Developing an Agricultural Research
and Development Priority
Framework
for Vietnam
Economic & Policy Sub-Sector
Workshop
Data and Information Sheets:
Economic & Policy Research Opportunity
(EPROs)
EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS,
FORECAST & POLICY ANALYSIS
EPRO 2: NATURAL RESOURCES AND RURAL
ENVIRONMENT MANAGEMENT
EPRO 3: RESEARCH, TECHNOLOGY DEVELOPMENT
AND TRANSFER DELIVERY SYSTEMS FOR
AGRICULTURE AND RURAL DEVELOPMENT
EPRO 4: SOCIAL SECURITY FOR RURAL PEOPLE AND
SUSTAINABLE POVERTY REDUCTION
EPRO 5: CLIMATE CHANGE
EPRO 6: RURAL DEVELOPMENT
EPRO 7: IMPACT OF INTERNATIONAL ECONOMIC
INTEGRATION AND MARKET ACCESS TO THE
VIETNAM AGRICULTURAL TRADE
July 2010
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EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS, FORECAST
& POLICY ANALYSIS
DATA SHEET
ARDO DEFINITION
1.1 National Goal or Purpose
To develop the capacity for market analysis and forecast, to improve competitiveness of major

production (including paddy, corn, cassava and sweet potato) has increased annually. In the
period from 1996-2001, total food production has increased from 31.48 million tons to 39.43
million tons (equivalent 5.05% per year). In 2002-2006, production rose further from 43.1 million
tons to 48.9 million tons (2.69% per year). At the same time there has been increased
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competition for land and water uses between rice production and industrial crops or other uses as
industrialization continues in the Vietnamese economy. Between 2001 and 2007, more than
500,000 hectares (1.2 million acres) of farmland had been converted into industrial parks. So far
in 2008, 125,000 hectares of rice fields have been lost.
According to MARD, the total export turnover of agricultural sector up to October 2008 is
estimated to reach 13.6 billion USD, up 25.7% over the same period last year, in which
agricultural products reached 7.4 billion USD, up 42.5%; fisheries reached 3.8 billion USD, up
24.2%; forestry products reached USD 2.46 billion, increased by 16.7%. In the same time, the
agriculture sector had 5 products with turnover of over 1 billion USD (fisheries, rice, forestry
products, coffee and rubber) out of 11 products that reached value of over 1 billion USD of the
country.
However, agricultural markets in 2008 also witnessed many unexpected changes. During mid
year, world food prices increased sharply and stayed at a peak of 300% over the same period of
2007 and then dropped. For example export rice prices reached a high of around US$800/ton in
2008 resulting in sharp increases in domestic rice to a high of about 20,000VND/kg (or
US$1.3/kg) in late April 2008. During 2009 export prices have declined. A similar situation
happened with meat products and industrial crops such as rubber, to early 2009, the price of
rubber (1,500 USD per ton) decreased almost 50% compared with the peak in 2008 (2900 USD
per ton). The stabilization of food prices is important because rapidly increasing food prices will
reduce purchasing power. In 2007 food prices have increased 14.6%. In early 2008, food prices
increased sharply, leading to the share of food reaching 43% in total household expenditure.
Among Vietnam’s agriculture products, rice (15%), aquaculture (30%), coffee and rubber
account for 80% of total annual export turnover. Together with meeting domestic demand,
agricultural exports have also grown quickly, both in quantity and value. For the past two
decades, Vietnam has become one of the world’s biggest agricultural exporting countries,

