Join IFAD and the Global Donor Platform for the launch of the report: The strategic role of the private sector in agriculture and rural development. Jonathan Mitchell (ODI), lead author of Platform Knowledge Piece 3 will be joined in his presentation via video by the authors of the Tanzania, Thailand and Vietnam country studies: Frédéric Kilcher, Wyn Ellis and Pham Thai Hung. A Question and Answer session will follow each discussion point.

1. The strategic role of the private sector in
agriculture and rural development
Platform Knowledge Piece 3 Launch : A case study of Vietnam
Pham Thai Hung,
With support from Le Thi Quynh Nga, Do Thu Trang
Wednesday 28th March 2012
International Fund for Agricultural Development, Rome
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2. Private sector responses: Rice
• Rice sector: 2nd world largest export; turning from hunger to
strong surplus in few years after Doi moi
• Rice in the Mekong: role of private sector
– Production: by 1.46 peasant hhs, 2/3 own less 0.8 ha
– Export: 80% by SOEs; around 55% is G2G contract
• Problems found
– Farmers: 2/3 is small-holders (either not profitable or even
‘lost’ if being net buyers of rice); 20% largest erned the most
– Exporters: limited to SOEs; over-reliant on G2G (low quality)
trade
– Knocked-in ‘low quality’ trap:
• Farmers: ‘mixed bag’ approach, lack of certified seeds
• Govt: create distortions; 3.8 million ha for rice?
• Other services providers: weak NAFEC
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3. Private sector responses:
Coffee
• Coffee sector: 2rd largest producer/exporter (of robusta) – from
almost zero at the Doi moi
• Coffee in CH: role of private sector
– Production: state farms collapse  private coffee growers (around
600 thousand peasant hhs); 90% own less than one ha
– Exporter: foreign-invested (40%) and around 200 small
processors selling to SOE exporters
• Problems found
– Unsustainable production: world highest yield due to intensive
fertilizing and underground watering
– Knock-in low quality:
• Farmers: sun dried processing by farmers  low quality; small
scale  lack of investment
• Other producers: low incentives as int’l buyers are happy to
buy these low quality coffee bean
• Almost no state interventions
• Ethnic minorities and the poorest tend to set aside
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4. Private sector responses:
Organic Vegetables
• OV sector: very new in Vietnam; perceived as potential
• OV in the Red River: role of private sector
– Production: pilots by INGOs; small scaled; production in
groups; PGS is the only certification process
– Trader/processors: few newly established private firms in
Hanoi; OV marts or few supermarkets
• Problems found
– Lack of legislation background; PGS is the only cerfication
– Constraits :
• Farmers: technical training; land fragmentation;
• Firms: poor awareness on OV
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5. Engagement of development
partners
• General discussion:
– Donors being pro-active in supporting development agenda of VN
– Predominance of Japan, WB, and ADB (70%) is a driving force
– Effective coordination is a big challenge
• Engament of donors in PSD and ARD:
– Mainly in ‘enabling’ environment: rural infrascture, legislation
reform toward better playfield for PSD, rural poverty reduction
interventions
– Few direct engagement in key agricultural sectors/products
(rice, coffee, seafood)
• Finding entry points for furture interventions:
– Vietnam as midle-income country  donors have revised
strategies
– Cross roads ahead
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6. Key messages for donors
• Rural economy growth: largely private sector led after major
agri liberalization; benefits generated were distributed unequally
• Major challenge
– Cheap food trap
– Government has ‘withrawn’ and remained unprepared for high
value agriculture
• Entry points for donors
– Pro-poor value chain on high quality agriculture products
– Revisiting agriculture structure e.g rice, coffee, aquaculture
– Capacity of service providers
– Climate change adaptation in agricultural production
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