Báo cáo Nghiên cứu khoa học The developing an agricultural research and development priority framework for Vietnam

Developing an Agricultural Research and Development Priority Framework for Vietnam Economic & Policy Sub-Sector Workshop Data and Information Sheets: Economic & Policy Research Opportunity (EPROs) EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS, FORECAST & POLICY ANALYSIS EPRO 2: NATURAL RESOURCES AND RURAL ENVIRONMENT MANAGEMENT EPRO 3: RESEARCH, TECHNOLOGY DEVELOPMENT AND TRANSFER DELIVERY SYSTEMS FOR AGRICULTURE AND RURAL DEVELOPMENT EPRO 4: SOCIAL SECURITY FOR RURAL PEOPLE AND SUSTAINABLE POVERTY REDUCTION EPRO 5: CLIMATE CHANGE EPRO 6: RURAL DEVELOPMENT EPRO 7: IMPACT OF INTERNATIONAL ECONOMIC INTEGRATION AND MARKET ACCESS TO THE VIETNAM AGRICULTURAL TRADE July 2010 2EPRO 1: COMMODITY RESEARCH, MARKET ANALYSIS, FORECAST & POLICY ANALYSIS DATA SHEET ARDO DEFINITION 1.1 National Goal or Purpose To develop the capacity for market analysis and forecast, to improve competitiveness of major Vietnamese products in domestic and international markets and to use that capacity as a basis for providing commodity policy advice, including food security, to Government. 1.2 Research Scope 1. To construct an effective database and monitoring system for market information and for food security for strategic agriculture commodities. 2. To built a group of agricultural commodity experts to do commodity market analysis and forecast, especially for policy analysis of MARD, as well as to provide consulting service for local authorities and business organizations 3. Conducting in-depth analysis and demonstration model of market change at macro level in short term and long term, in order to help in forecasting and planning work of MARD, local authorities and agri-business organizations. 4. Provide timely information and awareness of commodity analysis results via policy discussion forum, market outlook conference, publications to assist the public and private sector to develop stable and profitable markets. 1.3 Coverage The priorities are for the domestic and export products are rice, coffee, rubber, and aquatic sector (shrimp and catfish). To a lesser extent and mainly for the domestic market pig production could be a lower level priority. Introduction Vietnam is an agriculture based country with more than 73 per cent of its population residing in rural areas. In the past few years, owing to the special attentions of the Party and the Government, together with the reform (Doi Moi), rural livelihood has been gradually improving and the poverty rate decreasing. Vietnam is now the second largest rice exporting country in the world. Rice is the main crop produced in Vietnam and its level of production is closely linked to farm incomes and rural development. Rice production plays an important role in food security in Vietnam. During the economic reform process, the agricultural sector has grown at more than 4.5% annually for many years. Vietnamese agriculture has been shifting to commodity production based on the exploitation of advantages on diverse biological resources. Food, aquaculture livestock, vegetable, fruit and industrial crop production has grown significantly. Food production (including paddy, corn, cassava and sweet potato) has increased annually. In the period from 1996-2001, total food production has increased from 31.48 million tons to 39.43 million tons (equivalent 5.05% per year). In 2002-2006, production rose further from 43.1 million tons to 48.9 million tons (2.69% per year). At the same time there has been increased 3competition for land and water uses between rice production and industrial crops or other uses as industrialization continues in the Vietnamese economy. Between 2001 and 2007, more than 500,000 hectares (1.2 million acres) of farmland had been converted into industrial parks. So far in 2008, 125,000 hectares of rice fields have been lost. According to MARD, the total export turnover of agricultural sector up to October 2008 is estimated to reach 13.6 billion USD, up 25.7% over the same period last year, in which agricultural products reached 7.4 billion USD, up 42.5%; fisheries reached 3.8 billion USD, up 24.2%; forestry products reached USD 2.46 billion, increased by 16.7%. In the same time, the agriculture sector had 5 products with turnover of over 1 billion USD (fisheries, rice, forestry products, coffee and rubber) out of 11 products that reached value of over 1 billion USD of the country. However, agricultural markets in 2008 also witnessed many unexpected changes. During mid year, world food prices increased sharply and stayed at a peak of 300% over the same period of 2007 and then dropped. For example export rice prices reached a high of around US$800/ton in 2008 resulting in sharp increases in domestic rice to a high of about 20,000VND/kg (or US$1.3/kg) in late April 2008. During 2009 export prices have declined. A similar situation happened with meat products and industrial crops such as rubber, to early 2009, the price of rubber (1,500 USD per ton) decreased almost 50% compared with the peak in 2008 (2900 USD per ton). The