directly under the Government with thousand of staffs. Especially ABARE, which has 300
experts work on management and quality control issue of products. Countries like USA, EU and
Australia focus on quality control and increasing value added of agriculture products rather than
to stimulate supply.
Forecasting also includes prediction of total crop production, based on reliable on-farm data.
Collection of farm-based data could provide information on the health (input and output costs,
profitability, investment levels etc) of the agriculture sector. Analysis of this data and
information could provide valuable inputs into advice on policies for the agriculture sector
including policies relating to food security, both at the national and local level.
The five-year plan on agriculture and rural development (2006-2010) indicates an action plan
with focus on the development of high value commodity crops, livestock products and forestry
plants toward yield and production improvement. The plan also clearly states orientation on
growth rate, production, added value, the share of agricultural commodities, etc. in order to push
the development of these commodity sectors. This is considered the key task in the action plan on
the agricultural sector. Therefore, it can be said that commodity development with key solutions
of policy reform, institutional, organizational and public investment improvement are the first
important assignments of the sector. This project really matches with the above target.
Operational Environment
3.1 Political and Legislative Environment
Apart from Decree No. 7 issued at the central government meeting in July 2008 on the target of
developing comprehensive agriculture orienting to modern, sustainable and massive commodity
production, Vietnam has not yet issued policies or comprehensive strategies on a particular
agricultural commodity or on the investments in commodities related to future or stable or
sustainable markets. Policy intervention is mainly through related policies which may directly
and indirectly affect the commodity sector. These include 3 major policy groups on production
support, land and trade and supporting agriculture production policies such as science and
technology, credit and agricultural extension. Much of the legislation relates to Vietnam’s
obligations to international agreements. These are important, but they relate to the ability to trade
(export and import) rather than what to trade and how to empower producers, processors and
exporters of Vietnamese product to be competitive while being profitable. Examples of related

 Decree No. 03/2000/NQ-CP of the Government dated February 2, 2000 on farming economy
stipulates policies on land allocation, lease, transfer of land use right in order to encourage
cultivated land concentration, agricultural development toward farming scale, facilitating the
development of material production for focused commodities.
Trade policies
To meet requirements of the Agreement of Agriculture (AoA) the Vietnamese Government has
issued the following policies aimed at formulating a certain discipline in agricultural trade and
support policies and avoiding the use of policies that distort the world trade of agricultural
products.
 Decision No. 1042/QD-BTM issued by the Ministry of Trade on 29 June 2007 on lifting
bonus for export achievement. This decision is to implement Vietnam’s WTO commitment to
remove export subsidies.
 Law No. 20/2004/PL-UBTVQH11 on 29 April 2004 on anti-dumping of goods imported
into Vietnam.
 Decision No. 02 /2008/QĐ-BCT dated 21 Jan 2008 on the plan on development of machinery
industry for agriculture in 2006-2015 with vision towards 2020.
 Decision No. 104/2008/QD-Ttg dated 21 July 2008 on export tariff on rice and fertilizer.
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 Decree No. 39/2006/QĐ-BTC dated 28 July 2006 on tariff on export and import goods. This
decree mentions all kind of goods imposed with export tariff, of which only some agricultural
products are included in compliance with AoA.
Sanitary and Phyto-sanitary Agreement (SPS): Relevant international organizations or WTO
members are responsible for the definition of SPS measures and Vietnam is obliged to meet
importing countries SPS requirements. The following legal documents and policies have been
issued:
 Decision No. 04/2008/QD-BNN on 10 January 2008 on the functions and cooperation of
Vietnam’s SPS enquiry points.
 Law No. 12/2003/PL-UBTVQH11 dated 26 July 2003 on food sanitary measures.
 Decree No. 149/2007/QD-TTg dated 10 Sep 2007 on the implementation of a national plan
for food sanitary measures.

