Policy for development cooperatives in agriculture of Vietnam

ural cooperative development policy After the Cooperative Law was passed at the 4th session, the XIII National Assembly, effective from July 1, 2013. As of December 31, 2018, the Government has issued 05 Decrees, the Prime Minister issued 04 Decisions and 01 Directive, ministries and branches issued 9 Circulars, 03 Decrees, and 01 Instruction Directive. directly deploy the implementation of the Law on Cooperatives in 2012. Specifically, according to the time of promulgation, policies for developing cooperatives are expressed in the following major documents: 1. Law on Cooperatives in 2012 2. Decree 193/2013 / ND-CP guiding the Law on Cooperatives 3. Decision 2261 / QD-TTg on approving the cooperative development assistance program for the period 2015-2020 4. Circular 15/2016 / TT-BNNPTNT Guiding conditions and criteria for beneficiary to support investment in infrastructure development for agricultural cooperatives 5. Circular 340/2016 / TT-BTC guides the level of support and financial mechanism to support and foster human resources of cooperatives, establish new cooperatives, reorganize cooperative activities under the Support Program developing cooperatives for the period 2015-2020 8 6. Decision 445 / QD-TTg approving the Project "Piloting the completion and replication of a new type of cooperative model in the Mekong River Delta period 2016-2020" Decree 107/2017 / ND-CP amending and supplementing a number of articles of Decree No. 193/2013 / ND-CP detailing a number of articles of the Law on Cooperatives 7. Decision 23/2017 / QD-TTg amending and supplementing a number of articles of Decision No. 246 / QD-TTg on establishing Cooperative Development Assistance Fund and promulgating the Regulation on credit guarantee activities and post-investment interest rate support of the Cooperative Development Assistance Fund 8. Decree 98/2018 / ND-CP on policies to encourage cooperation and cooperation in production and consumption of agricultural products 9. Decision 461 / QD-TTg approving the project to develop 15,000 cooperatives and unions of cooperatives effectively operating to 2020. 3.1.2. Policy target for developing Vietnam's agricultural cooperatives 05 groups of tasks to be performed to develop cooperatives: Improve the system of legal documents on cooperatives; Propagating, disseminating and building models of cooperatives and unions of cooperatives; Implement projects and programs to support the development of cooperatives; Strengthen inspection, examination, audit and supervision of the implementation of the Law on Cooperatives; Strengthen state management and international cooperation on the development of collective economy, cooperatives and unions of cooperatives. The goal of developing cooperatives by 2020 is to achieve 15,000 cooperatives and cooperatives effectively 3.1.3. Contents of Vietnam's agricultural cooperative DP The State has issued 11 policies to develop the cooperative area, including: 9 (1) Six general policies for support and incentives for cooperatives: - Training and fostering human resources; - Trade promotion, market expansion; - Application of new science, technology and technology; - Access to capital and cooperative development assistance fund; - Facilitate participation in targeted programs, socio-economic development programs; - Establishing new cooperatives and unions of cooperatives. (2) Five policies for cooperatives and unions of cooperativess operating in agriculture, forestry, fishery and salt production: - Investment in infrastructure development; - Allocating or leasing land to serve operations of cooperatives and unions of cooperatives in accordance with the land law; - Credit preferences; - Capital, seed when facing difficulties due to natural disasters, epidemics; - Processing products. 3.2. Analyze and assess the status of organizing the implementation of policies for developing agricultural cooperatives in Vietnam 3.2.1. Overview of the status of developing cooperatives in Vietnam By the end of 2019, the whole country had 13,541, of which 4,045 agricultural cooperatives were newly established in the last 6 years, an increase of 1,558 cooperatives compared to the time when the Law on Cooperatives did not take effect; Dissolved 2,074 weak cooperatives, operated ineffectively, currently 795 weak cooperatives have stopped operating but have not been dissolved due to property problems, debts or misplaced files, etc. therefore, 382 agricultural cooperatives which have been operating with the nature of the Cooperative Law 2012 were changed into other types of economic sectors such as enterprises or cooperative groups; 10 362 old cooperatives that have not been re-registered under the 2012 Cooperative Law but are still operating (accounting for 3%) The most concentrated