</strong> <strong>Vietnam</strong> is very weak, policies and decrees are poorly<br />
communicated. Greater <strong>in</strong>vestment is required <strong>in</strong> technological <strong>in</strong>novati<strong>on</strong> and improv<strong>in</strong>g access to new<br />
technologies, such as technologies for the susta<strong>in</strong>able producti<strong>on</strong> of cassava <strong>on</strong> slop<strong>in</strong>g land.<br />
Market<strong>in</strong>g policies<br />
The policies are designed to support access to new markets, mobiliz<strong>in</strong>g resources from the private sector and<br />
facilitat<strong>in</strong>g trade promoti<strong>on</strong>. However, these policies do not pay sufficient attenti<strong>on</strong> to the protecti<strong>on</strong> and<br />
promoti<strong>on</strong> of local brands and geographical <strong>in</strong>dicati<strong>on</strong>. 1<br />
Foster<strong>in</strong>g partnership am<strong>on</strong>g stakeholders<br />
These policies are designed to foster collaborati<strong>on</strong> between value cha<strong>in</strong> actors, support services,<br />
researchers and government bodies and to ensure an enabl<strong>in</strong>g regulatory envir<strong>on</strong>ment <strong>in</strong> terms of credit,<br />
access to <strong>in</strong>formati<strong>on</strong>, and so <strong>on</strong>.<br />
However, small-scale farmers themselves, civil society organizati<strong>on</strong>s and <strong>in</strong>dustry associati<strong>on</strong>s are either<br />
absent or functi<strong>on</strong><strong>in</strong>g <strong>in</strong>efficiently <strong>in</strong> these purportedly multi-stakeholder partnerships.<br />
The result<strong>in</strong>g power imbalances can lead to decisi<strong>on</strong>s which have a negative impact <strong>on</strong> small-scale farmers <strong>in</strong><br />
particular. In the coffee and cassava sectors, value cha<strong>in</strong> actors are avoid<strong>in</strong>g us<strong>in</strong>g c<strong>on</strong>tracts because the<br />
<strong>in</strong>centive or dis<strong>in</strong>centive structures were not created, shared and susta<strong>in</strong>ed by all cha<strong>in</strong> actors and the rights<br />
and obligati<strong>on</strong>s of c<strong>on</strong>tracted parties are not be<strong>in</strong>g enforced.<br />
1 A name or sign used <strong>on</strong> certa<strong>in</strong> products which corresp<strong>on</strong>ds to a specific geographical locati<strong>on</strong> or orig<strong>in</strong> (for example a<br />
town, regi<strong>on</strong>, or country). The use of a geographical <strong>in</strong>dicati<strong>on</strong> may act as a certificati<strong>on</strong> that the product possesses<br />
certa<strong>in</strong> qualities, is made accord<strong>in</strong>g to traditi<strong>on</strong>al methods, or enjoys a certa<strong>in</strong> reputati<strong>on</strong>, due to its geographical orig<strong>in</strong>.<br />
5
Based <strong>on</strong> this problem analysis, the study team made the follow<strong>in</strong>g recommendati<strong>on</strong>s:<br />
To nati<strong>on</strong>al and prov<strong>in</strong>cial governments<br />
Enhance participati<strong>on</strong> of small-scale producers <strong>in</strong> land use plann<strong>in</strong>g.<br />
Enhance the competiveness of agro-commodities <strong>in</strong> <strong>in</strong>ternati<strong>on</strong>al markets through improv<strong>in</strong>g quality and<br />
value-add<strong>in</strong>g.<br />
Increase the <strong>in</strong>centives for producers to engage <strong>in</strong> quality improvement and value-add<strong>in</strong>g.<br />
Align nati<strong>on</strong>al quality standards with emerg<strong>in</strong>g <strong>in</strong>ternati<strong>on</strong>al standards and market demands.<br />
Improve mechanisms support<strong>in</strong>g transacti<strong>on</strong>al assurance for all value cha<strong>in</strong> actors.<br />
Improve access to and quality of credit services.<br />
Improve <strong>in</strong>vestment <strong>in</strong> research and development and <strong>in</strong>frastructure.<br />
Strengthen partnership mechanisms.<br />
To civil society, NGOs and producer associati<strong>on</strong>s<br />
Facilitate the <strong>in</strong>tegrati<strong>on</strong> of small-scale producers <strong>in</strong>to high quality value cha<strong>in</strong>s <strong>in</strong> a susta<strong>in</strong>able and<br />
competitive way.<br />
Facilitate the formati<strong>on</strong> of producer groups and horiz<strong>on</strong>tal coord<strong>in</strong>ati<strong>on</strong> between these groups.<br />
Facilitate partnerships and <strong>in</strong>formati<strong>on</strong> shar<strong>in</strong>g between stakeholders <strong>in</strong> value cha<strong>in</strong>s.<br />
Facilitate access by small-scale producers to medium-term f<strong>in</strong>anc<strong>in</strong>g.<br />
To private sector actors, <strong>in</strong>clud<strong>in</strong>g producers<br />
Improve market <strong>in</strong>formati<strong>on</strong> shar<strong>in</strong>g.<br />
Create and susta<strong>in</strong> <strong>in</strong>centives for producers and traders engaged <strong>in</strong> high value and susta<strong>in</strong>able<br />
producti<strong>on</strong>.<br />
Strengthen horiz<strong>on</strong>tal coord<strong>in</strong>ati<strong>on</strong> am<strong>on</strong>gst producers to enhance quality and cost effectiveness.<br />
6
Community and Grassroots Organizati<strong>on</strong>s and Acti<strong>on</strong> <strong>in</strong> relati<strong>on</strong> to the<br />
Defense of Access, Use and C<strong>on</strong>trol of Land<br />
This study focused <strong>on</strong> the drivers, processes and poverty impacts of agribus<strong>in</strong>ess related land use c<strong>on</strong>versi<strong>on</strong><br />
and how some - but not all - communities have been able to resist agribus<strong>in</strong>ess expansi<strong>on</strong> <strong>on</strong> their household<br />
and communal lands.<br />
The study was undertaken by a team made up of Bryn Tucknott (team leader), Pham Quang Trung (project<br />
manager) and Doan Thi Thu Thuy (research assistant/translator). The team used qualitative techniques to<br />
research three cases of land use c<strong>on</strong>versi<strong>on</strong>, <strong>on</strong>e each <strong>in</strong> Quang Tri, Quang B<strong>in</strong>h and Nghe An Prov<strong>in</strong>ces.<br />
CASE STUDY 1<br />
The first case study focused <strong>on</strong> community<br />
resistance to land grabs <strong>in</strong> Rali Village, Hu<strong>on</strong>g<br />
S<strong>on</strong> Commune <strong>in</strong> Quang Tri Prov<strong>in</strong>ce. Between<br />
1999 and 2011, 300 ha of communal land <strong>in</strong> Rali<br />
Village had been reallocated to agribus<strong>in</strong>ess<br />
companies for coffee and cassava plantati<strong>on</strong>s<br />
with little or no compensati<strong>on</strong>. This problem was<br />
addressed with the support of ACEP, a local NGO.<br />
ACEP’s <strong>in</strong>itial strategy focused <strong>on</strong> land use<br />
certificati<strong>on</strong>. However, this proved complicated,<br />
costly and time c<strong>on</strong>sum<strong>in</strong>g. Moreover, it did not,<br />
<strong>on</strong> its own, prevent the reallocati<strong>on</strong> of village<br />
land although it did ensure that villagers<br />
received higher compensati<strong>on</strong> than they would<br />
have otherwise. As a result, ACEP decided to stop<br />
work<strong>in</strong>g <strong>on</strong> land use certificati<strong>on</strong> and <strong>in</strong>stead<br />
focus <strong>on</strong> empower<strong>in</strong>g communities so that they<br />
were more able to defend themselves from<br />
external threats. ACEP’s new strategy <strong>in</strong>cluded<br />
organiz<strong>in</strong>g farmers and the wider community,<br />
enhanc<strong>in</strong>g representati<strong>on</strong> of marg<strong>in</strong>alized groups<br />
and strengthen<strong>in</strong>g participatory decisi<strong>on</strong> mak<strong>in</strong>g<br />
at the village level, legal and rights awareness<br />
rais<strong>in</strong>g, participatory land use plann<strong>in</strong>g and<br />
optimiz<strong>in</strong>g local use of communal and public land.<br />
As a result, the village has successfully refused<br />
subsequent requests from agribus<strong>in</strong>ess<br />
companies for additi<strong>on</strong>al land.<br />
Case study 2<br />
The sec<strong>on</strong>d case study focused <strong>on</strong> community<br />
resistance to land grabs <strong>in</strong> Cao Quang<br />
Commune <strong>in</strong> Quang B<strong>in</strong>h Prov<strong>in</strong>ce. With the<br />
support of local NGO CIRD, the communities <strong>in</strong><br />
this commune had been develop<strong>in</strong>g<br />
participatory land use plans and improv<strong>in</strong>g land<br />
use practice s<strong>in</strong>ce 2000. Follow<strong>in</strong>g the<br />
allocati<strong>on</strong> by Quang B<strong>in</strong>h Prov<strong>in</strong>ce of 10,000 ha<br />
of village and commune land to Cao Quang<br />
State Forest Enterprise <strong>in</strong> 2002, CIRD decided<br />
to focus <strong>on</strong> community-based advocacy. Like<br />
ACEP, CIRD’s strategy <strong>in</strong>cluded awareness<br />
rais<strong>in</strong>g, community mobilizati<strong>on</strong>, capacity<br />
build<strong>in</strong>g for community representatives <strong>on</strong><br />
legal positi<strong>on</strong>s and processes, advocacy and<br />
communicati<strong>on</strong>. As a result, the communities<br />
were able to mount a successful campaign for<br />
the return, and ultimately the expansi<strong>on</strong>, of<br />
their village and communal lands and the<br />
re<strong>in</strong>statement of their land use plans.<br />
7
Case study 3<br />
The third case study focused <strong>on</strong> the impact of<br />
land use c<strong>on</strong>versi<strong>on</strong> due to expansi<strong>on</strong> of<br />
