Large-field production zones – a sustainable rice production and water management model in

Mekong River Delta of Vietnam

Khoi Dang

Institute of Policy and Strategy for Agriculture and Rural Development

Presentation structure

• Importance of Vietnam’s rice sector

• Environmental issues in rice sector

• An Giang stock plant protection company

• Achievements of large-field production zone model

• Conclusion and policy recommendations

Importance of Vietnam’s rice sector

In 2013

• 7.8% agriculture’s GDP

• 17.8% agro–forestry–fishery export value

• 15.7% agricultural land area

• 9.27 million farming households

• 91% food structure

0.0

10.0

20.0

30.0

40.0

50.0

60.0

0

1000

2000

3000

4000

5000

6000

7000

8000

9000100kg/ha 1000 ha

Diện tích Năng suất Area Productivity

Source: General Statistics Office of Vietnam (2014)

Cultivated area and yield

Rice production and water related issues

• Rice land is small-scale and scattered hard to control water for irrigation when needed

• High risks of disasters, pest overuse of pesticide water pollution

• Farming schedules of farmers are different and lack of coordination at grass-root level conflicts between rice farmers, and between rice farmers with others

• Lack of knowledge and infrastructure on water management over use of water increase in GHG emission

High risks of disasters, pest, market (input, output)

Small production scale

Lack of knowledge,

infrastructure

Overuse of

fertilizer,

pesticide,

water,

conflict in

water use

Water

pollution,

GHG

emission

High

production

cost

Low

competitiveness

Health

problems

Some statistic on water related issues

0.00

0.50

1.00

1.50

2.00

2.50

3.00

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

100kg/ha

Trung Quốc Ấn Độ Indonesia

Philippines Thái Lan Việt Nam

China India

Thailand Vietnam

Source: Food and Agriculture Organization (2014)

0

20

40

60

80

100

120

140m3/t

Contaminated water volume due to the overuse of fertilizer with high nitrogen content

Use of chemical fertilizer in agriculture

Source: Twente University, Enschede, Netherland (2010)

37,429.77,

42%

Rice Livestock Forestry Fishery Other crops

Share of GHG emission

Source: Ministry of Agriculture and Rural Development (2014)

Development timeline of An Giang stock plant protection company

1993

AG Plant

Protection

Department

(state owned)

AG Plant

Protection

Service

Company

(Joint state

and private)

2004

AG Stock

Plant

Protection

Company

(private

owned)

Farmer’s

friends (FF)

network

2009 2011

Large-field

production

zones

6 limited

liability

companies

2013

Seed research centre,

pesticide factory, bag factor,

branches in HCM city, Ha

Noi, other provinces

Current business situation

• 5 main business sectors: pesticide, seed, bag, rice for export and tourism

• Human resource: 2000 staff (800 FF)

• Selling branches: 40 provinces, Cambodia

• 4 factories (380,000 tons)

AGSPP’s interventions

High risks of disasters, pest, market (input, output)

Small production scale

Lack of knowledge

Overuse of

fertilizer,

pesticide,

water

Water

pollution,

GHG

emission

High

production

cost

Low

competitiveness

Health

problems

Large-field production zones

Close linkage between farmers

and AGSPP

Farmer’s friend teams

Common

sustainable

production

process

Lower

water

pollution

Lower

production

cost

Higher

competitiveness

Better health

Establish material zones for AGSPP with stable price

Rice export with trademark

Domestic rice selling with trademark

Large field production zone – novel

business model of AGSPP

Contract to

supply seed,

fertilizer,

pesticide –

loans with

no interest in

120 days

Transfer,

monitor

production

process

Support

harvesting

Support to

transport to

factories of

AGSPP

Dry with

no fee

Free

storage in

30 days

Farmer can

choose:

- Selling time

- Selling price

Selling

Discuss with

farmers,

authorities to

consolidate

land

Shorten and strengthen rice value chain

F F

F F

F

F F

F F

F F

F

F F

F F

F F

F

F F

Farmer

group

Farmer

group

Farmer

group

AG PPC

Husking,

processing

Seed, pesticide, fertilizer

Agri

extension

services

Export

Domestic

market

Fresh paddy/Dry paddy Large-field

production

zone

Large-field

production

zone

Large-field

production

zone

Companies

Companies

Dealers

F F

F

F

F

Collectors

Export

Domestic

market

Companies

Current situation AG PPC

• Choose areas where farmers have relatively large plots

• Consolidate small plots of land to become bigger ones with the help of local authorities