 Decision No. 27/2007/QD-BNN of the Ministry of Agriculture and Rural Development dated
12 April 2007 on management regulations of the national plan on the development and
implementation of bio-technologies in agriculture until 2020.
 Law No. 05/2007/QH12 dated 21 November 2007 on product quality. This provides
regulations on quality of export products in general and binding that all exporters have to
follow this law and other international and regional commitments.
 Decree No. 151/2006/ND-CP dated 20 December 2007 on regulating national credit for
investment and export.
 Decision No. 08/2007/QĐ-BTC dated 2 March 2007 on interest for credit for investment and
export.
In general, besides positive effects, policies related to agricultural commodities are mainly
situational and passive, often issued at time of crises (rice crisis, coffee, food safety, animal
inputs, etc.). Commodity policies are mainly support for production, and specific regulations
relating to Vietnam’s international agreements which impact largely on access to global markets,
agricultural subsidies, product quality and specific sanitary and phyto-sanitary requirements.
There is little comprehensive policy along the chain of a specific commodity: planning, forecast
for investment, production organization, input materials, production, processing, trade, quality
control, risk management, and support for end consumers. Policy formulation process is reactive
and is generally not on a scientific basis and does not have proper consultation of many relevant
stakeholders such as policy makers, researchers, private sector, farmers, etc. As a result, market
forecast of agricultural commodities as the basis for policy formulation is really necessary.
Economic Environment
Planning based on production areas and yields with a focus on exports risks creation of an
imbalanced sectoral structure. Farmers are encouraged to invest in strong export commodities
such as coffee, pepper, cashew nut, rice, and tiger prawns. Weaker sectors such as livestock,
poultry, and forestry products, with large and often unfulfilled domestic markets do not seem to
receive sufficient support. Investment in strong export sectors are large often without due regard
to markets. Supply, often of low quality, has quickly exceeded demand for some crops with
surpluses in crops such as coffee, rice and catfish in recent years having significant impacts on
producer’s livelihoods. At the same time, investment and competitive advantage in local

of geographical information system (GIS) and modelling in analysing the balance of supply –
demand of rice for seven ecological zones of Vietnam. The important outputs include (i)
identification of areas of comparative advantage for rice production; (ii) methodologies for
improved estimation of rice yields and total production and forecasting demand for each
ecological region including some provinces; (iii) estimation that with a rice area of 4 million
hectares, and projections of domestic demand that Vietnam can maintain exports of 2-4
million tons/year with a price decline by 20% resulting in exports close to the 2m tons/year;
(iv) Household demand for rice in 2010 with the rate of urbanization of 33% will be about
13.8 million tons. Price variation of rice will increase or decrease consumption of rice by
about 1 million ton.
 Trends for livestock development in Vietnam
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are impacted by instability and high prices of
meat, high cost of animal feed, high price of breeding, and ineffective veterinary services.
Output is limited by low income, low meat quality, incomplete standards and system, lack of
information, and lack of distribution system for consumption. It also indicates the role of
government in creating a legal corridor, management of quality standards, safety and hygiene
of food that are very important and necessary to be improved to strengthen their role in
supporting the promotion of the livestock sector.
 Domestic consumption of coffee
3
sector, using survey data based on standard of living
indicate an increasing demand for coffee, especially in urban areas of Vietnam.
Research on competitiveness
 In 2002, Nielsen
3
conducted a research on rice sector of Vietnam on the international market,
summarizing the production, structure and commercial trends of the international rice market
and an evaluation of current policies for rice, especially the policies relating to market access,
export subsidies, use of GMOs and domestic support in other countries.

