«DEVELOPMENT STRATEGY OF THE AGRICULTURAL COOPERATIVES IN THE MEKONG DELTA, VIETNAM: SIGNIFICATION OF DIVERSIFICATION INTO BUSUNESS AND ACTITITIES ...»
The secondary data from variously case studies, research papers, summary of conferences, government reports, and statistical reports both in English and Vietnamese languages have been used. The primary data was found through conducting field surveys that were inputted into computer and analyzed both through simple and complex statistical procedures by software Microsoft Excel 2010 and the Statistical Package for Social Sciences (SPSS) 13.0.
The details of the different analytical procedures in this thesis will be presented in the chapters later.
1.7.5 Limitation of data The challenges were to collect secondary data from state government reports.
Several statistical reports are difference between figures and numbers from different to offices. Three state government offices issue data relate on agricultural cooperative including the MARD), VCA and MPI, However, facts and figures are different between those offices because of different statistic methods and report’s time. Ex: MPI collects data until June of each year, collects
all kinds of cooperatives including agricultural cooperatives. On the contract, MARD collects data only on agricultural cooperative and collects data until December in the year. The only VCA collects data with advance statistical method, data was collected annually at the end of national financial year and collected data of all provinces and cities in the countries. The challenge is that VCA issues with simple statistical analysis data and misses data from 2001 to 2004. However, this thesis uses most of figure and number from report of VCA during period 2000 to 2010.
1.8 Summary The main purpose of this study is identify successful services and activities of ACs in the Mekong Delta. Then the study wants to measure contribution of ACs to GA&BG and P0&PT, Also, this research finds out correlation between business and activities and successful ACs in the Mekong Delta. Finally, the study discoveries development strategy of ACs in the Mekong Delta during period 2014-2020.
1.9 Structure of the Thesis
The thesis consists of six chapters follow:
Chapter one provides introduction, background information, definitions related this study and presents other information an academic research paper such as: objective, hypothesis, research methodology and literature review.
Chapter two presents current status development of cooperatives and
and internal environments to development of cooperatives and agricultural cooperatives.
Chapter three describes and analyzes current status of ACs in the Mekong Delta, South of Vietnam. This chapter draws a picture of ACs in the Mekong Delta consist of achievements as well as challenges during period 2000-2010. Also, The case study of ACs in An Giang province gives readers evidences contributions of ACs to economics and society in An Gian province, it is an example of success and contributions of ACs in the Mekong Delta region.
Chapter fourth presents difference contributions of ACs between members(GA) and non-members(GB) of ACs. Significantly contributions of ACs to members group are higher than that of non-members because members use more agricultural cooperative’s services than that of non-members.
Chapter five give more detail and discussion on successful services of ACs and finds out factors affect success of ACs in the Mekong Delta through case study of agricultural cooperatives in An Giang and Kien Giang provinces. The chapter also identifies correlation between diversification services and success of ACs in the Mekong Delta.
Chapter six analyzes and presents strategy development of ACs in the Mekong Delta during period 2014-2020 in term of viewpoint of an academic science research.
2.1 Introduction The agricultural cooperative (AC) in Vietnam has developed since 1954 with many historical ups and downs. During 1954-1975, ACs developed only in northern Vietnam, and none existed in southern Vietnam because of wars. The government expanded the AC from North to South Vietnam during 1975-1995. During 1954-1995, which Icall the old AC period, ACs collected land, capital assets and property of individual farmers. The government required all farmers to join ACs, appointed AC staff, assigned duties to farmers in ACs and equally distributed profits to each farmer. There was no law regulated cooperatives because Vietnam was in the war until 1975 and central government and military managed all activities in the country. However, during period 1975-1995, ACs in Vietnam largely collapsed and could not conduct activities after Vietnam became a market-oriented economy in 1986.
In 1996, the government introduced the new AC model following the International Cooperative Alliance (ICA) model and enacted the First Cooperative Law. In addition, the government promulgated many resolutions, decrees and circulars to promote the new AC.
AC entered another development period, improving business activities, members, capital and property.
However, ACs have encountered many opportunities and challenges after the cooperative Law 1996 has effected and other policies related on AC have enacted.
Our major interest is the opportunities and challenges of AC development in Vietnam since the first Cooperative Law in 1996. Therefore, this study attempts to Describe the current situation of the AC in Vietnam.
Analyse opportunities in AC development.
Analyse challenges in AC development.
2.3 Research Methodology I used the business environmental analysis (BEA) model for analysing opportunities and challenges of AC development. The BEA consists of three environments as shown in Table 1. The BEA is a tool for analysing the effects of external and internal environments on business organizations including ACs.
Table 1: Business Environment Analysis Model
The BEA identifies the opportunities and challenges in a business environment in terms of an organization’s strengths and weaknesses. An organization relies on strengths to capture opportunities from business environment and recognise weaknesses to avoid becoming a victim of
The environmental analysis then influences corporate planning and policy decisions.
The AC is a particular business organization of farmers in Vietnam. It is a simple operation of small size in a rural area. Therefore, I focused on analysing certain environmental factors related to ACs. The macro environment includes policies and laws; economic, sociological and historical factors; and structure management. The micro environment focuses on members, suppliers, customers and competitors. The internal environment includes capital, capital assets, staff, finance and operations. However, I focused on analysing in detail the macro environment factors as our hypothesis states that the macro environment has the impact on AC development.
