1. The Role of Inputs Policy in
Transforming Agriculture in
Vietnam
ByBy Nguyen Manh Hai,Nguyen Manh Hai,
Central Institute for Economic Management (CIEM)Central Institute for Economic Management (CIEM)
Hanoi, VietnamHanoi, Vietnam
ReSAKSS-Asia program,ReSAKSS-Asia program,
International Conference, September 25-27, 2013International Conference, September 25-27, 2013
Siem Reap, CambodiaSiem Reap, Cambodia

2. The key research questionsThe key research questions
• What is the role of input policy in a transformingWhat is the role of input policy in a transforming
agriculture in Vietnam?agriculture in Vietnam?
• What are the key policies affecting agricultural inputWhat are the key policies affecting agricultural input
use and what specific policies were implementeduse and what specific policies were implemented
during food and input crises ?during food and input crises ?
• How these policies should be improved to promoteHow these policies should be improved to promote
efficient fertiliser and seed use ?efficient fertiliser and seed use ?
• What are the main policy issues of agricultural inputWhat are the main policy issues of agricultural input
markets in Vietnam especially those for fertiliser andmarkets in Vietnam especially those for fertiliser and

3. GDP and sectoral growths ofGDP and sectoral growths of
Vietnam, 2005-2012Vietnam, 2005-2012
4.02
3.69 3.76
4.07
1.83
2.78
4.01
2.72
10.69
10.38 10.22
6.11
5.52
7.7
5.53
4.52
8.48 8.29
8.85
7.18
6.63
7.52
6.99
6.42
8.44 8.23 8.46
6.18
5.32
6.8
5.89
5.03
0
2
4
6
8
10
12
2005 2006 2007 2008 2009 2010 2011 2012
Growth(%)
Agriculture-forestry-fisheries Industry-Construction Services GDP
Source: Demonstration based on data from GSO

4. The role of agricultural inputs in VietnamThe role of agricultural inputs in Vietnam
• Agricultural inputs in agriculture play a crucial role in the sectorAgricultural inputs in agriculture play a crucial role in the sector
development: Substantial effects on price, supply sources,development: Substantial effects on price, supply sources,
productivity, and agricultural production costs.productivity, and agricultural production costs.
• Among agricultural inputs in Vietnam, fertilisers and seeds are theAmong agricultural inputs in Vietnam, fertilisers and seeds are the
most important, due to:most important, due to:
• i) Vietnam is a large rice producer in the world. Cultivation share isi) Vietnam is a large rice producer in the world. Cultivation share is
relatively large in total agricultural product accounting for 72.1% inrelatively large in total agricultural product accounting for 72.1% in
total agricultural output value in 2011.total agricultural output value in 2011.
• ii) Fertiliser cost accounts for major share of total rice productionii) Fertiliser cost accounts for major share of total rice production
cost (34%). Seed quality/types has a strong correlation to rice (andcost (34%). Seed quality/types has a strong correlation to rice (and
other crop) productivity;other crop) productivity;
• iii) Efficient use of fertiliser is important avoiding over-consumptioniii) Efficient use of fertiliser is important avoiding over-consumption
or lack of fertilisers;or lack of fertilisers;

5. Broad cropping pattern and input demandBroad cropping pattern and input demand
• Major crops: Rice, maize, sugar-cane, cotton, coffee, tea, peanut,Major crops: Rice, maize, sugar-cane, cotton, coffee, tea, peanut,
soyabean of which rice and maize are two main dominant crops.soyabean of which rice and maize are two main dominant crops.
Rice is the largest staple crop accounting for 60% of total annualRice is the largest staple crop accounting for 60% of total annual
crop area, while the corresponding figure for maize is 9%.crop area, while the corresponding figure for maize is 9%.
• Demand for fertiliser and seed is high for these crops.Demand for fertiliser and seed is high for these crops.
• Fertiliser supply sources in 2012:Fertiliser supply sources in 2012:
+ Urea: Domestic supply of 78%; Import: 22%+ Urea: Domestic supply of 78%; Import: 22%
+ NPK: Domestic supply of 90.4%; Import: 9.6%+ NPK: Domestic supply of 90.4%; Import: 9.6%
+ DAP: Domestic supply of 68.5%; Import: 31.5% ; Imports: 100% of+ DAP: Domestic supply of 68.5%; Import: 31.5% ; Imports: 100% of
SA and potashSA and potash
• Seed imports: 70-75% hybrid rice seed; 60% of hybrid maize seed;Seed imports: 70-75% hybrid rice seed; 60% of hybrid maize seed;
80% of vegetable seed.80% of vegetable seed.