 A Study on trade liberalization in the livestock industry
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applied general equilibrium
modelling to assess the impact of trade liberalization indicated that (i) In general, trade
liberalization would not have negative impacts on Vietnamese livestock industry as the
volume of meat trade internationally would be low; (ii) impacts of international trade
liberalization, such as price shocks are likely to be low as Vietnam is self-sufficient in pork
and poultry with relatively low consumption of beef; (iii) exemption and reduction of import
tax on materials for animal feed processing on the development of the industry, especially pig
and poultry raising is likely to benefit the domestic livestock industry.
 One of the negative impacts of trade liberalization and increasing dependence on export is the
variation in domestic price
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.as price uncertainty not only makes farmers vulnerable but also
affects those in processing industries and some traders. Coffee prices peaked to a historic high
in 1990, causing overproduction and thus dropping prices which resulted in a serious impact
on the livelihood of coffee growers, particularly those in Daklak province – the biggest coffee
area in Vietnam. With low world prices and evolving globalization and trade liberalization,
farmers especially the poor, will be the most vulnerable.
4
Cao Bang Hoang, Tran Thi Quynh Chi, et al (2004)
5
Chantal Pohl Nielsen, University of Copenhagen and Dannish Food Economic Research Institute, “Vietnamese
rice policies: reform and opportunities for the future”, Asian Economic Journal, No. 17, 2003
6
Institute of Agricultural Economics and the Agricultural University (2005) funded by the Capacity building
Enhancement Fund for Vietnam (CEG), Australia.
7
ICARD and Oxfam (2002)
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for market analysis such as market differentiation, comparative advantage, trends in markets
and future opportunities is often available, but rarely incorporated into commodity research.
 Information collected has not met all the demands of commodity market research,
particularly the information needed to assess supply and demand of the goods.
 Timeliness of information on strategic commodities collected by the down-to-commune
vertical hierarchy General Statistics Office often means that prediction of crop yields are not
available until well after harvest time, which does not support sound investment decisions
by producers, processors and exporters.
 Vietnam has not yet been able to build scheme and development planning based on the
study of the competitiveness and comparative advantages of the main commodities – among
the local regions as well as between Vietnam and other countries.
 Research for market analysis of some strategic goods is available but not yet comprehensive
and does not come into details of the international market, tastes of the potential markets,
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Agrifood Consulting International (2002)
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International Food Policy Research Institute (IFPRI) and the Ministry of Agriculture and Rural Development
(MARD) (2001) "Selecting livestock policies to promote rural income diversification and growth in Vietnam”
10
Tran Thi Quynh Chi et al (2007)
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and competitiveness of Vietnamese goods etc. This is especially true for research conducted
within projects, which are usually not updated continuously and systematically.
 Market outlook for Vietnamese agricultural commodities is almost left untouched by
researchers. Although the Institute of Policy and Strategy for Agriculture and Rural
Development has done some researches to analyse the economic forecast for coffee sector,
few researches applied the balance model, which are partly for rice and animal-feed sector;
these researches are merely experimental and primitive. Other strategic sectors have not had
similar researches.
 In order to carry out similar researches in other commodities, there should be a system of

required to catch up with that great demand.
Research providers
MARD does not yet have any organizational systems or processes for development of up-to-date
analysis of commodity markets. Commodity research and information is often project related,
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short term and lacks an organizational framework. Development of these skills will take time
and will require international technical assistance.
IPSARD is currently one of a few agencies that are doing policy research on agricultural
commodities in Vietnam. IPSARD researchers are weak and insufficient in terms of the number
in analysis and forecasting work using advanced economic models. Therefore, capacity building
in this area is very necessary to implement the project. Information sources and forecasting
experts using economic models that IPSARD is focusing on for learning experiences include:
- Economic Research Service - ERS under United States Department of Agriculture;
- Australian Bureau of Agricultural and Resource Economics - ABARE;
- International Food Policy Research Institute – IFPRI; and
- International Livestock Research Institute – ILRI.
SWOT analysis
Strengthens Weaknesses
 Study methods (market analysis, forecast
models) are now available.
 Established relationships with international
agencies experienced in commodity analysis
 There are many professional commodity related
reports that are becoming increasingly available
through the internet
 Professional, enthusiastic experts of market
research are gathered in IPSARD
 IPSARD with its policy consultancy function
will be the best bridge to MARD and
Government .

 The studies usually use old data, and take long
time; therefore, they haven’t been able to response
quickly to urgent requests of policy makers and
businesses.
 Lack of funds and statistics expertise to establish a
production monitoring system.
 Lack of relationship and network with provincial
officials.
 Policy makers are lack of scientific information for
market forecast, therefore policy recommendations
from scientific studies haven’t really been taken in
decisions making.
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Opportunities Threats
 Market forecast plays more and more important
role policy making decisions.
 Data with sound analysis could provide
information that would improve investment
decisions by producers, processors and
exporters and assist in development of policies
including food security
 A shift from production target driven planning
to planning based on commodity research will
provide a scientific base for decision making
 Through IPSARD, this EPRO can get
cooperation with international organizations
who are experienced in agricultural market
monitoring.
 Vietnam’s Government and MARD consider the
issue of food security as a national priority.