large-scale commercial dairy operati<strong>on</strong>s <strong>in</strong><br />
Nghia Dan District <strong>in</strong> Nghe An Prov<strong>in</strong>ce. To date,<br />
the prov<strong>in</strong>ce has reallocated 2,500 ha of SOE<br />
land to TH Milk. This land had previously been<br />
worked by small-scale farmers who were<br />
leas<strong>in</strong>g the land from the SOE and us<strong>in</strong>g it to<br />
grow high value crops such as oranges and<br />
rubber. Despite this, farmers were forced to<br />
sign forms that stated they were us<strong>in</strong>g the<br />
land <strong>in</strong>efficiently. Farmers were unable to<br />
refuse the reallocati<strong>on</strong> because the dairy<br />
project was def<strong>in</strong>ed as be<strong>in</strong>g <strong>in</strong> the nati<strong>on</strong>al<br />
<strong>in</strong>terest. As the farmers were leas<strong>in</strong>g the land<br />
from state farms, they <strong>on</strong>ly received<br />
compensati<strong>on</strong> based <strong>on</strong> how the land was<br />
be<strong>in</strong>g used rather than for the land itself. In<br />
many cases, this was less than two years of<br />
household <strong>in</strong>come from the land. Over the last<br />
two years, the majority of the dispossessed<br />
farmers have been unable to access<br />
alternative land or develop viable livelihood<br />
alternatives.<br />
As a result, farmers have spent the majority of<br />
their compensati<strong>on</strong> payments <strong>on</strong> liv<strong>in</strong>g costs<br />
whilst wait<strong>in</strong>g for a relocati<strong>on</strong> strategy to be<br />
put <strong>in</strong> place by the district. The large-scale<br />
dairy operati<strong>on</strong> is also caus<strong>in</strong>g negative<br />
envir<strong>on</strong>mental impacts through the depleti<strong>on</strong><br />
of local water resources, animal waste, and so<br />
<strong>on</strong>. TH Milk plans to acquire a further 8,500 ha<br />
of land over the next 10 years and expand the<br />
dairy herd from the current 24,000 cows to<br />
135,000 cows. However this will <strong>on</strong>ly be<br />
possible if farmers are will<strong>in</strong>g to surrender<br />
red-book land. Whilst no doubt c<strong>on</strong>tribut<strong>in</strong>g to<br />
food security at the nati<strong>on</strong>al level, the loss of<br />
land, envir<strong>on</strong>mental degradati<strong>on</strong>, <strong>in</strong>adequate<br />
compensati<strong>on</strong> and delays <strong>in</strong> f<strong>in</strong>aliz<strong>in</strong>g the<br />
relocati<strong>on</strong> plans are lead<strong>in</strong>g to grow<strong>in</strong>g anger<br />
and frustrati<strong>on</strong> am<strong>on</strong>gst local people and<br />
c<strong>on</strong>tribut<strong>in</strong>g to poverty and vulnerability at the<br />
local level. Moreover, the capacity of the local<br />
government to manage the land recovery,<br />
compensati<strong>on</strong> and relocati<strong>on</strong> processes<br />
associated with the proposed expansi<strong>on</strong> is<br />
very limited.<br />
Some of the key f<strong>in</strong>d<strong>in</strong>gs and less<strong>on</strong>s aris<strong>in</strong>g from the case studies that were presented at the workshop or<br />
discussed <strong>in</strong> plenary <strong>in</strong>cluded:<br />
Land use c<strong>on</strong>versi<strong>on</strong> is a significant problem for small-scale farmers and must be addressed<br />
As noted <strong>in</strong> the discussi<strong>on</strong>, “the promoti<strong>on</strong> of the agribus<strong>in</strong>ess sector as a vehicle for boost<strong>in</strong>g the rural<br />
ec<strong>on</strong>omy has been at the expense of farmer’s <strong>in</strong>terests, especially <strong>in</strong> regard to land”. This has led to “dramatic<br />
situati<strong>on</strong>s” and “if agribus<strong>in</strong>ess c<strong>on</strong>t<strong>in</strong>ues to grab land from farmers then this will create social chaos”.<br />
<strong>Agribus<strong>in</strong>ess</strong> <strong>in</strong>vestors must play a more active role <strong>in</strong> ensur<strong>in</strong>g that farmers are no worse off and that their<br />
<strong>in</strong>comes improve over time. The current revisi<strong>on</strong> of the land law provides an ideal opportunity to address<br />
these problems.<br />
Empowered communities can resist land use c<strong>on</strong>versi<strong>on</strong><br />
Communities themselves have played a critical role <strong>in</strong> resist<strong>in</strong>g land use c<strong>on</strong>versi<strong>on</strong>. With the support of local<br />
NGOs and draw<strong>in</strong>g <strong>on</strong> progressive provisi<strong>on</strong>s with<strong>in</strong> exist<strong>in</strong>g land law and grass roots democracy decrees,<br />
empowered communities have, <strong>in</strong> some cases, been able to either ga<strong>in</strong> improved compensati<strong>on</strong> or resist<br />
further land use c<strong>on</strong>versi<strong>on</strong>. As noted <strong>in</strong> the discussi<strong>on</strong>, empowered farmers are also better able to negotiate<br />
terms and c<strong>on</strong>diti<strong>on</strong>s <strong>in</strong> c<strong>on</strong>tract farm<strong>in</strong>g arrangements (see also further <strong>on</strong> <strong>in</strong> this report).<br />
Support from local NGOs is critical to empower<strong>in</strong>g communities<br />
Local NGOs have played a key role <strong>in</strong> empower<strong>in</strong>g communities. Successful strategies have <strong>in</strong>cluded rights<br />
and legal awareness rais<strong>in</strong>g, community organiz<strong>in</strong>g, strengthen<strong>in</strong>g participatory decisi<strong>on</strong> mak<strong>in</strong>g at the<br />
village level, capacity build<strong>in</strong>g for community representatives <strong>in</strong> areas such as plann<strong>in</strong>g, negotiati<strong>on</strong>,<br />
communicati<strong>on</strong> and advocacy, facilitat<strong>in</strong>g l<strong>in</strong>kages between community representatives and other<br />
8
stakeholders, and so <strong>on</strong>. As noted <strong>in</strong> the discussi<strong>on</strong>, the provisi<strong>on</strong> of legal assistance to farmers affected by<br />
land use c<strong>on</strong>versi<strong>on</strong> is of particular importance.<br />
Participatory land use plann<strong>in</strong>g and maximiz<strong>in</strong>g local use of village communal land can prevent or reduce<br />
land use c<strong>on</strong>versi<strong>on</strong><br />
Participatory land use plann<strong>in</strong>g and <strong>in</strong>creas<strong>in</strong>g the utilizati<strong>on</strong> of village and commune land by small-scale<br />
farmers has led to a number of positive outcomes, <strong>in</strong>clud<strong>in</strong>g: (i) <strong>in</strong>creased community awareness and<br />
cohesi<strong>on</strong>; (ii) enhanced value of communal land <strong>in</strong> the eyes of villagers through creat<strong>in</strong>g new <strong>in</strong>come<br />
generat<strong>in</strong>g opportunities; and, (iii) dem<strong>on</strong>strated to government that villagers can manage this land as well as<br />
or better than SOEs or other commercial entities and established villager’s rights to be c<strong>on</strong>sulted <strong>on</strong> and to<br />
provide their c<strong>on</strong>sent to any proposed c<strong>on</strong>versi<strong>on</strong> of land covered by approved land use plans and receive<br />
appropriate compensati<strong>on</strong> if and when land use c<strong>on</strong>versi<strong>on</strong> does occur.<br />
Land use certificati<strong>on</strong> enhances tenure security and <strong>in</strong>creases compensati<strong>on</strong><br />
70 to 80 percent of small-scale farmers <strong>in</strong> <strong>Vietnam</strong> now have formal land use certificates (red books) which<br />
specify both how the land can be used and the durati<strong>on</strong> of their tenure. Red books enhance tenure security<br />
but the government can still revoke these and approve land use c<strong>on</strong>versi<strong>on</strong> if land is required <strong>in</strong> the nati<strong>on</strong>al<br />
or public <strong>in</strong>terest. However, when land use c<strong>on</strong>versi<strong>on</strong> is approved under these circumstances then it does<br />
ensure higher levels of compensati<strong>on</strong>.<br />
Better use can be made of producti<strong>on</strong> forests<br />
Producti<strong>on</strong> forests are designated <strong>in</strong>to three types (T1, T2 and T3). 2 Before any forest is used for timber<br />
harvest<strong>in</strong>g or plant<strong>in</strong>g it must first be surveyed and permissi<strong>on</strong> must be granted by the authorities. The use of<br />
T3 rich forest has been frozen s<strong>in</strong>ce 2011 because it was be<strong>in</strong>g <strong>in</strong>tenti<strong>on</strong>ally degraded before survey<strong>in</strong>g to<br />
allow greater exploitati<strong>on</strong> at T1 or T2 forests. The use of T2 forests has also been frozen <strong>in</strong> Quang B<strong>in</strong>h<br />
because of a lack of legal clarity follow<strong>in</strong>g the end of the 2006-2010 Forest Development Strategy and the<br />
high cost of forest surveys which cannot be met from current resources allocated to the prov<strong>in</strong>ce. T1 forests<br />
can be exploited or planted <strong>in</strong> accordance with agreed z<strong>on</strong>e plans. As noted <strong>in</strong> the discussi<strong>on</strong>, the allocati<strong>on</strong><br />
of green books <strong>in</strong> Quang B<strong>in</strong>h Prov<strong>in</strong>ce is still relatively low and needs to be strengthened. Greater <strong>in</strong>vestment<br />
by the central government is required for survey<strong>in</strong>g and for reforestati<strong>on</strong> programmes which can create jobs<br />
