New momentum generated by the policy
When Vietnam began entering the transition period from the subsidy to the market mechanism, provincial officials often went to Hanoi to meet with central leaders whenever their provinces faced difficulties.
I asked many of them whether they could ask for a lot of money each time they went to Hanoi. All of them told me that they did not go to Hanoi to ask for money but to expand the mechanism because good mechanisms could create money.
This is very practical thinking. Renovation must emphasize policies and institutions to generate new momentum, from which immediate economic benefits are created. It is needed to put people at the center, not money.
As analyzed above, this period of time needed the innovation of three policy groups, including land policy for farmers, policies on access to large credit for businesses, and policies for developing hi-tech for enterprises.
At the same time, we need to have guidebooks on setting up sustainable economic cooperation between enterprises and farmers, which require the assistance of the Farmers’ Association and the Chamber of Commerce and Industry of Vietnam in the process of setting up cooperation.
We need to have enterprises specializing in high-tech agriculture. The cooperation process will raise awareness among farming households, towards building professional farmer households and developing large-scale agricultural production.
Land policies should be adjusted to erase the agricultural land use deadline and land limit for farmers. If we can abandon these two things, the price of agricultural land will increase, i.e. the higher value of assets of farmers, the higher value of the country’s land property, and the ability of agricultural land capitalization will be more effective for development investment.
Besides, the farmers who want to develop large-scale farming will be no longer afraid that the State will revoke their land when the land use deadline comes; thus they dare to invest in the land for the long term. Certainly, this policy will be a great motivation for the development of large-scale agriculture.
In fact, today we cannot manage land limits when a person can have land in many different provinces. As land management has been assigned to local governments, nobody knows the total area of land that one person owns if the land is located in different locations. Thus, the land limit policy is ineffective.
It is more important that land limits are constraining the accumulation of land for large-scale agricultural production. The land limit policy was set in order to prevent the birth of the new landlord class. But to do this, we can implement many other policies such as taxation, not necessarily use the land limit policy.
For the agricultural land use time, the law has extended the duration to 50 years. It is important to answer the question that when the deadline comes, what will the state do? Of course, the answer in the Land Law is that the state will prolong the duration if the farmers want to keep using the land and they have used the land effectively and have not violated the land law.
In fact, in 2013 when the 20 year duration of using agricultural land came, the State granted the next 50-year duration to all farmers, including those who left their land fallow.
Thus, setting a time limit was for nothing. The policies should be changed towards allowing farmers to use agricultural and forest land and land for aquaculture and salt making without time limits like housing land. Besides, high tax rates would be imposed on the agricultural land that is left fallow. Tax income may not be much but the tax policy also aims to encourage investment and development.
Besides the two aforementioned policies, we must check the land that is ineffectively and wrongly used by state-owned farms and firms.
These businesses are holding up to 2.6 million hectares of agricultural land across the country, but most of the land is not effectively managed and used. In many cases, the land is used for wrong purposes while local farmers lacking land for agricultural production, resulting in land conflict.
For enterprises, the State should have specific policies on access to preferential credit and tax incentives for businesses to cooperate with farmers to invest in large-scale agricultural production. Agribank - a commercial state bank - should change its credit policy toward expanding preferential credit for businesses to work with farmers to implement agricultural development projects, especially start-up businesses in the field of high-tech agriculture.
Regarding technological development policy for agriculture, linkages with scientific research institutes in the country and foreign-invested firms are a highly effective solution.
The Ministry of Science and Technology should grant more funding for research projects for hi-tech agriculture, focusing on specific projects that are being implemented at the local level. Tax exemption for the enterprises using high-tech applications in agriculture is also needed.
Production partnerships between strong businesses and farmer communities has the highest rationality, in which farmers still have land and still work on their land while businesses provide input services, production procedures and ensure the output. This model always creates equitable benefits for both parties. The farmers have higher incomes compared to the self-production model.
The partnership based on the model in which businesses rent land and hire farmers to work on the land can also be effective if the risks of increasing land rent over time is hindered. This model also ensures direct benefits to farmers during the collaboration process.
In the first step of cooperation between enterprises and farmers, let’s focus on the benefit-sharing mechanism, not the risk-sharing mechanism. The first mechanism should be applied in the first stage of cooperation when the farmers contributing capital by the land use right is still unfeasible, and when farmers do not have the conditions to supervise the entire business process of enterprises. The later mechanism in which both parties share benefits and risks would be applied in the next phase of cooperation, when farmers become more professional.
In any model of cooperation between enterprises and farmers, local governments play a helping role, creating a favorable environment for cooperation and they must not intervene by setting administrative orders, and especially must not be on the side of interest groupsof businesses.
The State should focus on reforming the land policy to create new momentum for farmers. Removing the land use time and land limits in agricultural land will be the key to generate new momentum for developing large-scale and modern agriculture in the current period, especially guaranteeing better conditions for farmers’ cooperation with enterprises.
Prof. Dr. Dang Hung Vo