EPRO 2: NATURAL RESOURCES AND RURAL ENVIRONMENT
MANAGEMENT
DATA SHEET
1. EPRO DEFINITION
1.1. National goal or purpose
To develop a legal framework and policy environment to enhance (i) the sustainable and efficient
use and management of natural resources in the agricultural sector and (ii) healthy environment
in rural areas to ensure the sustainable agriculture and rural development; and (iii) to reduce the
adverse impacts of agricultural production on natural resources and the rural environment.
1.2. Research Scope
 To construct an effective database and monitoring system for natural resources use in the
agricultural sector and rural environment;
 To conduct research to estimate the mutual relationships between agricultural production and
natural resources use and the environment in short term and long term through quantitative
techniques such as experiments, environmental evaluation, cost benefit analysis, bio-
economic models, general equilibrium models and qualitative techniques such participatory
rural assessment, case study, etc.
 To study strategy/approach for the MARD and the government to maintain optimal natural
resources use and management and healthy rural environment; and
 To provide timely information and knowledge of these above research results via policy
discussion forum, conference, publications to assist the public and private sector to develop
their working plan and strategy.
1.3. Coverage
The focus includes:
 Land use and management in agricultural sector and rural areas;
 Water use and management in agricultural sector and rural areas (irrigation and drinking
water);
 Agro biodiversity conservation; and
 Rural environment protection.
2. POLICY OVERVIEW

Land allocation.
The Land Law 1993 and the Decree 64 CP 27/09/1993 allocated agricultural land to farmers in
long-term with stable use. The most important principle of the land allocation was to maintain
equality. Commonly, many localities in the North allocated a certain amount of land to each
person. Other conditions that were taken into consideration during land allocation were social
policies, land quality, the irrigation system, distance to plots and capacity for crop rotation.
Land use planning.
The land use zoning and planning is a bottom-up process based on geographical condition. The
process begins at the commune level. At this level, land use zoning and planning is formulated in
detail on the basis of parcels of land. Local production and investment plans will be formulated
based on this physical planning framework. Then, they have to submit the formulation to the
people councils at the same level and to district people committees. From the commune, the
process then moves up to the district, provincial and national levels. The periodic cycle for land
use zoning is ten years and for land use planning is five years.
Agricultural land is classified by six categories: (i) Land for planting annual crops; (ii) Land for
planting perennial crops; (iii) Forest land (production, protective forest, specialized use forest);
(iv) Land for aquaculture; (v) Land for salt production; and (vi) Other agricultural land stipulated
by the Government.
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Land use duration and quota
Land use purpose Duration Land quota
Plant annual crop, aquaculture, salt production 20 years 2 ha (Central and Northern)
3 ha (Mekong River Delta)
Plant perennial crop 50 years 10 ha
Additional land to plant perennial crop 50 years 5 ha
Forest 50 years 30 ha
Additional land for protective forest and production forest 50 years 30 ha
Tax on agricultural land
Current taxes related to agricultural land in Vietnam include (i) tax on agricultural land use, (ii)
tax on land use rights transfer, and (iii) tax on land over the land limit. In 2003, the Government

on-farm canals to provide full or partial irrigation services as required by farmers. There are six
types of WUO: agricultural cooperative (main type), water user group, water management board,
village’s water management board, water user association, and villages.
Irrigation supply fee is collected from organizations and individuals using water resources for
growing rice, vegetables, winter crops, short-term industrial crops, and salt production. A fee
frame is set by the government and each province can determine a particular rate based on reality.
Fee is in Vietnamese Dong (VND) charged based on the area of their irrigated crop land and type
of crops instead of volume of water they use.
Fees are typically collected by water user groups, which retain a part of the fee for their
collection efforts. The remainder is forwarded to the IMC. However, fees cover typically not
more than half of the operation and management expenditure of the IMCs. If natural disaster
mitigation and large-scale rehabilitation are included, the fees only cover about a quarter of total
operation and management costs. Most recently, Decree 154/2007/ND-CP of the Government
exempts the irrigation supply fee for farmers in the canal served by IMC. Nevertheless, farmers
still have to pay on-farm irrigation. This policy has raised many concerns about its social
economic impacts and efficiency.
Drinking water in rural areas
At central level, the National Centre for drinking water supply and rural hygiene of MARD is
responsible for: (i) design national strategy and plan of drinking water supply and rural hygiene;
(ii) Formulate technical standards for constructing drinking water supply works; (iii) monitor
water quality. At provincial level, there are centres for drinking water supply and rural hygiene
under the management of Provincial Department of Agriculture and Rural Development. Each
year, these centres select some communes in a province constructing drinking water works
(including community water supply work, small reservoir, deep well, and private water supply
work) for rural population. The budget for water work building is shared by national budget,
provincial budget and water users. The contribution of water users is at least 25 per cent of total
cost. They can apply for credit from banks (the National Program’s total fund for credit is 5649
billion VND). When the construction of water supply works is completed, they will be
transferred to and managed by rural communities. Apart from the public system, in some
provinces, there are also private companies supplying drinking water in rural areas. Water users

