agricultural development

Vietnam’s new policy framework toward more sustainable and market-led agricultural development

The past reforms and agricultural growth in Vietnam have resulted in new challenges. Agricultural policies have been primarily geared toward expanding output to meet food security, economic growth, and trade targets. This direction has encouraged land expansion and intensification and more intensive use of inputs and other means to raise productivity. The ubiquity of the small farm has led to a fragmented production structure, and to high transaction costs (lack of collective action) both in provision of technical advice on sustainable practices and in monitoring farmer compliance with regulatory or private standards. However, gradual consolidation of commercial agriculture is increasingly responsible for aquaculture, livestock, and rice production (World Bank 2016).

A new vision and plan have been developed to address challenges with diversification, sustainability, quality, and value added of products, technological and institutional innovation, and climate change. The plan places greater emphasis on sustainable development, market-led and consumer-driven agriculture, and a shifting role for the government from being the primary investor or service provider to being the facilitator of investments and services provided by the private sector, community organizations, research institutions, commercial banks, and others (World Bank 2015). To attract more investment to the sector, the government has also issued a series of policies to offer incentives to both foreign and domestic investors in the form of financial support (tax exemption, preferential credit, trade promotion, and other policies) to support land access and farming contracts or to reduce postharvest losses. Foreign direct investment in agriculture has remained limited (1 percent of the total foreign direct investment registered) despite the policies set in place (Diem and Thuy 2019).

agriculture, training programs for extension agents and farmers, and research programs on diverse aspects of sustainability (World Bank 2018a). Relatively more food insecure countries, such as Cambodia, Lao PDR, Myanmar, and the Philippines, largely emphasize productivity increases but with a limited environmental footprint. This overall change toward sustainability needs to continue and deepen to also encompass zoonoses management and food safety if the countries’ agri-food systems are to cope with the challenges and respond to new opportunities.

Knowledge intensity is a cross-cutting theme in agri-food system development in developing East Asia. Agriculture 4.0, smart agriculture, high-tech agriculture, and an innovation-driven economy are featured in countries’ policy and strategy papers targeting productivity, value added, sustainability, and safety of agriculture.4 Knowledge intensity has become an overarching element of innovation, whether innovations concern adoption of new agronomic practices or rely more on scientific endeavors. For instance, adoption of simple, environmentally friendly agronomic practices (such as most climate-smart agriculture) requires more than basic skills in literacy. The application of these practices tends to be fairly knowledge intensive, putting strains on the capacity of extension services and farmers alike. use of precision agriculture tools and even e-services also requires more from the service providers and farmers. use of biotechnology relies on high science, technology, and innovation (STI) skills. Knowledge accumulation also plays a crucial role in AIS, as illustrated in the AIS framework (figure 3.1) (Fuglie et al. 2020).

A successful transition to a knowledge- and innovation-driven agri-food system requires greater innovation capacity across the agri-food spectrum,

including higher farmer education levels (see the section titled “Innovation capacity and skills for long-term sustainability” in this chapter). Better educated and trained farmers are more likely to make successful changes to farm practices and be more innovative (Foster and Rosenzweig 2010; Labarthe and Laurent 2009). Today, the farmers in many of the region’s developing MICs (for example, China, Malaysia, Thailand, and Vietnam) are aging and have less education than younger generations, constraining the agri-food sector’s ability to innovate and transform. Different contexts, however, require different approaches to farmer education. Extension, including e-extension services (along with improved basic education), may be in the best position to improve smallholders’ knowledge of, for example, climate-smart agriculture approaches. However, in the transition-urbanizing contexts, greater emphasis on technical and vocational education and training-level approaches may be warranted. For instance, the share of farmers with basic and full training has gradually increased in the European union.5 In the netherlands, most farmers already have either basic (64.6 percent in 2010) or full (6.6 percent) training in agriculture, reflecting the importance and sophistication of the agri-food sector (exports of more than $90 billion in 2018). In East Asia, the Republic of Korea, for instance, has increased the education level of its farmers (OECD 2018b).6

Moving up the innovation ladder requires that greater importance be placed on coordination and governance of AIS as part of economywide national innovation system (nIS) governance. Well-functioning innovation systems critically depend on how well governments can bring together and coordinate the activities of the various actors and stakeholders fundamental to advancing STI policies in various sectors of the economy. The integration of the AIS into overall governance of the nIS ensures better use of public funds and increased efficiency as well as attention to cross-cutting STI policies. As the maturity of AIS and its governance increases, so do the requirements for monitoring and evaluation to assess the impact of different policies and instruments. Box 6.2 discusses the evolution of AIS governance arrangements in many agriculture-based countries as a response to better understanding agricultural innovation and its importance for the sector and dependency on the wider economy and overall STI policies (see the section titled “Better resource use and innovation outcomes from stronger governance of AIS” in this chapter).

The jump from being a technology adopter or innovator country to being an inventor at the technological frontier can be challenging. Overall, investment remains the single most important determinant of exceptional long-term economic growth;7 however, it should be channeled to new areas and backed by improvements in governance, education, and infrastructure (EBRD 2018). The AIS must also encompass actors and visionaries capable of such strategic decisionmaking and coordination. For instance, the netherlands—historically, a prominent producer and exporter of horticultural products—has built on its strong base in horticulture and gradually shifted toward innovation and higher-value-added products with greater profit margins8 (Dons and Bino 2008). Chile, an upper MIC, is undergoing such a transition process from being a successful technology adopter to being an inventor by strengthening its innovation capacity and AIS, including leadership among public and private sectors, and financing of diverse and strategically appropriate AIS (box 6.3). Thus, there is no one-size-fits-all policy mix for agri-food system transformation. However, developing East Asian countries with strong AIS capacity, national strategic leadership, capable governance, and available financing may be able to make such a transition.