Investment attraction in processing Agricultural products

​Prof. Dr. Nguyen Hong Son, Director of Vietnam Academy of Agricultural Sciences, former Director of Department of Crop Production (Ministry of Agriculture and Rural Development)

According to Prof. Dr. Nguyen Hong Son, Dong Nai is an area with many advantages in land, transportation and close to seaports, which attracts many businesses to invest, including agriculture. The strength of the locality is industrial trees and fruit trees, therefore it is necessary to attract businesses to invest in processing these items.

Growing according to market signals

*For many years, many agricultural products have been trapped in the falling season, many programs to "rescue" agricultural products have been implemented. According to you, which is the cause of this agricultural products “rescue” situation?

- We quite abuse the word "rescue" because of the fact that the agricultural product stagnation happens only locally, not too often. The reason for this situation is that our agricultural output has increased rapidly. Particularly for the average area of vegetables and fruits increased by 4.2%/year, but production increased 9.2%/year. On the other hand, vegetables and fruits are very seasonal.

Meanwhile, our production relationship is slow to change, especially in affiliated organizations, production is still on a fragmentary and small basis; Farmers only have land, resources, and seeing other people effectively invest in planting, they have little thought about where to sell the products after harvest completion. In order not to fall in prices devaluation and inventory when the harvest season is fruitful, farmers have to think about joining a chain to obtain a sustainable output.

* So according to you, what should be done to prevent agricultural products from "calling for help"?

- The State has a plan for the development of crops, but farmers do not care and see what can be planted. Production is not based on market demand, which is a very weak point of farmers. Each region, each locality needs to orient planning and farmers need to respect that plan because it is calculated on a scientific basis.

Over 80% of Vietnamese vegetables and fruits are still exported to China and this market often has administrative orders not under the trade agreement between the two countries. For example, China and Vietnam have 5 border gates, but one day they only open one, which is also the cause of accumulation of agricultural products. The solution is that we have to build bonded warehouses at the border so that when congestion occurs, businesses have a place to temporarily store goods. In addition, enterprises have to change the export direction according to official channels, avoiding the situation that agricultural exports are always under the "truss", easily under price pressure.

Finally, the State should have policies to support the transportation and circulation to reduce the cost of agricultural exports. Vietnam has advantages in terms of waterway and sea, but currently water transport is very poor, so most of its exports rely on road, which makes team costs high, less competitive in price.

* Export of agricultural products in general, fresh vegetables and fruits in particular are facing difficulties because of the influence of Covid - 19 epidemic, what is your opinion on this matter?

-In the first time, the export of agricultural products, especially fresh products to China was temporarily delayed due to the influence of the Covid-19 epidemic, but it gradually recovered. However, being overly reliant on one market is risky. In the future, we must make efforts to expand more export markets.

Domestic consumers are currently very interested in safe food through their willingness to pay high prices for imported vegetables and fruits. Enterprises are rushing to open export markets and seem to pay little attention to the domestic market. Enterprises should pay more attention to the domestic market and have a strategy in propagating and promoting high-quality agricultural products so that consumers can change their perception that domestic products are less safe than imported products to accumulate. polar support for domestic agricultural products.

Focusing on processing industrial investment

Dong Nai focuses on attracting businesses to invest in agricultural product processing. Photo: Processing dried fruit at Hung Phat Trading and Production Co., Ltd. (Binh Loc commune, Long Khanh city)

*Currently, vegetables and fruits are mainly exported fresh, so output is still uncertain. What solutions should be applied for sustainable development in these industries?

- The State focuses on calling for production links, forming concentrated production areas to manage output. But currently, building relation between businesses and farmers still faces many shortcomings, the contract is easily broken. Many businesses want to invest in agriculture, but then they withdraw because of weak linkages and high investment risks.

In which, investment in processing is a breakthrough for the sustainable development of agricultural products in general, vegetables and fruits in particular. The State issued many policies, especially policies to attract businesses to invest in the processing sector through the support of infrastructure, taxes, production premises ...

* What is your opinion about Vietnam's investment in processing currently?

In terms of technology, most of the processing lines, especially deep processing, we all import from advanced countries with modern technology, so we do not worry about being inferior.

The difficulty is that the processing industry of Vietnam is mainly small and medium-sized enterprises, with a capacity of only 800 thousand tons of fresh/year. Most of the processing factories are not operating at full capacity due to the seasonal nature of vegetables and fruits. Recently, some large corporations and enterprises investing in processing have increased their processing capacity, but this number is still very low compared to the total output of fresh fruits and vegetables nationwide. For agricultural sustainable development, I think the State must continue to attract investment in processing.

* What solution to boost investment in processing?

- Processing factories need to continue to be invested to expand; Besides, it is necessary to have solutions for factories to operate more efficiently. In small and scattered production, enterprises investing in processing factories must calculate near raw material areas to reduce input costs. Processing must be able to diversify types, but also to select and focus on items with the advantage of both having a market but with a wide production season. Do not choose products that are only harvested in a short time of the year, resulting in low operating capacity, high maintenance costs and high depreciation of machinery and equipment. Another essential factor is investment in preservation areas and storage of raw materials for processing to overcome the seasonal nature of agricultural products.

*Thank you Sir!

Nam Vu (performed)