cooperatives are in the Red River Delta (30.5%), the North Central Coast (20.8%), the Northeast (17.5%), and the Mekong River Delta (11.6%). . There are currently about 3,936 thousand cooperative members (down about 1,224 thousand members, equivalent to 23.7% compared to 2013). The average number of members is 367 members / cooperative. The South Central Coast provinces have the highest average membership of 808 members / cooperatives, followed by the Red River Delta with about 682 members / cooperatives. Provinces with a low average membership are: Southeastern about 32 members / cooperatives, Central Highlands about 54 members / cooperatives. The total number of regular laborers in the cooperative is about 1,670 thousand people, accounting for 42.4% of the members of the cooperative. The cooperatives mainly provide input services, focusing on services: 74.7% provide irrigation services, 27.1% provide tillage services, 45.9% provide services. agricultural extension, 32.4% provide production services, seed supply, 48.4% provide materials and fertilizer services for agricultural production, 42.5% provide production protection services, 29.8 % provided technical transfer services, 37.4% provided veterinary services, plant protection services, 4.5% provided product preservation services for members, 12% provided services. consumption and processing of products for members, 8.4% perform internal credit services. The revenue of the cooperative serving members also increases over the years, and accounts for about 63% of the average revenue of a cooperative. Particularly in 2019, the revenue will reach about VND 3.1 billion / cooperative. Average profit is 200 million VND / cooperative / year; The average income of members and employees is about 2.7 million VND / person / month. In particular, the regions with high income are the Northwest and South Central Coast of over 11 VND 3.5 million / year / month; the lowest is the Red River Delta 1.85 million / person / month. The structure between the four types of cooperatives does not change much every year, of which: The number of active cooperatives in 2019 accounts for the highest proportion (54.5%), tends to decrease by 1.9% compared to 2013; The number of active farming cooperatives in 2019 accounted for an average proportion (23%), an increase of 1.5% compared to 2013; The number of active cooperatives in 2019 accounted for the lowest proportion (11.2%), down 0.4% compared to 2013. 3.2.2. Organize the apparatus for implementation of Vietnam's agricultural cooperative development policy At the central level, the Steering Committee for the Renewal and Development of Collective Economic and Cooperatives is headed by the Deputy Prime Minister, the Government assigns the Ministry of Planning and Investment to be the agency that helps the Government manage the state. Group economy; Concerned ministries and branches shall coordinate and directly perform the task of State management over the collective economy of the branches or domains under their management. The Ministry of Planning and Investment has a Department of Economic Cooperation; The Ministry of Agriculture and Rural Development has a Department of Cooperative Economics and Rural Development. At the local level: Departments of Planning and Investment are assigned the function of state management of collective economy in all sectors and fields in the locality. Departments of Agriculture and Rural Development have specialized management units (rural development sub- departments). Other departments and agencies only arrange part-time officials to monitor the collective economy in the field assigned to them. Most of the provinces and cities have assigned the Provincial Cooperative Union to monitor, consolidate, advise, consolidate and develop collective economy in the province. 12 Figure 3.4. Organization chart for implementing the cooperative DP The most complex is the organizational structure for implementing the Capital Support Policy, just like when faced with natural disasters and epidemics [Figure 3.9]. In order to benefit from the policy, the cooperative has to go through 7 intermediate levels, which explains the reason that the support funding to the beneficiaries is often very slow, while the beneficiaries really need to be supported with seeds and capital quickly. to reorganize production soon. Another unreasonable point is that although there are so many intermediaries, the personnel in implementing policies in each level are very thin and dispersed, most of them have not received any professional training on cooperatives. Figure 3.9. Organizational chart of implementing CS support capital, like when facing natural disasters and epidemics 3.2.3. Organize the implementation of Vietnam's agricultural cooperative development policies Ministry of F A. Coperatives