Vietnam: Sustainable Farming Increases Productivity and Improves the Environment

Challenge

Since the introduction of economic reforms under “Doi Moi” in 1986, Vietnam’s agriculture has made impressive progress. Nevertheless, problems of quality and food safety remain--resulting in low export prices and concerns among domestic consumers. At the time of the launch of the ACP in 2008, productivity growth was decelerating and there was a decline in real expenditures in agricultural research and extension.

While the Government of Vietnam has traditionally played a major role in supporting smallholder agriculture, it has little experience facilitating private sector participation including linking up with small farmers, contracting and buying farm produce from farmers, and sharing of advanced technologies. Also, smallholders could no longer rely only on public infrastructure and public services to remain competitive. Partnering with private companies would be crucial to help them understand and meet new and emerging market requirements.

Approach

The ACP aimed to strengthen the competitiveness of smallholder farmers in the select project provinces through strengthening agricultural technology, fostering the establishment of farmers’ organizations and their linkages to agri-businesses, and provision of critical public infrastructure.

The project used a decentralized participatory approach which allowed strong local ownership, flexibility, location-specific areas of focus and scope for the spread of innovative solutions. It also provided an opportunity for smaller companies and farmers in less developed areas to accelerate growth.

Recognizing the potential challenges of introducing various new concepts, the project followed a phased approach, which started in four provinces in the first two years. Lessons learned from initial project implementation in these provinces helped inform and accelerate implementation in the second set of four provinces.

The project selected an open menu of commodities, technologies and value chains for support. A ‘let the market pick the winner’ approach allowed a variety of demand- and market-driven activities to be included and provided opportunities for smaller stakeholders to gain support while being able to avoid picking the wrong partners.

Results

The project helped strengthen the competitiveness of smallholder farmers with the following key areas:

• A total of 154 technology extension packages were implemented. More than 93,400 farmers were trained on modern technologies – mostly in sustainable farming. On average, where the technologies were applied, the farmers realized a 17 percent increase in yield and a 22 percent increase in the value of sales.
• In Can Tho, greenhouse gas emissions were measured in collaboration with Can Tho University. The results showed that in the rice farms adopting the new technology, greenhouse gas emission was reduced up to 60 to 90 percent.
• The project successfully established 98 demand-driven productive partnerships between farmer organizations and agribusiness companies. Thanks to higher quality and lower transaction cost, participating farmers realized a 10 percent increase in price and almost 20 percent increase in total sales value.
• More than 95,000 farmers benefited from upgraded infrastructure, of which the large proportion was rural/market access roads. These investments resulted in reductions in post-harvest losses, transportation time and transportation costs by 31, 20, and 29 percent respectively.

Bank Group Contribution

IDA financing totaling $59.8 million was provided to strengthen the competitiveness of smallholder farmers through the enhancement of agricultural technology, fostering of farmers’ organizations and their linkages to agribusinesses, and provision of critical public infrastructure.  

Partners

An IDA credit of $59.8 million was complemented by $3.1 million from the Canadian International Development Agency, $16.5 million from private funds and $3.5 million from the Government of Vietnam.

The project facilitated strong partnerships among farmers’ organizations and agri-business companies and also involved international and local research agencies such as the International Rice Research Institute (IRRI) and Can Tho University in providing technical support for farmers.

Moving Forward

The experiences and lessons from the ACP contributed to the conceptualization of the  Agricultural Restructuring Plan submitted by the Minister of Agriculture and Rural Development and approved by the Prime Minister in 2013.

The ACP experience played a significant role in the design of the Vietnam Sustainable Agricultural Transformation Project, including lessons pertaining to geographical focus, value chain focus, ways to ensure greater synergies among interventions, the roles of public officials in facilitating longer term farmer group—agribusiness relationships, and the need to better link ACP-type interventions with the products and outreach of the commercial banking sector.