Some Lessons for Vietnam

There are three types of agreements: fixed price, floor price and market price. Industries that carry out production under contracts are vegetable processing, meat processing, aquaculture, cooking oil processing, silk, cotton, mushrooms and milk. However, the highest rate of contract signing is in meat processing, aquaculture and milk processing.

In general, contract farming in China is carried out thanks to the agricultural industrialization policy. Farmers and enterprises are aware of the importance of contract farming, so more and more enterprises and farmers are participating in contract farming. The success of contract farming depends on the type of product. Products that require immediate processing and food hygiene requirements are easier to implement contract farming than other products.

b) Japan's experience

In agricultural development, Japan has proposed a smart and effective strategy, such as increasing the productivity of small-scale agriculture; nurturing the people, creating the ability to accumulate and promote internal resources; exporting agricultural and forestry products to import machinery and equipment for industrialization; decentralizing industry, bringing industry to rural areas, linking rural areas with industry, linking rural areas with urban areas... In that process, the formation of cooperatives plays a particularly important role. This is also the Japanese Government's way of enhancing the value chain of agricultural products from production, processing to consumption; creating a bridge between farmers and the market; developing Japanese agriculture quickly and sustainably. The activities of Japanese agricultural cooperatives focus on the following areas:

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Agricultural production and business guidance activities

The basic principle guiding the agricultural activities of Japanese agricultural cooperatives is to form concentrated production areas, such as crops and livestock typical of the region, and to improve the productivity and quality of those products. Thanks to that, people know the reputation of the locality as a major production area and highly appreciate the role of agricultural cooperatives. Going one step further, Japan focuses on planned production. Production planning together with

Agricultural extension plays an important role in guiding agricultural production.

industry. The main content in the current agricultural operation manual focuses on

The main focus is on popularizing techniques. State experimental centers undertake research and development of seed improvement techniques, planting techniques, and machinery techniques, while agricultural cooperatives undertake the dissemination of techniques.

To help farmers manage agricultural production well and effectively.

In addition to agricultural cooperatives, agricultural cooperatives also conduct agricultural business guidance activities for farmers. Agricultural business guidance has two contents: one is to help farmers develop plans for plant varieties and livestock ; two is to guide regional agricultural planning, improve quality, develop group production systems, reduce production costs on the basis of shared use of machinery and production tools, and jointly purchase production materials and regional marketing . This work is related to long-term plans including activities of supplying materials, production materials, credit, processing and consumption.

To carry out this guidance work, each cooperative has agricultural advisory groups. The advisory groups always closely coordinate their work with administrative management agencies, agricultural research stations, veterinary and livestock officers and other scientific researchers.

Agricultural marketing and consumption activities

This is a very important task for Japanese agricultural cooperatives to solve the problem of product output for farmers and increase income for members. By coordinating the sale of products through joint marketing and distribution, cooperatives have saved on circulation and marketing costs for members, implemented reasonable prices for farmers, adjusted seasonal price fluctuations and avoided price pressure from intermediaries, and at the same time improved the competitiveness of products in the market and adapted to the instability of agricultural product prices due to changes in weather conditions, overproduction or fluctuations in consumer demand and market competition.

Activities of coordinating marketing and consumption of agricultural products for farmers have gone through a rather long development period:

+ First stage - joint transportation: the purpose is to reduce transportation costs by expanding the scale of transportation. Agricultural cooperatives conduct

Transportation and other issues regarding goods and agreements with buyers will be handled by individual members.

+ Stage 2 - coordinated selection of goods: to increase the ability to trade through frequent deliveries in large quantities. Items are selected according to common standards to improve product quality. Usually this selection is coordinated with the consumption stage.

+ Stage 3 - consumption coordination: focuses on activities in the consumption stage such as deciding where to sell, sales volume, and delivery time.

+ The final stage - consumption coordination policy: adjusting supply and demand to stabilize and regulate prices, this is the ultimate goal of the consumption coordination development process.

To facilitate farmers, agricultural cooperatives apply 3

Main payment principles in product consumption: a) Unconditional entrustment:

Farmers can send products to the cooperative for sale without any requirements.

price, time of sale and place of sale of products. b) Actual service fee: The cooperative helps

Farmers consume products but they have to pay the cooperative a commission so that the cooperative can cover transaction costs and transportation costs of the products, c) General payment: The cooperative helps farmers transport and sell products to get stable prices, with this method, the economies of scale from distributing and marketing in large quantities will bring higher profits to farmers.

Some channels for coordinating agricultural product consumption in Japanese agricultural cooperatives:

. Consign sales to companies that receive products on the market (applicable to fruits, beef, pork, fresh flowers)

Producer → Group of agricultural cooperatives → Wholesale market → Companies receiving products (wholesalers) → Intermediaries → Retailers → Consumers.