Steering Committee for Renewal and Economic Development of Collective Ministry of P&I Ministry of A&DR Provincial People's Committee Government Disaster CC Ministry of A&DR Ministry of P*I Ministry of F Budged of Provicial PC; Disaster CC Provincial PC District PC Commune PC Economical Organisations of Agriculture A. Cooperatives 13 i. Policies for training and retraining human resources. In the period of 2013-2019, the central budget supported VND 187 billion for ministries, branches and localities to implement policies on training and retraining officials of cooperatives and cooperative groups. As of December 31, 2018, localities have organized training for 24,286 turns of people with a central budget of VND 21,274 million, and a local budget of VND 12,041 million; 59,225 turns of people were provided with VND 26,704 million from the central budget and 403,902 million VND from the local budget. The number of people trained and fostered gradually increased over the years (on average, each year increased by over 20%), in 2018 reached 45,151 people, an increase of 4,965 people compared to 2013.ii. Trade promotion policy, market expansion. In the period 2013-2019, the State budget allocated VND 385,000 million for the National Trade Promotion Program. Every year, the Ministry of Industry and Trade has approved a number of national trade promotion schemes for cooperatives and Vietnam Cooperative Union to participate in domestic and foreign fairs to promote the image and expand the market. The localities supported 1,260 times of agricultural cooperatives to promote trade and expand markets with a total budget of VND 30,574 million. Survey results of 148 cooperatives show that trade promotion and market expansion activities mainly focus on information and communication support contents; general promotion organization; organizing and participating in trade fairs and exhibitions (22%; 38%; 32%; 44%); organize for foreign delegations to enter Vietnam for purchase transactions. iii. Policies for new scientific, technical and technological applications. In the period of 2013-2019, the annual funding to support scientific and technological activities for Vietnam Union of Cooperatives was 13.94 billion VND, organized consultancy for cooperatives to apply 26 jobs. Different technologies to improve product quality, support 540 cooperatives to apply science and technology, very little compared to the total number of cooperatives nationwide (only 2.76%). The localities have supported 3,698 turns of cooperatives to apply new science and technology, with a total budget of 67,414 million dong, of which the central budget is 7,914 million dong, from the local budget is 59,500 million VND 14 iv. Policy on capital access and cooperative development assistance fund Capital access policy: Bank credit capital has contributed to promoting the development of cooperatives, improving the material and spiritual life for members of the cooperative. In the period of 2013-2019, the average loan turnover for cooperatives each year reached VND 8,000 billion. By the end of 2018, outstanding loans reached nearly VND 5,000 billion, up 18.2% compared to the end of 2017, down VND 1,600 billion compared to July 1, 2013. The number of outstanding customers was 1,918 customers (including 1,365 cooperatives and 29 LH cooperatives). Although outstanding loans to cooperatives decreased in 2013 and 2014, there has been an increasing trend from 2015 to the present. This shows that the cooperatives after the conversion process have been operating stably, the demand for loans increases and is the basis for credit institutions to focus on credit investment. However, access to capital for cooperatives is still difficult because many cooperatives are not qualified to access credit (limited management capacity, governance leads to confusion in production and business activities). Cooperative Development Fund. In the period of 2013-2019, there were 5,006 cooperatives with access to funds (about 25.58% of the total number of cooperatives nationwide), of which the central capital was 58,834 million VND, the local capital was 634,567 million VND. This is also a positive sign when the number of cooperatives that have access to capital from the Cooperative Development Assistance Fund has increased since the Law on Cooperatives 2012 Preferential policy on credit. In the period of 2013-2019, the provinces and cities directly under the Central Government have facilitated 1,953 cooperatives to enjoy preferential credit interest rate support with a total budget of 138,296 million VND, of which the budget is from Central government is 9,330 million dong, from local budget is 128,966 million dong. According to a report of the State Bank, outstanding loans to cooperatives under Decree No. 55 / ND-CP reached about VND 3,200 billion, of