and improve envir<strong>on</strong>mental services.<br />
Revocati<strong>on</strong> <strong>in</strong> the nati<strong>on</strong>al <strong>in</strong>terest is problematic at present<br />
As noted <strong>in</strong> the presentati<strong>on</strong> and subsequent discussi<strong>on</strong>, article 39 of the Land Law (1994) allows the<br />
revocati<strong>on</strong> of land use certificates and changes <strong>in</strong> land use plans for the purposes of nati<strong>on</strong>al defense,<br />
nati<strong>on</strong>al security and nati<strong>on</strong>al ec<strong>on</strong>omic <strong>in</strong>terests. However, the “nati<strong>on</strong>al <strong>in</strong>terest” is not clearly def<strong>in</strong>ed and<br />
several m<strong>in</strong>istries can revoke current land use arrangements. Revocati<strong>on</strong> <strong>in</strong> the “nati<strong>on</strong>al ec<strong>on</strong>omic <strong>in</strong>terest”<br />
has proved to be particularly problematic with this now be<strong>in</strong>g addressed through the <strong>on</strong>-go<strong>in</strong>g revisi<strong>on</strong> of the<br />
Law <strong>on</strong> Land.<br />
Standards and processes for compensati<strong>on</strong>, relocati<strong>on</strong> and alternative livelihoods must be improved<br />
The current standards for compensati<strong>on</strong> and relocati<strong>on</strong> are <strong>in</strong>adequate and the capacity of local government<br />
to manage and resource these processes are very limited, particularly <strong>in</strong> regard to projects <strong>in</strong>volv<strong>in</strong>g largescale<br />
land use c<strong>on</strong>versi<strong>on</strong>. This raises enormous challenges <strong>in</strong> regard to manag<strong>in</strong>g envir<strong>on</strong>mental degradati<strong>on</strong>,<br />
the loss of farm-based livelihoods for those displaced, <strong>in</strong>adequate agricultural land available for resettlement<br />
sites, the lack of suitable off-farm employment and <strong>in</strong>adequate <strong>in</strong>vestment <strong>in</strong> vocati<strong>on</strong>al tra<strong>in</strong><strong>in</strong>g that is<br />
suitable for small-scale farmers. Compensati<strong>on</strong> and relocati<strong>on</strong> for farmers displaced from SOE owned land is<br />
particularly problematic.<br />
2 Type 1: Poor forest, treeless scrub land or highly degraded; Type 2: Average forest, with < 50M 3 /ha of timber; and, Type 3:<br />
Rich forest, which has a > 50M 3 /ha of timber.<br />
9
Sector plans and targets can have a negative impact <strong>on</strong> small-scale farmers<br />
<str<strong>on</strong>g>Nati<strong>on</strong>al</str<strong>on</strong>g> programs, such as expansi<strong>on</strong> policies, give rise to prov<strong>in</strong>cial targets and district sector plans. As<br />
most usable land has already been allocated to households, villages or communes, these targets can <strong>on</strong>ly be<br />
met through c<strong>on</strong>tract farm<strong>in</strong>g arrangements or land use c<strong>on</strong>versi<strong>on</strong> to allow large-scale plantati<strong>on</strong>s.<br />
The key recommendati<strong>on</strong>s that were either made by the study team or raised dur<strong>in</strong>g the discussi<strong>on</strong> at the<br />
workshop <strong>in</strong>cluded:<br />
To civil society<br />
<br />
<br />
Expand and deepen support to NGO programs which focus <strong>on</strong> community organizati<strong>on</strong>, representati<strong>on</strong>,<br />
legal and rights awareness rais<strong>in</strong>g, the provisi<strong>on</strong> of legal assistance and participatory land use plann<strong>in</strong>g.<br />
Promote and support the establishment of an <strong>in</strong>dependent advisory service which can assist farmers with<br />
negotiat<strong>in</strong>g c<strong>on</strong>tracts, provide advice to farmers and communities <strong>on</strong> the law and their rights and<br />
resp<strong>on</strong>sibilities and assist farmers should disputes occur.<br />
To government<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Ensure that the compensati<strong>on</strong> that is paid to small-scale farmers, who have had to reallocate land to<br />
private sector <strong>in</strong>terests, is based <strong>on</strong> free market prices rather than be<strong>in</strong>g set by the state.<br />
Improve compensati<strong>on</strong> to farmers who lose access to land that they have been leas<strong>in</strong>g from SOEs,<br />
particularly those who have no other land hold<strong>in</strong>g or <strong>in</strong>come opportunities.<br />
Establish an <strong>in</strong>dependent body or ombudsman to review compla<strong>in</strong>ts <strong>on</strong> land issues. As noted <strong>in</strong> the<br />
discussi<strong>on</strong>, this can focus <strong>on</strong> problems with the formulati<strong>on</strong> of policy and laws as well as problems with<br />
implementati<strong>on</strong>.<br />
Clarify what c<strong>on</strong>stitutes <str<strong>on</strong>g>Nati<strong>on</strong>al</str<strong>on</strong>g> or Public Interest <strong>in</strong> the Land Law. As noted <strong>in</strong> the discussi<strong>on</strong>, this a key<br />
focus <strong>in</strong> the com<strong>in</strong>g revisi<strong>on</strong> of the law.<br />
Ensure relocati<strong>on</strong> plans which take <strong>in</strong>to account cultural diversity as well as material replacement are <strong>in</strong><br />
place and ready to be implemented as so<strong>on</strong> as land is reclaimed by the state.<br />
Establish mechanisms for <strong>in</strong>dependent m<strong>on</strong>itor<strong>in</strong>g of relocati<strong>on</strong> schemes to ensure that the criteria for<br />
“equivalent or better” are met.<br />
As noted <strong>in</strong> the discussi<strong>on</strong>, government must improve m<strong>on</strong>itor<strong>in</strong>g of implementati<strong>on</strong> of the exist<strong>in</strong>g land<br />
law, <strong>in</strong>clud<strong>in</strong>g strengthen<strong>in</strong>g the role of communities and civil society <strong>in</strong> the M&E system rather than<br />
rely<strong>in</strong>g solely <strong>on</strong> report<strong>in</strong>g by government agencies.<br />
10
Case Studies of Agri-SOE Reform and its Impacts <strong>on</strong> Communities<br />
This study focused <strong>on</strong> the drivers, processes and poverty impacts of the reform of state-owned enterprises<br />
(SOEs) <strong>in</strong> the agricultural sector <strong>in</strong> <strong>Vietnam</strong> and the implicati<strong>on</strong>s for government policy. The study was<br />
undertaken by Nhat Nguyen Duc (team leader) and four team members (Hu<strong>on</strong>g Nguyen M<strong>in</strong>h, Duc Ho Hoang,<br />
Mai Tru<strong>on</strong>g Thanh and Tuan Bui Van).<br />
The team used qualitative techniques to research three cases of agri-SOE reform, supplemented by a<br />
literature review, archival analysis and <strong>in</strong>terviews with researchers and policy makers <strong>in</strong> Hanoi. In each of the<br />
case studies, the study team sought to assess the impact of reform <strong>on</strong> job creati<strong>on</strong>, the <strong>in</strong>come of c<strong>on</strong>tracted<br />
households, land use, tax revenue, public benefits and local manufactur<strong>in</strong>g.<br />
As noted by the study team, there are two ma<strong>in</strong> streams to the reform of agri-SOEs <strong>in</strong> <strong>Vietnam</strong>: (i) the reform of<br />
their <strong>in</strong>stituti<strong>on</strong>al arrangements for land use, and (ii) the reform of their ownership and governance structures.<br />
The legal basis for these reforms lies <strong>in</strong> a number of decrees and resoluti<strong>on</strong>s <strong>on</strong> SOE reform which were<br />
promulgated between 1995 and 2010. The total number of enterprises <strong>in</strong> <strong>Vietnam</strong> has <strong>in</strong>creased from 42,000<br />
to 288,000 between 2000 and 2010. Over the same period, the total number of SOEs has dropped from 29,201<br />
to 3,241. As a result, SOEs made up <strong>on</strong>ly 1 percent of all enterprises <strong>in</strong> 2010, down from 69 percent <strong>in</strong> 2000.<br />
In c<strong>on</strong>trast, the number of agri-SOEs <strong>on</strong>ly fell from 371 to 257 between 2005 and 2010 and the number of agri-<br />
SOEs as a proporti<strong>on</strong> of all agri-enterprises <strong>on</strong>ly fell from 55 to 19 percent over the same period. This data<br />
<strong>in</strong>dicates that SOE reform has slowed <strong>in</strong> the last five years both overall and <strong>in</strong> the agricultural sector <strong>in</strong><br />
particular. In the agricultural sector, the predom<strong>in</strong>ant approach has been <strong>on</strong>e of gradual reform characterized<br />
by experimentati<strong>on</strong> rather than step change. This is generat<strong>in</strong>g significant debate <strong>in</strong> policy circles <strong>in</strong> <strong>Vietnam</strong>,<br />
particularly <strong>in</strong> regard to the pace of reform, balanc<strong>in</strong>g competitiveness and equity demands and address<strong>in</strong>g<br />
c<strong>on</strong>venti<strong>on</strong>al market failure. This debate is <strong>in</strong>fluenced as much, if not more, by ideology and vested <strong>in</strong>terests<br />
as it is by evidence.<br />
11
All of the cases <strong>in</strong>vestigated by the study team were of large SOEs located <strong>in</strong> the central part of <strong>Vietnam</strong>, each<br />
of which now has a different ownership structure. Each of the cases is described <strong>in</strong> more detail below.<br />
CASE STUDY 1<br />
The first case study focused <strong>on</strong> a state farm<br />
that rema<strong>in</strong>s under full public ownership and<br />
operates as a limited liability company under<br />
the supervisi<strong>on</strong> of the local government. Of the<br />
