«DEVELOPMENT STRATEGY OF THE AGRICULTURAL COOPERATIVES IN THE MEKONG DELTA, VIETNAM: SIGNIFICATION OF DIVERSIFICATION INTO BUSUNESS AND ACTITITIES ...»
The SWOT analysis is an analysis that it helps us setting a framework for the formation of strategies by relating internal environment, Strengths and Weaknesses, of a specific system to the external environment, with a direct or indirect influence on the system, represented by Opportunities and Threats. All these parameters have an impact on the outcome of implementation of a certain strategy and its goal (Grant 2005). In this researh the internal environment is regarded as marketing, service types, staff, management, capital, revenue, property and the external environment the policy, structure management, stakeholders (members), customers(members and non-members). By relating the strengths and weaknesses of a organization system with the opportunities and possible threats in the environment where it’s supposed to be implemented, we can weigh/consider their impact and form a strategy by using the internal strengths together with the external opportunities to reinforce the base of the
lead to an assessment of internal strengths/weaknesses that could be of competitive advantage/disadvantage. In this case the intrinsic advantages and disadvantages of ACs on business and activities.
External analysis (Opportunity and Threats): The external analysis focuses on
opportunities as well as threats relative to competitive solutions After I develop and build an analysis of strengths, weaknesses, opportunities, and threats (SWOT) of ACs in the Mekong Delta, I am going to identify the alternatives or choices to build strategic development of ACs in the Mekong Delta.
Table 30 shows SWOT matrix for developing strategy of ACs in the Mekong Delta Vietnam. I focus on diversification business and activities of ACs to members and non-members. Also, SWOT matrix will be used for developing other strategies development of ACs in this research.
6.3 Summary of Previous Discussions The cooperatives and ACs in Vietnam after the first Cooperative Law in 1996 have uncounted opportunities as well as challenges on development of cooperatives and ACs in Vietnam. The results from Chapter II show that ACs development in Vietnam has been affected by the macro, micro and internal environments. However, the macro environment is the most important factor because it affects both opportunities and challenges in ACs development. On the other hand, the internal environment is the second factors that cause many opportunities as well as challenges to ACs.
Chapter III shows current situation of ACs in the Mekong Delta, South of Vietnam. The results show that agricultural cooperatives in the Mekong Delta have also had some problems and faced several challenges similar to Vietnam’s ACs such as simple business and activities services, low educational level of board management members, low farmers enrollment in agricultural cooperatives, small share capital, low efficiency of operation and some challenges from macro environments as same as ACs in Vietnam. ACs in Mekong Delta is ranked lowest compared with 8 economic regions in the country. However, the Mekong Delta has appeared with many successful ACs. These ACs have had positive economic and social effects and have produced other advantages during period 2000-2010. For example, quality of ACs has fast improved. Educational degree of management members is still low, but it has increased because government give training, supports and ACs have changed management staff with young people, higher
services related non-agriculture such as marketing, credit and transfer farming technique.
There are many reasons for becoming success in operation of ACs in the Mekong Delta but there most significant reason is the diversification into business and activities to both members and non-member of ACs.
The case studies in Chapter IV and V have given evidences of contributions of ACs to farming practices. These ACs have succeeded because their business and activities to members and non-members are diversified, beneficial, convenient and based on the needs of members and non-members, reduce production cost and increase revenue and profit and the AC has developed its internal resources for sustainable development.
6.4 Author Opinions for Development strategy of agricultural cooperatives
- Development multi-purposes AC
- Development diversification business and activities
6.5 Goals and Objectives
- Develop strategies of ACs in the Mekong Delta on diversification of business and activities services to members and non-members
- Develop strategies of ACs on implementation of diversification of business and activities services
- Describe resources, conditions and recommendations for implementation the
6.6 Analyse Farmers’ Demand on ACs’ Business and Activities.
6.6.1 Demand for an irrigation service because of global warming increase flood in the Mekong Delta.
The Mekong delta is one of the most endangered regions in the world under the effects of global warming. Such effects include ocean warming, a rise in sea level, heat waves, typhoons, and high tides. As a result there are coastal flooding, sedimentation and erosion, salt water intrusion, and spread of disease (Mekong Delta Climate Change Forum Report, 2009). In addition, 90% of the agricultural land in the Mekong Delta would be affected by flooding and 70% of the Mekong Delta will suffer from saline intrusion as a result of climate change (ICEM, page 6). The Mekong Delta is critical to the livelihoods and food security of millions of people in Vietnam. 22% of the population of Vietnam lives in the Mekong Delta, which is a high population density area of about 21.8 million people (2012). Agriculture is a primary source of livelihood in the Mekong Delta, where roughly half of the total amount of food in Vietnam is produced (ICEM, 7).
Vietnam is the second largest rice exporter the World, with 90% of rice exports produced in the Mekong Delta(ICEM, 59) Therefore, building dike system and offering irrigation service has been the best solutions of Mekong Delta provinces. It depends on natural condition of provinces, the dike system includes dike boundary one hamlet76, some hamlets in Six to eleven hamlets sets up a commune/village 76
contains water during dry season.
Individual farmer can build dike for preventing flood in only their rice field because flood level is high from one to three meters.
As the result, farmers will need ACs’ irrigation service because many advantages as I stated in chapter three and four. The water is pumped into (six-month dry season) and out (six-month rainy season) of rice fields by ACs and ACs takes services from farmers.
