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On policies of agriculture and rural development in the industrialization process
28/3/2011 9:49' Send Print

Many arguments and approaches relevant to agriculture and rural development have been applied in Vietnam, and they had strong impacts to policy making on these issues. While encouraging the process of industrialization and modernization, Vietnam also applied the strategies of this process to the way the country solves its agriculture and rural development problems. For theoretic exchange purpose, this paper focuses on:

- Discussing arguments on agriculture and rural development ;

- Describing the actual situations of agriculture and rural development and farmers in Vietnam; and

- Suggesting some orientations and policies on agricultural – rural development and farmers.

1. Arguments on Agriculture, Rural Development and Farmers in Vietnam

Some arguments agree that, along the process of development toward a model and developed economy, (1) agriculture will play a less important role, leading to a smaller portion of agriculture in GDP (2) Almost all farmers will be farmers with large farms, and agricultural production units will most likely be large-sized ones (3) Portion of agriculture labor in the total labor force will reduce (4) Rural scenes will disappear, and rural areas will look like a city with high buildings, model infrastructure and architecture and (5) Rural culture will transform from community and family based relationship to the urban style (such as “other business is not my business”). These arguments were reflected in agricultural and rural development planning in Vietnam. However, the actual process of economic development in both developed and developing countries did not support these arguments, showing through the following facts:

First, despite a smaller portion in GDP, agriculture as well as farmers played an important role along the road of development. Agriculture had multi-functions: economic function (supplying food-grain and food-stuff for the population and raw materials for industries), cultural function (preserving traditional value through agricultural production), social functions (linking social groups and communities through agricultural production and trading) and environmental functions (managing and using natural resources such as soil, water, air and biological resources). In Vietnam, agriculture contributed a great deal to preserve material and non-material cultural values that existed thousand of years ago. Also, the stability in agriculture provides a balance in the society as a whole because in many cases, social uncertainty most likely would come from the rural areas first. In Vietnam, agriculture and countryside covers 90 percent of the land surface, 100 percent of forests and 95 percent of water sources (The Ministry of Agriculture and Rural Development, MARD, 2006). Therefore, agriculture and farmers played a very important role in the socio–economic development in Vietnam.

Second, model agriculture is a multi-sectoral field that consists of not only farmers with large farms, but also farmers with medium farms and farmers with small farms. That is because farmers vary in economic potentiality and they possess a different level of production management, trade or cultivation skills. This also explains the existence of farmers with no land. These no-land farmers form a work-for-hire labor force, so they are necessary in the agricultural production. Therefore, multi-sectoral agriculture is necessary and the main objective in a market economy. In fact, in developed economies, only 20 percent of farmers are those with large farms. Therefore, Vietnam should not apply administrative measures in order to increase the percentage of the farmers with large farms. This increase should be done in compliance with the market mechanism, especially in land and labor markets.

Third, in a developed country, the rate of agricultural labor (in an open meaning) does not become smaller. This fact is clearly observed in the developed countries such as Japan, France, the US and Canada. In these countries, agriculture is considered to include all production processes, from cultivation and husbandry to the final products, from the farms to the tables of consumers. Thus, the rate of workers who are directly involved in agriculture may decrease but the rate of agriculture in an open meaning (agriculture product producers) does not. In fact, this rate did not become smaller in some last decades. On the other hand, the political position of agriculture is never put down because it manages a large part of a nation’s resources and provides food supplies for human beings. Agriculture is still considered to be playing a very important role in the process of development.

Fourth, in comparison with a city’s environment, a developed rural area bears its own peculiarities of village community and spaciousness, where residential structures express special cultural characteristics of each commune and group of population. Also, infrastructural and architectural development is made in the way that it preserves the original characteristics and natural conditions of each area.

In Vietnam, it is noted that due to a lack of planning, many villages are “concretized”, especially in the resettlement zones for the development of hydro-electric plants (such as Sonla, Yaly and Nahang, etc.) where ethnic minority relocated residents have to live in adjoining houses built in Kinh-styles. Therefore, a good plan is required as a base to develop rural architecture that matches culture, tradition and characteristics of each rural area and ethnic minority groups. Areas having such a plan turned out to be human – ecological tourist points, for example mountain villages in Tay Nguyen with “Rong” houses or villages in the North with thatch houses.