three cases, this company has the largest land<br />
hold<strong>in</strong>gs (2500 ha), the largest number of<br />
c<strong>on</strong>tracted households (1800) and the sec<strong>on</strong>d<br />
largest number of employees (736). Difficulties<br />
encountered dur<strong>in</strong>g the reform process fell<br />
under three broad head<strong>in</strong>gs: (i) land<br />
management, (ii) f<strong>in</strong>anc<strong>in</strong>g c<strong>on</strong>stra<strong>in</strong>ts and (iii)<br />
market pressures. Land management problems<br />
arose from the c<strong>on</strong>fus<strong>in</strong>g legal framework for<br />
reallocat<strong>in</strong>g SOE land to small-scale farmers,<br />
the small size of the result<strong>in</strong>g farm plots and<br />
the absence of land use rights certificati<strong>on</strong>.<br />
F<strong>in</strong>anc<strong>in</strong>g problems <strong>in</strong>cluded <strong>in</strong>sufficient<br />
<strong>in</strong>vestment from the state which the SOE could<br />
not address through rais<strong>in</strong>g funds from the<br />
private bank<strong>in</strong>g system due to uncerta<strong>in</strong>ties<br />
over the use of land which has been leased to<br />
farmers as collateral for loans. Market<strong>in</strong>g<br />
problems <strong>in</strong>cluded competiti<strong>on</strong> from other<br />
producers and from private traders and local<br />
buyers. The study team identified a number of<br />
poverty impacts <strong>in</strong>clud<strong>in</strong>g an overall reducti<strong>on</strong><br />
<strong>in</strong> the number of employees due to overstaff<strong>in</strong>g<br />
<strong>in</strong> the pre-reform period, improved ec<strong>on</strong>omic<br />
performance and enhanced producti<strong>on</strong> and<br />
access to markets for local households which<br />
is <strong>on</strong> par with that achieved by the equitised<br />
SOE which was the subject of the sec<strong>on</strong>d case<br />
study (see below). This suggests that <strong>in</strong> the<br />
medium term, this SOE may perform as well or<br />
better from a pro-poor perspective than the SOE<br />
which features <strong>in</strong> the sec<strong>on</strong>d case study.<br />
Case study 2<br />
The sec<strong>on</strong>d case study focused <strong>on</strong> an almost<br />
completely equitised SOE <strong>in</strong> which the state<br />
<strong>on</strong>ly reta<strong>in</strong>s 10 percent equity whilst the<br />
rema<strong>in</strong><strong>in</strong>g 90 percent is held by the private<br />
sector. Of the three companies, this has the<br />
sec<strong>on</strong>d largest land hold<strong>in</strong>g (1288ha), the<br />
sec<strong>on</strong>d largest number of c<strong>on</strong>tracted<br />
households (950) and the largest number of<br />
employees (1072). The key drivers of the reform<br />
process were the prov<strong>in</strong>cial government, senior<br />
management <strong>in</strong> the SOE and private <strong>in</strong>vestors.<br />
The study team identified a number of<br />
difficulties encountered dur<strong>in</strong>g the reform<br />
process. Dur<strong>in</strong>g the early stages, these<br />
<strong>in</strong>cluded the negative attitudes of workers and<br />
local households towards reform, limited<br />
participati<strong>on</strong> by local households <strong>in</strong> the reform<br />
process due to their low ec<strong>on</strong>omic status and a<br />
lack of transparency and low levels of<br />
c<strong>on</strong>fidence <strong>in</strong> the capacity of the local<br />
community <strong>on</strong> the part of the company. Dur<strong>in</strong>g<br />
the current stage of reform, the ma<strong>in</strong><br />
difficulties encountered <strong>in</strong>clude a lack of clarity<br />
<strong>in</strong> the legal framework and policy of the<br />
government, limited public c<strong>on</strong>fidence <strong>in</strong><br />
private sector led reform, c<strong>on</strong>t<strong>in</strong>u<strong>in</strong>g tensi<strong>on</strong>s<br />
between those advocat<strong>in</strong>g m<strong>on</strong>opoly and those<br />
advocat<strong>in</strong>g competiti<strong>on</strong> and weak l<strong>in</strong>kages<br />
between the company and the community. The<br />
study team identified a number of poverty<br />
impacts aris<strong>in</strong>g from the reform process,<br />
<strong>in</strong>clud<strong>in</strong>g that most employees and c<strong>on</strong>tracted<br />
households were ec<strong>on</strong>omically better off after<br />
the reform, redundant workers were reemployed<br />
as a result of bus<strong>in</strong>ess expansi<strong>on</strong><br />
and c<strong>on</strong>tracted farmers were protected from<br />
market risks/volatility although the benefits to<br />
producers may be reduced <strong>in</strong> the l<strong>on</strong>ger term as<br />
the company is now exhibit<strong>in</strong>g cartel-like<br />
behavior. On balance, this has been the most<br />
successful to date of the reformed SOEs from a<br />
pro-poor perspective.<br />
12
Case study 3<br />
The third case study focused <strong>on</strong> an SOE which<br />
has been transformed <strong>in</strong>to a jo<strong>in</strong>t stock<br />
company where government still ma<strong>in</strong>ta<strong>in</strong>s a 75<br />
percent share hold<strong>in</strong>g with the balance sold to<br />
local people. Oversight is undertaken by State<br />
Capital Investment Corporati<strong>on</strong> (SCIC). Of the<br />
three companies, this has the smallest land<br />
hold<strong>in</strong>g (400ha), the smallest number of<br />
c<strong>on</strong>tracted households (230) and the smallest<br />
number of employees (25). In this case the<br />
driv<strong>in</strong>g forces for equalizati<strong>on</strong> were the<br />
company itself, local government and an<br />
<strong>in</strong>ternati<strong>on</strong>al NGO which provided support with<br />
capacity build<strong>in</strong>g. The central government<br />
played a largely passive role whilst workers and<br />
c<strong>on</strong>tracted households were largely ignored <strong>in</strong><br />
the process. Difficulties encountered dur<strong>in</strong>g<br />
the reform process <strong>in</strong>cluded poor land<br />
management practices which led to the illegal<br />
transfer of land, and c<strong>on</strong>flicts between those<br />
who wanted to ma<strong>in</strong>ta<strong>in</strong> state assets and those<br />
who preferred to transfer assets to the local<br />
community. The impacts of the reform process<br />
<strong>in</strong>cluded a return to profitability, large-scale<br />
redundancies, lead<strong>in</strong>g to a more streaml<strong>in</strong>ed<br />
workforce but also a higher unemployment rate,<br />
marg<strong>in</strong>alizati<strong>on</strong> of farmers and workers who<br />
could not afford to buy shares <strong>in</strong> the enterprise<br />
and relatively low dividends for those who<br />
could afford to buy shares. This has led to<br />
grow<strong>in</strong>g unrest am<strong>on</strong>gst farmers and workers.<br />
On balance, this was the least successful of<br />
the reformed SOEs from a pro-poor people<br />
perspective.<br />
Based <strong>on</strong> cross-case comparis<strong>on</strong>s and archival analysis, the study team identified a number of f<strong>in</strong>d<strong>in</strong>gs which are<br />
comm<strong>on</strong> to all of the case studies.<br />
Improved ec<strong>on</strong>omic performance post reform<br />
In all of the case studies, reform has led to reducti<strong>on</strong>s <strong>in</strong> staff<strong>in</strong>g, lower costs, improved productivity and enhanced<br />
governance and management. Although this has been less than expected <strong>in</strong> some <strong>in</strong>stances due to weak<br />
performance <strong>in</strong>centives for senior management, <strong>in</strong>adequate access to resources, limited management aut<strong>on</strong>omy<br />
and c<strong>on</strong>t<strong>in</strong>ued protecti<strong>on</strong> from competiti<strong>on</strong>.<br />
The potentially c<strong>on</strong>tradictory roles played by government <strong>in</strong> the reform process<br />
Although <strong>on</strong>e of the key objectives of SOE reform is to enhance corporate efficiency and effectiveness by provid<strong>in</strong>g<br />
greater aut<strong>on</strong>omy and expos<strong>in</strong>g SOEs to competiti<strong>on</strong>, the government has c<strong>on</strong>t<strong>in</strong>ued to play a key role <strong>in</strong> the reform<br />
process albeit with mixed motives and results. Whilst vary<strong>in</strong>g from case to case, the government: (i) c<strong>on</strong>t<strong>in</strong>ues to<br />
exert vary<strong>in</strong>g degrees of <strong>in</strong>fluence over SOE operati<strong>on</strong>s through reta<strong>in</strong><strong>in</strong>g different levels of ownership <strong>in</strong> the<br />
reformed SOEs; (ii) c<strong>on</strong>t<strong>in</strong>ues to appo<strong>in</strong>t the leaders of the reformed entities <strong>in</strong> some cases; (iii) c<strong>on</strong>t<strong>in</strong>ues to be<br />
<strong>in</strong>volved <strong>in</strong> the development and operati<strong>on</strong>alizati<strong>on</strong> of bus<strong>in</strong>ess strategy through legal and adm<strong>in</strong>istrative means<br />
which c<strong>on</strong>trol the pace, scope and nature of the reform process and by c<strong>on</strong>troll<strong>in</strong>g the allocati<strong>on</strong> of public f<strong>in</strong>ances.<br />
The government also exerts <strong>in</strong>fluence through restrict<strong>in</strong>g access to loans from the private sector because, <strong>in</strong> the<br />
absence of land use certificates, the SOEs are unable to use land under their supervisi<strong>on</strong> as collateral. Local<br />
government is thought to have played a more positive role <strong>in</strong> the reform process because they are forced to address<br />