stabilization of food prices is important because rapidly increasing food prices will reduce purchasing power. In 2007 food prices have increased 14.6%. In early 2008, food prices increased sharply, leading to the share of food reaching 43% in total household expenditure. Among Vietnam’s agriculture products, rice (15%), aquaculture (30%), coffee and rubber account for 80% of total annual export turnover. Together with meeting domestic demand, agricultural exports have also grown quickly, both in quantity and value. For the past two decades, Vietnam has become one of the world’s biggest agricultural exporting countries, including rice, coffee, cashew nut, pepper, rubber, tea, aquaculture, etc. Exported agricultural and forestry products account for 30-35% of total agricultural production. Exporting ratios by sectors are about 20% for rice, coffee 95%, rubber 85%, cashew nut 90%, tea 80%, and pepper 95%. Some Vietnamese agricultural products have confirmed their leading positions in the world market (e.g. rice, coffee, cashew nut, pepper, and fishery products). Markets for Vietnam’s agricultural products have been expanded, besides traditional markets (e.g. China, ASEAN, Russia and Eastern European countries); Vietnam has initially entered such potential markets as Middle East, EU, the USA and Africa. Vietnam is moving quickly to market economy and integrating into global economy. Demand and supply of agricultural products fully depend on market forces, rather than on top-down decision as it was in central State economy. The change from planning based on centrally derived production targets to producers, processor and exporters planning based on market opportunities will take time, but without reliable market forecasts is unlikely to happen. Thus, it is necessary to have study on market analysis and forecast, which would assess comparative advantages, then provide guidance and create motivation for market forces to restructure the production and market system based on comparative advantage. While moving to market economy, Vietnam’s agriculture faces a lot of challenges, especially the issue of supply surplus in many agricultural commodities e.g. coffee, dairy, vegetable, sugarcane etc. Farmers are very vulnerable to price fluctuations caused by over-supply or poor quality and in the absence of sound market forecasts cannot adjust their production systems to minimize risk 4of poor returns and capitalise on improving market opportunities. Many commodities (e.g. fish products like shrimp and catfish, rice, coffee, pepper, and cashew nut etc.) fail to forecast market demand and unexpectedly face surpluses or deficits. Farmers often follow short-term market signals, shifting among commodities, causing big losses for themselves and for the economy. As a result, investors have difficulties and uncertainties in investment in processing factories, for instance in cases of tea, sugarcane, cassava and dairy processing. Experience of leading countries in agriculture development e.g. USA, EU, Australia and Japan provide valuable lessons. The USA has Economic Research Service (ERS) under Ministry of Agriculture; Australia has Australian Bureau of Agricultural and Resource Economics (ABARE) directly under the Government with thousand of staffs. Especially ABARE, which has 300 experts work on management and quality control issue of products. Countries like USA, EU and Australia focus on quality control and increasing value added of agriculture products rather than to stimulate supply. Forecasting also includes prediction of total crop production, based on reliable on-farm data. Collection of farm-based data could provide information on the health (input and output costs, profitability, investment levels etc) of the agriculture sector. Analysis of this data and information could provide valuable inputs into advice on policies for the agriculture sector including policies relating to food security, both at the national and local level. The five-year plan on agriculture and rural development (2006-2010) indicates an action plan with focus on the development of high value commodity crops, livestock products and forestry plants toward yield and production improvement. The plan also clearly states orientation on growth rate, production, added value, the share of agricultural commodities, etc. in order to push the development of these commodity sectors. This is considered the key task in the action plan on the agricultural sector. Therefore, it can be said that commodity development with key solutions of policy reform, institutional, organizational and public investment improvement are the first important assignments of the sector. This project really matches with the above target. Operational Environment 3.1 Political and Legislative Environment Apart from Decree No. 7 issued at the central government meeting in July 2008 on the target of developing comprehensive agriculture orienting to modern, sustainable and massive commodity production, Vietnam has not yet issued policies or comprehensive strategies on a particular agricultural commodity or on the investments in commodities related to