«DEVELOPMENT STRATEGY OF THE AGRICULTURAL COOPERATIVES IN THE MEKONG DELTA, VIETNAM: SIGNIFICATION OF DIVERSIFICATION INTO BUSUNESS AND ACTITITIES ...»
I found that farmers’ primary reason for enrolment is their awareness of ACs’ profit, benefits and contributions of ACs. In contrast, Figure 26 presents the reasons for which farmers do not join in ACs: they do not recognize the benefits and advantages (28.4%), membership takes too much time in terms of meetings and training (24.2%), farmers received no invitation or campaign from cooperative members and the local government (22.1%), ACs provide a not cheap service price (10.5%), ACs do not allow farmers to join to AC (8.4%) and various other reasons.
Moreover, ACs have only a limited capacity in capital, human resources, property and tools. Cooperatives provide services lesser than those required by members and non-members. As Figure 19 reports, cooperatives’ highest priority is services for members.
4.4.5 Suggestions to increase ACs contributions to farming practices To expand the contributions and development of ACs in An Giang province, Mekong Delta, in the future, I suggest the following actions. (i) Improve ACs’ capacity for expanding the scale of services and activities for farmers by increasing capital, property, tools and member numbers. (ii) Increase the number and types of services that ACs offer. Table 23 reports farmers’ ideas about most-needed AC services.
However, our opinions are that ACs should expand the combine harvester service in the short term, rather than the fertilizer and pesticide service because the markets for them have not been monopolized by state-owned companies since
2011. The market is very competitive among state-owned companies, private companies and foreign investment companies, and farmers will benefit more from that competition without any further intervention by the cooperatives. ACs should provide services for market information and marketing and provide services for improving farmers’ lives in the long run. This is because such services are new in Vietnam and no ACs have yet provided them. (iii) Increase the percentage of farmer enrolment in ACs through various activities, such as offering membership to non-members and advertising the benefits of membership and the cooperatives’ contributions to farming practices to non-members. (iv) Provide more inexpensive and useful services in response to farmers’ needs reported in
non-agricultural services, such as those for market information and marketing, and farmers’ overall lives. (v) The local government and cooperative board management members should improve the quality of training courses vi) Local
communities during the merge process and create infrastructures for providing services.
4.5 Summary Agricultural cooperatives have contributed to the improvement of farming practices in An Giang province for both members and non-members. The contribution of ACs to farming practices widely differs between P0, when the AC did not give services, and PT, when it provided services. Moreover, ACs’ contributions have greater effects on the members than the non-members because the members have more opportunities to use services than do non-members.
Members use a greater variety of services from ACs than do non-members. Hence, contributions of ACs to farming practices have more significant effects on members(GA) than on non-members(GB).
The most significant contribution of ACs to farming practices is the reduction of farmers’ component and production costs, thus increasing profit/ha.
This advantage is the farmers’ main reasons for enrolling in an AC. Members also increase their profit/ha to a greater degree than do non-members because the AC provides more services to members.
The greater the number of business and activities and the greater scale of services ACs perform, the greater their positive contributions to farming practices.
Therefore, cooperative management members, government and farmers must increase the capacity of ACs by improving the amount of share capital, business capital, property, tools, infrastructure and members.
5.1 Introduction Chapter II presented general status of ACs in Vietnam with many opportunities as well as challenges from macro, micro and internal environments, and data showed that ACs have low contributed to GDP, but ACs have earned achievements through their business and activities. Chapter III stated current status development of ACs in the Mekong Delta, South of Vietnam. The situation of ACs in the Mekong Delta is similar to ACs in Vietnam, ACs in the Mekong Delta have faced some challenges as simple business and activities, low educational degree of management staff, low ratio of farmers enrolment into ACs.
But, Mekong Delta’s ACs have contributed to develop economic and society among region. Also, some ACs have been successful business and activities and have valuable contributed to farming practices and agriculture in the Mekong Delta.
Chapter IV measured valuable difference AC’s contributions between members and non-members of ACs in An Giang province.
Chapter V is going to present successful business and activities of ACs Mekong Delta and reasons affect to success of these ACs.
5.2 Criteria for Success Currently, insufficient AC success criteria or elements have been identified in Vietnam. I build AC success criteria based on my assumptions from external and internal results of AC development. Most Japan Agricultural Cooperatives (JAs)
but also banking, insurance, business activities and services that improve farmers’ lives. ACs in Thailand provide diversified services on savings and loans, input supply, marketing and the market, sustainable agriculture cultivation, traditional health and agricultural tourists. As a result, most multi-function cooperatives in Japan and cooperatives offering diverse services in Thailand are successful. In contrast, Vietnam’s ACs provide services related largely to agriculture. In Vietnam, offering diversified services is a criterion for rating ACs for the national prize. For example, the state government recognized the nation 100 best ACs in 2011 and the Vietnam Cooperative Alliance recognized the nation 200 best ACs in business in 2012. One of the selection criteria is that ACs provide more than three services. In contrast, the list of weaknesses of ACs includes the fact that 95% of ACs provide only one service. Therefore, the number overall and specific AC services for agriculture and non-agricultural matters are one of this study’s criteria.
My criteria for a successful AC are as follows: (i) An AC provides its members and non-members more than four services. (ii) The AC provides services for both agriculture and non-agriculture matters to meet member needs. (iii) AC services contribute to reducing production cost and increasing revenue and profit for members and non-members. (iv) The AC has developed the cooperative’s internal resources for its sustainable development, such as increasing the number of members, the amount of overall and share capital, property and business results.