crises <strong>in</strong> the prov<strong>in</strong>ce and to resp<strong>on</strong>d to issues raised through m<strong>on</strong>itor<strong>in</strong>g by local people.<br />
C<strong>on</strong>t<strong>in</strong>u<strong>in</strong>g uncerta<strong>in</strong>ty over land use rights<br />
The SOEs <strong>in</strong> the case studies still c<strong>on</strong>trol large areas of land which is now be<strong>in</strong>g leased to small-scale farmers. The<br />
typically fragmented land hold<strong>in</strong>gs are used for both subsistence and cash cropp<strong>in</strong>g but without the security of<br />
tenure provided by land use rights certificates. As a result, small-scale farmers are - <strong>in</strong> some but not all cases -<br />
reluctant to <strong>in</strong>vest <strong>in</strong> agricultural improvement. It also means that the government, the SOE and small-scale farmers<br />
all have <strong>in</strong>terests <strong>in</strong> the land. Farmers are relatively powerless <strong>in</strong> this “triangle of <strong>in</strong>terests” because they cannot<br />
match the resources and <strong>in</strong>fluence of the SOEs or the m<strong>on</strong>opoly power of the government.<br />
13
Moreover, the government’s role <strong>in</strong> social and ec<strong>on</strong>omic plann<strong>in</strong>g and corporate regulati<strong>on</strong> is dim<strong>in</strong>ished <strong>in</strong> favor of<br />
maximiz<strong>in</strong>g returns <strong>on</strong> <strong>in</strong>vestment. Taken together, this creates <strong>in</strong>centives for land grabb<strong>in</strong>g by companies, private<br />
speculators and politically supported groups.<br />
Distributi<strong>on</strong>al c<strong>on</strong>sequences of reform<br />
The distributi<strong>on</strong>al c<strong>on</strong>sequences of reform are c<strong>on</strong>text and case specific. That said, the reform of SOEs has typically<br />
<strong>in</strong>volved large-scale redundancies, although <strong>in</strong> the sec<strong>on</strong>d case study those made redundant have s<strong>in</strong>ce been reemployed<br />
as a result of bus<strong>in</strong>ess expansi<strong>on</strong>.<br />
Previously, SOEs paid relatively low salaries but provided subsidized or free access to services and <strong>in</strong>frastructure.<br />
With the advent of reform, the salaries of the rema<strong>in</strong><strong>in</strong>g employees have rema<strong>in</strong>ed low <strong>in</strong> comparis<strong>on</strong> to the market,<br />
but access to services has been severely reduced or stopped altogether.<br />
In the first and sec<strong>on</strong>d case studies, local households have benefited overall from the reform process although this<br />
may decl<strong>in</strong>e due to cartel-like behavior exhibited by the company <strong>in</strong>volved <strong>in</strong> the sec<strong>on</strong>d case study. As illustrated<br />
by the third case study, the under-pric<strong>in</strong>g of SOE assets, power imbalances between the stakeholders and weak<br />
oversight has resulted <strong>in</strong> the large-scale transfer of assets to politically and ec<strong>on</strong>omically powerful groups <strong>in</strong> some<br />
<strong>in</strong>stances.<br />
As a result, large areas of land <strong>in</strong> both of the prov<strong>in</strong>ces under study are now owned by a small number of people<br />
which has led to grow<strong>in</strong>g landlessness. A problem compounded by large-scale redundancies and <strong>in</strong>creas<strong>in</strong>g<br />
unemployment. This delegitimizes the reform process, reduces the effectiveness of the reformed SOEs and risks the<br />
creati<strong>on</strong> of social unrest and <strong>in</strong>stability.<br />
Policy Implicati<strong>on</strong>s<br />
The study team identified a number of policy implicati<strong>on</strong>s aris<strong>in</strong>g from the case studies, literature survey and<br />
<strong>in</strong>terviews with key <strong>in</strong>formants <strong>in</strong> Hanoi. Both the policy implicati<strong>on</strong>s and the result<strong>in</strong>g feedback from participants at<br />
the workshop are listed below.<br />
Clarify and commit to a SOE reform strategy<br />
The research dem<strong>on</strong>strates the variety of approaches to SOE reform that are currently be<strong>in</strong>g used <strong>in</strong> <strong>Vietnam</strong>. This<br />
variati<strong>on</strong> reflects differences <strong>in</strong> leadership capacity and ideology, the power of vested <strong>in</strong>terests, the pragmatism of<br />
policy makers who recognize that there is more than <strong>on</strong>e way to make SOEs more pro-poor, c<strong>on</strong>cerns about the<br />
distributi<strong>on</strong>al c<strong>on</strong>sequences of shock-therapy and complete privatizati<strong>on</strong>, and a predom<strong>in</strong>ant preference <strong>in</strong><br />
<strong>Vietnam</strong>ese policy mak<strong>in</strong>g for experimentati<strong>on</strong> and <strong>in</strong>cremental reform. As a result, the study team favors a<br />
c<strong>on</strong>t<strong>in</strong>uati<strong>on</strong> of the gradualist approach and c<strong>on</strong>text-specific experimentati<strong>on</strong> which they believe is c<strong>on</strong>sistent with<br />
the current capacity of the <strong>Vietnam</strong>ese state and which could <strong>in</strong>form more evidence-based policy mak<strong>in</strong>g <strong>in</strong> the<br />
medium term.<br />
This approach may or may not lead to a more unified approach <strong>in</strong> the medium term as decentralized and c<strong>on</strong>textspecific<br />
reform strategies may emerge as the preferred model. This preference was challenged <strong>in</strong> the discussi<strong>on</strong> by<br />
those who favor shock-therapy because of the slow pace of reform, the purported <strong>in</strong>herent <strong>in</strong>efficiency of SOEs, the<br />
problems the SOEs are creat<strong>in</strong>g for the wider ec<strong>on</strong>omy, the power of vested <strong>in</strong>terests which will frustrate attempts<br />
at <strong>in</strong>cremental reform and the problems associated with decentralized approaches because of weak local<br />
government capacity and low levels of accountability to their c<strong>on</strong>stituencies. In their view, the key issue is to<br />
quickly reduce the number of agri-SOEs and to redistribute land currently managed by those SOEs to communities<br />
and households.<br />
Reform of land use policy<br />
The study team argued for the reform of land use policy <strong>in</strong> ways which balance efficiency and equity c<strong>on</strong>siderati<strong>on</strong>s<br />
allows for the development of c<strong>on</strong>text-specific soluti<strong>on</strong>s and <strong>in</strong>creases land tenure security for small-scale farmers<br />
whether through the provisi<strong>on</strong> of l<strong>on</strong>g-term leases or land use certificates.<br />
14
Enhance policy coord<strong>in</strong>ati<strong>on</strong><br />
The study team argued that the reform of land use policies should be undertaken as part of an <strong>in</strong>tegrated policy<br />
reform package which would also (i) improve social security, (ii) enhance educati<strong>on</strong> and tra<strong>in</strong><strong>in</strong>g for redundant<br />
workers, and (iii) <strong>in</strong>crease access to credit for small-scale farmers. The latter would enable households to purchase<br />
stocks <strong>in</strong> equitised companies and thereby enhance their commitment to the reform process.<br />
Enhance support to small-scale farmers<br />
The study team called for greater <strong>in</strong>vestment by NGOs <strong>in</strong> activities which enhance community knowledge of markets<br />
and of government policy, <strong>in</strong>crease community capacity for collective acti<strong>on</strong>, improve the negotiat<strong>in</strong>g power of<br />
small-scale farmers and workers <strong>in</strong> the development of c<strong>on</strong>tracts, facilitate producer access to legal services and<br />
<strong>in</strong>crease the number of households with land use rights certificates. The team also called <strong>on</strong> government to create<br />
an enabl<strong>in</strong>g envir<strong>on</strong>ment for <strong>in</strong>ternati<strong>on</strong>al d<strong>on</strong>ors to <strong>in</strong>vest <strong>in</strong> the agri-SOE reform process.<br />
Greater <strong>in</strong>vestment <strong>in</strong> services for redundant workers<br />
The study team called for greater <strong>in</strong>vestment <strong>in</strong> tra<strong>in</strong><strong>in</strong>g and support to workers made redundant as a c<strong>on</strong>sequence<br />
of SOE reform, although as noted <strong>in</strong> the discussi<strong>on</strong>, job reducti<strong>on</strong>s <strong>in</strong> the SOEs themselves may be offset by job<br />
creati<strong>on</strong> <strong>in</strong> community-based or private sector enterprises.<br />
Enhanced <strong>in</strong>vestment <strong>in</strong> corporate social resp<strong>on</strong>sibility<br />
The study team called <strong>on</strong> agribus<strong>in</strong>ess enterprises to improve their corporate social resp<strong>on</strong>sibility and for d<strong>on</strong>ors<br />
and INGOs such as <strong>Oxfam</strong> to raise enterprise awareness and capacity <strong>in</strong> CSR practices.<br />
15
Case Studies <strong>on</strong> c<strong>on</strong>tract farm<strong>in</strong>g models and their impacts <strong>on</strong> small-scale<br />
farmers<br />
This study focused <strong>on</strong> the poverty impact of c<strong>on</strong>tract farm<strong>in</strong>g models used by companies operat<strong>in</strong>g <strong>in</strong> the peanut,<br />
cassava and cott<strong>on</strong> sectors <strong>in</strong> three prov<strong>in</strong>ces <strong>in</strong> <strong>Vietnam</strong> and the implicati<strong>on</strong>s for policy makers, NGOs, companies<br />