Fifth, rural community structure is based on family linkages. These special links will not be lost in the process of development. Many families live together in a village, worshipping the same “God of Village” in a delta area or “Holly Mother” in a highland area or “Yang” in Taynguyen, “God of Forest” or “God of Mountain” in mountain areas. Trust is a precious value in the economic and social development process. Unlike cities and towns, many people in a village are family relatives. This creates a high unity in villages and tightens the links between people in a rural community.

2. Outstanding Matters in Agriculture, Rural Development and Farmer’s Issues in Vietnam

2.1. Agriculture

Agriculture is still an important production field in Vietnam. It attracts 85 percent of the rural labor force and creates an income for 70 percent of the population. It plays a key role in ensuring food security, and therefore in the social – political stability in Vietnam. Up until 2008, food output (in rice) was 52.4 million tons, in which rice output – 38.73 million tons; vegetables, beans and peas – 12 million tons; fruits – 8 million tons; raw meats – 3.44 million tons; eggs – 5 billion ones; fresh milk – 250 thousand tons; and aqua-products – 4.3 million tons. The average output level per head was 421 kg of rice; 154.5 kg of vegetables, beans and peas; 97.7 kg of fruits, 58 eggs, 3.2 kg of fresh milk and 50 kg of aqua-products in this year. The output per head of food and foodstuff grew by 20 – 30% from the year 2000 to 2008, in particular, fresh milk increased by 4.5 times and rice by 12%, supplied 2,400 kg of calories/head daily.

Vietnam exported 4.5 – 5 million tons of rice each year and was the second largest rice export country in the world. In 2008, it exported 4.74 million tons of rice for 1.9 billion USD. Income from aqua-products export was 4.5 billion USD in this year.

Thanks to the growth in agricultural output, rates of poverty and mal-nutrition children significantly decreased. The poverty rate in Vietnam was 14.8% in 2007 and 12.1% in 2008. This rate declined by 0.7% - 1% annually. The rate of mal-nutrition children reduced from 33% in 2002 to 21.2% in 2007. These achievements were salient in the National Targeted Program on Poverty Alleviation in the period of 2006 – 2010 (MARD, 2009).

However, many challengers emerged in the process of agricultural development in Vietnam.

First, the decreasing agricultural growth rate. The annual agricultural growth rate gradually decreased from 4.5% in 1992 – 1995 to 3.9% in 1995 – 2000, to 3.7% in 2001 – 2005 and to 2.1 – 2.8% in the period of 2006 – 2008 (MARD, 2009). The causes included poor conditions to apply technologies and materials in agricultural production, leading to a heavy dependence on nature in agricultural production; and continual serious natural disasters.

Moreover, the marginal productivity of investments in agriculture was on a downward trend. It showed a decreasing effectiveness of new investment in agriculture. Therefore, at present, agricultural growth should be motivated through an in-depth investment to improve technologies in order to create a stable and sustainable increase in agricultural productivity.

Second, the reducing agricultural investment rate. The rate of public investments in agriculture per total public investments decreased from 15% in 1997 – 2006 to 8.6% in 2007. The rate of investment in agriculture per total social investment in the economy went down from 13.8% in 2000 to 7.5% in 2007. Foreign investment in agriculture was nearly 4% in 2000 (Dang Kim Son, 2008). This investment reduction was the main cause of the recent decrease in Vietnamese agricultural production.

Third, the disadvantages of agricultural products in term of comparative prices, as the costs of inputs increased at higher paces than the prices of outputs. In the period of 1989 – 2000, the output prices of agricultural products grew by 14.3% and the input costs grew by 19.9%. These numbers were 4.2% and 10% in the period of 2000 – 2006, respectively. That meant farmers had to exchange more agricultural products for one unit of input. Therefore, their agricultural benefits reduced year by year. In particular, a farmer in Thai Binh, Hung Yen, Nam Dinh, Phu Tho and Thanh Hoa earned 2,000 VND- 3,000 VND (equal 0.15 US cent) per day only (Do Kim Chung, 2008).

Fourth, the farmland diminishment. On the road towards industrialization and modernization in Vietnam, about 74 thousand hectares of farmland were transferred into non-agricultural land (Nguyen Sinh Cuc, 2008). During the period of 2000 – 2005, 366.4 thousand hectares of agricultural land became non-agricultural, mostly for infrastructural, urban and industrial zone development, of which 302.5 thousand hectares were rice fields. While the loss 1 hectare of rice field for non-agricultural purposes affected the livelihood of 12 to 25 rural people (Do Kim Chung, 2008), this negatively impacted so many people. The cut of agricultural land was also harmful to the country’s food security. Moreover, the scattered agricultural land due to household division and individual inheritance prevented the application of technologies to improve productivity in agricultural production.