future or stable or sustainable markets. Policy intervention is mainly through related policies which may directly and indirectly affect the commodity sector. These include 3 major policy groups on production support, land and trade and supporting agriculture production policies such as science and technology, credit and agricultural extension. Much of the legislation relates to Vietnam’s obligations to international agreements. These are important, but they relate to the ability to trade (export and import) rather than what to trade and how to empower producers, processors and exporters of Vietnamese product to be competitive while being profitable. Examples of related policies include: Policies on production support  Decree No. 225/1999/QD-TTg dated December 10, 1999 on crop and forestry varieties and breeding during the period 2001 – 2005 and Decree No. 17/2006/QD-TTg dated January 20, 2006 on continuous implementation of Decree 225/1999/QD-TTg till 2010 5 Decree No. 129/2003/ND-CP (2003) relates to exemption of agricultural land use and the latest Decree 115, 2008 allowed the abolishment of irrigational fees.  Decree 05/2005/QD-BNN dated January 20, 2005 sets standards of agricultural commodities or agricultural products which are produced and traded under MARD’s supervision.  Decision No. 391/QD-TTg (April 2008) on the review and inspection of the management and use of land for the five years to 2010, with a focus on rice fields in particular.  National Food security of Vietnam and vision to 2030: (Pending)  Government’s Decree of Rice Land Management: (Pending 2008) Land policies The Land Law 2003 stimulates that all land area belongs to the entire people, representing by the State with five main responsibilities: (i) Formulate land use zoning and land use plans; (ii) Decide land use quota and duration; (iii) Grant land use rights to land users; (iv) Collect taxes related land use; and (v) Determine land prices. Land users are allocated with land for long-term and stable use and are granted seven rights of land use: transfer, exchange, lease, inheritance, mortgage, donation, and use of land as capital contribution. Besides, land users have to (i) farm appropriate crops and rotations; (ii) pay attention to land fertility maintenance; and (iii) pay taxes and fees on agricultural land. Current taxes related to agricultural land in Vietnam include (i) tax on agricultural land use, (ii) tax on land use rights transfer, and (iii) tax on land over the land limit. In 2003, the Government promulgated a legal regulation exempting most farmers from paying agricultural land use tax until 2010. Specifically, the following land policies are related to agricultural production:  Decree 09/2000/NQ-CP of the Government issued in June 2000 stipulates the stabilization of about 4 million ha of irrigated for rice production and ineffective rice land types (compared to the national average level) are allowed to transfer to other more effective crops.  Decree No. 03/2000/NQ-CP of the Government dated February 2, 2000 on farming economy stipulates policies on land allocation, lease, transfer of land use right in order to encourage cultivated land concentration, agricultural development toward farming scale, facilitating the development of material production for focused commodities. Trade policies To meet requirements of the Agreement of Agriculture (AoA) the Vietnamese Government has issued the following policies aimed at formulating a certain discipline in agricultural trade and support policies and avoiding the use of policies that distort the world trade of agricultural products.  Decision No. 1042/QD-BTM issued by the Ministry of Trade on 29 June 2007 on lifting bonus for export achievement. This decision is to implement Vietnam’s WTO commitment to remove export subsidies.  Law No. 20/2004/PL-UBTVQH11 on 29 April 2004 on anti-dumping of goods imported into Vietnam.  Decision No. 02 /2008/QĐ-BCT dated 21 Jan 2008 on the plan on development of machinery industry for agriculture in 2006-2015 with vision towards 2020.  Decision No. 104/2008/QD-Ttg dated 21 July 2008 on export tariff on rice and fertilizer. 6 Decree No. 39/2006/QĐ-BTC dated 28 July 2006 on tariff on export and import goods. This decree mentions all kind of goods imposed with export tariff, of which only some agricultural products are included in compliance with AoA. Sanitary and Phyto-sanitary Agreement (SPS): Relevant international organizations or WTO members are responsible for the definition of SPS measures and Vietnam is obliged to meet importing countries SPS requirements. The following legal documents and policies have been issued:  Decision No. 04/2008/QD-BNN on 10 January 2008 on the functions and cooperation of Vietnam’s SPS enquiry points.  Law No. 12/2003/PL-UBTVQH11 dated 26 July 2003 on food sanitary measures.  Decree No. 149/2007/QD-TTg dated 10 Sep 2007 on the implementation of a national plan for food sanitary measures.  Law No. 18/2004/PL-UBTVQH11 dated 29 April 2004 on animal health service.  