and farmers themselves. These commodities were chosen because they are be<strong>in</strong>g grown us<strong>in</strong>g the most popular<br />
c<strong>on</strong>tract farm<strong>in</strong>g methods <strong>in</strong> <strong>Vietnam</strong>, the strategic relevance of the commodities to small-scale farmers and their<br />
potential to improve the livelihoods of the poor.<br />
C<strong>on</strong>tract farm<strong>in</strong>g is def<strong>in</strong>ed as “an agreement between farmers and process<strong>in</strong>g or market<strong>in</strong>g firms for the producti<strong>on</strong><br />
and supply of agricultural products under forward agreements, frequently at pre-determ<strong>in</strong>ed prices”. C<strong>on</strong>tract<br />
farm<strong>in</strong>g schemes can be categorized accord<strong>in</strong>g to (i) the nature of the c<strong>on</strong>tract (<strong>in</strong>clud<strong>in</strong>g whether, how and to what<br />
extent the c<strong>on</strong>tract prescribes the provisi<strong>on</strong> of <strong>in</strong>puts, producti<strong>on</strong> techniques and supply arrangements), and (ii) the<br />
way stakeholders are organized with<strong>in</strong> the scheme. The latter varies accord<strong>in</strong>g to the nature of the product, the<br />
resources of the processors and the <strong>in</strong>tensity of the relati<strong>on</strong>ship required between farmers and processors, for<br />
<strong>in</strong>stance. <strong>in</strong> regard to quality c<strong>on</strong>trol and delivery regimes.<br />
The cases studied by the research team <strong>in</strong>cluded a centralized model used by the Tay Nguyen Cott<strong>on</strong> Company <strong>in</strong><br />
the cott<strong>on</strong> sector <strong>in</strong> Dak N<strong>on</strong>g, a multi-partite model used both by the Hu<strong>on</strong>g Hoa Tapioca Starch Company <strong>in</strong> the<br />
cassava sector <strong>in</strong> Quang Tri and by the Sy Thang Company <strong>in</strong> the peanut kernel sub-sector <strong>in</strong> Nghe An and a<br />
centralized model used by the Agrimex Company <strong>in</strong> the peanut seed sub-sector <strong>in</strong> Nghe An which is now mov<strong>in</strong>g<br />
towards an <strong>in</strong>termediary model.<br />
In the centralized model, the agribus<strong>in</strong>ess company provides agricultural <strong>in</strong>puts, credit, extensi<strong>on</strong> services and<br />
transport to farmers via village leaders or buy<strong>in</strong>g stati<strong>on</strong>s. The company makes c<strong>on</strong>tracts with the village leaders<br />
and buy<strong>in</strong>g stati<strong>on</strong>s rather than with the farmers themselves. In the multipartite model, the company uses <strong>on</strong>e or<br />
more <strong>in</strong>termediaries to provide <strong>in</strong>puts, credit, extensi<strong>on</strong> services and transport. In this model, the company may<br />
c<strong>on</strong>tract with (i) the <strong>in</strong>termediaries who <strong>in</strong> turn c<strong>on</strong>tract with the cooperatives or village leaders or (ii) both the<br />
<strong>in</strong>termediaries and the cooperatives or village leaders. In all cases, the cooperatives, buy<strong>in</strong>g stati<strong>on</strong>s or village<br />
leaders - rather than companies themselves - enter <strong>in</strong>to agreements with small-scale farmers.<br />
The study was undertaken by Nham Ph<strong>on</strong>g Tuan (team leader) and Tran Thi Hai, Vu Van Anh and Pham Thi Bich Diep<br />
(team members). The study team used qualitative techniques and analyzed the result<strong>in</strong>g data from a governance<br />
and <strong>in</strong>stituti<strong>on</strong>al perspective (rules and regulati<strong>on</strong>s, enforcement and support services) and a pro-poor people<br />
perspective (<strong>in</strong>clusi<strong>on</strong> of small-scale farmers, cost and benefit distributi<strong>on</strong> and risk shar<strong>in</strong>g).<br />
A comparative analysis of the case studies highlighted the follow<strong>in</strong>g po<strong>in</strong>ts:<br />
Farmers and companies have different reas<strong>on</strong>s for enter<strong>in</strong>g <strong>in</strong>to c<strong>on</strong>tract farm<strong>in</strong>g schemes<br />
For companies, c<strong>on</strong>tract farm<strong>in</strong>g can: (i) ensure a stable supply of raw material which reduces the costs <strong>in</strong>volved <strong>in</strong><br />
large-scale producti<strong>on</strong> (for <strong>in</strong>stance cott<strong>on</strong>) and reduces the risks associated with large up-fr<strong>on</strong>t <strong>in</strong>vestments; (ii)<br />
enhance the quality of supply through standard sett<strong>in</strong>g and the provisi<strong>on</strong> of technical <strong>in</strong>puts; (iii) facilitate the<br />
<strong>in</strong>troducti<strong>on</strong> of new product l<strong>in</strong>es through improved access to and <strong>in</strong>teracti<strong>on</strong> with farmers, and (iv) enhance l<strong>on</strong>gterm<br />
bus<strong>in</strong>ess plann<strong>in</strong>g through enter<strong>in</strong>g <strong>in</strong>to l<strong>on</strong>g-term partnerships with farmers. It can also allow companies to<br />
attract government subsidies (for <strong>in</strong>stance for extensi<strong>on</strong> services and transportati<strong>on</strong>) which reduce costs and risks.<br />
For example, government subsidies for extensi<strong>on</strong> services and acquir<strong>in</strong>g new seeds prompted Agrimex to start<br />
c<strong>on</strong>tract farm<strong>in</strong>g <strong>in</strong> the peanut seed sub-sector and government assistance with arrang<strong>in</strong>g exclusive buy<strong>in</strong>g rights<br />
and subsidies for extensi<strong>on</strong> services prompted Tay Nguyen Cott<strong>on</strong> to extend its c<strong>on</strong>tract farm<strong>in</strong>g scheme to more<br />
farmers.<br />
16
For farmers, the <strong>in</strong>troducti<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g enhanced access to technical support and to agricultural <strong>in</strong>puts<br />
such as seeds, fertilizers and pesticides which reduced farmer’s transacti<strong>on</strong> costs and <strong>in</strong>creased yields. In some<br />
<strong>in</strong>stances, companies provided <strong>in</strong>puts at lower-than-market prices and delivered services which were not available<br />
through other providers. C<strong>on</strong>tract farm<strong>in</strong>g can also <strong>in</strong>crease access to credit although this did not actually occur <strong>in</strong><br />
any of the cases under study. C<strong>on</strong>tracts also assured farmers that they would be able to sell all of their products<br />
even though there was - <strong>in</strong> most cases - no corresp<strong>on</strong>d<strong>in</strong>g guarantee <strong>on</strong> price (see below). This created <strong>in</strong>centives<br />
which bound farmers to the c<strong>on</strong>tract grow<strong>in</strong>g schemes, although, as noted <strong>in</strong> the discussi<strong>on</strong>, c<strong>on</strong>tracted farmers<br />
still chose to opportunistically sell their products to other buyers who were offer<strong>in</strong>g higher prices <strong>in</strong> some cases.<br />
Farmer organizati<strong>on</strong> benefits both farmers and companies<br />
Evidence from the case studies suggests that farmer organizati<strong>on</strong> can benefit both farmers and companies. As<br />
highlighted <strong>in</strong> both the case studies and subsequent discussi<strong>on</strong>, farmer organizati<strong>on</strong>s enable farmers to share labor<br />
and other assets, achieve ec<strong>on</strong>omies of scale and negotiate better prices <strong>on</strong> <strong>in</strong>puts and outputs. For companies,<br />
deal<strong>in</strong>g with farmer organizati<strong>on</strong>s rather than <strong>in</strong>dividual farmers m<strong>in</strong>imizes the number of c<strong>on</strong>tracts required,<br />
simplifies the delivery of <strong>in</strong>puts and the collecti<strong>on</strong> of outputs, facilitates timely problem solv<strong>in</strong>g and reduces the<br />
likelihood of opportunistic sell<strong>in</strong>g. Companies which <strong>in</strong>vested <strong>in</strong> farmer organizati<strong>on</strong> and capacity build<strong>in</strong>g were<br />
generally more successful than those that relied solely <strong>on</strong> work<strong>in</strong>g through village leaders.<br />
Ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g effective relati<strong>on</strong>ships with farmers as a key success factor<br />
Build<strong>in</strong>g trust and <strong>in</strong>vest<strong>in</strong>g <strong>in</strong> l<strong>on</strong>g-term relati<strong>on</strong>ships with farmers was critical to the success of the c<strong>on</strong>tract<br />
farm<strong>in</strong>g schemes <strong>in</strong> most cases. The relati<strong>on</strong>ships between company representatives and the farmers were critically<br />
important <strong>in</strong> expand<strong>in</strong>g the number of people <strong>in</strong>volved <strong>in</strong> the c<strong>on</strong>tract farm<strong>in</strong>g schemes as well as <strong>in</strong> the early<br />
identificati<strong>on</strong> and effective resoluti<strong>on</strong> of problems. Furthermore, the Hu<strong>on</strong>g Ha Company case study suggests that<br />
trust build<strong>in</strong>g was more important than the c<strong>on</strong>tract itself <strong>in</strong> prevent<strong>in</strong>g opportunistic sell<strong>in</strong>g to other buyers. This<br />
has implicati<strong>on</strong>s for both the number and the attitudes and skills of fr<strong>on</strong>t-l<strong>in</strong>e staff that agribus<strong>in</strong>ess companies are<br />
will<strong>in</strong>g to deploy.<br />