. The form of agricultural cooperative groups in market circulation functions

sales business capabilities such as companies that receive eggs, vegetables and fruits)

(applies to all aspects)

Producer → Agricultural cooperative group (product receiving company: wholesaler → intermediary) → Retailer → Consumer.

. Form of sale to the market through other channels (applicable to vegetables, beef, pork)

Producer → Agricultural cooperative group (such as goods consolidation and delivery center) → Place of great demand (supermarket - life support association) → Retail store → Consumer.

. Form of selling raw materials to large-scale processing companies (applicable to barley, chicken, beef, fresh milk)

Producer → Agricultural Cooperative Group → Processing Company

. Form of cooperatives with processing factories, processing and selling products (applicable to milk, dairy products, fruit juices)

Producer → Agricultural cooperative group (processing factory) → Wholesale and retail stores → Consumers

. Wholesale form under government management:

+ Sell to the government (for Government rice, Government wheat)

Producer → Agricultural Cooperative Group → Government - Wholesaler → Retail Store → Consumer

information)

+ Agricultural cooperative groups sell directly

(for natural rice products)

save

Producer → Agricultural Cooperative Group → Wholesaler → Retail Store → Consumer.

Agricultural processing activities

Agricultural cooperatives' processing and consumption activities have four roles:

a) creating added value for agricultural products and bringing that value to rural areas; b) increasing demand for agricultural products through creating and developing new foods; c) maintaining a balance between supply and demand through market segmentation and storage; d) creating more jobs for rural areas.

Agricultural processing activities are carried out in Japanese cooperatives with two purposes: processing products for sale and processing products for family consumption. Currently, agricultural cooperatives carry out processing according to three

types: a) processing and consumption of agricultural products; b) combined collective use of processing facilities and c) purchasing and processing.

When it comes to manufacturing, many people think that new technologies need to be introduced and applied from abroad. However, Japan has been very successful in applying traditional product processing techniques. The "one village one product" model was formed and developed from this way of thinking.

Goods supply activities

Japanese agricultural cooperatives ensure the supply of inputs for agricultural production and essential products for members' lives at high quality and reasonable prices. By competing with private sellers, cooperatives bring farmers more benefits in terms of both reducing costs and increasing the quality of purchased goods, while contributing to the efficiency of the entire agricultural sector.

Credit activities

The operating principle of agricultural credit cooperatives is mutual support - that is, they both receive deposits from members and lend to members to improve their lives. In addition to operating as an independent bank serving agricultural production, cooperatives are also places to receive loans and receive interest rate support from the state to ensure the provision of long-term capital with low interest rates for agricultural production members.

While other conventional credit agencies only lend to farmers with capital accounting for 0.3% of the total loan amount, the agricultural cooperative allocates 83.3% to agriculture and cooperative members. By the end of 1997, the total amount of money the cooperative

The total deposits of members reached 67,979,796,216 thousand yen and the total loan amount to members was

20,805,146,636 thousand yen. Agricultural cooperative credit institutions also conduct many activities such as invoice discounting, domestic exchange transactions, legal guarantees, foreign exchange transactions, and lending to informal members.

c) Taiwan's experience

Not only known for its natural beauty called “Pearl Island”, Taiwan is also the “Asian Dragon” that emerged in the 70s thanks to its wise economic policy. With an area and few natural resources, Taiwan’s agriculture has developed at a fast and sustainable pace. Explaining the reason for that success, many people believe that Taiwan has had appropriate macro policies, choosing products with investment advantages, including economic sectors.

Other industries must play the role of supporting industries for agriculture. This territory has known how to rely on soft power, mainly information technology (IT) and biotechnology. Taiwan has used about 1/3 of the US reconstruction aid capital for rural development, mainly for science and technology development, vocational training for farmers and providing credit capital for agriculture. Among the factors that create the success of agricultural development, we must mention the important role of farmers' organizations. Taiwan has 4 farmers' organizations: Farmers' Association, Fruit Tree Cooperative, Irrigation Association and Fisheries Association. Basically, these are cooperative economic organizations that provide non-agricultural services, including providing materials and consuming agricultural products, helping farmers increase their bargaining power in buying and selling activities. Among these organizations, Farmers' Association is the largest organization and plays a great role in Taiwan's agricultural development.

The Farmers' Association was established to act as a bridge between the government and farmers, connecting farmers with the government. On the one hand, it guides farmers to effectively implement agricultural development strategies, while at the same time reflecting farmers' urgent demands to the government and protecting their interests. This is the difference between the Farmers' Association and other cooperative organizations that purely serve the economic purposes of farmers. In such circumstances, the Taiwanese government chose the Farmers' Association as a strong arm to implement the agricultural development strategy, aiming at ensuring food safety and promoting agricultural exports. Up to now, after many reforms and developments, the Taiwanese Farmers' Association still plays two main roles:

- Is an organization of farmers, to protect the rights and represent the people; provide services for farmers such as: agricultural extension, credit, insurance, information, marketing and consumption of agricultural products.

