Agricultural production: businesses make big investments in processing

Vietnam needs to make basic changes in agricultural production and may have to start over from scratch, according toTran Ba Duong, chair of Truong Hai Automobile (Thaco).

“Start over from scratch”, according to Duong, means the organization of large-scale agriculture production in which high technologies are used to create safe and clean products.

Thaco strives for large-scale mechanical engineering and automation. It uses digitization in administration and follows a closed value chain for different kinds of farm produce. High technology and biological materials will be used in the cultivation of fruits and cereals in the near future.

Duong said that technology makes up 95 percent of value and labor 5 percent.

The investors conduct agriculture in a professional way with detailed programming on products to develop, and markets to target, and they do not work with short-term plans. This, according to Hanh, is the best path forward for Vietnam’s agriculture. 

Nguyen Lam Vien, chair and general director of Vinamit, a dried fruit producer, said it is risky to invest in post-harvesting processing, but is a must. 

“Many investors have poured capital into the field. Each of them follows their own way, but all of them strive for closed production chains and post-harvest processing,” he said.

VinEco, a subsidiary, is taking steps to conquer the domestic market. Thaco is following the way of Hoang Anh Gia Lai Group – selling fresh food to China and establishing a processing zone where other companies, like Vinamit, can join.

Vinamilk is now paying more attention to developing organic products. TH Milk is also following this path, and Vinamit is accelerating the use of biotechnology in farm produce processing, mostly targeting middle-class Chinese consumers.

Vu Kim Hanh, chair of the Vietnam High Quality Product Enterprise Association, noted that the new investors in agriculture are mostly large corporations which have vowed to build closed value chains.

“They have capital, business administration skills, market information, ability to connect to the global network, and high technology,” Hanh commented.

The investors conduct agriculture in a professional way with detailed programming on products to develop, and markets to target, and they do not work with short-term plans. This, according to Hanh, is the best path forward for Vietnam’s agriculture. 

Le Quoc Doanh, Deputy Minister of Agriculture and Rural Development, said Vietnam’s agriculture will be restructured in three major categories:  national key products, provincial key products, and OCOP (one commune, one product).

He said the ministry would focus on completing the legal framework for development, especially policies on land, credit access, and agriculture insurance.