C<strong>on</strong>tract terms and c<strong>on</strong>diti<strong>on</strong>s tend to favor companies<br />
Farmers were generally under-represented <strong>in</strong> price sett<strong>in</strong>g processes and even when they were represented they<br />
had less power than the companies. This <strong>in</strong>cluded choos<strong>in</strong>g when prices were set as well as choos<strong>in</strong>g a benchmark<br />
price. Most of the c<strong>on</strong>tracts studied <strong>in</strong>cluded the market price at the time of delivery. One c<strong>on</strong>tract also <strong>in</strong>cluded a<br />
floor price, although whether this was fair to farmers <strong>in</strong> light of their producti<strong>on</strong> costs was debatable. Interest<strong>in</strong>gly,<br />
farmers <strong>in</strong>terviewed for these case studies <strong>in</strong>sisted <strong>on</strong> us<strong>in</strong>g a market price and opposed the use of a floor price <strong>in</strong><br />
most cases for fear that the floor price would take precedence even if the market price was higher. Government<br />
agencies were not <strong>in</strong>volved <strong>in</strong> negotiat<strong>in</strong>g better prices for farmers <strong>in</strong> any of the cases under study.<br />
Only some of the c<strong>on</strong>tracts <strong>in</strong>cluded provisi<strong>on</strong>s cover<strong>in</strong>g crop loss and natural disasters with most farmers<br />
c<strong>on</strong>t<strong>in</strong>u<strong>in</strong>g to reply <strong>on</strong> support from government <strong>in</strong> the event of disasters. Accord<strong>in</strong>g to the study team, this<br />
<strong>in</strong>dicates that farmers have not, as yet, taken full advantage of the protecti<strong>on</strong> that c<strong>on</strong>tract farm<strong>in</strong>g can offer<br />
aga<strong>in</strong>st market volatility. As noted dur<strong>in</strong>g the discussi<strong>on</strong> at our workshop, there are many factors other than<br />
c<strong>on</strong>tracts which affect the distributi<strong>on</strong> of costs and benefits <strong>in</strong> value cha<strong>in</strong>s.<br />
Weak enforcement of c<strong>on</strong>tracts<br />
Neither the rights of farmers nor the rights of companies were protected <strong>in</strong> practice <strong>in</strong> the cases under study. The<br />
government was not <strong>in</strong>volved <strong>in</strong> negotiat<strong>in</strong>g better prices for farmers and was unwill<strong>in</strong>g or unable to prevent<br />
c<strong>on</strong>tracted farmers from opportunistically sell<strong>in</strong>g their produce to other buyers.<br />
Limited impact <strong>on</strong> participati<strong>on</strong><br />
In all cases, the adopti<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g made little or no difference to the level of participati<strong>on</strong> by small-scale<br />
and poor farmers. For specialized products such as peanut seeds, the <strong>in</strong>troducti<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g may <strong>in</strong> fact<br />
privilege farmers with greater endowments such as more fertile land and better skills and knowledge.<br />
17
Mixed impact <strong>on</strong> household <strong>in</strong>comes<br />
In all of the cases under study, the <strong>in</strong>troducti<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g schemes had little or no impact <strong>on</strong> farm-gate<br />
prices. C<strong>on</strong>tracted farmers <strong>in</strong> Nghe An and Quang Tri <strong>in</strong>creased their household <strong>in</strong>comes but this was because of<br />
higher yields rather than higher farm-gate prices. The producti<strong>on</strong> of cott<strong>on</strong> provided a stable source of <strong>in</strong>come<br />
rather than improv<strong>in</strong>g <strong>in</strong>comes overall. As noted <strong>in</strong> the discussi<strong>on</strong>, more quantitative <strong>in</strong>formati<strong>on</strong> <strong>on</strong> the distributi<strong>on</strong><br />
of costs, benefits and risks al<strong>on</strong>g the value cha<strong>in</strong> would lead to a better understand<strong>in</strong>g of poverty impacts overall.<br />
Based <strong>on</strong> these f<strong>in</strong>d<strong>in</strong>gs, the study team identified key success factors for <strong>in</strong>creas<strong>in</strong>g benefits to farmers <strong>in</strong><br />
c<strong>on</strong>tract farm<strong>in</strong>g operati<strong>on</strong>s. These <strong>in</strong>cluded:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Choos<strong>in</strong>g the right commodity. C<strong>on</strong>tract farm<strong>in</strong>g appears to work best for commodities which have significant<br />
value added further al<strong>on</strong>g the cha<strong>in</strong> or which must meet specific delivery or quality standards at the farm gate.<br />
The use of <strong>in</strong>termediaries <strong>in</strong> multipartite c<strong>on</strong>tract farm<strong>in</strong>g schemes which helps bridge the capacity gap<br />
between companies and farmers and improves the negotiat<strong>in</strong>g power of farmers.<br />
Farmer organizati<strong>on</strong>, capacity build<strong>in</strong>g and network<strong>in</strong>g.<br />
Informati<strong>on</strong> shar<strong>in</strong>g, communicati<strong>on</strong> and shared problem solv<strong>in</strong>g which helps build trust and strengthen<br />
relati<strong>on</strong>ships between cha<strong>in</strong> actors over time.<br />
Operat<strong>in</strong>g modalities which resp<strong>on</strong>d the needs of both farmers and companies.<br />
Incentives which b<strong>in</strong>d farmers to c<strong>on</strong>tract farm<strong>in</strong>g schemes such as access to credit and <strong>on</strong>go<strong>in</strong>g technical<br />
support, <strong>in</strong>surance mechanisms, and so <strong>on</strong>.<br />
Inclusive, fair and transparent price sett<strong>in</strong>g mechanisms which rema<strong>in</strong> resp<strong>on</strong>sive to market c<strong>on</strong>diti<strong>on</strong>s.<br />
An activist approach by government, <strong>in</strong>clud<strong>in</strong>g <strong>in</strong>volvement <strong>in</strong> sector development, br<strong>in</strong>g<strong>in</strong>g together<br />
stakeholders <strong>in</strong>volved <strong>in</strong> specific value cha<strong>in</strong>s, ensur<strong>in</strong>g the provisi<strong>on</strong> of support services, assist<strong>in</strong>g farmers <strong>in</strong><br />
price negotiati<strong>on</strong>, certify<strong>in</strong>g c<strong>on</strong>tracts and ensur<strong>in</strong>g effective enforcement of c<strong>on</strong>tracts where necessary. As<br />
noted <strong>in</strong> the discussi<strong>on</strong>, this means that government agencies will need to engage staff who not <strong>on</strong>ly have<br />
agricultural extensi<strong>on</strong> skills but can also work with farmer groups <strong>on</strong> group formati<strong>on</strong>, bus<strong>in</strong>ess development<br />
and c<strong>on</strong>tract<strong>in</strong>g mechanisms.<br />
The study team and workshop participants identified a number of recommendati<strong>on</strong>s which are outl<strong>in</strong>ed below.<br />
To government<br />
<br />
<br />
<br />
<br />
<br />
<br />
Make decisi<strong>on</strong> 80/CP-2002 <strong>on</strong> promoti<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g mandatory rather than a guide as current.<br />
Better <strong>in</strong>tegrate c<strong>on</strong>tract farm<strong>in</strong>g <strong>in</strong>to government plann<strong>in</strong>g and budget allocati<strong>on</strong>s at the prov<strong>in</strong>cial level and<br />
create an enabl<strong>in</strong>g regulatory envir<strong>on</strong>ment for the emergence of pro-poor c<strong>on</strong>tract farm<strong>in</strong>g.<br />
Establish price sett<strong>in</strong>g mechanisms for c<strong>on</strong>tract farm<strong>in</strong>g operati<strong>on</strong>s which <strong>in</strong>clude farmer representati<strong>on</strong> but<br />
which rema<strong>in</strong> resp<strong>on</strong>sive to market signals. As noted <strong>in</strong> the discussi<strong>on</strong>, direct government <strong>in</strong>volvement <strong>in</strong> price<br />
sett<strong>in</strong>g may be unrealistic but government can certa<strong>in</strong>ly play a role <strong>in</strong> m<strong>on</strong>itor<strong>in</strong>g c<strong>on</strong>tracts.<br />
Establish arbitrati<strong>on</strong> and dispute resoluti<strong>on</strong> mechanisms to protect the rights of farmers and, as noted <strong>in</strong> the<br />
discussi<strong>on</strong>, the rights of companies as well.<br />
Facilitate access to credit for companies engaged <strong>in</strong> c<strong>on</strong>tract farm<strong>in</strong>g. As noted <strong>in</strong> the discussi<strong>on</strong>, credit should<br />
also be extended to farmers <strong>in</strong> ways which enable them to make <strong>in</strong>formed choices about crop selecti<strong>on</strong> rather<br />
than steer<strong>in</strong>g farmers towards a particular crop.<br />
Improve agricultural extensi<strong>on</strong> services to farmers, <strong>in</strong>clud<strong>in</strong>g promot<strong>in</strong>g group formati<strong>on</strong> and <strong>in</strong>troduc<strong>in</strong>g a<br />
str<strong>on</strong>ger focus <strong>on</strong> market<strong>in</strong>g of agricultural produce. As noted <strong>in</strong> the discussi<strong>on</strong>, this will require extensi<strong>on</strong><br />
workers who are able to engage with farmer groups and provide a wider range of supports than present.<br />
18
To development agencies<br />
The key role of development agencies should be to ensure that farmers are well represented and protected <strong>in</strong><br />
c<strong>on</strong>tract farm<strong>in</strong>g operati<strong>on</strong>s.<br />
To this end, development agencies such as <strong>Oxfam</strong> could:<br />
