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Vietnam looks to divest from all agricultural SOEs by 2017

As Vietnam integrates more into the global market, Vietnamese farmers will need to expand their businesses to compete with foreign rivals, and that, of course, requires land.

Vietnam’s scattered farm land hits the overall efficiency of the country’s agricultural production, which in turn reduces the competitiveness of local agricultural firms.

Thai Binh Seed JSC., one of the country’s biggest seed companies, finally managed to expand its business last year by opening a new seed processing factory on an area of 1.2 hectares in the northern province of Thai Binh.

It took the seed supplier three years to talk 27 farm households into selling their land to the company, said CEO Tran Manh Bao.

He added that some land owners had left their land unused for many years.

“I even had to fly across the country to the southern province of Vung Tau to strike a deal with the owner, even though the plot was tiny,” said Bao.

Vietnam looks to divest from all agricultural SOEs by 2017

Only one percent of foreign direct investment is flowing into Vietnam's agricultural sector, according to the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD). Photo by VnExpress Photo Contest/Pham Phuoc

One of the main reasons for agricultural inefficiency lies in the unfavorable farmland structure.

The fact that farmland is divided into multiple plots and a considerable proportion of state-owned plots are left unused has dampened investors’ appetite for the agricultural sector.

Only about one percent of foreign direct investment is currently flowing into the agricultural sector, said the Institute of Policy and Strategy for Agriculture and Rural Development.

However, the government is trying to change the situation by making state-owned agricultural land available to the public through privatization.

“There will be about one million hectares of farmland available after the government divests from state-owned farms,” said Deputy Minister of Agriculture and Rural Development Ha Cong Tuan.

He added that the Agriculture Ministry is trying to sell its stakes in many enterprises.

The state has already fully divested from corporations such as Vietnam Tea Corp, the country's top tea exporter.

“We are trying to divest from all companies the ministry holds stakes in by 2017,” deputy minister Tuan continued.

Vietnam is feeling the need to give the agricultural sector a push especially after the worst drought in nearly a century has cost the country more than $670 million in lost rice and fruit output, according to the Ministry of Planning and Investment.

Official statistics show some 250,000 hectares of rice have been lost to the drought.

Rice wasn't the only crop affected by the dry spell. 30,000 hectares of fruit were also lost and aquaculture losses covered 6,800 hectares.

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