Decree No. 33/2005/ND-CP dated 15 March 2005 on the implementation of Law No. 18/2004/PL-UBTVQH11  Law No. 36/2001/PL-UBTVQH10 dated 25 July 2001 on plant protection and inspection. Technical Barriers to Trade Agreement (TBT): The TBT agreement is relevant for technical regulations covering all specific characteristics of a product, such as size, design, operation, package, and label. Decision No. 0975/QD-BTC issued by the Ministry of Finance on 15 February 2008 is on the approval of a project on technical support after WTO entry- phase 1. This is to evaluate current status and give solutions to obstacles and difficulties in implementing WTO commitments on distribution, franchise, goods inspection, logistics, and trade agencies. Trade related Aspects of Intellectual Property Rights (TRIPS): The agreement obliges members to protect inventions of products and processes. It covers all intellectual property rights with instruments to protect authors, investors, brands and names against imitation and reproduction. Plant varieties and geographical indications relating to agriculture are also covered in this agreement. The following provisions oblige WTO members to introduce intellectual property rights for plant varieties and geographical indications.  Law No. 50/2006/ QH11 dated 29 November 2006 on intellectual property rights  Decree No. 104/2006/ND-CP dated 22 September 2006 on intellectual property rights for plant varieties, wine and spirits  Decree No. 54/2000/ND-CP dated 13 October 2000 on trade secrets, geography Besides WTO agreements, Vietnam has signed the some regional agreements that can affect agriculture, such as AFTA/CEPT, US bilateral trade agreement, AFTA- China, and AFTA- Korea. All these agreement basically focus on reducing import tariff and other trade and non- trade barriers to bind all members open up their markets for imported goods. General documents at central level relating to agricultural production and export  Decision No. 69/2007/QD-TTg issued by the Prime Minister on 18 May 2007 on the development plan on processing industries for agricultural and forestry products until 2010 and vision towards 2020 7 Decision No. 27/2007/QD-BNN of the Ministry of Agriculture and Rural Development dated 12 April 2007 on management regulations of the national plan on the development and implementation of bio-technologies in agriculture until 2020.  Law No. 05/2007/QH12 dated 21 November 2007 on product quality. This provides regulations on quality of export products in general and binding that all exporters have to follow this law and other international and regional commitments.  Decree No. 151/2006/ND-CP dated 20 December 2007 on regulating national credit for investment and export.  Decision No. 08/2007/QĐ-BTC dated 2 March 2007 on interest for credit for investment and export. In general, besides positive effects, policies related to agricultural commodities are mainly situational and passive, often issued at time of crises (rice crisis, coffee, food safety, animal inputs, etc.). Commodity policies are mainly support for production, and specific regulations relating to Vietnam’s international agreements which impact largely on access to global markets, agricultural subsidies, product quality and specific sanitary and phyto-sanitary requirements. There is little comprehensive policy along the chain of a specific commodity: planning, forecast for investment, production organization, input materials, production, processing, trade, quality control, risk management, and support for end consumers. Policy formulation process is reactive and is generally not on a scientific basis and does not have proper consultation of many relevant stakeholders such as policy makers, researchers, private sector, farmers, etc. As a result, market forecast of agricultural commodities as the basis for policy formulation is really necessary. Economic Environment Planning based on production areas and yields with a focus on exports risks creation of an imbalanced sectoral structure. Farmers are encouraged to invest in strong export commodities such as coffee, pepper, cashew nut, rice, and tiger prawns. Weaker sectors such as livestock, poultry, and forestry products, with large and often unfulfilled domestic markets do not seem to receive sufficient support. Investment in strong export sectors are large often without due regard to markets. Supply, often of low quality, has quickly exceeded demand for some crops with surpluses in crops such as coffee, rice and catfish in recent years having significant impacts on producer’s livelihoods. At the same time, investment and competitive advantage in local consumption-oriented sectors/product is reduced increasing the risk of loss of domestic markets through intense competition from imported goods. Farmers are the weakest actor in the value chain: Compared to other market actors, farmers benefit the least from the value chain. Though current policies all give priority to farmers, no policy is really suitable. Some policies give “in-kind” support rather than method support to encourage farmers. Value added along the value chain mostly comes from processing, packaging, advertising and marketing stages while almost Vietnamese farmers can access to raw production. This is particularly true to small-scale farmers or those living in remote and mountainous areas. Social Environment  Transfer of agricultural land for industrial purpose impacts on poverty and labour as farm families are forced to look for non-farming jobs. According to estimates of the Ministry of Social, War Invalids and Labour, on average, 1.5 labour of one farmer household is unemployed as their production land is revoked while most of them are not well educated and vocationally trained. 