2,541,675 ha.
Outside the protected areas (buffer zones, landscape, planning, and mainstreaming conservation
in production sectors).
Conservation of species diversity
MARD collaborates with other ministries, agencies to examine, assess endangered endemic plant
seeds, husbandry animal breeds to include in the List of endangered valuable species and races
that need to be protected.
Custom agencies have to check, identify and address illegal imports of invasive exotic species.
Provincial People Committees have to prepare the lists of invasive exotic species to report to
MONRE and MARD. The production of exotic species is only permitted after the examination
result shows that this species is harmless to biodiversity.
Conservation of genetic diversity
Ministries and agencies have to preserve and protect in long term the heredity elements of species
and the List of endangered plant seeds and husbandry animal breeds for the purpose of research.
The state encourages organizations and individuals to conserve and protect heredity elements to
establish gene bank systems contributing to the biodiversity conservation. Until now, many
research institutes of MARD have their own gene banks for their research field, such as Maize
research institute, Food crops research institute, etc.
MONRE manages the database on modified genes and heredity elements of genetically modified
species related to biodiversity. Organizations and individuals conduct research to create
genetically modified species have to register with Ministry of Science and Technology.
2.2.4. Rural environment protection
In general, the rural environment protection is encapsulated in legal documents such as the
Environmental Protection Law 2005, Degree 67/2003/ND-CP on environmental protection fee
for waste water, and Degree 174/2007/ND-CP on environmental protection fee for solid waste,
etc. Apart from those, this issue has been also regulated in strategies (Strategy for national
environmental protection up to 2010, the National Agenda 21 on Orientation strategy for
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advancing toward sustainable development 2002), National program of the government for clean
water and rural hygienic development (NPCWRHD), and MARD’s directives such as Directive

Bank 2003). This situation leads to low productivity, and puts constraints on agricultural
commercialization, application of modern technology, hence affecting efficiency in agricultural
production for all farm households. Accompanied by imperfect land tenure and
underdevelopment of land market institutions, land fragmentation creates disincentives for good
farmers to invest in agriculture. Though policies to promote land consolidation and accumulation
may lead to certain level of landlessness and rural differentiation, such policies are expected to
accelerate agricultural commercialization and mechanization, and create incentives for
technology innovation, which are critical for sustainable growth in Vietnam’s agriculture.
Inefficient land use by state-owned farms. At the moment, in Vietnam there are 314 agricultural
state-owned farms, and 353 forestry state-owned farms who manage about 4.6 million ha of
agricultural land, mostly concentrated in remote and mountainous areas. However, the efficiency
of their land use is very low because the management mechanism of these farms does not create
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the incentives for farm households to increase productivity. In 2006, about 70 per cent of the
state-owned farms experienced business losses.
Frozen land market. In reality, apart from the official price system regulated by the state, there is
another ‘underground’ land price system reflecting true market prices which is usually higher
than regulated prices of the state. This failure of the land-use-rights market to accurately reflect
market values restricts the ability of efficient farmers to take advantage of market opportunities to
increase production, and encourage inefficient farmers to leave the sector.
Land use tax exemption. The Government exempted agricultural land use tax in 2000. In fact,
this tax contributes insignificantly to the government budget at only around 2-3 percent. Though
releasing financial burden on farmers, land use tax exemption policy might lead to a relaxed
approach to land management and have negative impacts on land use (Anh 2007). Low
productivity agriculture with tax exemption and land fragmentation creates low incentives for
farmers to utilize and investment on small plots of land. In addition, in order to cover their
budgets from tax exemption, local governments may need to order farmers to pay additional fees
or face a degradation of public service provision.
Land accumulation and rural differentiation. Vietnam faces a dilemma about this issue. On the
one hand, policy makers agree that land accumulation is beneficial because it helps raise the