<br />
<br />
<br />
<br />
<br />
Lobby government to modify Decisi<strong>on</strong> 80/CP-2002 <strong>in</strong> ways which reflect field experience and successful case<br />
studies.<br />
Promote the <strong>in</strong>corporati<strong>on</strong> of c<strong>on</strong>tract farm<strong>in</strong>g <strong>in</strong> sector, prov<strong>in</strong>cial and district plans.<br />
Raise awareness <strong>in</strong> local government of the costs and benefits of c<strong>on</strong>tract farm<strong>in</strong>g for small-scale farmers and<br />
enhance the capacity of local government to undertake value cha<strong>in</strong> and market analysis and to effectively<br />
oversee c<strong>on</strong>tract farm<strong>in</strong>g operati<strong>on</strong>s.<br />
Support group formati<strong>on</strong> am<strong>on</strong>gst farmers and build the capacity of farmer organizati<strong>on</strong>s and farmers <strong>in</strong><br />
understand<strong>in</strong>g c<strong>on</strong>tract farm<strong>in</strong>g models, market analysis, negotiati<strong>on</strong> skills, understand<strong>in</strong>g c<strong>on</strong>tracts, and so<br />
<strong>on</strong>.<br />
Provide capacity build<strong>in</strong>g to companies to enhance their ability to engage effectively with farmers, farmers<br />
groups and other <strong>in</strong>termediaries.<br />
19
Ways Forward<br />
When asked to identify ways forward, participants made the follow<strong>in</strong>g po<strong>in</strong>ts:<br />
<br />
<br />
<br />
<br />
The workshop has identified some of the fundamental problems faced by small-scale farmers. <strong>Oxfam</strong> should<br />
provide l<strong>on</strong>g term support to farmers, <strong>in</strong>clud<strong>in</strong>g through support<strong>in</strong>g farmer organiz<strong>in</strong>g and empowerment,<br />
strengthen<strong>in</strong>g farmer access to and c<strong>on</strong>trol over land, improv<strong>in</strong>g farmer knowledge, attitudes and skills,<br />
facilitat<strong>in</strong>g l<strong>in</strong>kages between farmers and bus<strong>in</strong>esses and enabl<strong>in</strong>g farmers to exploit market<strong>in</strong>g opportunities.<br />
<strong>Oxfam</strong> should also support private bus<strong>in</strong>esses, <strong>in</strong>clud<strong>in</strong>g those <strong>in</strong>volved <strong>in</strong> producti<strong>on</strong>, not just those <strong>in</strong>volved <strong>in</strong><br />
post-harvest distributi<strong>on</strong>. Improv<strong>in</strong>g producti<strong>on</strong> will make it easier to keep land <strong>in</strong> the hands of farmers.<br />
The government needs to develop a more comprehensive approach to the reform of agri-SOEs which have large<br />
land hold<strong>in</strong>gs but limited producti<strong>on</strong> and low efficiency. The land which is be<strong>in</strong>g <strong>in</strong>effectively managed by SOEs<br />
should be handed over to farmers and communities. Otherwise there is a risk that land will be captured by<br />
<strong>in</strong>terest groups dur<strong>in</strong>g complex processes of equitisati<strong>on</strong>. Farmer cooperatives can then engage with<br />
bus<strong>in</strong>esses to provide capital and technology.<br />
<strong>Oxfam</strong> can work closely with government agencies such as MARD, the M<strong>in</strong>istry of Labor, to improve access to<br />
credit, provide tra<strong>in</strong><strong>in</strong>g to farmers, support the development of farmer’s enterprises and small-scale rural<br />
bus<strong>in</strong>esses (which helps reduce out-migrati<strong>on</strong>), and facilitate l<strong>in</strong>kages between these enterprises and<br />
bus<strong>in</strong>ess support services.<br />
20
C<strong>on</strong>clusi<strong>on</strong>s<br />
In his clos<strong>in</strong>g remarks, Bert Maerten, <strong>Oxfam</strong> Associate Country Director, thanked the participants for their <strong>in</strong>puts and<br />
suggesti<strong>on</strong>s which have generated a rich set of ideas, policy propositi<strong>on</strong>s and strategies. He noted that <strong>Oxfam</strong> is<br />
<strong>on</strong>ly a small actor with limited voice and <strong>in</strong>fluence.<br />
As a matter of pr<strong>in</strong>ciple, <strong>Oxfam</strong> wants to work with others - particularly local organizati<strong>on</strong>s - to advance the rights of<br />
poor people. He hopes that this workshop represents the beg<strong>in</strong>n<strong>in</strong>g of a c<strong>on</strong>t<strong>in</strong>u<strong>in</strong>g c<strong>on</strong>versati<strong>on</strong>, exchanges and<br />
collaborati<strong>on</strong>.<br />
As an immediate next step, <strong>Oxfam</strong> will f<strong>in</strong>alize the studies based <strong>on</strong> <strong>in</strong>puts and comments received at the workshop<br />
and dissem<strong>in</strong>ate the f<strong>in</strong>al versi<strong>on</strong>s to a wider audience.<br />
Follow<strong>in</strong>g this, we will work at two <strong>in</strong>terl<strong>in</strong>ked levels:<br />
At the local level, <strong>Oxfam</strong> will c<strong>on</strong>t<strong>in</strong>ue to work with communities, small-scale farmers and workers to promote<br />
susta<strong>in</strong>able livelihoods and to make markets work for the poor. This will build <strong>on</strong> <strong>Oxfam</strong>’s exist<strong>in</strong>g value cha<strong>in</strong> work,<br />
<strong>in</strong>clud<strong>in</strong>g work<strong>in</strong>g with the private sector where possible and appropriate. We recognize that much needs to be d<strong>on</strong>e<br />
to improve policy implementati<strong>on</strong> and that strengthen<strong>in</strong>g the rights and voice of the poor people will be central to<br />
address<strong>in</strong>g many of the issues raised dur<strong>in</strong>g this workshop. <strong>Oxfam</strong> will aim to strengthen collaborative acti<strong>on</strong><br />
am<strong>on</strong>gst farmers, the private sector and government, and use this to develop successful models for replicati<strong>on</strong> and<br />
scale up.<br />
At the policy level, <strong>Oxfam</strong> will take advantage of “w<strong>in</strong>dows of opportunity” to address a number of key issues,<br />
<strong>in</strong>clud<strong>in</strong>g land, SOE reform and New Rural Areas. <strong>Oxfam</strong> will also c<strong>on</strong>t<strong>in</strong>ue to work <strong>on</strong> “l<strong>on</strong>g-stand<strong>in</strong>g” challenges,<br />
<strong>in</strong>clud<strong>in</strong>g women’s rights, credit and extensi<strong>on</strong> services. Our c<strong>on</strong>tributi<strong>on</strong> will be through research, develop<strong>in</strong>g<br />
models based <strong>on</strong> our field experience and evidence-based advocacy which will be undertaken <strong>in</strong> collaborati<strong>on</strong> with<br />
those who have other local organizati<strong>on</strong>s.<br />
<strong>Oxfam</strong>’s perspective will always be that of the poor and vulnerable people - particularly small-scale farmers - and<br />
we will c<strong>on</strong>t<strong>in</strong>ue to strengthen voices and defend rights when necessary.<br />
<strong>Oxfam</strong> <strong>in</strong>vites participants to c<strong>on</strong>t<strong>in</strong>ue the c<strong>on</strong>versati<strong>on</strong> <strong>on</strong> these important matters.<br />
In clos<strong>in</strong>g, Bert Maerten thanked the presenters and research teams, discussants and all participants. He also<br />
expressed high appreciati<strong>on</strong> for the <strong>Oxfam</strong> team who organized this event.<br />
21
<str<strong>on</strong>g>Workshop</str<strong>on</strong>g> AGENDA<br />
9.00-9.15 Welcome by Andy Baker and Bert Maerten (<strong>Oxfam</strong>)<br />
09.15-10.15 Sessi<strong>on</strong> 1: Review of Key Sector Expansi<strong>on</strong> Targets and Policies <strong>in</strong> <strong>Agribus<strong>in</strong>ess</strong> Commodities<br />
Presentati<strong>on</strong> (30 m<strong>in</strong>), Discussant (10 m<strong>in</strong>)<br />
Nguyen Trung Kien & Nguyen Thuy Hang<br />
Mr. Luu Duc Khai (Head, Department of Agriculture and Rural Development Policy, CIEM)<br />
Plenary discussi<strong>on</strong> (30 m<strong>in</strong>)<br />
10.15-10.45 Coffee break<br />
10.45-12.00 Sessi<strong>on</strong> 2: Community and Grassroots Organizati<strong>on</strong>s and Acti<strong>on</strong> <strong>in</strong> Relati<strong>on</strong> to the Defense of Access, Use<br />
and C<strong>on</strong>trol of Land<br />
Presentati<strong>on</strong> (30 m<strong>in</strong>), Discussant (10 m<strong>in</strong>)<br />
Bryn Tucknott<br />
Mr. Dang Hung Vo (Former Vice M<strong>in</strong>ister, MONRE)<br />
Plenary discussi<strong>on</strong> (30 m<strong>in</strong>)<br />
12.00-13.30 Lunch<br />
13.30-14.45 Sessi<strong>on</strong> 3: Case Studies of Agri-SOE Reform and Its Impacts <strong>on</strong> Communities<br />
Presentati<strong>on</strong> (30 m<strong>in</strong>), Discussant (10 m<strong>in</strong>)<br />
Nguyen Duc Nhat<br />
Mrs. Pham Chi Lan (Former Vice Chairwoman, VCCI)<br />
Plenary discussi<strong>on</strong> (30 m<strong>in</strong>)<br />
14.45-16.00 Sessi<strong>on</strong> 4: Case Studies of C<strong>on</strong>tract Farm<strong>in</strong>g Models and Their Impacts <strong>on</strong> Incomes and Livelihoods of Smallscale<br />
Farmers<br />
Presentati<strong>on</strong> (30 m<strong>in</strong>), Discussant (10 m<strong>in</strong>)<br />
Nham Tuan Ph<strong>on</strong>g & Tran Thi Hai<br />
Mr. Dao The Anh (Director, CASRAD)<br />
Plenary discussi<strong>on</strong> (30 m<strong>in</strong>)<br />
16.00-16.30 Coffee break<br />
16.30-17.00 Go<strong>in</strong>g forward<br />
Discussi<strong>on</strong> and debate<br />
17.00-17.30 Clos<strong>in</strong>g by Bert Maerten (<strong>Oxfam</strong>)<br />
22
22 LE DAI HANH<br />
HANOI, <strong>Vietnam</strong><br />
<strong>Oxfam</strong>blogs.org/<strong>Vietnam</strong><br />
WWW.OXFAM.ORG/VIETNAM<br />
23