8 Farmer’s decisions on farming systems they use and the mix of farm products is restricted by designation of land use for specific crops, such as rice. While this may provide some assurance of food security, it is also likely to significantly impact farm household income, through inability to switch to higher value production systems.  Modelling work will identify impacts on income distribution of agricultural land use and transfer as well as trade liberalization at regional and sectoral levels, will assist in identifying vulnerable groups and the development of policies to support them. This will help the Vietnamese Government clearly identify problems and purposively select social welfare policies, avoiding expenditures on ineffective sectors. R&D Information Main Research Areas Research on demand – supply of agricultural commodities  A study on methodology for supply and demand of the rice sector1 describes the application of geographical information system (GIS) and modelling in analysing the balance of supply – demand of rice for seven ecological zones of Vietnam. The important outputs include (i) identification of areas of comparative advantage for rice production; (ii) methodologies for improved estimation of rice yields and total production and forecasting demand for each ecological region including some provinces; (iii) estimation that with a rice area of 4 million hectares, and projections of domestic demand that Vietnam can maintain exports of 2-4 million tons/year with a price decline by 20% resulting in exports close to the 2m tons/year; (iv) Household demand for rice in 2010 with the rate of urbanization of 33% will be about 13.8 million tons. Price variation of rice will increase or decrease consumption of rice by about 1 million ton.  Trends for livestock development in Vietnam2 are impacted by instability and high prices of meat, high cost of animal feed, high price of breeding, and ineffective veterinary services. Output is limited by low income, low meat quality, incomplete standards and system, lack of information, and lack of distribution system for consumption. It also indicates the role of government in creating a legal corridor, management of quality standards, safety and hygiene of food that are very important and necessary to be improved to strengthen their role in supporting the promotion of the livestock sector.  Domestic consumption of coffee3 sector, using survey data based on standard of living indicate an increasing demand for coffee, especially in urban areas of Vietnam. Research on competitiveness  In 2002, Nielsen3 conducted a research on rice sector of Vietnam on the international market, summarizing the production, structure and commercial trends of the international rice market and an evaluation of current policies for rice, especially the policies relating to market access, export subsidies, use of GMOs and domestic support in other countries. 1 Chu Thai Hoanh (IRRI), Dang Kim Son (ICARD) and the colleagues from the University of Wagenningen. 2 Vu Trong Binh and Lucy Lapar (ILRI) (2203) "Hinders for participating in input and output markets of livestock in Southeast Asia: the case of Vietnam." 3 2005, Tran Thi Quynh Chi and Muriel Figue 9 Research on the competitiveness of Robusta coffee industry of Vietnam4 concluded that the competitiveness of Vietnamese coffee in the past is based on cheap labour, high productivity through more fertilizer and irrigation, and infrastructure development policies for all stakeholders involved in production, processing and consumption of coffee. Recent trends in the coffee market have shown that it will be hard to maintain the high competitiveness of Vietnamese coffee as the market trend is towards high quality, organic and clean products together with increasing concern for GAP and environmental impacts. Research on the impacts of world trade integration  Nielsen (2003)5 listed 3 trade policies which have direct impacts on Vietnamese rice sector: (i) Removal of the quota on rice export and import of fertilizer is likely to increase the effectiveness of resource allocation within the economy. (ii) Land policy and land allocation - measures which restrict the change of agricultural land use purposes create obstacles for production and export and control of agricultural diversification activities through adjustment of land use allocation will reduce comparative advantage and the socio-economic benefit of different partners. (iii) Preferential trade agreements with EU – potential trade partners of Vietnam are unlikely to be beneficial for rice production and export of Vietnam as they place Vietnam in a competitive playing field with all exporting countries to the EU.  