Water use inefficiency. As water for irrigation and drinking is free or under-priced, it is likely to
be used wastefully by farmers. Some case studies in Red River Delta indicate that too much water
in used for irrigation in rice production.
Lack of financial budget for maintaining and upgrading irrigation schemes and drinking
water supply works. Because fees collected for water use are insufficient to cover the proper
maintenance of water storage and distribution systems, the performance of this system declines
seriously. This in turn increases the inefficiency for water supply. Water users may thus achieve a
'false economy' in which they pay little or nothing for their water directly, but as a consequence
are subject to declining income resulting from deteriorating water supply services. According to
MARD (2006), due to degradation, the current irrigation system only operates at 55 to 65 per
cent of designed capacity.
Governmental budget deficit for water supply services. At the moment, as both irrigation and
rural drinking water supply are subsidized, the government has to spend a large amount of budget
to maintain these services.
Services Amount
Irrigation Governmental budget: from 2000 to 3000 billion VND yearly
Rural drinking water supply Governmental budget: 4500 billion VND in 2006-2010
Local state budget: 2300 billion VND in 2006-2010
Lack of drinking water supply for rural living. Lack of drink water for rural living has led to a
problem causing the inequality between rural and urban population. UNICEF and Ministry of
Health (2008) show that while 76 per cent of urban population has obtained fresh water, only 48
per cent of farmers can access fresh water and drilled-well water. Although Vietnam is
acknowledged as a country redundant in water, about 60 to 70 per cent of water sources is
derived from outside. That upstream countries like China and Thailand are preparing to construct
large-scale hydropower dams may seriously change water regime and volume in Vietnam.
Water quality degradation. As both MARD and MONRE do not have effective policy to monitor
and control pollution sources discharged to water, the water quality is deteriorating. Dung of
poultry and pig has been used to feed fish. This results in pollution in ponds, rivers and
reservoirs. Moreover, the overuse of chemical fertilizers and pesticides also seriously degrades
both surface and underground water resources. Moreover, due to dyke system planning and

intensive rice production has degraded the soil quality, reduce water volume and increase the
capacity of harmful insect and diseases against plant protection chemicals.
Wild animal trade. There is increasing trade with neighbouring countries in human and animal
food, medicinal plants, and raw materials for handicrafts and industry, which is difficult to
manage sustainably.
Limited definition of agro biodiversity. A major weakness in interpreting agricultural
biodiversity issues is that national documents appear to restrict the definition of agro biodiversity
to crop and livestock species and their wild relatives, rather than the broader ecosystems in which
these exist. Such views exclude wild species that provide services to agriculture, such as
pollinators, natural enemies, soil organisms, and other species that make up the agro ecosystem.
3.4. Rural environmental protection
Lack of monitoring system. There is no clear distinction between MARD, MONRE and Ministry
of Health’s responsibilities related to rural environmental management regarding: water quality
control, solid waste management, disease control, etc.
Lack of rewarding – punishment mechanism. Currently, there is no effective mechanism to
control the farmer’s practices that affect the environment, such as chemicals and fertilizer use,
livestock waste treatments, etc.
Lack of land fund for pollution control. Due to intensive agricultural development policies, the
pollution from pesticides, husbandry wastes and handicraft industries has become serious in
many localities. It is reported that local governments cannot implement public-health related
policies, such as relocating animal husbandry and handicraft industries, because no land is
available for these purposes.
Industrialization. Industrial zones have increasingly caused serious pollution to rural
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environment and degradation of farmer’s health.
Climate change. Mekong River Delta and coastal areas will be flooded in the future due to
climate change. This would dramatically damage the rural environment due to lack of fresh
water, epidemic, etc.
4. RESEARCH AND DEVELOPMENT INFORMATION
Main Research Areas