which loans without collaterals for cooperatives reached about VND 70 billion. for 35 cooperatives, accounting for a very small proportion (about 2.18%) of the total outstanding loans under Decree No. 55 / ND-CP 15 v. Policies to facilitate participation in target programs, socio- economic development programs; support investment in infrastructure development. In the period of 2013-2019, 2,104 cooperatives were facilitated to participate in the target programs, socio-economic development with a total budget of 74,965 million VND, of which the central budget is 7,484 million dong, from local budget is 67,481 million VND. In fact, the survey of 148 cooperatives shows that the percentage of cooperatives participating in these programs is negligible (the highest is 3.3% of the cooperatives). vi. New establishment policy of cooperatives and LH cooperatives. In the period of 2013-2019, the whole country supported 4,045 new cooperative cooperatives with a total budget of 27,204 million VND, of which the central budget was 4,680 million VND, from the local budget was 22,524 million VND. vii. Policy on land allocation and land lease. In the period of 2013- 2019, there were 1,413 cooperatives allotted and leased land with a total land area of 12,016 ha. The number of cooperatives with preferential credit when leasing land is 182 cooperatives with a total budget of VND 54,168 million. Survey results of 148 cooperatives show that: Most of the productive land area in the cooperative is currently owned and managed by members. Cooperatives only have the role of providing some basic services such as irrigation or tillage. The common land managed and used by cooperatives is very low. viii. Policy supporting product processing. Survey results of 148 cooperatives showed that the proportion of loans to buy equipment and invest in factories accounted for a very small proportion of demand. The main reason is that many cooperatives do not have collaterals to get loans so they cannot access. Some cooperatives have access to capital, the time for making documents is time-consuming, the procedure of appraisal and loan is long, so there are many costs. 3.2.4. Evaluation of experts and managers on the development policy of agricultural cooperatives in Vietnam About the policy content. Some regulations have not been specifically guided or given instructions, which are not feasible, making it difficult to implement, such as: Determination of undivided assets, handling of 16 undivided assets after conversion, dissolution of cooperatives; compulsory dissolution procedures for cooperatives; guide the conversion of cooperatives to other types of organizations; guide norms and procedures to support investment in infrastructure for agricultural cooperatives; auditing work for cooperatives; The Law on Cooperatives 2012 stipulates 11 preferential policies for cooperatives but in reality these policies have not come to life much. There are policies that are almost not implemented as support policies for infrastructure for agricultural cooperatives. Some policies have not been implemented effectively such as credit incentives, product processing support, etc .; the number of cooperatives enjoying the State's support and preferential policies is limited; A number of supportive policies have been issued scatteredly, inconsistently, lacking feasibility, no specific instructions, lacking resources; lack of examination, inspection and supervision of the implementation of the Law on Cooperatives and policies to support cooperative development. Regarding the organization of policy implementation. The time to issue a number of documents guiding the Law on Cooperatives was prolonged and had to be adjusted so the implementation of the Law was difficult; Coordination in the implementation of statistical reports among ministries, central agencies and localities has not performed well, so it is difficult to synthesize. There is no data system of farm economics, cooperatives or if any, it is incomplete, not updated, not accurate; No new large-scale cooperative models have been built, linking production with consumption according to agricultural value chains through economic contracts. Regarding the organizational structure for implementing policies. The state management apparatus of farm economics, cooperatives is weak and dispersed; most of them are part-time officers and officers; State management functions on farm economics, cooperatives spread out in many agencies and many different units; There has not been an unified organizational structure and specialized cadres from the central to local levels to concentrate the intellect, the strength of researching and building up and implementing the Resolution, laws and policies on farm economics. 