A Study on trade liberalization in the livestock industry6applied general equilibrium modelling to assess the impact of trade liberalization indicated that (i) In general, trade liberalization would not have negative impacts on Vietnamese livestock industry as the volume of meat trade internationally would be low; (ii) impacts of international trade liberalization, such as price shocks are likely to be low as Vietnam is self-sufficient in pork and poultry with relatively low consumption of beef; (iii) exemption and reduction of import tax on materials for animal feed processing on the development of the industry, especially pig and poultry raising is likely to benefit the domestic livestock industry.  One of the negative impacts of trade liberalization and increasing dependence on export is the variation in domestic price7.as price uncertainty not only makes farmers vulnerable but also affects those in processing industries and some traders. Coffee prices peaked to a historic high in 1990, causing overproduction and thus dropping prices which resulted in a serious impact on the livelihood of coffee growers, particularly those in Daklak province – the biggest coffee area in Vietnam. With low world prices and evolving globalization and trade liberalization, farmers especially the poor, will be the most vulnerable. 4 Cao Bang Hoang, Tran Thi Quynh Chi, et al (2004) 5 Chantal Pohl Nielsen, University of Copenhagen and Dannish Food Economic Research Institute, “Vietnamese rice policies: reform and opportunities for the future”, Asian Economic Journal, No. 17, 2003 6 Institute of Agricultural Economics and the Agricultural University (2005) funded by the Capacity building Enhancement Fund for Vietnam (CEG), Australia. 7 ICARD and Oxfam (2002) 10 Commodity value chain research  A comprehensive study of the rice value chain in Vietnam8 concluded that (i) Vietnam suffers from a lack of and infrastructure environment and policy mechanism to enhance food security, decrease rural poverty and increase income from exports; (ii) Methods for creating value for the rice industry include increase productivity, especially in the mountainous areas, remote areas and increasing production and export of special rice with high quality. The role of the state sector in direct investment in productivity increase should be only limited to irrigation supply, infrastructure strengthening and policies and the private sector should develop specialty and high value markets. In addition, investment in the rice industry should be combined with policies on crop diversification to solve the problem of rural poverty.  A comprehensive study9 on livestock market actors such as producers, feed traders and processors, meat traders, meat processors, consumers, retailers and veterinary agencies analysed demand for meat and calculated price elasticity in Hanoi and Ho Chi Minh City. Research on commodity supply forecast  A study10 on forecasting long-term supply of 5 main coffee regions in Vietnam using Vintage model a analysed the impacts of various factors (coffee prices, inputs prices, tree age and productivity etc.) on coffee supply. The research makes specific predictions of coffee supply of each province in the research area Key issues  Lack of data sources (data and image) to fully analyse the market by time series and to regularly update. Although there have been a number of sources of market information this is only conducted under projects, hence it is not possible to maintain long-term stability and research units do not have a mechanism to exchange and use information effectively.  Market information is merely on price – mainly retail price – other important information for market analysis such as market differentiation, comparative advantage, trends in markets and future opportunities is often available, but rarely incorporated into commodity research.  Information collected has not met all the demands of commodity market research, particularly the information needed to assess supply and demand of the goods.  Timeliness of information on strategic commodities collected by the down-to-commune vertical hierarchy General Statistics Office often means that prediction of crop yields are not available until well after harvest time, which does not support sound investment decisions by producers, processors and exporters.  Vietnam has not yet been able to build scheme and development planning based on the study of the competitiveness and comparative advantages of the main commodities – among the local regions as well as between Vietnam and other countries.  Research for market analysis of some strategic goods is available but not yet comprehensive and does not come into details of the international market, tastes of the potential markets, 8 Agrifood Consulting International (2002) 9 International Food Policy Research Institute (IFPRI) and the Ministry of Agriculture and Rural Development (MARD) (2001) "Selecting livestock policies to promote rural income diversification and growth in Vietnam” 10 Tran Thi Quynh Chi et al (2007) 11 and competitiveness of Vietnamese goods etc. This is especially true for research conducted within projects, which are usually not updated continuously and systematically.  