Findings and Implications from JICA-MARD Project for Enhancing functions

1. Findings and Implications from JICA-MARD Project for Enhancing functions of agricultural cooperatives in Vietnam JICA VietnamOffice November 10, 2010

2. JICA’s assistance to the RuralDevelopment sector Purpose: Improve the livelihood of the people in rural areas (Eliminate disparity between urban and rural areas) Output 1 Increase Income “ Project for enhancing functions of agricultural cooperatives in Vietnam” Output 2 Protect people from natural disaster Output 3 Improve quality of life through food safety / rural sanitary

3. Why Farmers need Cooperatives? Vietnamese farm scale is very small andit is difficult for farmers to • get adequate finance for farming, educational or living purposes • acquire knowledge about modern cultivation techniques • supply enough irrigation water • sell products in high prices Expectation to agricultural cooperatives Internal credit, Joint marketing, Joint utilization of machines….

4. Can ACs meet the needs of farmers ? １．Member’s participation in operation & management are not so active - large membership but inactive participation - weak understanding of members rights & duties - insufficient trained officers to operate ACs 2．AC services are still limited compareto the demand - Lack of joint-use of facilities and machines - weak financial condition due to capital shortage - joint marketing is uncommon due to lack of leadership

5. “ Project for enhancing functions of agricultural cooperatives in Vietnam”(March 2006 – September 2010) Japanese experts dispatched to MARD Chief advisor / Coordinator / Credit business / Economic activities Main Activities -Training -Preparing mid-term plan -Developing manuals and guidelines -On-site guidance Infrastructure support Facilities of pilot agricultural cooperatives (Office, drying machine, irrigation pump and so on)

6. Current status of agricultural cooperatives in Vietnam 1996～　The Cooperative Law Transformation of agricultural cooperatives (ACs) in Vietnam The number of ACs in Vietnam (2005) : 8,322 Its major activities are: Irrigation 6,106 Extension 3,492 Electricity 3,201 Activities in certain ACs only: Marketing 153 Credit 770 Farmer’s strong needs Expand these activities based on the Japanese agricultural Cooperative’s experiences

7. Project strategy – How to change from the old ACs to the new ACs (1) Prepare the mid-term plan of ACs based on the needs of members.(2) Introduce the new serviceswith support of Japanese experts.(3) Visit and learn from advanced agricultural cooperatives in Japan, Thailand and Philippines.

8. Good examples in Pilot provinces（１） internal credit service HTX Nguyen Xa prepared mid -term plan and introduced internal credit. March 2007Visited advanced ACs in Thailand June 2008 Started providing loans to members June 2010Gain member`s trust with the healthy financial status. Started to receive savings from members.

9. （2） Joint marketing at HTX Binh Dinh • April 2009 Prepared mid-term plan and started joint marketing • October 2009 ～ -Rice seed production groups for joint marketing were formed - Started to grow soybean (180 ha) for joint marketing. Soybean production groups were organized. • HTX Binh Dinh tries keeping the quality of rice and soybean by using drying machine

10. Project results • Most of ACsexpanded their services and improved its turnoverafter they received training and made mid-term plan → ACs in Vietnam can playa key role in economic development of rural areas. → Training of officials of ACs as well as AC members involvement in planningare crucial for its better operation. • It is relatively easy for ACs to putinternal credit into action, while it may take time to succeed injoint marketing business.

11. Recommendations • For ACs and its members, in order to sell the farm products collectively and secure the stable supply of safe products, followings are recommended. - Innovation in distribution channel such as developing wholesale farm produce markets that will enable large-scale distribution. - Improvement of evaluation system in wholesale markets of agricultural products.