COVID-19 accelerates digital transformation of agriculture in Vietnam

By Nga Dao | August 20, 2021, 11.00am

Photo by Dan Meyers on Unsplash

Bac Giang, Vietnam’s lychee growing hub, was one of the provinces worst hit by the fourth wave of the COVID-19 pandemic which broke out in Vietnam in late April this year. In late May, when around 1,500 cases of COVID-19 were recorded in Bac Giang, more than 8,000 tons of lychee of this province had been sold out, for the first time, on Postmart.vn and Voso.vn – two local e-commerce platforms. One month later, the Vietnam E-Commerce and Digital Economy Agency (IDEA) announced that more than 3 tons of lychee had been exported to Germany, also for the first time through “cross-border e-commerce”. This “lychee phenomenon” raises a question about how COVID-19 has been transforming Vietnam’s agriculture and how it would speed up the digitization of this sector.

Agriculture is the most important economic sector in Vietnam. About 70% of Vietnamese people live in rural areas, and agricultural land accounts for over 39% of the total area of Vietnam. The agricultural sector adds up to 24% of the gross domestic product (GDP), 20% of the total exports and over 70% of the total employment[1]. In the last five-year period, the sector’s growth rate was around 2.7% per year.

Before the pandemic, there already exited regulatory frameworks that support digitization of agriculture in Vietnam, although they are quite fragmented. These include, for example, the Strategy for information technology application and development for naturalresources and environment, which  set orientations and tasks for reforming the nation’s land information, water resource management and hydro-meteorological  systems to 2015[2];  the Plan on restructuring agricultural sector which considered “moving from resource-intensive to technology-intensive agricultural growth” a key priority in the period up to 2020[3]; the Master Plan on hi-tech agricultural parks and zones[4], which set a target for Vietnam to be home to 200 hi-tech agricultural businesses and 10 hi-tech agricultural zones by 2020; and the Directive on enhancing the agricultural sector’s capacity to access the fourth industrial revolution[5], among others.

When the COVID-19 pandemic broke out in Vietnam in early 2020, it placed several burdens on agriculture, particularly reducing the purchasing power and causing serious disruptions in supply chains. However, the sector adapted well to the challenges, having been able to maintain a growth rate of 2.65% and gain an export turnover of 41 billion USD, which is expected to rise to 3% and 44 billion USD, respectively in 2021. A main attributor of the sector’s growth amid the pandemic is the Government’s digital transformation agenda.

In June 2020, the Vietnamese Prime Minister signed off Decision No. 749/QD-TTg issuing Vietnam’s National Digital Transformation Program[6] towards 2025 with a vision to 2030 which defines agriculture as one of eight priority sectors for digital transformation in Vietnam. Accordingly, the Government will:

  • Develop hi-tech agriculture with a focus on smart agriculture and precision agriculture, increasing the proportion of digital agriculture in the economy.
  • Conduct digital transformation in agriculture based on data, focusing on development of large information systems such as such as those of land, crops, livestock, and aquatic products. Establish a network of integrated aerial and ground observation and monitoring networks for agricultural activities. Promote the provision of information on the environment, weather and soil quality, so that farmers can improve productivity and crop quality and support the sharing of agricultural equipment through digital platforms.
  • Apply digital technology to automate production and business processes; manage and supervise product supply chains and origin, ensuring timeliness, transparency, accuracy and food hygiene and safety. Consider trying out the idea “every farmer is a trader, every cooperative is a digital enterprise” with the aim of encouraging farmers to apply digital technology to agricultural production, provision, distribution, and prediction; provide training in such application and promote the development of e-commerce in agriculture.
  • Robustly digitalize management activities to promptly adopt agricultural development policies and guidelines.

In February 2021, the Prime Minister approved Vietnam’s plan on restructuring the agricultural sector for the 2021- 2025 period[7] which aims to develop modern, clean and sustainable agriculture, and sustainably connect with global agricultural value chains. A key solution under this plan is to “promote the application of high technology, digital technology and information technology in all stages of the value chain”.

These policy documents have laid down a strong foundation and paved the way for recent actions and initiatives to boost digital transformation in agriculture and rural development. These include, for example, the online conference co-hosted by the Ministry of Information and Communications and Ministry of Agriculture and Rural Development in June where the top leaders discussed and vowed to work together to accelerate the digitization of agriculture; the MIC’s plan issued in late July with a target of helping five million farming households go online and connect with e-commerce platforms by the end of this year.

Vietnam’s accession to various free trade agreements (especially CPTPP, EVFTA and UKFTA)[8] and the government’s tax incentives[9] are also providing great opportunities for local exporters of agricultural produce to participate in global value chains, attraction of more investment in the sector, and improvement of the local farmers’ technological knowledge and skills.

However, there remain several key barriers to digital transformation of agriculture in Vietnam. These include digital illiteracy among farmers, fragmentation of agricultural data, lack of human resources to use farming technology, and lack of funding, especially to support the participation of SMEs[10].

Despite these challenges, the outlook for the digitization of agriculture in Vietnam seems more promising than ever.

The fourth industrial revolution with the surge in digital technologies and digital tools plus strong political will, favorable policy and regulatory frameworks are transforming the agricultural sector, giving opportunities for Vietnam to develop digital agriculture towards more productivity, profitability and sustainability.

[1] Rice as a determinant of Vietnamese economic stability

[2] http://vbpl.vn/tw/pages/vbpq-search.aspx?type=0&s=1&Keyword=179/2004/QD-TTg&SearchIn=Title,Title1&IsRec=1&pv=0

[3] https://vietnamlawmagazine.vn/priorities-for-agricultural-restructuring-in-vietnam-3400.html

[4] http://www.fao.org/faolex/results/details/en/c/LEX-FAOC168526/

[5] https://thuvienphapluat.vn/van-ban/cong-nghe-thong-tin/chi-thi-6524-ct-bnn-khcn-2017-tang-cuong-nang-luc-tiep-can-cuoc-cach-mang-cong-nghiep-lan-thu-tu-358687.aspx?v=d

[6] http://www.asemconnectvietnam.gov.vn/law.aspx?ZID1=10&ID1=2&MaVB_id=2847

[7] Plan of restructuring agricultural sector in a period of 2021 – 2025 (asemconnectvietnam.gov.vn)

[8] https://www.asiabizconsult.com/en/news-briefs/278-free-trade-agreements-in-vietnam

[9] https://www.grantthornton.com.vn/press/press-release-2020/tax-incentives-for-vietnams-agriculture-sector/

[10] https://vietnamnews.vn/economy/988106/farmers-need-training-to-develop-digital-agriculture.html

 

 

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