TCCS – After nearly 38 years of renewal, Vietnam’s agriculture has recorded important achievements and begun shifting its mindset from “treating labor as profit”—focusing on increasing output—to an agricultural economy that builds a coordinated and sustainable development ecosystem with high added value. This is an important direction in the spirit of Resolution No. 19-NQ/TW, dated June 16, 2022, of the 13th Party Central Committee, “on agriculture, farmers, and rural areas through 2030, with a vision to 2045.” This includes developing a sectoral economic strategy within the economic structure to support the transformation of the growth model, effectively harness potential, and build global agricultural value chains.

The Need to Rethink Agricultural Development

Since comprehensive renewal began in 1986, Vietnam’s agriculture has taken an important new direction through a policy of reforming management mechanisms in agricultural cooperatives and fully promoting the initiative of farming households. As a result, resources for agricultural development have been mobilized, the sector’s scale and contribution to the economy have increased, and its structure has changed significantly, although agriculture’s share of the economic structure has tended to decline.

Despite this important institutional shift, which has helped unlock resources, agriculture remains heavily focused on production under the mindset of “treating labor as profit.” Production is not yet closely linked to markets; “bumper harvests and falling prices” persist; “rescue” campaigns for surplus agricultural products have not ended; exports face difficulties arising from numerous technical measures; and production has yet to be organized in a coordinated manner on a large scale. In other words, agriculture remains reactive to market fluctuations and policy adjustments by other countries. Investment in agriculture carries relatively high risks.

This shows that the prevailing mindset of “treating labor as profit” is no longer appropriate and wastes development resources such as land, water, fertilizers, pesticides, and labor. At the same time, agricultural production remains fragmented, significantly dependent on natural conditions, seasonal, and lacking close connections along value chains, resulting in considerable instability. Market forecasting lacks professionalism, investment in science and technology is modest, and mechanisms for mitigating adverse market impacts and capitalizing on favorable ones remain weak… All these aspects call for a new development mindset and a shift toward a highly professional, innovative, and sustainable agricultural economy.

Promoting the development of an agricultural economy serves the goal of long-term, sustainable development in a market economy. Domestic and external supply and demand dynamics directly influence the mobilization and allocation of resources for development across the sector. A developed agricultural sector is organized scientifically and efficiently, aligned with market demand in terms of scale, structure, and connections with other sectors. In particular, agriculture develops continuously in response to changing demand and expanding markets, transforming resources into market value in accordance with economic laws while minimizing reliance on habits, experience, or subjective, will-driven decisions. The more market demand expands, the greater the value created and accumulated.

An agricultural economy minimizes seasonality and agricultural risks through policies and management mechanisms such as subsidies, procurement, reserves, agricultural insurance, and investment in research and development. Investment in processing agricultural products ensures the highest possible added value and rich nutritional content while meeting consumers’ diverse demands and increasingly high quality expectations. Marketing techniques are developed alongside techniques for building strong brands and extensive, large-scale sales networks that respond promptly to customer needs. In other words, this is a process of converting agricultural resources and assets into value, or moving away from an orientation toward physical output associated with agriculture’s lower level of market development compared with industry. It involves professionalizing techniques for organizing value realization, establishing efficient, low-cost business models, harnessing agricultural technologies, and advancing market organization at every scale. This is a way of organizing agriculture on an industrial scale. Its units include large-scale households, professional production groups and teams, and large-scale enterprises, with agricultural products sold in large volumes.

An agricultural economy encompasses complete agricultural value chains. Each link in a chain is assessed appropriately for its position and role and closely connected according to the principle of harmonized interests and shared risks. The new value created by each participant is maximized, while risks are minimized. Furthermore, in the context of sustainable development, an agricultural economy is organized according to sustainability standards and complies with international commitments to achieve net-zero emissions by 2050. These are characteristics of a modern agricultural economy: it is not passive in the face of natural conditions, does not simply accept negative market impacts, and proactively and actively complies with international commitments.

Based on the analysis above, several fundamental differences between agricultural production that “treats labor as profit” and an agricultural economy can be summarized in Table 1.

These fundamental differences between agricultural production that “treats labor as profit” and an agricultural economy show that the transition from the former state of agricultural development to the latter is a shift from traditional, habit-based, inflexible development to modern development based on scientific and technological advances and innovation, while also moving toward sustainable, civilized agriculture. This is also a general trend in agricultural development in countries with market economies, promoting economic restructuring and the transformation of growth models.

The Current Transition in Vietnam’s Agricultural Development

Before renewal in 1986, Vietnam’s agriculture was highly fragmented and small-scale, with low internal accumulation. On the one hand, production techniques were outdated and heavily dependent on natural conditions; on the other, the centralized command-based management mechanism almost entirely eliminated market functions. During this period, agriculture met only subsistence needs, meaning that it sought to address food shortages among the population. Agricultural products have low price elasticity of demand, making it difficult to stimulate demand by lowering prices. Sharp declines in agricultural prices also mean greater economic losses and increased risks for agriculture.

Following renewal, particularly after the introduction of the production contracting policy, agriculture changed, and agricultural output increased significantly. From the introduction of this policy through 2021, agriculture developed strongly, as demonstrated by its ability to supply enough agricultural products to meet domestic demand and serve exports. For many years, Vietnam ranked among the world’s three largest rice exporters. Other products, such as coffee, pepper, and fisheries products, also hold important positions in world markets.

