Investment in agriculture fails to match sector’s potential

Agricultural exports help reduce the trade deficit, National Assembly Science, Technology and Environment Committee vice chairman Nguyen Dang Vang told reporters.

The public cannot help but worry about the agriculture sector after hearing about the need to import grass. What is the truth?

It is true that Viet Nam has to import grass, but it’s not fair to say this has become a societal concern.

The agriculture sector currently has to import between US$1.7 billion and $2 billion worth of animal feed each year. This is one of the products that the country cannot produce domestically.

Many Asian countries also have to import soya beans from the US because they can not grow it themselves. Similarly, Viet Nam has to import grass, but this is not normal grass because it has a 20 per cent concentration of protein which is good feed for a special type of dairy cow. This type of grass helps dairy cows produce much more milk than they could by eating domestic feed. However, the project to import grass is only a pilot and the total value is only a few hundred thousand US dollars, which is not as expensive as importing a car.

You have said the agriculture sector has helped reduce the trade deficit. Could you elaborate on this?

The agriculture sector imports about $14 billion in value each year while its annual trade surplus is around $6 billion. One could say that agriculture is a unique sector which has a trade surplus and contributes to the balance of trade.

What worries you most about the agriculture sector?

My biggest concern is that investment in agriculture has yet to match its potential. Although annual Government reports show a recognition of the shortcomings, they failed to put forth concrete figures so it is difficult to see how deeply the Government is aware of the problem.

Last year, agricultural investment was equal to 6.26 per cent of the total investment in the society. The figures were 6.45 per cent, 7.50 per cent and 13.85 per cent in 2008, 2005 and 2000 respectively. I am afraid that the ratio will further decrease which will adversely impact the agriculture sector.

We also found that foreign direct investment (FDI) companies had invested only 0.58 per cent of their total investment in agriculture last year and 0.32 per cent in 2008. The ratio was 2.3 per cent from 1988-2009 while agriculture made up 27.7 per cent of the economic structure. These figures constitute a clear proof that agriculture has yet to attract either foreign or local investors and even policy makers. This is worth worrying about.

What will happen if the situation continues?

Growth of the agriculture sector is slow, with its peak hitting only 4.5 per cent in a good year. The growth of industry, meanwhile, is three times higher. As a result, the agriculture sector receives less investment because policy makers do not believe it helps the country become rich. In my opinion, they should not continue to think this way. The country cannot pursue sustainable development if it does not invest properly in agriculture.

In the Republic of Korea, for instance, the country is interested in developing agriculture to keep its growth relatively sustainable. Their agriculture extension programme invests $850 per ha while Viet Nam only invests $1. Through this example, I would like to suggest the Government to discontinue decreasing investment in the agriculture sector and in turn raise investment next year.

- VNS

Tags: Vietnam agriculture