2.2. Farmers’ Issues

Scattered and small-sized production. There were 12.6 million farming households in Vietnam, each had 2.2 workers with 0.4 – 1.2 hectare of land. 61.2% of them possessed under 0.5 hectare of land. In the Red River Delta and in the Centre, a household had 0.3 hectare of land on average, some had only 0.1 hectare. In the rural areas, 90% of households divided their land into smaller pieces for inheritance purposes. Only 3% of them could accumulate land for farming (Do Kim Chung, 2000). Therefore, scattered and small-sized production was prevalent in Vietnamese agriculture.

Among 113.7 thousand farms in 2008, 70.4% located in the Mekong River Delta, Tay Nguyen and the South East. 50% of the total farms were in the Mekong River Delta. Since 2001, the number of farms involved in cattle-breeding, aqua-culture and general businesses rapidly increased. From 2001 to 2007, the number of farms in plant-growing and industrial crop declined from 35.6% to 28.7% and from 27.2% to 20.1% while the number of farms in cattle-breeding and aqua-culture increased from 2.9% to 14.6% and from 27.9% to 29.6% at the same period of time, respectively (MARD, 2009).

The wider the farmers expand their production, the poorer they became, especially in the case of rice producers. 71% of the Vietnamese population was farmers. Among them, 20.4% was considered poor. This poverty rate was 4 times higher than that of non-farming population (5%). In particular, 53% of the population was rice farmers, and 23.4% of them were in poverty; and this number was 3 times higher than that of non-rice farmers (7.5%) (Do Kim Chung, 2009).

Farmers’ low income levels. Although profit rates of rice production was 35 – 45% (depending on each crop), the average income of farming household was still a low level (about 3 million VND/household/crop). Meanwhile, farmers had to pay many kinds of fees and contributions (28 items in 2007) for production (MARD, 2009). On the other hand, natural disasters and unusual weather that caused draughts, floods and storms, along with unsteady prices, created various difficulties to farmers, especially to rice producers.

Migration to the urban areas and other localities. Due to the low income, many labors from the countryside moved to urban areas to find jobs. 84.4% of rural households in Vietnam had their family members migrating to the urban areas or other localities for jobs (Union Association of Sciences and Technologies of Vietnam and CARE, 2006). Migration took young men away from the rural areas. In many villages, only the elderly and women stayed home. Also, migration people suffered economic and social risks.

2.3. The Rural Areas

Characteristics of rural development in Vietnam are as follows:

First, upgraded economic – social infrastructure, especially in irrigation, transportation and electricity systems. 525/536 rural districts are covered by the national grid, accounted for 97.95% of the total. Muong Te district (Lai Chau province) and other island districts where the national grid does not reach now enjoy electricity from diesel or on-spot small hydro-electric generators. Almost all communes (98.9% of the total) and households (93.34%) have access to the national grid.

Second, rapid development of housing construction in the rural areas. Many durable houses are built in the country-sides. Almost all temporary houses that are made from bamboo and palm leaves are replaced by tiled and concreted houses in the communes of Red River Delta, Mekong River Delta and the Centre,

Third, improved communication system. Up to 2006, 2,848 telephone central offices were set up in the country-sides. All of 64 provinces and cities were covered by optical cable. People in all communes have access to the telephone network, with the rate of one telephone for each 6.67 persons. 749 internet stations provided services for 80,000 subscribers in the rural areas. 7,920 literature post offices were under operation in 85.5% of the total communes (72% in 2001) (MARD, 2009).

Fourth, improvement of spiritual and material living standards.

On the other hand, Vietnam faces the following challenges during the process of rural development.

First, rapid growth of the population leads to a decrease in land area per head. This causes a danger to the national food security.

Agricultural population accounted for 75% of the total in 2005 and 73% in 2009. Average land area per head declined from 2,542 m2 in 1930 to 630 m2 in 2005 (Table 1). As a result, annual agricultural output level per head gradually decreased: from 431 kg per head in 2005 to 426 kg in 2006, 421 kg in 2007 and 410 kg in 2008.

Second, poor infrastructure system. Although official reports recognized the infrastructural improvement efforts, this system in many rural localities was backward and in bad condition.