17 About beneficiaries of the policy. Most cooperatives have little capital, outdated equipment, small-scale production, and have not built a chain of links. Members' ability to mobilize capital is very limited, difficult to borrow medium, long-term loans from banks. Some cooperatives have not shown the role of connecting members with the market, the cohesion of benefits between cooperatives and members is lacking, not cooperative. Direct economic benefits brought by cooperatives for members are not many. The association and joint venture between cooperatives and cooperatives, between cooperatives and other economic sectors is still low, the efficiency is not high. 3.3. Overall assessment of the status of planning and implementation of policies for developing agricultural cooperatives in Vietnam 3.3.1. Achievements The development policy of cooperatives has contributed to increasing the number and stabilizing production and business activities and increasing the size of each cooperative, improving production and business efficiency of cooperatives. Survey data of 148 cooperatives in the period of 2013-2019, the profitability of cooperatives is relatively stable. In 2019, the profit before tax of the cooperative / equity is 8.5%, meaning that with 100 equity capital that members invest in the cooperative will profit 8.5 VND. Livestock cooperatives have a high profit rate (20.2%), cultivation cooperatives have a low profit rate (8.2%); The development policy of cooperatives has contributed to economic efficiency for members participating in cooperatives and associated households. 3.3.2. Limitations and weaknesses i. The degree of policy impact is very limited and unclear Over the past seven years, the number of cooperatives has increased slowly (only an average of 3% per year); The number of members decreased from 5,017,293 members in 2013 to 3,936,000 members in 2019, equivalent to a 22% decrease. Many cooperatives enjoyed various policies but still made losses, of 25 cooperatives with 4 policies, there were 11 cooperatives with losses (accounting for 44%), of 23 cooperatives with 3 policies, 8 Cooperative losses (accounting for 35%). While there were 15 cooperatives who did not receive any policies, only 27% suffered losses, which shows that 18 the reality of the quality impact on cooperatives of the policy is really unclear. Some policies have not really come to life, low benefit rates such as: CS facilitates participation in target programs, socio-economic development programs; CS support investment in infrastructure development; CS allocates, leases land to serve the activities of cooperatives and unions of cooperatives; CS support capital, like when facing difficulties due to natural disasters, epidemics. Development policy of cooperatives has not been as effective as expected. In the period of 2013 - 2019, the Central Government and the provinces and cities directly under the Central Government have implemented support contents [Appendix II] for 32,113 times of cooperatives, with a total budget of VND 2,101,317 billion, if calculated The average number of cooperatives in 6 years is 10,991 cooperatives with 45% effective operation, the cost for an effective cooperative is about 423.7 million VND / cooperative, which is a quite large number if compared with other chapters. Other programs for rural development such as poverty reduction program, new rural construction program. The policy has not been properly targeted at cooperatives. Of the 148 cooperatives surveyed, up to 130 cooperatives have benefited at least one policy of support and incentives of the State, but only 6 cooperatives fully comply with the principles of cooperatives, accounting for about 2.5%. . This shows that many cooperatives do not operate according to the cooperative principles but still enjoy the State's support and preferential policies. 3.3.3. The cause of the limitations and weaknesses 3.3.3.1. The cause from the policy making stage The approach in planning a number of policies is not appropriate; The information and data to set specific goals and policy measures have not been investigated and statistical in a consistent and scientific manner; There is no method to identify cooperatives operating in accordance with the principle of cooperatives to have support policies and incentives at the right address. 3.3.3.2. The cause is from the organization of policy implementation The state management apparatus of farm economics, cooperatives is weak and scattered, with many agencies acting as focal points for organizing the implementation of policies; The budget for science and technology is not 19 sufficient to implement S&T projects; There is no effective method to determine the tax-exempt income and taxable income for the cooperative; Many policies are integrated into socio-economic development programs, so in reality it is the beneficiary cooperative, but the beneficia