|Vietnam Analytical Update | August 8, 2017
Authors: Hai Pham, Sunita Kapoor, Brian Ong
Addressing Climate Change in Vietnam: Harnessing the Power of High-Tech Agriculture
Introduction: The Current Agriculture Problem
In recent years, climate change has hindered the continued growth of the agriculture sector in ASEAN. In Vietnam, climate change is beginning to drastically impact the livelihood of farmers, specifically rice farmers, in the Mekong Delta region. Rice farmers must deal with both droughts and floods, with such extremes making it difficult to rapidly adjust. Erosion of river banks from these floods has washed away much of the fertile soil and increased salinization of the Mekong Delta. In addition, Vietnam’s “Rice First” policy, implemented after the war to stabilize the economy and food security, has created an overdependence on rice. Overdependence on a single cash crop, combined with the above climate change factors in the Mekong Delta poses serious sustainability risks to rice farmers. Should these climate change trends remain constant, it is estimated that the nation may see a 7.2 ton decrease in rice yields and 3.2 percent loss of agricultural land by the end of the century.
In response to these factors impacting the agricultural sector, the Vietnamese government under the leadership of the Minister of Agriculture and Rural Development, Nguyen Xuan Cuong, has implemented a $4.4 billion credit line for high-tech agriculture projects to alleviate the volatility in the agriculture sector caused by climate change. In March 2017, Prime Minister Nguyễn Xuân Phúc signed a resolution providing a credit package worth VND 100 trillion (US$4.4 billion) to invest in the development of high-tech agriculture at lower than market rates. The State Bank of Vietnam (SBV) has been tapped to establish regulations to disburse this line of credit to Vietnamese farmers. For example, the SBV will offer credit packages with interest rates 0.5-1.5 percent lower than average rates. These credit packages will offer 6.5 percent interest rate for loans with a life of 12 months or less; 7.5 percent interest rate for loans that exceed 12 months. Agribank, Vietcombank, and the Bank for Investment and Development of Vietnam will offer credit packages for agriculture equipment, technology, production, fertilizer, and pesticides. The SBV reported that the total amount of outstanding loans for high-tech agriculture is $14.2 billion. At the end of May 2017, the amount of outstanding loans for agriculture and rural development was $50.6 billion, up 9.9 percent from the end of 2016.
The following report reviews the key stakeholders which make up Vietnam’s agricultural ecosystem and the myriad challenges they face in utilizing technologies to promote innovation and greater efficiency.
How We Define High-Tech and Climate-Smart Agriculture:
High-tech farming utilizes technology to produce more efficient, environmentally-friendly farming processes and better quality crops. Effective high-tech farming introduces leaner operations for farmers and potentially higher returns, better quality and unchanged quantity of food for consumers, and better environmental conditions for the people in the region.
Climate-smart agriculture, which is rather analogous to high-tech agriculture, presents innovative farming methods to alleviate some of the volatility in the agriculture sector because of climate change. If proof of concept and implementation are effective, climate-smart agriculture will help achieve national food security and economic development goals. These innovative methods incorporate elements of the following three principles:
Climate Corporation, a subsidiary of Monsanto, utilizes data science to assist farmers increase their productivity. They offer software so that farmers can visually map their fields and assess the health of their crops. This will detect any weather threats to a farmer’s harvest, and they can address them proactively. In addition, they offer technology that allows farmers to test the quality of water and nitrogen levels in soil, to evaluate the growing conditions of their crops. They can keep record of this data and compare it to previous growing seasons. This allows farmers to adjust to the impacts of climate change and to work efficiently such that it minimizes the damage to the food supply and incomes of the farmers.
To understand how effective high-tech agriculture can be implemented in Vietnam, it is necessary to analyze the various stakeholders to see who the key players are, who holds power, and where there may be pain points with respect to buy-in.
Current Action Plans and Examples of High-Tech/Climate-Smart Agriculture Projects Implemented in Vietnam
Example 1: The International Union for the Conservation of Nature and the Netherlands Development Agency launched the Mangroves and Markets (MAM) initiative which incentivizes shrimp farmers to preserve the mangroves in the provinces of Ben Tre and Tra Vinh.
Example 2: Vietnam Food purchases more than 100 tons of shrimp waste (shells and heads) from Ca Mau shrimp farmers every day and repurposes it for animal feed
Example 3: Development of climate proof irrigation systems in the Mekong Delta (Hau Giang, Ben Tre, and Tien Giang provinces)
Example 4: Developing rice cultivation methods that are resistant to severe drought or flood. With the understanding that reversing climate change will not be immediate, the Ministry of Agriculture and Rural Development (MARD) has recommended the implementation of a crop diversification plan to run through 2020, with the goal of reducing greenhouse emissions by 20 percent every year. The focus is on hardier crops that are more resilient to climate change
It is critical to find the right balance of practices that address short and long term environmental and industry issues. Crop diversification or mixed farming systems may alleviate the income issues for farmers in the short term, but do not necessarily address the long-term environmental issues that high-tech and climate-smart agriculture seek to mitigate.
Although high-tech agriculture may be the answer to the many environmental issues at hand, there may be challenges regarding buy-in and implementation. Many farmers can be risk averse and reluctant to change. This is especially true when farmers feel they have a firm grasp of what works well for them, both in terms of operations and access to resources, and have done so for generations. However, if there are structures put in place that show these farmers that high-tech agriculture methods produce leaner, more efficient operations, then that may provide the security that these farmers want when adopting new techniques. It would be useful to provide farmers with literature or workshops to educate them about these innovative farming techniques, equipment, and products. This will ease the transition and implementation phases. Besides offering friendly interest rates for loans, the government to offer business or tax incentives to implement these new practices.
In terms of improving the implementation of high-tech agriculture programs, it may be helpful to launch a pilot program in certain provinces of Vietnam for one to three years to show its effectiveness. It is imperative that this pilot program be tailored for the region, especially when engaging with different types of farmers and introducing crops and equipment that are appropriate for the geography. At the end of this pilot program, it may be necessary to consult with a third party to assess the effectiveness of this program and to see if it can be scaled up for the rest of Vietnam. Furthermore, from a policy perspective, if the government commits to high-tech agriculture, then they may mandate the use of high-tech agriculture farming methods or products. If mandates are implemented, they should be done so in an incremental manner. It would be more effective to map out a five to 10-year process, rather than enforcing high-tech agriculture immediately.
High-tech and climate-smart agriculture firms with products and services have the potential of tapping into a new market in Vietnam and to contribute to reversing climate change. In some ways, these firms are introducing new technology, such as a new seed or irrigation system. However, in some contexts, just recognizing the environmental issues and offering creative solutions, such as the MAM initiative can be equally effective without changing the day-to-day operations of farmers in the region. It is with this balance where Vietnam may see effective change from a policy and industry perspective.
High-tech agriculture is a multibillion dollar industry in Vietnam and will have economic, social, public health, and environmental impacts. In building upon this momentum, the 39th ASEAN Ministerial Meeting on Agriculture and Forestry (AMAF) will serve as a platform for US companies to highlight some of their innovative practices that can be developed in the region. The AMAF seeks to improve the agriculture and forestry sectors, while fortifying food security in the region and addressing environmental issues.