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Digital Transformation in Agriculture in Vietnam

Updated: Mar 31

In recent years, the rapid population growth, urbanization, and climate change have posed numerous challenges and risks to Vietnam’s agricultural sector, necessitating its restructuring for adaptation. Alongside technological advancements and the national digital transformation strategy, digitalization and the application of high-tech solutions are expected to enhance agricultural productivity, enable climate resilience, ensure income for farmers, and reduce food waste. However, current digital transformation policies and initiatives in Vietnamese agriculture remain localized and lack a comprehensive national approach. Based on these existing conditions, this article aims to assess the state of agricultural digital transformation in Vietnam and propose policy recommendations to accelerate this process.



The Current State of Digital Transformation in Agriculture in Vietnam

In recent times, several specific mechanisms and policies have been enacted to enhance the capacity for embracing the Fourth Industrial Revolution. Among these, credit policies have focused on increasing credit limits and reducing interest rates for clean agriculture and technology-driven agriculture. Notably, Decree No. 116/2018/NĐ-CP allows enterprises to borrow up to 70%-80% of the value of high-tech agricultural projects without requiring collateral. Additionally, various administrative procedures have been streamlined to facilitate these initiatives.


However, the adoption of smart agriculture in Vietnam is still in its early stages, leading to several limitations: (1) lack of comprehensive scientific database; (2) insufficient investment capital; (3) many agricultural operations are small-scale and dispersed, accompanied by high initial costs; (4) quality control and food safety practices need improvement, and issues persist in traceability systems; (5) a stable consumer market for smart agricultural products has not fully developed; (6) some enterprises still struggle to meet technology demands, including machinery variety and quality; (7) high-quality human resources are scarce; (8) climate change continues to pose multifaceted challenges.


Policy Recommendations for Vietnam

Capital

In order to facilitate procedures and registration related to Decision 19/2018/QD-TTg, it is necessary to streamline and clarify the criteria for recognizing high-tech agricultural projects. This will provide a basis for credit institutions to grant loans. Additionally, it is essential to establish a specialized authority with the jurisdiction to identify high-tech agricultural projects, rather than having to collaborate simultaneously with various departments and agencies.


Furthermore, banks need detailed plans to recognize assets on agricultural land, such as greenhouses, net houses, and fishponds, as collateral for loans. Commercial banks should also extend repayment deadlines for high-tech agricultural projects in cases of natural disasters and adverse weather conditions.


High-tech agricultural projects in Vietnam can save equipment costs by utilizing local components to create affordable devices, rather than directly importing equipment from international sources.


The state needs to focus on solving the issue of land consolidation and accumulation, as well as raising awareness and improving the skills of farmers to attract investment capital.

Land

The state needs to reduce various fees and taxes (such as personal income tax, property transfer tax, land use fee, and appraisal fee) and increase the transfer limit for agricultural land. Additionally, local authorities should act as intermediaries to facilitate transactions, thereby enhancing farmers’ trust in non-local businesses.


Furthermore, the role of agricultural cooperatives in aggregating small-scale agricultural producers is crucial. Specifically, cooperative members can allocate land for cooperative management to use as needed. The cooperative management board is responsible for linking with private companies to introduce high-tech machinery and production models. Landowners can directly participate in the production process after receiving training to apply advanced technology.


Moreover, investment in land funds for high-tech agricultural zones at the local level is essential. Policies should restrict the conversion of agricultural land to non-agricultural land in suitable areas for agricultural production and those designated for high-tech agricultural development.


Awareness and Human Resources

To enhance the adoption of smart agriculture and high-tech solutions, both farmers and local authorities need a deep understanding of the costs and benefits of technology in agriculture. Technology providers should demonstrate the practical effects of their solutions directly to farmers and local leaders to encourage adoption.


Universities and technology companies should educate farmers on interpreting data collected by IoT systems, enabling informed decision-making in farming practices. Future technologies should prioritize user-centric design and continuous improvement to make devices more user-friendly for farmers.


Network Connectivity

Regarding network connectivity, policies should focus on expanding coverage and reducing internet connection costs in remote areas. This will enable farmers to access IoT technology. Additionally, internet connectivity will enhance farmers’ knowledge of agriculture and information technology.


Strengthening Linkages and Market Access

To strengthen linkages, local authorities should connect farmers with large-scale production organizations to promote the adoption of high-tech agriculture and ensure traceability, especially for small farms.


To achieve this, the government should: (i) engage in policy dialogues on digital tools for agriculture at different levels (industry, national, provincial, and agricultural basin); (ii) encourage entrepreneurial ventures in digital agriculture; (iii) improve access to suitable financial products for production organizations, small and medium-sized enterprises, and startups investing in digital technology; (iv) enhance data access and management for large-scale data analytics in digital agriculture; (v) improve e-commerce legal frameworks; (vi) address research bottlenecks; and (vii) harmonize interventions with the digital economy’s strategic programs.

Furthermore, leveraging e-commerce platforms can promote smart agriculture and high-tech solutions. These platforms play a vital role in providing market access for smart agricultural products and establishing quality standards.


Legal Framework

Exporting agricultural products with traceability often targets markets with strict regulations regarding food safety and the origin of agricultural products. Therefore, both the government and private companies need to thoroughly study the legal framework related to traceability and food safety in these countries. This research will help establish standards for Vietnamese farmers’ farms. These standards should not only apply to export markets but also aim to create a legal framework for domestic traceability. Some relevant EU regulations that the government can consider include EC 178/2002 and EC 1224/2009.


For the full research article on Digital Transformation in Vietnamese Agriculture, you can find it here. You can also listen to the podcast version here.


Author team: Dr. Vo Tat Thang, MSc. Vu Ngoc Tan, Truong Hoang Dung, Nguyen Thi Bich Hien, Nguyen Hoang Lan – Health & Agricultural Policy Research Institute (HAPRI), School of Economics, College of Economics, Law and Government, University of Economics Ho Chi Minh City (UEH).


This article is part of a series of research and knowledge dissemination from UEH, with the message “Research Contribution For All” UEH cordially invites readers to explore the knowledge in the ECONOMY NUMBER #32 “Human Data Analysis in Vietnam”.

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