Reluctant cooperation
The government's new-style agricultural
cooperatives meet resistance from many farmers
and lack the preconditions vital for success
HANOI - A lively kindergarten occupies the dingy
shed once filled with a communal stock of paddy. In
Khanh Mau village in the northern province of Ninh
Binh, each household stores its own rice these days,
and proudly holds a land-lease title. But for local
farmers bad memories of Vietnam's collectivized
agriculture in the 1960s and 1970s haven't entirely
faded. Back then they were hungry and demoralized
because the system of sharing land, tools, and farm
animals didn't reward hard work.
That's why they're not fully committed to Vietnam's
effort to resurrect a cooperative spirit. A residue of
distrust clogs the official efforts to promote new-style
agricultural cooperatives--tasked with coordinating
irrigation, supplying fertilizer and other inputs, and even
helping farmers market produce.
In Khanh Mau every household has dutifully joined the
co-op, led by a Communist Party cadre--the
organization is technically voluntary but villagers signed
up because they wanted to get irrigation services. Yet
no one wants to contribute any paddy or cash as
working capital for the group. "The farmers have the
impression that if they contribute something they will
lose it," says farmer Le Xuan Hung.
Such news alarms the Communist Party, which
considers the co-ops an essential tool in combatting
rural poverty--the party's most urgent task. Two thirds
of the nation's labour force of almost 40 million people
are engaged in farming and most poor people reside in
rural areas. Even in a relatively accessible province like
Ninh Binh, just south of Hanoi, farming households get
by on an average per capita annual income of just 2
million dong ($133)--a figure that the World Bank
describes as hovering on the borderline of poverty.
The bank and other overseas donors have given
Vietnam high marks for lifting living standards over the
past decade. But the going is getting rougher: Farmers
face dismal prices for major commodities such as
coffee, rice, cashews and pepper, mainly due to global
oversupply. They also have scant access to critical
market information to shape their future planting
decisions.
Mounting research suggests the party has committed
itself to a rural development strategy without forging the
preconditions vital for success--enough capital,
management training and decision-making autonomy for
co-op members.
"Cooperatives should be free of politics, free of
administrative control," says Bui Quang Toan, a senior
researcher at the National Institute for Agricultural
Planning and Projection. "The government must give up
the idea that they can use cooperatives as a tool to
manage the people."
It's a familiar refrain in most economic
sectors--Vietnam must accelerate reforms and liberalize
the climate at the grassroots level to reach ambitious
development targets. That's why the escalating debate
over the co-ops' failings could have a positive impact.
The debate highlights the broader folly of herding
villagers into conformity with top-down policies.
"The ideology of Marxism-Leninism emphasizes that it
is absolutely impossible to constrain farmers in any
form," said Chu Tien Quang, a top rural economy
official at the state-run Central Institute for Economic
Management, at an August workshop. Indeed, millions
of farmers have opted out of co-ops, preferring smaller,
more flexible units that perform some communal tasks
without seeking any legal status.
The issue will rank high on the agenda at a meeting in
December of the Communist Party's central committee.
That doesn't mean that party leaders are gearing up to
abandon the co-op strategy. On the contrary, many
officials paint a dire picture of life without co-ops: the
return of big landlords, exploitation by private traders,
and growing landlessness that could end in
encroachment on precious forests. And some farmers
can't imagine getting rid of them altogether.
"Impossible," says Hung in Khanh Mau.
It's true that agricultural co-ops work well in some
countries, and Vietnam has noted some isolated
success stories in the five years since the new-style
co-ops were launched. At their best, co-ops provide
important economies of scale for discounted inputs and
stronger bargaining muscle. In helping to market
commodities, the co-ops aim to deliver more profit
directly to farmers, instead of being siphoned off by a
long line of intermediary traders. Co-ops can also ease
technology transfer and spread new ideas for crop
diversification.
That's why foreign cheerleaders like Japan, Germany,
Canada and Denmark are putting money into selected
Vietnamese co-ops. But conditions in those countries
differ markedly from Vietnam. In Canada, for example,
co-ops hire professional managers to run the
business--which Vietnam's co-ops can't afford. Co-ops
overseas can also count on staff trained in accounting,
planning and management practices. And in many cases
in Canada and Denmark, the government has played a
minimal role in the co-ops, which evolved gradually
over time based on the members' perceived needs.
In Japan, agricultural co-ops have evolved into a
powerful political lobby, urging leaders to reject freer
trade at World Trade Organization talks. Some
international development experts question whether
Vietnam should be taking lessons from Japan's
notoriously inefficient agricultural sector. But the
resident Japanese advisers on co-ops urge their
Vietnamese counterparts to keep the faith. "The present
condition of Vietnam is the condition of Japan 30 years
ago. It doesn't mean that it will take Vietnam 30 years
to catch up," says Naoto Imagawa, an expert from the
Japan International Cooperation Agency. Meanwhile,
officials at Vietnam's Ministry of Agricultural and Rural
Development admit that they are frustrated by the
co-ops' slow progress.
Would money solve the problem? Maybe, but there's
no clear financial solution in sight. It's a vicious circle:
Poor management and negligible collateral make most
co-ops a bad credit risk. And the government has failed
to craft a budget for the massive training needed to
improve co-op management. While co-op leaders can
take out personal loans for the use of the group, most
fear risking their own assets. "They personally don't feel
confident about what they're doing," notes a banking
official in Ninh Binh.
Vietnam has good reason to fear another debt
trap--which could imperil its three-year agreement with
the International Monetary Fund for a $368 million
loan. In October, officials announced that they would
write off 525 billion dong ($35 million) in pre-1997
debts accumulated by the old subsidized and
semi-subsidized cooperatives. In addition to providing a
clean slate, the State Bank is considering establishing
some sort of credit guarantee to ease the flow of new
loans to co-ops. But if each of the 10,853 existing
co-ops sought to borrow 200 million dong per year--as
suggested by farmers in Ninh Binh--that adds up to a
whopping $144 million in the first year alone. That's
roughly double the current loan portfolio of the Vietnam
Bank for Agriculture and Rural Development.
The big numbers make little sense to the farmers in
Ninh Binh. All they know is that they're being left high
and dry. "Without capital, we can't do anything," says
Duong Xuan Hich, cashier for the Tay Van co-op. And
without more creative thinking on how to pump
micro-finance into the countryside, poverty will remain
a persistent scourge.
By Margot Cohen - The Far Eastern Economic Review - November 15, 2001.
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