Third, lack of a master plan for industrialization and modernization. This creates confusion in regards to rural architecture and contributes to a degraded environment and a high unemployment rate in rural areas during the process of industrialization and modernization.

Table 1: Rural Population and Average Land Area per Head in Vietnam


Rural population (million)

% of population (%)

Agriculral land surface/head (m2)





















Source: Data in 1930 – 2000 quoted from Do Kim Chung (2003); data in 2005 was taken from the Statistical Yearbooks.

3. Orientation for Policies in Agriculture, Rural Development and Farmers

3.1. Points of Views

To encourage agricultural and rural development, investment in agriculture should be separated into two parts: public investment and private investment. This division supports the Government in the way that it can focus its policies and interventions on the former where the private sector does not want and/or is incapable for investing in, for example infrastructure. Public investment should facilitate the private sector’s investment in agricultural production. Meanwhile, the Government should not interfere with the market. The private sector’s activities should be naturally regulated by the market mechanisms under the law of values.

3.2. Orientations for Policies

3.2.1. Orientation for Policies in Agricultural Development

The work of planning agriculture should be done first, followed by a plan on industrial and urban development. In this master plan, food security should be made absolutely stable for decades. This plan is the base for the development of agriculture and rural area.

Investments in agriculture should be enhanced, especially investments to create conditions for the private sector to increase their competitive capacity and help their entering into the market more efficient. Public investment in agriculture should concentrate on infrastructure, irrigation, transportation, plague and natural disaster control, research, agricultural encouragement, trade promotion and information providing.

Applying new technologies should be promoted in agricultural production, especially new technologies at a low price to increase efficiency and the competitive capacity of agriculture.

Renewing management mechanisms should be implemented. Roles of the Government and market mechanisms should be clearly separated.

3.2.2. Orientation for Policy in Farmer’s Issues

Knowledge and skills in operations in a market economy of farmers should be improved. Vocational training courses should be supplied to affected people whose land was recovered in the process of industrialization and urbanization. Works of agricultural encouragement, technological transfer as well as agricultural extension service should be promoted to raise competitive powers of agricultural products.

Each special region needs specific policies to enhance agricultural production, especially regions in the master plan of food security. Public investments should link closely to the work of poverty alleviation. Labor migration should be considered as a condition to economic growth and unemployment reductions in rural areas.

3.2.3. Orientation for Policy on Rural Development

To develop rural areas, it requires a combination of economic – social – environmental solutions. Economic solutions include upgrading rural infrastructure, providing information, applying technology to increase the capacity of competitiveness of agricultural products.

Social solutions include improving the social roles of rural households as well as their participation in social associations and social groups. A sectoral rural economy should be recognized and encouraged in which there are four sectors (households, farmers, business and landless labors) having equal opportunity to operate and develop together. Markets of labor, land and science – technology should be respected and developed in law.

Environment solutions are protecting and maintaining land, water and biological resources and managing environment in rural area.


· Do Kim Chung, 2002. From Agricultural Marketing to Food and Agricultural Product Marketing: Experiences of Asian Countries, Economic Studies, # 291, November, 2002.

· Do Kim Chung, 2000. Land Market in Agriculture in Vietnam: Reality and Orientation for Policy, Economic Studies, # 260, p. 21-31.

· Do Kim Chung, 2003. Rural Development for Poverty Reduction and Growth in Vietnam, Journal of Agriculture and Rural Development, MARD, Hanoi, p. 30-32.

· Do Kim Chung, 2008. Theory of Dual Economy in Rural Development: Experiences of China for Vietnam, Economic Studies, # 371, p. 46-50.

· Dang Kim Son, 2008. Food – Foodstuff Security: Some theoretical and Real Issues, Orientation for Policy in Vietnam, Journal of Agriculture and Rural Development, MARD, # 135, 2009.

· Ministry of Agriculture and Rural Development, Report on Biological Diversification, Hanoi.

· Ministry of Agriculture and Rural Development, 2009. Project on National Food Security to 2020, Hanoi.

· Nguyen Sinh Cuc, 2008. What to Do for a Sustainable Development in Three Parts of Agriculture in the Coming Time, Journey of the Centre Board of Propaganda and Education,, quote at 13h23 in 18 July 2008.

· The Union Association of Technology and Science of Vietnam and CARE, 2006. The Survey on Rural Migration.

Do Kim Chung