Market outlook for Vietnamese agricultural commodities is almost left untouched by researchers. Although the Institute of Policy and Strategy for Agriculture and Rural Development has done some researches to analyse the economic forecast for coffee sector, few researches applied the balance model, which are partly for rice and animal-feed sector; these researches are merely experimental and primitive. Other strategic sectors have not had similar researches.  In order to carry out similar researches in other commodities, there should be a system of standardized research methods applied synchronously to all sectors. However, this standardized system has not been established yet.  Our industry experts are not so good at modern and high-level research method serving market analysis and forecast; in addition, these people are scattered in various research agencies, not yet gathered into a united and effective organization.  Therefore, in general the market research for agricultural strategic commodities in Vietnam has not met strict requirements in terms of quality and update level of a consultancy product for both policy makers and agricultural businesses.  Industrial organization at macro scale to the individual strategic commodity is still a new concept for Vietnam. United mechanism for a sector, which results in the best cooperation, advantage taking and cost minimization among the stakeholders in the value chain of the sector, has proved itself as an effective way in many countries. In particular, if a commodity organization is established, it will perform the following functions: (i) sector management; (ii) research organization, experience exchange, performance improvement; (iii) policy proposal; and (iv) investment consultancy, etc.  Information is not available to farmers, extension workers and the beyond-the-farm-gate stakeholders in a timely manner so that they can make forward plans and investments to improve returns and profit.  There is no information on the “heath” of the smallholder farming sector. This information and data could be collected routinely through development of monitoring systems for the most important farming systems. Such information would greatly assist development of agriculture and rural policies that address financial and social issues important to sustainability of rural households.  Weaknesses in planning, market information, quality control, agricultural crop and food safety management, input and output price stabilization, etc have reflected poor capacity of the management of formulation and implementation of agricultural commodity policies. However, capacity of agricultural policy research, implementation and management is still very poor. It is necessary to work out large-scale and long-term programs which can sufficiently meet production requirements. Therefore, support from this project is really precious and necessary; however, this is just initial step. Further efforts and investment are required to catch up with that great demand. Research providers MARD does not yet have any organizational systems or processes for development of up-to-date analysis of commodity markets. Commodity research and information is often project related, 12 short term and lacks an organizational framework. Development of these skills will take time and will require international technical assistance. IPSARD is currently one of a few agencies that are doing policy research on agricultural commodities in Vietnam. IPSARD researchers are weak and insufficient in terms of the number in analysis and forecasting work using advanced economic models. Therefore, capacity building in this area is very necessary to implement the project. Information sources and forecasting experts using economic models that IPSARD is focusing on for learning experiences include: - Economic Research Service - ERS under United States Department of Agriculture; - Australian Bureau of Agricultural and Resource Economics - ABARE; - International Food Policy Research Institute – IFPRI; and - International Livestock Research Institute – ILRI. SWOT analysis Strengthens Weaknesses  Study methods (market analysis, forecast models) are now available.  Established relationships with international agencies experienced in commodity analysis  There are many professional commodity related reports that are becoming increasingly available through the internet  Professional, enthusiastic experts of market research are gathered in IPSARD  IPSARD with its policy consultancy function will be the best bridge to MARD and Government .  Priority commodities play a key role in economy and export turnover, and need for market research and forecast is huge  As part of the Government, it will be easier to obtain technical support from Statistics Office of Vietnam in design and establish the monitoring system.  As an official economic research organization, it will be easier to get the approval for establishing such a monitoring system and the cooperation of local governments.   