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iv) Autonomy and Independence – Cooperatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.

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training for their members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of cooperation.

vi) Cooperation among Cooperatives – Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.

vii) Concern for Community – Cooperatives work for the sustainable development of their communities through policies approved by their members.

According to the Cooperative Law of Vietnam in 2003, “he cooperative is a collective economic organization established under the provisions of this Law by individuals, households or legal persons (hereinafter referred collectively to as cooperative member) who share common demands and interests, and volunteer to contribute capital and labor in order to bring into play the collective strength of

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production/business activities and improve the material and spiritual file, thus contributing to the national socio-economic development” 6. However, this definition is hard to understand for foreigner people and it also is hard to understand original version in Vietnamese language. Because definition is long but it is lack of meaning.

The definition from the Cooperative Law revised version in 2012 is a little The Cooperative Law 2003, Chapter I, Article 1.


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and legal entity status, established voluntarily by at least 07 members who cooperate with and assist one one another in production, business or job creation activities to meet the the basis of autonomy self-responsibility, equality and democracy in management of the cooperative”7 1.2.2 Other Definitions of Agricultural Cooperative and Concepts Agricultural Cooperatives

There are several definitions on agricultural cooperative follow:

Agricultural Cooperative is a type of cooperative that unites agricultural producers for production or other activities needed by the members such as processing, marketing of output, or supply of the means of production8 An agricultural Co-operative, also known as a farmers’ co-operative, is a co-operative where farmers pool their resources in certain areas of activity9 However, I define an AC as an organization of farmers similar to Japan Agricultural Cooperative (JA)10 but simpler in business & activities and smaller in capital. Members and Non-members of AC

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receives dividends (share profits) from the cooperative at the end of year.

The Cooperative Law, revised version in 2012, chapter I, article 3.

7 http://encyclopedia2.thefreedictionary.com/Agricultural+Cooperative 8 9 http://encyclopedia.thefreedictionary.com/Agricultural+Cooperative 10 Daman Prakash, 2000, JA deliveries multipurpose services & operates as multi-function

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receives no dividend but uses its services and pays service fees as a customer. Transformed cooperative and newly establish cooperative Vietnam government identifies two categories of cooperatives: transformed cooperative and newly established cooperative.

A transformed cooperative is one established before 1996 on the model of the Soviet Cooperative Union (old cooperative). It was transformed to the new cooperative model under the guidance of the 1996 Cooperative Law.

A newly established cooperative is one established after the 1996 Cooperative Law took effect. Among the transformed and new cooperatives, there were some re-organized cooperatives that have merged, divided their services or restructured their operations. Old cooperative and new cooperative (Hợp tác xã cũ và hợp tác xã mới) Old cooperative is phrases that Vietnamese people called cooperatives and AC during 1954-1995. Old cooperative was original of transformed cooperative and most of old cooperative and transformed cooperatives are in North of Vietnam. Characteristic of old cooperative or old AC included collection land, capital assets and property of individual farmers. The government required all farmers to join ACs, assigned duties to farmers in ACs and equally distributed profits to each farmer. The government also appointed AC staff, and no law regulated cooperatives.

New cooperative is the phrases that Vietnamese people called cooperatives and AC establishment after the first cooperative Law in 1996.

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It is business and activities that an agricultural cooperative provides to members and non-members in exchange for a service fee or non-service fee. ACs in Vietnam have been provided services as: irrigation, harvest, input supplies, production, technology, credit, collection, marketing…The irrigation service is the most popular business service of AC in Vietnam. Categories of types namely

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into ten types namely cooperatives including agricultural cooperative, trade and service, transportation, aquaculture, construction, small scale industry, credit, electric and water, environment and others category for new type of cooperative such as: fruit cooperative, hospital cooperative, school cooperative… According to officially reports in Vietnam, a word “cooperative” descripts all types of cooperative in Vietnam and “agricultural cooperative” shows only agricultural cooperative.

1.2.3 Development of cooperative and AC in Vietnam. Periods 1954-1986 The activities of agricultural cooperatives followed guidelines of the state authorities. This period is considered the boom period of the Cooperatives.

Figure 2 shows that number of cooperatives was 45 in 1955, increased to 41,000 in 1960 and reached 73,470 in 1986. Many cooperatives have developed belong to each village and commune.

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cooperative jumped up during 1975-1986 because the war was end and government expended cooperative model from North to South of Vietnam.

Cooperatives during 1955-1986 were characteristic of old cooperative. ACs formed with collection land, capital assets and property of individual farmers. The old ACs played an importance role in food security and agricultural production until the end of the war in Vietnam in 1975.

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50,000 41,000 40,000 30,000 16,89917,13317,53517,59918,18018,10418,24418,578 18,607 20,000 14,20714,193

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However, cooperatives were low efficiency from 1975-1986. Cooperatives in the North were in the trend “the large-scale size of agricultural cooperatives, the lower the efficiency”. Thousands of the cooperatives in the South were established but cooperative’s production was ineffective because farmers did not respond to cooperative.11 Nguyen Quang Ngoc (2006), history of Vietnam, Educational publisher, pp 365-379 11

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Vietnam made an economic renovation “DOI MOI” and changed into market-oriented economy in 1986. Vietnam gradually move from economic mechanisms centrally planned economy to market mechanisms oriented socialist, encouraging respect and facilitate the economic development of households, business individual sector, the private sector, the household economy is considered autonomous economic entity. The transformation of the economy has reduced the role and advantages of the cooperative as well as revealing the weakness of the.