existing land distribution cannot create serious rural differentiation. Van de Walle and Cratty
(2003) claim that households that undertake rural non-farm activities have a significantly higher
probability of being non-poor.
Ravallion & van de Walle (2001) analyze VHLSS 1993 and conclude that the land allocation
process under Contract 100 in 1988 and the Land Law of 1993 was not dominated by the rich or
influential, and results in an egalitarian land distribution. However, they found some differences
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when using the 1997-1998 VLSS and suggest that some degree of land accumulation by more
wealthy and educated households was taking place.
Other studies show that land markets in Vietnam are pro-poor (Deininger and Jin 2003; Ravallion
and van de Walle 2003). These authors used VHLSS 1993, 1998 and 2002 to estimate impacts of
land allocation on rural differentiation in Vietnam. They claim that land distribution has
improved in favour of households in the relatively poorer per capita expenditure quintiles.
Similarly, Schipper (2003) finds evidence based on the VHLSS 1993 and 1998 to indicate
strongly that the distribution of land has become more equal over the 1990s. Moreover, this
conclusion seems to have been confirmed in a number of econometric studies of Vietnam’s land
market that have examined the panel data in the VHLSS (Joint Donor Report 2003; ADB 2002).
Ravallion and van de Walle (2003) argue that the land market serve to iron out some of the
inefficiencies in land allocation generated by initial administrative decisions. Deininger and Jin
(2003) reinforce this finding, and argue that in addition to the equity enhancements generated by
the land market, land transfer have improved efficiencies because the demand for land, either to
buy or to rent, is driven by those households who are more productive but have lower
endowments.
In contrast, Akram-Lodhi (2005) argues that rural differentiation in terms of access to land in
Vietnam proceeded during the 1990s. His argument is provided by the case studies conducted in
Northern, Central and Southern Vietnam between 1998 and 2002. He questions how rural
households were able to finance land purchases when the average price of crop land per hectare
jumped from VND 11.9 million in 1993 to VND 26.1 million in 1998. With unequal access to
credit, relatively poorer rural households would not be able to purchase land. Consequently, land
sales market might be segmented on the basis of wealth.

household level such as illness, and because of income and asset diversification into rural non-
farm household enterprises (Deininger and Jin, 2003; Ravallion and van de Walle, 2003;
Haughton, 2000). Although fixed rents are more common than sharecropping, perhaps the most
interesting aspect of the land rental market is that in terms of both renting in and renting out it is
most common for land to be leased for free, a finding that requires further research but which
may be a consequence of the enhanced power of local officials to intervene in the land market as
a consequence of land market legislation (Ravallion and van de Walle, 2003).
4.2. Water use and management
Irrigation management
Participatory Management for Agricultural Water Control in Vietnam: Challenges and
Opportunities (Bryan Bruns 1997). After analysing strengths, weakness and opportunities and
challenges to improve the operation and maintenance mechanism of irrigation schemes in
Vietnam, the study recommends a participatory irrigation management including pilot projects
and its roadmap for implementing in some corresponding irrigation schemes.
A framework for improving the management of irrigation schemes in Vietnam (ACIAR 2004). By
investigating three case studies in Ha Tay province and Ho Chi Minh City, the project focused on
analysing the operation and management of publicly managed irrigation systems comprising:
system operation, asset management, system economics and institutional analysis. Findings
include:
 Low water productivity: very low output of rice per unit volume of water; and
 Sustainability of financial management for IMCs: (i) They are heavily reliant on government
subsidies to carry out their operations; (ii) the level of government subsidies is insufficient to
ensure the long-term sustainability of IMC assets; (iii) the level of expenditure on
maintenance is consistently below the standard needed to prevent the rapid decay of the
company assets.
Aligning Public Expenditure and Sectoral Institution to cope with Agriculture and Rural
Development Challenges (World Bank 2005). The report presents some key findings as follows:
 The trend of irrigation expenditure decentralization, and shifts in emphasis from building new
structures to upgrading and completing existing works;
 Capacity of irrigation and drainage is low; and