During 1995–2023, agricultural export value recorded the largest increase, rising from over USD 1.7 billion in 1995 to approximately USD 28.15 billion in 2023. The corresponding figures for fisheries products were USD 621 million and USD 9.2 billion. For forest products, the figures were USD 154 million and USD 14.39 billion, respectively.

This demonstrates substantial progress in agricultural production. However, Vietnam’s agricultural products still experience “bumper harvests and falling prices” and depend heavily on importing markets’ capacity to absorb them. Consequently, agricultural surpluses continue to occur, requiring rescue campaigns almost every year.

Numerous technical and nontechnical measures stipulated in free trade agreement commitments require greater investment to overcome these barriers. Requirements such as the yellow card for fisheries exports to the European Union (IUU—illegal, unregulated, and unreported fishing), safeguard measures, technical and sanitary standards for fruit exports to China, Japan, the United States, and other markets, and regulations on organic rice exports to the European Union (EU) further demonstrate the diversity of technical barriers, with no sign that the introduction of new technical barriers is slowing. Although full and rigorous compliance with countries’ import regulations increases export costs, it yields higher export prices and satisfactory profits. Value-chain connections also ensure the stability of each link in the chain and fully eliminate risks from chain disruptions. This approach contributes to reorganizing the structure of value chains across the sector, thereby reallocating resources and promoting economic restructuring.

The achievements outlined above demonstrate that an agricultural economy mindset makes it possible to develop modern agriculture capable of industrial-scale production, delivering high-quality agricultural products and high productivity, deepening domestic market development, and substantially expanding overseas markets. New-style cooperatives, farms, enterprises, and business groups are being developed as the most effective organizational and operational models. This reality shows that an agricultural economy mindset is a strategic choice for development.

Some Solutions to Promote the Transition

Most countries with market economies develop agriculture according to an agricultural economy model, in which market supply and demand provide the direct and long-term impetus for agricultural development. The State plays only a supporting role through appropriate instruments. The sector’s internal structure is designed on a scientific basis, and value chains are developed for each commodity.

A coordinated and timely shift in thinking helps mobilize development resources effectively and put them to optimal use, eliminating inefficient investment and waste. This approach to agricultural development is consistent with the sector’s general global trends. Accordingly, the following issues need to be addressed effectively in the coming period:

First, strengthen information dissemination and communication to raise awareness of agricultural development, thereby developing appropriate action plans encompassing policymakers, enterprises, cooperatives, households, and individual farmers. Effective communication programs are needed, including scientific conferences, fairs, exhibitions, forums, training, campaigns, and mass media coverage on shifting the agricultural development model toward an agricultural economy. Invest in scientifically grounded agricultural economic organizational models based on technological advances, achievements in agricultural development, and highly effective management science. These should serve as exemplary organizational models with a ripple effect on the awareness and actions of the sector, enterprises, communities, cooperatives, households, and farmers.

Second, prioritize restructuring within the sector to fully leverage its comparative advantages and establish a new, highly efficient sectoral structure. Establish mechanisms to build a sectoral structure with low-cost foundational industries, such as agricultural equipment and input production, digital agricultural technology, biotechnology, and agricultural processing. Use domestic and global market trends as the driving force for adjustments to the sector’s internal structure. Consumer trends favoring green, clean, high-quality, nutrient-rich agricultural products with low net emissions, along with economical and efficient use of land, labor, and energy resources, provide a means of effective restructuring. Develop circular economy models in agriculture based on relationships within the sector and between agriculture and industry, minimizing resource waste and increasing value across the sector.

Third, develop agricultural value chains that maximize the benefits for each actor and for the chain as a whole. These value chains should position Vietnamese enterprises as upstream actors with substantial capacity to supply large volumes of high-quality goods, fully comply with hygiene, food safety, animal and plant quarantine standards, and green and sustainable supply chain standards, and ensure their ability to steer or influence the entire chain. At the same time, establish stable distribution systems serving both domestic and overseas markets, with extensive networks that facilitate timely sales and protect the interests of the entire chain. Alongside traditional sales channels, invest in developing online sales platforms, applications, and processes, new types of sales channels, and modern, internationally connected trading platforms with the highest level of risk insurance coverage.

Fourth, improve the institutional framework for developing the agricultural economy under new conditions, incorporating standards for sustainable development, inclusive development, and climate change adaptation, and building an operational ecosystem to reduce net emissions to zero by 2050. First, laws relating to the development of markets for agricultural economy inputs, such as land, labor, capital, technology, and agricultural services, need to be improved to lay the groundwork for developing an agricultural economy that relies primarily on market forces. At the same time, ensure a highly transparent business environment, minimize barriers and costs, develop coordinated agricultural infrastructure, and establish sustainable, high-tech agricultural production areas capable of generating spillover effects both domestically and abroad. In addition, train highly qualified human resources in agriculture with sufficient capacity to harness the strengths of the country’s agriculture through an agricultural economy mindset, including leading agronomists, agricultural technology specialists, highly qualified engineers, and a professional workforce.