• Share the cost of infrastructure (land, irrigation) with farmers

Field of F Field of F

Field of F

Field of F

Field of F

Field of F

Field of F Field of F

Field of F

Field of F

Field of F

Field of F

Field of F Field of F

Transportation Channel

Transportation Channel

Tran

spo

rtat

ion

Ch

ann

el

Storage, Processing

Field of F Field of F

Nat

ion

al r

oad

Establish large-field production zones

Improving in-field irrigation management

• Consolidate small plots to large plots with the help of local authorities

• Construct irrigation infrastructure with share of farmers and AGSPP

• Apply the same technical rice production process to reduce quantity of pesticide and chemical fertilizer (supervised by FF teams)

• Apply the same irrigation schedule (irrigate at the same time when rice needs water with the supervision of FF) for each large-field production zone

Sustainable production based on FF

Establish standard production process

Machine soil

preparation Use certified seed Seeding at the same time Line transplantation Balanced fertilizer use

Water saving and

active irrigation

Protect pest

enemies Pest management Apply machines, reduce post harvest loss

Achievements of large-field production zone model

Better selling

price

Larger

production

scale

Standardized

production

process,

reduce

production

cost

Enjoy credits

for high-

quality inputs

Receive

supports for

transportation

Better storage

Achievements of large-field production

zone model

Increase in farmer’s production scale

0

8000

0

80.0

0020

.000

40.0

0060

.000

100.

000

Die

n tic

h (m

2)

0 .25 .5 .75 1Ty le

Source: IPSARD (2013)

Reduction in farmer’s production inputs

Province Reduction in times of using

pesticide (times/crop) Reduction in water use (%)

Dong Thap 1.7 – 2.5 30

Long An 2.2 – 2.6 35

Bac Lieu 1.8 – 2.0 30

Tay Ninh 1.2 – 4.0 25

Tra Vinh 1.5 – 2.0 25

Source: Vietnam’s Ministry of Agricultural and Rural Development (2013)

Increase in farmer’s profit

Province Yield

(tons/ha)

Average profit

(Million

VND/ha)

Increase in

profit (Profit/ha)

Production

cost (VND/kg of

rice)

Decrease in

production cost

(VND/kg of

rice)

Dong Thap 6,00 16 – 18 2,3 – 2,5 2.493 120 – 300

Long An 7,00 15 – 20 2,5 – 3,0 2.860 150 – 250

Bac Lieu 6,00 19 – 20 2,8 – 3,0 2.763 200 – 360

Tay Ninh 5,00 15 – 16 2,2 – 2,4 3.100 150 – 200

Tra Vinh 7,23 26 – 27 7,0 – 7,5 2.300 500 – 600

Source: Vietnam’s Ministry of Agricultural and Rural Development (2013)

Better profit for AGSPP

• Rice production area: 2012 19,500 ha (6,500 smallholders), 2013 61,600ha (20,500 smallholders)

• Export: 2013, 300 tons to Japan (closed since 2008 due to high pesticide residue of VN)

Challenges

• Most farmer in Vietnam is small-scale hard to participate in large-field production zones

• Entrepreneurs require huge capital investment to establish large-field production zones big barrier for most entrepreneurs in agricultural sector in Vietnam

• Incentive for entrepreneurs to follow environmental friendly production practice is not strong if the market signal is not clear

Conclusion

• Large-field production zone model developed by the AGSPP company is a good example of promoting sustainable rice production

• This model has proved that it can reduce input (fertilizer, pesticide, water), increase yield and net profit of farmers.

• This model can also manage to export in highly demanding countries

• Policy recommendations: Withdraw labours out of agriculture, develop supplementary industries in agricultural sector

to create added value for products

Market signal needs to be strong

Government needs to share with AGSPP in prepareing infrastructure