- Is an organization authorized by the government to solve problems to serve the government's goals of agricultural and rural development; receive investment capital and preferential credit from the state, and implement rural socio-economic development programs.

Farmers' Association plays a key role as a bridge between the government and farmers, is a special political - economic - social organization to organize and help small-scale farmer households in the process of large-scale commodity production.

Because of its special importance, the Taiwanese government focuses on supporting the Farmers' Association in many aspects, first of all with huge financial support. Specifically: 50% of the capital of

The Agricultural Association is provided by the government, not to mention other direct investments in rural areas such as infrastructure construction, transfer of new varieties, and technical advances through development programs. With the reasonable policy of the Government, the Agricultural Association is truly the main source of capital for Taiwanese farmers. The Agricultural Association was established by farmers, so it has a network of branches in all rural areas, clearly understanding the loan needs, the borrowers, the payment capacity... of each household; therefore, the risks are low, the costs are cheap, the loan procedures are convenient for the people, and the loans are for the right purposes. The Agricultural Association's loans focus on activities of developing irrigation, livestock, processing and consuming agricultural products.

In addition to credit activities, the Farmers' Association also promotes the consumption and trading of agricultural products. The Farmers' Association's agricultural product promotion activities focus on activities to help members such as: providing input materials for the production process, organizing the purchase of agricultural products, organizing and developing wholesale markets and product processing... To overcome the situation where farmers lack information and are not proficient in handling commercial transactions, the Farmers' Association focuses on helping members consume agricultural products together. Products that are focused on promoting consumption include pork, vegetables, mushrooms, asparagus, onions and rice. The Farmers' Association also promotes business activities at markets and wholesale centers through purchasing or guiding farmers to consume agricultural products. The market is equipped with a modern management system including transportation, warehousing, slaughtering, price information, and quality control services. The wholesale market system allows public auctions, ensuring the rights of both buyers and sellers. Farmers can choose to sell through the Agricultural Association channel or sell outside.

Thus, Taiwanese farmers, through the activities of the Farmers' Association, have mastered the entire supply chain of input materials and output products of agricultural production. Taking agricultural production and rural economic development as the center, the Farmers' Association's agricultural supply business activities always ensure that farmers have sufficient quantity, quality and the best price. At the output, the Farmers' Association's product consumption chain reaches the final market in cities or abroad, with a good service system, infrastructure and marketing, allowing farmers to rest assured to produce the right type, quality, and time; and most importantly, to strengthen the position of farmers and their agricultural products in the market, ensuring the highest benefits for producers. When the Farmers' Association promotes the consumption of a certain agricultural product, information

The market will be responded to farmers, making them actively participate in activities supporting the consumption process. Therefore, the activities of the Farmers' Association create a spillover effect, connecting the process from production to consumption of each product line.

Regarding agricultural extension activities: Agricultural extension activities of the Farmers' Association focus on the following areas:

- Training knowledge and production development techniques for farmers

- Providing materials and services for production

- Providing credit to farmers

- Guide farmers to organize and plan production

The agricultural extension activities of the Farmers' Association are mainly to assist farmers, not to do business. In the early stages of Taiwan's agricultural development, the main source of funding was the State, accounting for about 70% of the agricultural extension activities of the Farmers' Association. In the later stages, the funding for agricultural extension was mainly from the Farmers' Association's profits (accounting for 56%) and the government provided 32%. Training is highly emphasized in the agricultural extension activities of the Farmers' Association, accounting for about 45% of the agricultural extension budget.

According to the policy of the Taiwanese Government, agricultural extension activities are assigned to the Agricultural Association system under the supervision and assistance of the Ministry of Agriculture. Therefore, for agricultural extension officers, farmers are both customers and managers. Technical transfer activities are closely linked to credit services, processing, seed production, marketing, etc. Profits from credit services are reinvested by the Agricultural Association into agricultural extension activities; thus, it not only creates a market to attract agricultural technical staff to work in rural areas, but also creates a market for scientific and technical advances and mechanical equipment from Institutes and Schools to be brought to rural areas.

2.1.5.3. Some lessons for Vietnam

Through studying the experiences of China, Japan, and Taiwan in linking the "four houses" in particular and developing commodity agriculture in general, we can draw the following lessons for developing Vietnamese agriculture in the period of industrialization, modernization, and international integration:

The first lesson is that the State plays an important role in supporting and promoting production as well as creating sustainable links between entities in the agricultural value chain from production to processing and consumption; especially in fragmented and backward agricultural production.

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