Land tenure Institutions

Land Reform Bulletin: 1996
Réforme agraire: 1996
Reforma Agraria: 1996

Tenurial Reforms and Agricultural Development in Viet Nam, Part Two

T. Haque
Director, Centre for Asian Studies
National Institute of Rural Development
Rajendranagar, Hyderabad 500 030, Pakistan

L. Montesi
Senior Officer, Rural Development Organizations
FAO Rural Development Division, Rome

< to Part One

Contents

Part Two

Impact of tenurial reforms on land-use efficiency and agricultural productivity

Improvement in land-use efficiency

The tenurial reforms involving a shift from the collectivized farming system to individual household-based farming, with long-term land-use rights, resulted in more intensive use of land. The intensity of land-use increased, from 140 percent in 1985 to 158 percent in 1993, in the case of annual cropland, but the intensity of land-use marginally declined overall, from 89.1 percent in 1985 to 84.6 percent in 1993, partly owing to newly reclaimed land not being put to use. The available data (FAO, 1994b) show that there has been a marginal shift in land-use patterns in recent years. The proportion of land used for annual crops declined from 17.0 percent in 1985 to 16.6 percent in 1992, while that for perennial crops increased from 2.4 percent in 1985 to 3.6 percent in 1992. The water surface used for aquaculture also increased from 0.5 percent in 1985 to 0.9 percent in 1992, but the proportion of land under forestry remained more or less constant at 29.1 percent. However, the area of wasteland declined marginally from 14.8 million hectares (44.8 percent) in 1985 to 14.2 million hectares (42.9 percent) in 1992. Nearly 0.6 million hectares of land were reclaimed during this period. It has been estimated that another 4.1 million hectares of wasteland could be used as vegetative cover, while only about 1.3 million hectares of such reclaimed land would be fit for cultivation.

Change in cropping patterns and the trend towards agricultural diversification

Cropping patterns are generally determined by agroclimatic factors such as soil conditions, topography, rainfall and temperature and, therefore, change slowly in response to a favourable market and tenurial environment.

Recent data (FAO, 1994b) show that the reform measures have also helped to change the cropping patterns in favour of certain tradeables, such as rice, rubber and coffee, which have large export potentials. The area under rice increased from 5.7 million hectares in the early 1980s to 6.4 million hectares in 1992, thereby raising the proportion of the rice area from 75 percent in 1981 to 76 percent in 1992. In recent years, there has also been a seasonal shift in the area under rice. While the area under winter rice declined from 3.1 million hectares in 1985 to 2.6 million hectares in 1992, the area under spring rice increased from 1.8 million hectares in 1985 to 2.6 million hectares in 1992, and that of autumn rice from 0.9 million hectares in 1985 to 1.4 million hectares in 1992. Since the average yields of both spring rice (3.9 tonnes per hectare) and autumn rice (3.6 tonnes per hectare) are higher than that of winter rice (2.9 tonnes per hectare), the seasonal shift in the area has resulted in increased rice output. In addition, there has been a significant increase in the area under industrial/commercial crops including rubber, coffee, tea, coconut, mulberry, fruits and vegetables, while the area under inferior crops such as cassava and sweet potato has declined.

The growth of agricultural production

The liberalization of productive forces through tenurial and market reforms in recent years has resulted in an impressive growth of agricultural output, transforming Viet Nam from a food-deficit country into a food-surplus country. Rice production increased from 12 million tonnes in 1981 to 22 million tonnes in 1992 and the country is now exporting 2 million tonnes of rice per year. Assuming 1979­81 as the base, the index of agricultural production and that of per caput food output rose to 178 and 125, respectively. Table 2 shows the changes in crop outputs. Assuming 1979­81 as the base, the index of the volume of agricultural exports increased to 882 in 1991, although the index of the value of agricultural exports rose less sharply to 576, owing to a decline in the unit value of agricultural exports.

TABLE 2 - Trends in output of major crops
Output of crops (in million tonnes)
Crop1976 19811982 19851987 19921993
Paddy rice11.812.4 14.415.915.1 21.621.9
Maize0.40.4 0.40.60.6 0.70.8
Total cereals12.2 12.814.8 16.515.722.3 22.7
Roots and tubers3.66.0 5.74.95.1 5.45.3
Fruits2.02.7 2.93.43.7 4.2NR
VegetablesNR2.2 NR2.32.9 3.3NR
Tea0.020.02 0.030.030.03 0.04NR
Coffee0.010.01 0.010.020.03 0.07NR
Tobacco0.020.02 0.020.040.03 0.030.03
Rubber0.040.04 0.050.050.05 0.070.07
Index of agriculture production (base = 1979-81 = 100) 88105116 130136178 182
NR: Not recorded

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Areas of concern for sustainable agricultural development

In spite of the impressive growth of agricultural outputs in the post-reform era, there are some major areas of concern from the point of view of sustainable agricultural development.