Farm land is reimbursed to individual farmer-household to use for production.

Farmer households have become independent units and were to sell products in market. Role management of agricultural cooperatives in agriculture have reduces and agricultural cooperatives have become providers of services as demanded by the members for a service fee. Collective system was replaced by independent farm household economy system. The collective economy was considering the country second economic sector, but it was face the most difficult period in the development of cooperatives in Vietnam. The number of cooperatives was significantly reduced from 73,490 in 1987 to 18,607 cooperative in 1996. The number of ACs decreased from 17,022 in 1986 and was about 11,071 in 1996.

The period 1987-1995 was the worst period development of ACs in Vietnam. The number of ACs plunged, the AC operation was low, AC’s property did not use and maintained and most of ACs could not active.

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and operated in accordance with the fundamental principles of promoting cooperatives so no motivation to join the cooperative’s members. The cooperative model of organization though but not adjusted in accordance with the market mechanism has made the old cooperative system is paralyzed, spontaneous disintegration or transformation to adapt to the new environment. The system proved less cooperative adapts transition mechanism by increasing the autonomy of cooperatives and reduced incentives in terms of capital and credit for cooperatives. Period 1996-2003 The first ever enactment of the Cooperative Law in 1996 based on basic principles introduced by the International Cooperative Alliance, the legal framework for ACs was completed. The transformation process of AC as stipulated by the Cooperative Law since 1996 resulted in good achievements. Some cooperatives transformed successfully, while 2,196 new cooperatives were established 12.along with the economic state economy is the core group that cooperatives are considered the foundation of the national economy in many economic sectors. This period witnessed the shift and narrowing of the cooperative.

The Figure 2 shows the number of cooperatives has decreased fast from 18,607 in 1986 to 14,207 in 2000 and tended light increased to 14,193 in 2003. The number of ACs was parallel with the national cooperative. Number of ACs was Nguyen Van Nghiem, 2007, agricultural cooperatives in Vietnam: innovations and 12

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The decrease in the number of cooperatives period 1997-2003 reflects the process of market selection for cooperative systems and many old ACs dissolved because these ACs could not transform to new cooperative under guidance of the cooperative law. According to law, cooperative does not work properly the principles of voluntariness, autonomy, democracy, fairness and transparency will be difficult in the conditions of market economy Characteristics of cooperative development in the period 1997-2003 confirms the cooperative is not established on the basis of voluntary members, not all are able to find it harder to survive in conditions of market economy13. In addition, the introduction of a series of new cooperatives and the development of cooperative widely in rural and disadvantaged areas in this period reflect a form of cooperative economic organizations should be developing special priority in rural areas and areas where people were difficult or unfavorable. The period 2004 -2012 The recovery and growth of cooperatives and ACs after reform cooperative law in 2004 was significantly development of cooperative and ACs in Vietnam.

The number of cooperatives and agricultural has increased from 2004 to 2012. The increase in number Cooperative at this stage as a result of the transformed cooperative founded before 1996 and many newly establish cooperatives. The implementation of Cooperative Law revised version in 2004 and many policies Nguyen Van Nghiem, 2007, agricultural cooperatives in Vietnam: innovations and 13

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Vietnamese farmers has changed their mind about the ACs, some successful ACs has introduced and ACs has shown role of a special economic organization.

1.2.4 Principle of ACs in Vietnam after 199614

i) Individuals, households and legal entities establish, join or leave cooperatives voluntarily. Cooperatives shall be established, joined and leave unions of cooperatives voluntarily.

ii) Cooperatives and unions of cooperatives shall widely admit members and affiliated cooperatives.

iii) Members and affiliated cooperatives have equality and equal vote regardless of contributed capital in determining the organization, management and operation of cooperatives and unions of cooperatives; are provided information completely, promptly and accurately on production activities, sales, finance, income distribution and other contents as prescribed by the charter.

iv) Cooperatives and unions of cooperatives shall control and take responsibility for their activities before the law by themselves.

v) Members and affiliated cooperatives and cooperatives and unions of cooperatives have responsibilities to carry out their commitment under service contract as prescribed by the charter. The income of cooperatives and unions of cooperatives shall be distributed by the level of use of products or services of the members and affiliated cooperatives or by members’ contributed labor for job creation cooperatives.

Cooperative Law 1996 and revised version 2012, chapter 1, article 7 14

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training and retraining for their members and affiliated cooperatives, managers, employees of cooperatives and unions of cooperatives and give information about the nature and benefits of cooperatives and unions of cooperatives.

vii) Cooperatives, unions of cooperatives shall care for the sustainable development for member community, member cooperatives and work together to develop the cooperative movement on the local, regional, national and international scale.

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