6.6.2 Demand for machinery utilization At present, high demand of labor in industrial zone has increased, non-agriculture job opportunities which could offer higher income as compared to agriculture has been increasing in rural Mekong Delta. Young labors tend to leave agriculture for new employment in industrial places as Can Tho, Ho Chi Minh cities and Binh Duong, Long An, Dong Nai provinces. Agricultural labor gradually becomes more expensive. In addition, the average farm size in the Mekong Delta is almost twice larger77 size than that of other regions. The appropriate solution is to use machinery as substitution for labor. Accordingly demand for machinery utilization is increasing rapidly. Machine is used intensively for land preparation and harvest. The highest demand of machine is during harvest time.
Therefore, ACs should offer services related harvest, transportation, MARD, 2009, land using effective survey, pp23-29 77
6.6.3 Demand for Agricultural Extension The rapid progress in production of new seeds, plant protection, veterinary and other agricultural technologies makes many farm households embarrassed to access information and technologies. In the other hand, since the government agricultural extension service is not enough to meet diversified demand of farmer, and private agribusiness company introduce some many new seed, technique, fertilizer, pesticide and farm tools. ACs shall play an important role to offer extension services.
6.6.4 Demand for cooperation in marketing and material supply Cooperation in terms of joint marketing and material supply in large-scale rice field, animal and fruit farms are in need to establish. Because Vietnam has participated into WTO, TPP and other markets, buyers need to buy a large quantity products and difficulty requirements. Some successful ACs in the Mekong Delta should start to offer these kind services. But, new ACs, average and weak ACs try to find the way of do these services.
6.6.5 Demand for Loan and Save capital Many farmers demand for capital and some farmers have cash at home.
ACs should open small saving service for members. Monthly or quarterly, each
for internal credit service.
ACs should start to do business on saving and loan as case of Thailand, Malaysia, Philippine and Japan Beside the traditional agricultural production, many farm households enter other fields such as trading, services and other non agricultural business.
A part of farm households are to expand scope of agricultural production. So that, the demand for financial service from this group increases day by day. In the rural areas which have been urbanizing and in the specialized production areas of paddy, vegetable, fish, livestock, flower, etc. the demand for this service is relatively higher than other regions.
6.6.6 Demand for partnership with suppliers in input supply services ACs shall get inputs from suppliers at advance basis and pay up in identified period of time. Both sides shall negotiate the contract conditions which may compromise interest of all parties concerned. Follow this was, ACs will buy cheap price and get other advantages. The successful business of JA model in Japan is that JA is partnership with supplier in input supply services. As the results, most of input supply from JA to members have advantages on price and other promations.
6.6.7 Demand for changing crop because narrowing paddy field in MD.
low income, then they will change into planting flowers, vegetables and other plants and breeding, which can meet their target of increasing income.
where income is increasing relatively fast. These of changing will need new service from ACs.
6.7 SWOT analysis of ACs in the Mekong Delta, Vietnam.
Table 31: SWOT Analysis of ACs in MD and Strategy Development Services in ACs.
Non-agricultural service: credit, health insurance, process, life, insurance… 78 AC' service fee is cheaper than individual farmers and private companies. (the cheapest services 79 fee at government subsidies services: irrigation, seed, combine harvester) 80 Reduce production cost, increase revenue, improve farming practices, improve farmer bad
6.7.1Strategy S+O (Strengths + opportunities) Strategy 1: Alternative between S1, S2 and O1, O2: ACs need to offer diversification number of business and activities to members and non-members.
Because members and non-members need more services for their production and society. ACs have ability to offer cheap service fee and more advantages because of some government subsidise programs. ACs should priority develop services with subsidies programs from government in investing infrastructure fop production (dike, in field lanes, irrigation canal, electrical power, store house, roads…). These services will have huge impact on the whole community where ACs offer service. Field survey shows demand types services of farmers in An Giang province as shown in Table 23 of chapter IV. However, my opinion recommends that the irrigation by electrical power service and harvest by combine harvester machine are urgent services from now to 2019.
6.7.2 Strategy S+O and S+T (Strengths + opportunities) + (Strengths + Threats) Strategy 2: Alternative between S3, S4 + O3, O4 and S+T: ACs should occupy government programs development high investment cost services such as irrigation, combine harvest machine and some non-agriculture services. There are 20 criterions in the new rural building program, development ACs in commune is the criteria number 19 that every commune has to follow and stage government subsidize. Therefore, ACs and commune authority should develop proposals for taking government subsidies to ACs development.
Opportunities) Strategy 3: Alternative (S5+O4)+ (W1,2+O1,2,3): Develop capacity and status of ACs by increase number members of one AC; Expand scale of services to both members and non-members Because the most importance principle of ACs is service their membership. But the average member/AC in MD is decreasing. Therefore, increase number of members in one agricultural cooperative is necessary. Number of members increase, agricultural cooperative’s capital, customers, competitive ability increase.
In addition, demand services from farmers are higher than capacity service of ACs. Some services are necessary for farmers such as: harvest by machine, credit for members and input supply. However, capacity of ACs is low, ACs offer services priority for members. Therefore, ACs occupy government subsidies programs for investing and expanding scale of services.
Strategy 4: Alternative W+T (Weaknesses + Threats) Many weak ACs should merge or re-organize together with other small ACs in same commune for increasing of capital, members, property, assets and competitive among ACs in same communes.
6.8 Stages development of service in Agricultural cooperatives.
Table 32: Model Five Stages Development Services in Agricultural Cooperatives
6.9 Implementation strategies 6.9.1 Short term strategy Stage 1 and stage 2 can apply in short term strategy of ACs within 5 years from 2014. However, there are difference between conditions and requirements for each stage.