Yields of rice are low in many regions

Although the average yield of rice in Viet Nam increased from 3.4 tonnes per hectare in 1981 to 3.6 tonnes per hectare in 1992, the yield levels continue to be low (less than 3 tonnes per hectare) in the North Mountain, Mid Land and Central Highland regions, on the central coast of North Land and in the northeast of South Land (Table 3). In fact, during 1985 to 1992, there has been a decline in the rice yields in the provinces of Dong Nai, Tay Ninh and TP Ho Chi Minh in the northeast of South Land and Cao Bang, Lai Chau, Bac Thai, Son La and Hoa Binh provinces in the North Mountain region. It is therefore necessary to identify the main constraints to productivity growth in rice and adopt remedial measures to improve the yield levels in these regions and provinces at least to the level of An Giang (4.3 tonnes per hectare) which is the highest-yielding and major rice exporting province in the country.

Region Province Area ('000 ha) Yield (tonnes/ha)
1985 19921985 1992
North Mountain 437.0479.82.24 2.26
Ha Giang 67.4 31.0 2.432.22
Tuyen Quang- 40.0-2.56
Cao Bang36.4 30.42.532.14
Lang Son45.2 43.72.272.28
Lai Chau41.7 47.81.981.95
Lao Cai 70.6 32.3 2.312.14
Yen Bai- 38.2-2.34
Bac Thai77.0 77.12.392.34
Son La55.9 48.41.551.52
Hoa Binh44.4 46.22.312.25
Quang Ninh42.8 45.2-2.74
Mid Land304.5 330.62.35 2.80
Vinh Phu124.8 144.42.602.78
Ha Bac197.7 186.22.182.83
Red River Delta 1 051.81Ê024.7 2.494.00
Hanoi120.5 56.33.043.12
Hai Phong90.1 94.13.513.69
Hai Tay 115.1 165.92.353.71
(159.1)
Hai Hung235.4 238.33.183.90
Thai Binh 157.7 166.93.454.95
Nam Hainh 288.6 229.0 2.584.12
Ninh Binh- 74.2-3.52
Northeast of South Land 296.4326.9 2.582.27
Dong Nai77.6 61.63.112.62
Song Be59.1 60.11.912.02
Tay Ninh87.0 104.22.121.93
TP Ho Chi Minh 72.7 80.8 3.102.56
Ba Ria Vung Tau- 20.2-2.65
Mekong River Delta 2 250.82 924.7 3.053.74
Long An204.1 331.12.692.53
Tien Giang201.3 256.33.954.15
Ben Tre125.1 104.33.373.20
Dong Thap212.7 304.43.044.40
Vinh Long 267.2 169.5 3.034.11
Tra Vinh- 179.3-3.16
Can Tho 480.2 339.4 3.094.02
Soc Trang- 242.8-3.40
An Giang263.2 256.83.204.27
Kien Giang250.1 318.42.663.19
Minh Hai246.9 322.42.603.51
Central coast of North Land 708.2687.5 2.132.58
Thanh Hoa250.8 246.52.632.71
Nghe An 305.4 190.8 2.212.43
Ha Tinh- 109.3-2.29
Quang Binh 152.0 48.0 1.122.50
Quang Tri - 42.2-2.67
Thua Thien Hue- 50.2-3.06
Central coast of South Land 496.6522.2 3.243.02
Q Nam -Da Nang124.0 124.43.332.86
Quang Ngai 201.8 91.6 2.932.24
Binh Dimh- 122.9-2.98
Phu Yen96.1 60.5 3.884.30
Khanh Hoa- 36.5-3.43
Ninh Thuan 74.7 28.3 3.123.93
Binh Thuan- 58.0-2.99
Central Highlands 157.6179.5 2.202.39
Gia Lai 80.1 56.3 1.781.97
Kon Tum- 17.4-2.22
Dac Lac50.0 70.82.722.75
Lam Dong27.5 35.02.452.11
Source: Government of Viet Nam, 1994a

Overall declining trend in crop yields in recent years

It can be seen from Table 4 that the negative yield trends of the pre­reform era (prior to 1981) have been reversed in the post-reform period but the growth rates of yields of most of the crops during 1985 to 1992 remained lower as compared to those in the period from 1981 to 1985. It seems that the yield potentials were largely realized during the first phase of reform (1981 to 1983), when an output contract system was operating. Any further sustenance of the growth rates of crop yields required further improvement in technological and infrastructural facilities as well as improved delivery systems for inputs and services. The yields of coffee and rubber, however, increased at higher rates during 1987 to 1992 as compared to the earlier periods, which reflects the positive impact of the recent allocation of lands to individual households on a contract basis by state farms that are responsible for the cultivation of plantation crops.

