Enhancing efficiency of agricultural cooperatives

The contribution of agricultural cooperatives to the growth of the Vietnamese economy remains limited at 4-4.5 percent per year. It is therefore necessary to enhance their efficiency in conjunction with the development of product value chains.

Quality and quantity

A Vietnam Cooperative Alliance report shows that by the end of 2017, 19,487 cooperatives were in operation nationwide, a rise of 10 percent compared with 2016, with more than 6.4 million members. These included 2,226 new cooperatives established in 2017, up 46.5 percent compared with the new cooperatives established in 2016. Some 785 cooperatives were dissolved in 2017 due to ineffective operations, while 38 percent of the total proved their efficiency, up eight percent compared with 2016.

At a recent meeting to summarize 2017 results and develop tasks for 2018, Nguyen Ngoc Bao, president of the alliance, emphasized the cooperative sector’s growth in quantity and quality, as well as revenue and profit, which benefited its members.

Deputy Prime Minister Vuong Dinh Hue praised the results of cooperative development in 2017. He said the establishment of more than 2,000 new cooperatives within just one year was a surprising achievement that reflects the important role, as well as the attraction, of agricultural cooperatives. The percentage of efficient cooperatives in 2017 (38 percent) was higher compared with that in 2012 (10 percent). Agricultural cooperatives not only contribute to the growth of the economy but also generate jobs and income for members, helping ensure social security and promote new rural construction.

Despite their great potential, cooperatives’ contribution to the growth of the Vietnamese economy remains limited, 4-4.5 percent, the deputy prime minister said.

Nguyen Ngoc Bao said the quantitative growth of cooperatives is incommensurate with socioeconomic development potential and demand. Many communes still have no cooperatives. He also pointed to weaknesses of the cooperative sector. Specifically, the number of inefficient cooperatives was declining at a slow pace; the benefits cooperatives create for their members remain limited; their internal difficulties are often unresolved; their financial capacity remains weak and competitiveness low; many cooperatives still encounter numerous difficulties in production and trade due to a lack of management skills.

Developing value chains

According to Deputy Minister of Agriculture and Rural Development Tran Thanh Nam, the average income of each household in a cooperative is VND1.7 million per month; the average chartered capital of an agricultural cooperative is VND1.2 billion; and the average revenue of a cooperative is VND980 million per year. The annual revenue of high tech agriculture cooperatives is much higher. Currently, 54 cooperatives create annual revenue averaging VND10.3 billion. Some cooperatives even create revenue of VND123 billion per year.

Deputy Minister Tran Thanh Nam said Vietnam expects to have at least 1,500 high-tech agriculture cooperatives by 2020. He added that in 2018, the Vietnam Cooperative Alliance would coordinate with the Ministry of Agriculture and Rural Development (MARD) to provide guidelines for promoting production linkages in value chains. The MARD will build agricultural supply centers meeting export requirements and having connections with material production areas, helping cooperatives sell their products.

Nguyen Ngoc Bao said the Vietnam Cooperative Alliance would continue mobilizing resources and coordinate with groups, corporations, businesses and research institutes, as well as domestic and foreign organizations, to boost the development of agricultural cooperatives linked with product value chains in provinces and cities nationwide in the 2018-2020 period and ensuing years. For three years, from 2018-2020, 250-300 new cooperatives will be built under direct guidance of the Vietnam Cooperative Alliance (120-150 cooperatives in 2018; 60-80 cooperatives in 2019; and 60-80 cooperatives in 2020).

Deputy Minister Tran Thanh Nam asked the alliance to faithfully represent cooperative members and protect their interests. Regarding the tasks for 2018 and ensuing years, he asked that the cooperative sector attract new members.

Deputy Prime Minister Vuong Dinh Hue: It is necessary to promote the development of production cooperatives and their linkages with businesses. Cooperatives need to be sponsored by businesses, which will benefit from such strong linkages with cooperatives by being able to successfully invest in agriculture and rural development.