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HomeSocio-Economic information

Promoting connection and cooperation in agricultural production

Posted Date: 11/12/2018
​Production connection and cooperation are considered as one of the important solutions to help people acquire stable income, aiming towards the development of production of high value agricultural products. Because of this, Dong Nai is currently developing a new framework of policies to broaden its scope and simplify supporting procedures to promote connection and cooperation in agricultural production.

Expand the range of supported subjects 

Dong Nai is one of the first regions of the country in implementing connection in agricultural production. According to the Vice Chairman of the People's Committee of the Province Mr. Vo Van Chanh, Dong Nai is currently a province with the earliest and most synchronized policy framework. As a result, many joint production projects have been implemented effectively and with positive possibilities.
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 The beneficiaries of connection policy in production shall be expanded to include the aquaculture and many other activities. 

According to the Department of Agriculture and Rural Development, until now, there have been 19 large field projects approved to become operational in the province, with a total area of over 7,000 ha, attracting over 6,000 farmer household. The connections between farmers, co-operatives and companies recently has delivered certain effects such as improved productivity, improved product quality, stricter managed production process... Especially, many agricultural products in the production chains now have stable market due to connection with companies.
 
However, the development of connection between business has also encountered some limitations, resulting in the number and area of implementation are still limited. According to the Vice Chairman of the People's Committee of the Province Mr. Vo Van Chanh, one of the limitations is that the number of people benefitting from the connection promotion policy is still low. "According to Decision 58 of the People’s Committee of the Province, the implementation of the new support policy only applies to cultivation. Livestock, aquaculture breeding... are not eligible for support, while these are the strong areas of the province in terms of agricultural production,” The Vice Chairman of the People's Committee said.
 
From this reality, Dong Nai is currently assigning the Department of Agriculture and Rural Development to develop a new policy framework to expand the range of beneficiaries from connection promotion policy.
 
According to the Deputy Director of Department of Agriculture and Rural Development Mr. Le Van Goi, the draft of the new support policy of Dong Nai is based on Decree No. 98 on the policy of encouraging the development of cooperation in production and consumption of agricultural products issued by the Government in July last year. The significant change in the policy this time is in the expansion of range of beneficiaries. "Before, only cultivation got supported, then in this new draft shall extend its support scope to including livestock, aquaculture, forestry," Mr. Goi said.
 
According to Director of the Department of Agriculture and Rural Development, in the draft there are 10 subjects that would be supported, including: financial support for connection consultancy; infrastructures for joint services; support to agriculture models, support for breeds, materials, slaughtering costs, packaging and labeling of products from co-operative’s concentrated services; support the costs of transferring new science and technology... According to this, individuals, companies and cooperatives, when leading the connected production and consumption lines of agricultural products shall be supported by the state budget in terms of connection consultancy with the amount of 300 million dong. The joint project shall be supported by the state budget by an amount of 30% of total investment capital for machinery but not exceeding 10 billion dong. "Estimated budget for the period of 2019 - 2025 of the project is about 50 billion," Mr. Goi told us.
 
“Untangle” the red invoice complication (VAT invoice)
 
According to Mr. Le Van Goi, with 19 joint projects approved, Dong Nai is now the province with the highest number of joint projects in the country. However, in fact, the paddy field area of the joint project(s) has only accounted for less than 5% of the planned paddy field area, and the number of farmers participating is only 2.4% of the total agricultural production households in the province.
 
One of the reasons that have lead to this situation was due to support procedures for projects were still complex and the level of support was still not high that farmers were not interested in participating. After over 3 years of implementing joint project support, the disbursed amount for projects was only 800 million, equivalent to about 10% of the total funding.
 
Particularly, according to the farmers and co-operatives participating in the project, although the Government’s support amount for seeds and materials would be 30%. However, the actual amount that they received was much lower
 
Deputy Director of the Department of Agriculture and Rural Development Mr. Le Van Goi also acknowledged that the application of red invoices for 100% of the value of seedlings, agricultural materials did not actually equal 30% as prescribed. As an example of this insufficiency, Mr. Goi said, a farmer when participating in a large paddy field project, if he spent 10 million dong purchase of agricultural supplies, although as prescribed he would be supported by an amount of 30% of 10 million dong equivalent to 3 million. However, to get the support he must have a red invoice for the total amount of 10 million dong. After calculating the value added tax (VAT), he had to pay 1 million (10%) tax. Thus, the actual support he could get was only 2 million dong.
 
Therefore, according to Mr. Gọi, in the draft of new support policy, the Department of Agriculture and Rural Development has also proposed to apply only the red invoice for the actual supported amount so that farmers and co-operatives can receive larger supported sums overall. "In the new draft, we propose that red invoice only applies to the actual sum provided. As stated above, according to the new policy, the said farmer would only have to pay VAT for the 3 million dong provided to him, equivalent to 300,000 dong. Thus, the actual support he receives would be VND 2.7 million, "he said.
 
Le Van