You might ask me that why SWOT (alternatively SWOT Matrix) analysis did not use in this case, I used to argue on this matter, but I found that BEA analysis is better than SWOT analysis for this chapter because ACs in Vietnam is an economic organization. In addition, SWOT analysis is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. In this chapter, I provide general information of cooperatives and ACs in Vietnam, I don’t analyze in specially product, place and only ACs. Therefore, SWOT analysis is not suitable in this chapter.
from reports of Vietnam Cooperative Alliance (VCA), Ministry of Planning and Investment (MPI), Ministry of Agriculture and Rural Development (MARD) and General Statistics of Vietnam. I also utilized secondary data from previous research related in agriculture and ACs on Vietnam.
2.4 Research Results 2.4.1 Current Status of Agricultural Cooperatives in Vietnam ACs is largest number among of all type cooperative in Vietnam. ACs in Vietnam always comprises nearly half the total of national cooperatives30 among ten categories31 of cooperatives as shown in Figure 3.
Figure 3: Classification Name of Cooperatives in Vietnam (2010) AC consists of 48.9 the total national cooperatives in 2010, VCA, report 2012, p 3 30 Ten type of cooperative: agricultural cooperative, trade and service, transportation, 31 aquaculture, construction, small-scale industrial, credit, electric and water, environment and other cooperatives such as health, school, fruit and livestock cooperative.
Figure 4: Percent Growth & Contributed GDP of Collective Economy Figure 4 shows the contribution of the collective economy (including cooperatives, ACs and cooperative groups) to the GDP has decreased continuously since 1996, although the government expected that the collective economy’s contribution to the GDP would be 15.9% in 2001 and 12.5% in 2005. ACs contributed to the GDP only 8.1% in 2001, was 6.8% in 2005 and was down 5.2% in 2010. The contribution of collective economy has been lowest compared with other economic sectors since 1996, although collective economy has been consideration as the second important national economic sectors since 1986. For example, the contribution to GDP in 2010 from the state owned economic sector was 33.7%, 30.8% from the individual economic sector, 18.7% from the Foreign Direct Investment (FDI) economic sector, 11.5% from the
In addition, the growth ratio of the collective economy has decreased annually. It was 6% in 1999 was 4.7% in 2002, compared 3.8 % in 2005, was 3.3% in 2007 and went down 3.2% in 2010. However, the national economy grew on average 7.5% during 1995-200533.
AC’s capital and profit are the lowest compared with other cooperatives.
For example, ACs had an average capital of VND 1,452 mil in 2010, whereas aquaculture cooperatives had an average of VND 1,590 mil and credit cooperatives an average of VND 4,634 mil. Similarly, in 2010, ACs had profit of VND 27.4 mil/year (equal to 100,000 Yen) compared with VND 115 mil in transport, VND 137 mil in trade and service cooperatives, and VND 275 mil for aquaculture cooperatives.
compared with eight economic regions in Vietnam as shown in Figure 6. The development index of revenue and capital of AC's Mekong Delta is only better than that of in North mountain region.
implementation, but average number of membership in one AC has been decreased trend. Figure 2 depicts how the number of ACs has increased from 1955 to 2012. There was 45 AC in 1955, jumped around 31,700 in 1965, was about 39,200 in 197534, went down to 17,022 in 1986, was 11,071 in 1996, decreased to 7,100 in 2000 and steady increased from 2000 to 2010.
According to my previous research, number of ACs in the Mekong Delta, south of Vietnam has increased parallel with the trend of national ACs from 2000 to 2012, I am not sure about number of ACs in 1965 and 1975.
Mekong Delta region had 554 ACs in 2000, was 736 ACs in 2005, increased to 851 ACs in 2010.
Therefore, number of Vietnam’s ACs, in general, AC’s Mekong Delta, in particular, has increased annually since 2000, while ACs number of ACs in the United States and Japan has decreased from 2000 to 2010 as shown in Figure 7.
Figure 7: No. ACs in Vietnam, Japan, USA and Korea Development of ACs in Vietnam is difference between North and South.
These differences affect more challenges than opportunities in development process. For example, ratio of farmers in South enrolment in ACs is lower than that of in North. Farmers in South contribute money to buy share from AC and get dividend annually, but farmers in North do not buy share and get no dividend
newly established cooperatives. However, 86.3% of transformed ACs are in North, it means that the original of most cooperatives in North were old cooperative.
Otherwise, 79.5% of newly established ACs are in South35. Table 2 also reports other differences of ACs situation between North and South Vietnam.
Table 2: AC Differences between North & South (2010)
AC operating results have been improving annually, although value operation has been limited. ACs provide more services to both members and non-members, and AC service scale has increased rapidly in volume. Report from MPI in 2012 shows that only 21.7% of national ACs earned a profit in 2002 compared with 68.2% in 2010. In contrast, the proportion of ACs having losses decreased from 9.4% of national ACs in 2002 to 5.2% in 2010. Further reports the amount of annual profit increased from VND 15.2 mil in 2002 to VND 27.4 mil in 2010.36 Business and activities of agricultural cooperatives in Vietnam have been improved fast since 2004. According to (Nghiem, MARD, 2006), the proportion of agricultural cooperatives in Vietnam offers irrigation services reach 80.2%, marketing service 2.%, electricity service 41.5%, extension service 45.3% and other service as shown in Table 3.
VCA, report 2011, pp3-4 35 MPI, 2012, result of implementation the Cooperative Law 2003, p7.
Nghiem, 200637 also presents, some new services have been opened by cooperatives such as: farm product processing and marketing, internal credit, clean water supply, and waste collection. Agricultural cooperatives have likewise organized new business services such as: marketing 8 percent, and internal credit 8.4 percent. As a whole, only good cooperatives are able to manage services in the fields of marketing, internal credit, and processing.
Irrigation was the most popular service. Agricultural cooperatives construct and manage irrigation canals and pump systems. Large-scale