Agriculture Economic Reform In Vietnam

Agriculture economic reform in Vietnam- Collective Regime:
Prior to the contract system, the collective regime was prevalent in Vietnam. The features of the system are given below and what led to the introduction of the contract system has also been mentioned.

Features of the system:
The collective regime was characterized by the presence of several cooperatives where agricultural production occurred. The Collective regime occurred during the period between 1976-1980. The cooperatives were allowed to take control of approximately 95% of the arable land. However, decisions pertaining to the distribution as well as production were taken care of at the state level.


The collective regime was not beneficial enough and the agricultural workers could get access only to 5% of the agricultural output, which did not suffice their daily needs.

During the collective regime, production of rice was stagnated. So much so, Vietnam was compelled to import rice for fulfilling the demands of the people. As trends followed this path, with time very few farming households get associated with cooperatives. As this system failed miserably, the contract system was propounded to address the loopholes of the collective regime.
Studies suggest that agricultural economic reform in Vietnam has undergone two main phases of transition: contract system and market liberalization. Market liberalization proved to be more helpful in this regard.

Agricultural economic reform in Vietnam:

Contract system:

The agriculture sector in Vietnam underwent liberalization approximately 20 years back. It was marked with the launching of 1981’s Contract system. Under the contract system, farm households would be contracted by cooperatives. A defined amount of crop would be produced by the cooperatives. Crops produced in excess of the defined amount was allowed to be sold in the market. The “Doi Moi” policy was launched by Vietnam in the year1986. Two years later, in 1988, as an addendum to the policy, the farm households were given recognition as primary units of agriculture. The agricultural workers were given the permission to sell, own and buy raw materials of agriculture. The work of the farmers included harvesting, sowing, seedling, maintaining and transplanting. But matters related to distribution and employing methods for various processes would be taken care of by the state. They were given the permission to sell 40% of the agricultural produce on land owned by the cooperatives. In 1989, the government introduced a system wherein the traders trading privately could buy agricultural products from the agricultural workers directly.

Market liberalization-1988:

The government wanted to take agricultural economic reform in Vietnam a step further. So, market liberalization was introduced for the same. Under the liberalization program, the agricultural workers or the farmers were permitted to possess agricultural equipments, machines, buffaloes and other animals. The program prompted the return of collectivized land to the peasants for a longer period of time ranging between 15 years to 50 years. Crop type was one of the criteria in determining the duration of ownership of tillable land.

Drawbacks of market liberalization:

Compared to the earlier two agriculture economic reform in Vietnam, this could to some extent better things but it was not foolproof.

Drawbacks of this agricultural economic reform in Vietnam can be summarized as under:
The government continued to exercise control over the rice market
As the arable land was fragmented, it gave rise to small stretches of land. As a result, it proved to be a hindering factor in specialization, mechanization and irrigation.
It could not create enough job opportunities.
Processing of agro based products dropped sharply and was unable to keep pace with production in agriculture.
Lack of proper infrastructure in the rural areas.

In a nut shell, agricultural economic reform in Vietnam has given more freedom to the farm households. This has in turn encouraged the agricultural workers to work devotedly in their own piece of land. It has also boosted production of rice and serves as an important staple food for the people of Vietnam. When production of rice is optimum, one could expect export activities to follow suit and bring prosperity to the country.

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Last Updated on : 26th June 2013

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