Agricultural production requires huge capital

A general director of a fruit export company, who attended the national conference on encouraging investment in agriculture in late July, affirmed that if businesses cannot earn money from many sources, they will not be able to exist with just agricultural production.

Meanwhile, a report of the Ministry of Planning and Investment (MPI) showed while the revenue of agricultural enterprises is on the rise, the total profit dropped by 60 percent in 2008-2016. 

The ministry also found that the number of unprofitable enterprises increased by 28 percent during the same period.

An analyst commented this is understandable, because agriculture production requires huge capital and long-term investments, while the risks are high because of uncertain markets and weak infrastructure. 

Regular traffic jams on roads and overloading at ports have become problems for enterprises.

He went on to say that the entire agriculture production value chain is still small because Vietnam has to spend dollars to import input materials. 

Nearly 100 percent of plant protection chemicals need to be imported. Agricultural machinery and solvents are also imported.

A representative of VinEco, a safe vegetable & fruit grower and supplier, admitted that the company has to import many things, including fertilizer and seeds, because made-in-Vietnam products cannot meet the standards. 

Animal feed producers confirm they have to import input materials to make products, while farmers say they need imported animal feed.

In principle, the state should encourage investors in the hi-tech agriculture sector by offering incentives. But the current policies are not encouraging. The limited land fund, for example, is hindering the development of large-scale production.

Nguyen Dang Quang, chair of Masan Group, said the land fund for agriculture is declining. To improve the productivity of large-scale farming, the State needs to think of solutions to develop the coastal water surface resources.

Vietnam has a long coastline, a big resource that needs to be exploited in a way to ensure sustainable development.

The lack of land fund and land fragmentation has been mentioned recently by analysts when talking about the obstacles to hi-tech agriculture production.

Ho Cao Huy Bao, managing director of La Fresh Da Lat, a vegetable and fruit exporter, said the company many times had to break contracts in the past because the materials provided by separate farming households were not big enough to fulfill orders and could not meet standards.

Though the company has signed contracts with farmers to provide outlets of products, developing material growing areas remains a big headache for the company.

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