Page 66 - Agricultural innovation

• Create products that are uniform in size, design and quality that meet international standards
and trace the product’s origin.
• Effectively exploiting the advantages of economies of scale, reducing costs and increasing incomes
of participants in the product value chain.

However, in fact, the development of the large sample field model in recent years has revealed a
number of challenges that make the cultivated area under this model not expand but tend to decrease.
Contracts between businesses and rice farmers with a fixed price already exist, but they are only
contracts based on “trust” between the two parties, not legally binding. This leads to the situation
that, at times, when the market price of rice increases, farmers “break the contract” to sell outside
to traders. Enterprises participating in large fields cannot buy rice from farmers as committed, do
not have enough goods to deliver to partners... leading to businesses and farmers losing trust and
not daring to “cooperate” in the long term. On the contrary, many times, businesses do not have
enough capital to purchase, making prices lower and suplus increased, so the copperation is often
relatively loose.
Although it is a very effective production model, linking stakeholders along the value chain, the
capital level of participating enterprises is limited, banks do not lend or lend very little, so they must
be limited to their own scope. At first, the company’s large field area was about 8,000 hectares, but now
it is only about 5,000 hectares. Although his company has the ability to associate rice production with
about 23,000 hectares, it still lacks the capital to do so.
Thus, the main challenge of this model is that increasing of scale (farming area) depends heavily
on investment (domestic and export markets), capital capacity of rice processing and exporting
enterprises, people’s trust on the partners, the effectiveness of the activities of the participating partners
(cooperatives, local authorities, etc.)

5.4.4. Conclusions

The model of large fields in the Loc Troi Group has overcome the limitations created by the household
economy for many years such as fragmentation, small size, difficulty in applying science and
technology, especially 4.0 technologies. Therefore, it has been participated by farmers and businesses
in many localities to create great achievements in Vietnam’s rice exports in recent years, although for
this model to develop sustainably, it is necessary to have policies in place, stronger improvement in
land law, credit capital or infrastructure investment in rice-growing regions.
Increasing participation of businesses should be encouraged by supporting policies on building
transport infrastructure, processing and trading rice in the region. On the other hand, it is necessary
to study and summarize practices to diversify consumption methods including some modern methods
such as farmers participating in shares in rice trading enterprises, bidding to consume large fields in
Vietnam. During the ripening stage of rice, a part of farmers in large fields can become traders who
provide rice transportation services to the enterprise’s factory.
It is necessary to strengthen training of core farmers so that they can operate and manage large
fields as well as build cooperative economic organizations such as cooperatives, guilds, etc.
Focus on investing in infrastructure for large fields, especially redesigning fields to facilitate
mechanization, completing in-field irrigation, electric pumping stations, upgrading traffic to fields,
supporting farmers to buy machinery and equipment for production and harvesting, giving priority to
agricultural insurance as well as encouraging enterprises to invest in large fields to build large areas of
raw materials for processing and export according to the policy of development of 1 million hectares
of rice for export by the Ministry of Agriculture and Rural Development in the Mekong Delta.

Agricultural Innovation Review in CLV Countries 59