TABLE 4 - Compound growth rates of crop yields 1981­1992
Period Growth rates
Rice MaizeSugar cane RubberCoffee Tea
1976­810.0-1.7 -2.1-0.8-5.0 1.3
1981­856.28.1 1.9-14.75.0 3.9
1985­922.80.9 1.40.511.0 -1.8
1987­924.72.7 1.42.315.6 2.3

Sustaining the changes in factor productivity

Assuming 1981 as the base, the index of total factor productivity in crop cultivation increased to 110 in 1984 and 1985 and then showed declining trends to 106 in 1986, 105 in 1987 and 104 in 1988. However, presumably under the impact of tenurial changes and other policy reforms during 1988­89, the index of total factor productivity rose again to 114.7 in 1989 and 114.1 in 1992 (Table 5). An appropriate strategy and policy package is needed to sustain the rising trend in factor productivity which is crucial for sustainable agricultural development.

TABLE 5 - Changes in the index of total factor productivity in crop cultivation
Year Index of output Index of input Index of total factor productivity
197693.290.7 102.8
1981100.0100.0 100.0
1982112.3102.8 109.2
1983113.8104.9 108.5
1984120.0108.7 110.4
1985123.3112.1 110.0
1986127.0119.6 106.2
1987124.0118.0 105.1
1988133.4127.7 104.5
1989143.8125.4 114.7
1990145.3129.3 112.4
1991150.7140.0 107.6
1992164.9144.5 114.1

Slow growth in use of modern inputs

Although the stagnating trend in the use of modern inputs of the pre­reform era has been reversed, the growth of use of modern inputs continues to be slow. It has been estimated that the annual compound growth rate of irrigated areas declined from 1.4 percent during 1981 to 1988 to 0.4 percent during 1988 to 1992. The proportion of total irrigated area increased only marginally from 25.1 percent in 1981 to 29.0 percent in 1992. The use of chemical fertilizers increased from 33.3 kg per hectare in 1981 to 116.5 kg per hectare in 1991, but the compound growth rate of fertilizer consumption declined from 21.8 percent during 1981 to 1988 to 4.8 percent during 1989 to 1992.

Decline in the growth of livestock output

Although the overall growth rate of livestock output during the post­reform period (1981 to 1992) appears to be quite impressive, there has been a decline in the growth rate of livestock output in recent years. The annual compound growth rate of pig meat output declined from 9.0 percent during 1981 to 1985 to 2.4 percent during 1988 to 1992, while that of poultry meat declined from 2.3 percent during 1981 to 1985 to 1.0 percent during 1988 to 1992.

Need for further reforms in infrastructure, institutions and policy environment

While there is a need for further improvement in land-use efficiency through tenurial reforms and the abolition of restrictive land-use laws which prevent the farmers from adopting the most profitable combination of cropping system, livestock, aquaculture and forestry according to agroclimatic suitability and market potential, a wide range of other technological, infrastructural and organizational measures are also necessary for ensuring the viability and sustainability of small farms and market-oriented agricultural development in Viet Nam.

In spite of the recent policy of encouraging private business, farmers continue to depend largely on state enterprises and cooperatives for various material inputs and services. However, the results of an extensive survey by MAFI carried out within the context of TCP/VIE/2358 (MAFI, 1994) show that a majority of farmers are not satisfied with the quality of inputs and services rendered by these enterprises. In addition, the marketing cost of these organizations appears to be on the high side. Unfortunately, private enterprise is unlikely to emerge as an alternative and competitive form of organization in the near future (owing to various constraints). What is therefore needed is the identification of successful cooperatives among the existing ones and their assistance in emerging as viable independent agribusiness centres. These successful centres could then be extended to other areas to replace inefficient cooperatives. The roles and functions of cooperatives and farmers' unions need to be redefined and reoriented to meet the needs of the emerging market-oriented economy, without having any interim adverse impact on agricultural production, equity and the environment in the transition period.

At present, farmers and agribusiness organizations face acute shortages of institutional credit facilities. In fact, according to the survey result (MAFI, 1994), nearly 72.3 percent of farmers faced shortage of capital and about 70 percent reported high input and service costs as one of the major constraints in farming. Moreover, a substantial proportion of farmers feel that the bank rate of interest is so high that it discourages them from borrowing. It is therefore desirable that farmers' self­help groups, as well as credit fund organizations on the pattern of the Grameen Bank of Bangladesh, should be promoted to mobilize local savings for loans and investment.

