Linkage - the "key" to sustainable development of agricultural value chains

Durian fruit is experiencing rapid growth in export turnover. Photo: ST

Horizontal and vertical linkages are still loose

In the first 8 months of 2024, agricultural, forestry and fishery production activities nationwide underwent bright performance, which are important growing promotion elements for the agricultural sector and affirming the fundamental role of the economy, meeting domestic consumption needs and serving exports. In particular, thanks to focusing on implementing the restructuring policy, the agricultural sector has maintained high growth (in 2023, it witnessed an increase of 3.83%, higher than the Government's assigned level). Many industry value chains have been formed and recorded outstanding development. Vietnamese agricultural products have been present in international markets, including demanding markets such as the US, EU, Japan, etc.

Speaking at the recent forum "Agricultural restructuring: Solutions for effective and sustainable development of agricultural value chains", Deputy Minister of Agriculture and Rural Development Phung Duc Tien affirmed recent outstanding results of agricultural exports along with trade promotion. In particular, the agricultural export market has continuously expanded, agricultural exports have shifted strongly to official channels and are present in over 200 countries and territories, ranking 2nd in Southeast Asia and 15th in the world. Many industry value chains have been formed and undergone outstanding performance with more and more penetration of Vietnamese agricultural products in international markets. In 2024, agricultural, forestry and fishery exports are expected to reach 55 - 56 billion USD. Of which, there are 11 groups of products with export turnover of 1 billion USD or more, 6 products with export turnover of over 3 billion USD.

According to the Deputy Minister of Agriculture and Rural Development, this result is partly due to the restructuring of the entire industry, associated with ensuring sustainable efficiency in the agricultural value chain. Forms of cooperation and production linkages according to the value chain are in accordance with the production characteristics of the region, sub-region and each locality to increase product value. Through linkages, many enterprises have established sustainable relationships between production and processing, creating stable raw material areas, associated with the requirements of ensuring food safety and hygiene criteria, traceability and building product brands.

Ms. Cao Xuan Thu Van, Chairwoman of the Vietnam Cooperative Alliance, said that currently, there are over 4,000 cooperatives participants in value chain linkages (accounting for nearly 13% of the total number of cooperatives).

“It can be said that in order to promote the consumption of agricultural products and to reinforce the value of Vietnamese agricultural products, the effective and sustainable development of the agricultural value chain is a vital issue in agricultural restructuring. This is to meet the international market that continues to expand for Vietnam with nearly 20 signed and negotiated free trade agreements, as well as to meet the needs of the domestic market with a population of more than 100 million people,” Ms. Cao Xuan Thu Van added.

However, according to the Chairman of the Vietnam Cooperative Alliance, the sustainable development of the agricultural value chain are facing certain challenges. In particular, the biggest limitation at present is that the linkage between actors in the same stage (horizontal linkage) as well as between stages (vertical linkage) in the value chain is still loose. In addition, the linkage between cooperatives and cooperatives in some product lines is only temporary instead sharing risks and benefits, so it has not yet achieved high sustainability. In general, the linkages in production and consumption are still unstable.

According to Ms. Cao Xuan Thu Van, in restructuring agriculture, in order to target the sustainable and effective value chain, Vietnamese agricultural must overcome these inherent limitations. Especially, it is necessary to have close linkages in production, processing and consumption. At the same time, it is necessary to strengthen and develop collective production organizations and vertical linkages between actors in the chain. In particular, given the trend of green agricultural product consumption in domestic and foreign markets, "greening" agriculture is not a burden but an opportunity. Therefore, actors in the chain must aim to apply new standards and adjust chain operations accordingly.

Shifting from “supply-oriented” to “demand-oriented”

Due to crucial role of sustainable development of agricultural value chains, experts believe that building brands and increasing added value for Vietnamese agricultural products plays vital role, requiring both strong support from State policies and intensive training and capacity building for cooperatives and agricultural enterprises. Therefore, sustainable development of agricultural value chains is not only a technical issue but also a long-term strategy to ensure sustainability for Vietnamese agriculture.

According to Mr. Nguyen Quoc My, advisor to An Binh High-Tech Agricultural Cooperative (Hiep Hoa, Bac Giang), in order for Vietnam's agricultural sector to “take off” in the spirit of Resolution No. 19-NQ/TW, with the actual conditions of newly-started cooperatives such as An Binh Cooperative, it is necessary to implement many synchronous solutions.

Basically, Vietnam's agriculture is still extensive agriculture, managed in the form of small-scale farming which is under high risks but low efficiency. Therefore, the current agricultural production development requires the cooperative model to gather land, labor, capital and many other resources, which is compatible to the district level and above and capable to focus on supporting and promoting production linkages. Cooperatives need to take advantage of State support resources to invest in processing machinery, packaging, and labels to increase competitiveness and enter demanding markets. Mr. Nguyen Quoc My also said that in order to develop the value chain and effectively apply high technology, cooperatives need to shift from "supply-oriented" production to "demand-oriented" production. Because for the same product, consumer needs in each market are different in terms of smell, taste, appearance, etc.

Sharing the same view, Mr. Nghiem Xuan Thuyen, Director of Han Thi Medicinal Herbs Cooperative (Bac Ninh province) expressed his hope that the authorities would create favorable conditions to support long-term land lease to stabilize production. In addition, it is necessary to deal with output products by supporting linking with businesses and the Cooperative Union, enhancing trade promotion to help bring the best products to consumers.

To develop an effective agricultural value chain and improve the competitiveness of Vietnamese agricultural products in the international market, Ms. Cao Xuan Thu Van said that amid current challenges such as climate change and international competition, finding comprehensive solutions to achieve the agricultural value chain target has become an urgent task. In particular, building close links between actors in the value chain from farmers, cooperatives to processing and exporting enterprises is one of the important solutions to achieve this goal.