6. Key policies affecting agricultural input useKey policies affecting agricultural input use
• Land policies:Land policies:
• ““Contract 100” policy applied in 1981: collective cooperativesContract 100” policy applied in 1981: collective cooperatives
assigned agricultural land to groups of farmers or farmers;assigned agricultural land to groups of farmers or farmers;
production is under the management of cooperatives and theproduction is under the management of cooperatives and the
farmers are paid based on earnings in rice production output and onfarmers are paid based on earnings in rice production output and on
the number of contribution days in three stages of the productionthe number of contribution days in three stages of the production
process at the end of season.process at the end of season.
• 1987 Land Law and Resolution No. 10-NQ/TW in 1988, farmer1987 Land Law and Resolution No. 10-NQ/TW in 1988, farmer
households were recognized as self-controlled economic units forhouseholds were recognized as self-controlled economic units for
the first time. The Resolution No. 10 was a real “renovation” policythe first time. The Resolution No. 10 was a real “renovation” policy
in agriculture issuing new regulation on piece-work contractin agriculture issuing new regulation on piece-work contract
• Land Law in 1993: Land was re-allocated to farm households forLand Law in 1993: Land was re-allocated to farm households for
stable use and this encourages farmers to expand the cultivationstable use and this encourages farmers to expand the cultivation
land area. The land law was revised in 2003 with more freedom forland area. The land law was revised in 2003 with more freedom for
land users.land users.

7. Major input policy changesMajor input policy changes
• Before 1988 (economic reform): Fertiliser and seed prices wereBefore 1988 (economic reform): Fertiliser and seed prices were
fixed by the government. Domestic fertiliser market was fragmentedfixed by the government. Domestic fertiliser market was fragmented
by administrative borders, imports from former Soviet Union andby administrative borders, imports from former Soviet Union and
Eastern Europe by protocols. Seeds supplied to cooperatives andEastern Europe by protocols. Seeds supplied to cooperatives and
state farms according to state plans.state farms according to state plans.
• 1989-2003: + Fertiliser and seed prices basically determined by the1989-2003: + Fertiliser and seed prices basically determined by the
market but SOEs were still dominant the domestic markets;market but SOEs were still dominant the domestic markets;
• + Abolishing market fragmentation of administrative borders.+ Abolishing market fragmentation of administrative borders.
• + Imports from all other countries and Provincial People Committee+ Imports from all other countries and Provincial People Committee
entitled to verify and select a list of capable fertiliser importingentitled to verify and select a list of capable fertiliser importing
companies. Before 2001: fertiliser import quotas applied. After 2001:companies. Before 2001: fertiliser import quotas applied. After 2001:
the quotas were only oriental, technical barriers applied.the quotas were only oriental, technical barriers applied.
• + Joint-ventures with foreign partners for fertiliser investment (1989-+ Joint-ventures with foreign partners for fertiliser investment (1989-
1998); Private fertiliser companies were set up (1999 onwards);1998); Private fertiliser companies were set up (1999 onwards);
Since 1989, investments from all sectors including state, private andSince 1989, investments from all sectors including state, private and
FDI were encouraged in seed sector, especially since 2003.FDI were encouraged in seed sector, especially since 2003.

8. Key policies affecting agricultural input useKey policies affecting agricultural input use
Current effective fertiliser policiesCurrent effective fertiliser policies
• Fertiliser prices were basically determined by the market. However,Fertiliser prices were basically determined by the market. However,
fertilisers were subject to price stabilization (2012 Price Law)fertilisers were subject to price stabilization (2012 Price Law)
• MARD releases the List of fertilisers which are allowed to beMARD releases the List of fertilisers which are allowed to be
produced, traded and used in Vietnam.produced, traded and used in Vietnam.
• The importation of fertilisers which are not in theThe importation of fertilisers which are not in the
tested/experimented “List” must be agreed by MARD.tested/experimented “List” must be agreed by MARD.
• Individuals and organisations are responsible for the quality of theirIndividuals and organisations are responsible for the quality of their
fertilisers imported or exported. MARD is responsible for statefertilisers imported or exported. MARD is responsible for state
management on fertilisers including, among others, organisation ofmanagement on fertilisers including, among others, organisation of
undertaking researches and application of science and technologyundertaking researches and application of science and technology
in fertiliser use and production, control, inspection and treatment forin fertiliser use and production, control, inspection and treatment for
violations in organic fertiliser production and use. MOIT has similarviolations in organic fertiliser production and use. MOIT has similar
roles with respect to mineral fertilisers;roles with respect to mineral fertilisers;