As described in the Introduction, several ACs in the MD have succeeded in terms of our criteria listed in Section Criteria for Success. Therefore, this chapter introduces those successful ACs in the MD and their successful business and activities and identifies factors contributing to their success.
5.4 Research Method I used the case study approach. Phu Thanh and 3A Canal ACs were chosen as my case studies because these ACs were two out of seven ACs in the MD belong to the national 100 best ACs in 2011, recognized by central government. Therefore, I visited all seven ACs in the MD to obtain general information on their activities and management. Next, I analyzed the information of the seven ACs and selected the Phu Thanh AC (hereinafter, Phu Thanh) in An Giang province and the 3A Canal AC (hereinafter, 3A Canal) in Kien Giang province for our case study, because both provinces are agriculture-dominated provinces. Then, we returned to Phu Thanh and 3A Canal. In each site, we had discussion with management staff of ACs, local authorities, and four farmers, two of them are members of AC and others are non-members. Finally, we held a short discussion with the commune governor on AC activities in the commune. I used a qualitative method for collecting and analysing data and used results from my previous studies on ACs in the MD for statistical analysis.
5.5.1 Description Status of Phu Thanh and 3A Canal ACs Table 24 reports major descriptive elements for the general situation of Phu Thanh and 3A Canal in 2011. These elements are compared with the average situation of ACs in the MD in 2010, among which Phu Thanh and 3A Canal have been famously successful. However, certain differences exist between Phu Thanh and 3A Canal about number of hectare service, members and ratio of farmer’s enrolment into cooperative. Because Phu Thanh is newly established cooperative including area five out of six hamlets in Phu Thanh commune, few numbers of farmers voluntary join to cooperative until AC’s business and activities offer more benefits to farmers. Phu Thanh set 100,000 VND (equal=500￥) as one unit share price and 20,000 shares as a total shares, one members can occupy from one to 6,000 shares, number of members in Phu Thanh will increase in the near future.
In contrast, 3A Canal used to be an old cooperative including area of only one out of six hamlets in Tan Hiep commune, 100% households had joined to cooperative and occupied equally one share at unit price 300,000 VND. 3A Canal transformed to newly established cooperative in 2001, but it cannot increase number of members and share capital.
Table 24: Status of Phu Thanh & 3A Canal ACs
(2) Governance and operation at Phu Thanh and 3A Canal Both ACs in my case studies held the annual general meeting that members can determines and approves the cooperative’s activity plan for the next year. The general meeting also defines the range of activities for which the cooperative’s management board can make independent decisions. Otherwise, the management board must obtain agreement from the membership representative and activities require full membership approval.
The annual AC meeting determines the total amount of share capital, total number of shares and unit price per share. Each member can purchase a minimum of one share and a maximum of 30% of the total number of shares. The annual meeting also votes on the method of profit distribution. After payment of costs and taxes, the AC takes a maximum of 30% of the net profit as cooperative
5.5.2 Successful services offered by both Phu Thanh and 3A Canal Table 25 reports the services that Phu Thanh and 3A Canal provide to members and non-members. Both Phu Thanh and 3A Canal offer irrigation, combine harvesters, credit for members and seed provision. But each cooperative provides different additional services as shown in Table 25 and other services
126.96.36.199 Irrigation service The irrigation service covers both periods when water is pumped into (six-month sunny season) and out (six-month rainy season) of rice fields. The cooperative receives a service fee for pumping. The irrigation service is the most successful activity of not only Phu Thanh and 3A Canal but also of other successful ACs in the MD, where they can build a dike system for the service.
Building a dike system is not only a high-cost project but also requires the approval of all farmers within the dike area and local government.
irrigation service. For example, members and non-members inside the dike have increased their crop production from two to three crops per year because they can cultivate rice during the four-month flood season. The irrigation service fee is lower than that borne by an individual farmer or offered by other companies.
Table 26: Irrigation Cost by Cooperative and by Others
Table 26 reports that members and non-members of Phu Thanh paid an irrigation fee of VND 700 thousand per hectare, far below fees of VND 1,075 thousand to a private company and VND 2,215 thousand incurred by individual farmers. In addition, Phu Thanh gives a 15% discount to members compared to its service fee for non-members. Thus, AC irrigation services have reduced irrigation cost and increased benefits for members and non-members in the cooperative area.
The cooperative could provide irrigation services at a low service fee because it used an electric pump station, whereas individuals used diesel engines; the use of electrical power costs less than diesel. The cooperative also obtained a state government subsidy67 for the irrigation system, and the government required Government loans to ACs cover 50% of the cost of a dike system, if ACs provide to the state 67
Picture 4: Irrigation individual farmers (diesel engine)68 and by ACs (electrical power)69 188.8.131.52 Combine harvester service The combine harvester service is an activity whereby the cooperative charges a service fee to cut, pack, thresh and transport rice using a combine harvester machine. This method is more efficient than the traditional method70. According to our survey, Phu Thanh and 3A Canal provide combine harvester service, with many advantages for members and non-members. Table 27 reports the dike signed by all farmers within the dike area.
68 Individual farmer usually use small diesel engine for pumping water into rice field 69 ACs use electrical power for pumping water into or out to rice field (Pictures on right). ACs built a dike system boundary an area of many hundreds ha. Then, ACs use many big electrical pump station for the irrigation service.
70 Traditional harvest: cut rice stems by hand, collect and transport rice stems by labourers or
An average cooperative service fee is 50.4% that of the traditional method’s cost.