The thorny path to hi-tech agriculture

The government’s strong commitment to support the development of hi-tech agriculture has excited investors, but many difficulties lie ahead.

The government's focus is shown by the presence of Prime Minister Nguyen Xuan Phuc at the launch ceremonies of hi-tech projects, his commitments to help farmers conduct marketing for Vietnam’s farm produce, the commitment to offer a huge credit package of VND100 trillion with preferential interest rates and recent moves to help the land accumulation. 

The HCMC People’s Committee in early 2016 released the Decision 04 on providing preferential loans to investors developing hi-tech agriculture projects. 

Under the decision, investors will get an interest rate support of 100 percent if their projects are recognized as ‘high-technology’. However, no project in the city has received the support because agencies have not granted certificate on hi-tech projects and there is no criterion for state management agencies to refer to. 

The government's focus is shown by the presence of Prime Minister Nguyen Xuan Phuc at the launch ceremonies of hi-tech projects, his commitments to help farmers conduct marketing for Vietnam’s farm produce, the commitment to offer a huge credit package of VND100 trillion with preferential interest rates and recent moves to help the land accumulation. 

It’s unclear if the biotechnology center or the hi-tech agriculture zones’ management board can grant such certificates.

As a result, the startups in hi-tech agriculture find it difficult to access bank loans. Commercial banks only provide loans if borrowers mortgage land use right certificates for the loans. Meanwhile, the assets on agricultural land could not be used as collateral for the loans even if they are valuable.

Vuong Duc Tuan from MST commented that technologies in different fields can be examined only by experts in the majors. Meanwhile, it is very difficult to assess technologies as new technologies are created every day. 

Therefore, Tuan believes that it is necessary to give support to projects which can bring high efficiency and utilize suitable technologies.

Nguyen Khac Hai, general director of PAN Group, said investors must not follow the ‘hit and run’ strategy when developing hi-tech agricultural projects, but they need to think of long-term development strategy.

He foresees big challenges in production consumption, as hi-tech agriculture, if succeeding, can bring a yield which is 20-30 times higher than traditional methods. Meanwhile, the production cost of the projects with high technologies is always higher than other projects. 

Some hi-tech agriculture projects may require a higher investment rate by hundreds of times than other projects. High investment rate means high pressure on investors. In Japan, the agricultural production model applied 30 years ago, if well managed, still can bring higher economic efficiency than the models utilizing modern methods.

Nguyen Minh Nhan from Vuong Tron Company admitted that techniqal problems still exist. Due to the lack of preservation technology, the company is meeting difficulties in carrying melons to Hanoi for consumption.