9. Key policies affecting agricultural input useKey policies affecting agricultural input use
Current effective seed policiesCurrent effective seed policies
• Seed prices were determined by the markets.Seed prices were determined by the markets.
• Seed regulations are stipulated in Seed Ordinance No. 15/2004/PL-Seed regulations are stipulated in Seed Ordinance No. 15/2004/PL-
UBTVQH11: National and foreign organizations and individuals areUBTVQH11: National and foreign organizations and individuals are
entitled to operate on plant seeds if they meet required conditions.entitled to operate on plant seeds if they meet required conditions.
• Regulations on seed copyrights and labels, on testing, inspectionRegulations on seed copyrights and labels, on testing, inspection
and new varieties approval and protection were stipulated andand new varieties approval and protection were stipulated and
updated over time.updated over time.
• MARD often promulgated lists of plants/seeds permitted inMARD often promulgated lists of plants/seeds permitted in
production and trading. Seed quality, in principle, is accredited byproduction and trading. Seed quality, in principle, is accredited by
2011 Circular No. 79/2011/TT-BNNPTNT and thus, in principle,2011 Circular No. 79/2011/TT-BNNPTNT and thus, in principle,
should be better controlled.should be better controlled.

10. During 2008 food and fertiliser crisesDuring 2008 food and fertiliser crises
0
100
200
300
400
500
600
700
800
900
Jan-08Apr-08
Jul-08Oct-08Jan-09Apr-09
Jul-09Oct-09Jan-10Apr-10
Jul-10Oct-10Jan-11
US$/ton
Domestic rice price Rice FOB price NPK price
• The 2008 food and fertiliser
crises had significant adverse
effects in Vietnam although it
lasted in very short time
• Temporary rice export ban
in Vietnam: substantial
reduction in domestic rice
prices especially from April to
July 2008. This led to a lower
fertiliser domestic demand
and prices especially from
August 2008 to the end of the
year.
• There was no significant
fertiliser/input policy
responses creating difficulties
for farmers. The government
policy: quick responses for
domestic rice price
stabilisation but slower in
responses to fertiliser market.
Source: Own demonstration based on
MARD’s data

11. The policy formulation andThe policy formulation and
implementation processimplementation process
• There is still inefficiency in policy formulation procedure in VietnamThere is still inefficiency in policy formulation procedure in Vietnam
including agricultural policies.including agricultural policies.
• Fertiliser and seed policies: often promulgated at central level, whileFertiliser and seed policies: often promulgated at central level, while
local/provincial people committees could issue implementationlocal/provincial people committees could issue implementation
guidance: Lack of effective mechanism to gather opinions ofguidance: Lack of effective mechanism to gather opinions of
affected parties.affected parties.
• The policy implementation is a top-down process: lack of resourcesThe policy implementation is a top-down process: lack of resources
both financial and human may result in improperboth financial and human may result in improper
implementation/enforcement of the policy.implementation/enforcement of the policy.
• Unclear (or too general) articles in higher legal documents mayUnclear (or too general) articles in higher legal documents may
cause some consequences: i) lower legal documents will leancause some consequences: i) lower legal documents will lean
toward being advantageous to state management agencies; ii)toward being advantageous to state management agencies; ii)
Lower legal documents are allowed to “stipulate” some articles inLower legal documents are allowed to “stipulate” some articles in
higher legal documents.higher legal documents.

12. Key agricultural input policy issuesKey agricultural input policy issues
and recommendationsand recommendations
• The agricultural land: shrunk due to industrialization and urbanization:The agricultural land: shrunk due to industrialization and urbanization:
good land planning and post-acquisition policies demandedgood land planning and post-acquisition policies demanded
• Agricultural land tenure (20 years) is too short making less motivationsAgricultural land tenure (20 years) is too short making less motivations
for better use and conservation of the land.for better use and conservation of the land.
• There should be a market for agricultural land in Vietnam due to slowThere should be a market for agricultural land in Vietnam due to slow
agricultural land accumulationagricultural land accumulation
• The scattered and overlapping responsibilities among ministriesThe scattered and overlapping responsibilities among ministries
• The enforcement mechanisms for both fertiliser and seeds policies areThe enforcement mechanisms for both fertiliser and seeds policies are
still weak and penalties for quality violations: not strong enough. In-still weak and penalties for quality violations: not strong enough. In-
transparency and information asymmetry in domestic fertilizer marketstransparency and information asymmetry in domestic fertilizer markets
result in too many “intermediate” distribution agencies.result in too many “intermediate” distribution agencies.

13. Thank you very muchThank you very much
for your attention !for your attention !