In recent years, agricultural prices and marketing policies have been liberalized to allow market forces to determine domestic price levels and allow private businesses to operate. However, there is no reason why private enterprises should not be allowed in the foreign trade of agricultural commodities. This would reduce marketing costs and enable farmers to gain from the growth of external trade in agricultural commodities. In addition, the interest subsidies granted to state enterprises for the export of rice and the import of fertilizers should be abolished and the surplus thus generated invested in the development of marketing infrastructures.

The lack of adequate infrastructural road, transportation, electricity and power facilities constrains both agricultural and industrial development in rural areas. The development of infrastructure should, therefore, be a priority in investment planning by the government. There is also the need and potential for further development of irrigation facilities as well as generation and transfer of new technology, keeping in view the needs of various agroclimatic zones and the requirements of small farmers. However, agricultural research organizations currently under MAFI, the Ministry of Education and Training, the Ministry of Water Resources, the Ministry of Forestry and the Ministry of Science, Technology and Environment would require to be reorganized for better coordination and effectiveness. The merger of the three ministries of agriculture and food industry, water resources and forestry into one Ministry of Agriculture and Rural Development would pave the way for further reorganization and cooperation. In addition, the administrative control of the agricultural universities should be shifted from the Ministry of Education and Training to the Ministry of Agriculture and Rural Development for better results.

Finally, the average farm in Viet Nam is so small and the rural labour force is growing at such a high rate that unless there is adequate development of non­farming sectors, there is no scope for sustainable agricultural and industrial development. In fact, the integrated development of farming and non­farming sectors through various technological, infrastructural and policy changes would hold the key to sustainable development of small farmers in Viet Nam.

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Conclusions

The recent reforms in the land tenure system have resulted in substantial improvements in land-use efficiency and agricultural output growth. Nevertheless, the sustenance of agricultural productivity growth in the small-farm-based economy of Viet Nam requires further improvement in factor use efficiency through additional doses of land tenure and market reforms. In addition, an appropriate organizational structure for the efficient delivery of inputs, technology, credit and other services to small farmers is crucial. Land tenure should be made permanent and inheritable without any condition. Rules on land-use should be more liberally drafted and enforced to allow market forces to operate freely according to economic and productivity norms. Land administration should be geared to complete the survey and LURCs issued within a stipulated time period, say two years. The restriction of the land lease period to three years should be withdrawn. Unreasonable restrictions on land transfer should be removed to allow the land market to operate. Landholdings should be consolidated. Land disputes should be settled amicably as far as possible. The list of categories of people exempted from land-use taxation and land transfer taxation should be reduced. All newly irrigated land should be taxed differently than unirrigated lands.

In the wake of reform, while the government-managed cooperative delivery system looks demoralized and uncertain, private enterprise has not yet picked up growth, owing to capital and infrastructural constraints. However, nearly 30 percent of cooperatives in the country are managing their business and services efficiently. These successful cooperatives should be helped to develop as autonomous agribusiness centres for providing a wide range of inputs and services to small farmers on a viable and self­sustaining basis. These examples could be emulated in all regions by promoting the growth of such independent farmers' agribusiness groups. Competition and cooperation between private enterprises and independent farmers' agribusiness groups should be promoted in order to provide a stable basis for sustainable, market-oriented agricultural development in Viet Nam. Moreover, the investment priorities of the government must be reordered to promote: land and water resources; strategic research; and infrastructure, for diversified agricultural and rural development. There is also a need for reorganization and merging of various ministries, such as those of agriculture, fisheries, forestry and water resources, and related departments in each ministry in order to provide a well-coordinated policy environment for sustainable agricultural and rural development.

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Bibliography

FAO. 1994a Agricultural policy analysis for transition to a market-oriented economy in Viet Nam, FAO Paper No. 123. Rome.

FAO. 1994b. Technical report on tenurial reforms and sustainable agricultural development in Viet Nam, by T. Haque. Rome.

Government of Viet Nam. 1994a. Statistical Data on Agriculture, Forestry and Fisheries, 1985­1993. Hanoi.

Government of Viet Nam. 1994b. Draft Statistical Abstract of Viet Nam Living Standard Survey, 1992­1993. Hanoi.

MAFI. 1994. Report on agricultural support services in Viet Nam, (TCP/VIE/2358). Hanoi, Government of Viet Nam.

SPC/FAO. 1993. An agriculture-led strategy for the economic transformation of Viet Nam. South Pacific Commission (SPC) and FAO.

World Bank. 1993. Viet Nam: transition to the market. Washington, DC.



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