There are not many market studies which apply international standard methods.  Commodity market studies, if any, haven’t followed united standards and are generally the result of short term projects.  Experts of MARD mainly focus on production fields like: varities, agricultural expansion and irrigation, while there are few experts on commodity and agricultural market.  Practical experience of reseachers at IPSARD or in other agencies in Vietnam is relatively weak.  Domestic data is not sufficiently updated in accordance with variables for market analysis and forecast.  There are not enough international data from big markets and exchanges and access too much of this data and analysis is costly.  The studies usually use old data, and take long time; therefore, they haven’t been able to response quickly to urgent requests of policy makers and businesses.  Lack of funds and statistics expertise to establish a production monitoring system.  Lack of relationship and network with provincial officials.  Policy makers are lack of scientific information for market forecast, therefore policy recommendations from scientific studies haven’t really been taken in decisions making. 13 Opportunities Threats  Market forecast plays more and more important role policy making decisions.  Data with sound analysis could provide information that would improve investment decisions by producers, processors and exporters and assist in development of policies including food security  A shift from production target driven planning to planning based on commodity research will provide a scientific base for decision making  Through IPSARD, this EPRO can get cooperation with international organizations who are experienced in agricultural market monitoring.  Vietnam’s Government and MARD consider the issue of food security as a national priority.  There are more and more relevant parties interested in market forecast study, and give prominence to market study impact to eco- social development of agri region and rural and the whole economy.  “Tam nong” Decision just out expresses the Government’s concern of agriculture.  Promotion and regular updating of commodity information will assist in developing a longer term planning approach to agro-industry development  Development of commodity analysis and continuous monitoring will address policy makers needs for quick and continuously updated comments  A mix of short and longer term forecasts will better meet business investment decisions  Lack of long term financial support for development and maintenance commodity forecasts will mean that any short-term funding is likely to be wasted.  Inability or unwillingness of other government departments or institutions with significant experience in farm surveys and agricultural market forecasting will jeopardize the ability to provide sound commodity analysis and advice.  Final products need to be able to satisfy the demand from MARD, other stakeholders and industries. 14 EPRO 2: NATURAL RESOURCES AND RURAL ENVIRONMENT MANAGEMENT DATA SHEET 1. EPRO DEFINITION 1.1. National goal or purpose To develop a legal framework and policy environment to enhance (i) the sustainable and efficient use and management of natural resources in the agricultural sector and (ii) healthy environment in rural areas to ensure the sustainable agriculture and rural development; and (iii) to reduce the adverse impacts of agricultural production on natural resources and the rural environment. 1.2. Research Scope  To construct an effective database and monitoring system for natural resources use in the agricultural sector and rural environment;  To conduct research to estimate the mutual relationships between agricultural production and natural resources use and the environment in short term and long term through quantitative techniques such as experiments, environmental evaluation, cost benefit analysis, bio- economic models, general equilibrium models and qualitative techniques such participatory rural assessment, case study, etc.  To study strategy/approach for the MARD and the government to maintain optimal natural resources use and management and healthy rural environment; and  To provide timely information and knowledge of these above research results via policy discussion forum, conference, publications to assist the public and private sector to develop their working plan and strategy. 1.3. Coverage The focus includes:  Land use and management in agricultural sector and rural areas;  Water use and management in agricultural sector and rural areas (irrigation and drinking water);  Agro biodiversity conservation; and  Rural environment protection. 2. POLICY OVERVIEW 2.1. Introduction Following a series of reforms, the Vietnamese economy grew rapidly during the 1990s. The agriculture also witnessed remarkable development with the annual average rate of four per cent. Despite this creditable performance, concerns are being raised as to whether this development can be environmentally sustainable. There are two main problems: first, uncontrolled pollution from agricultural production activities; and two, the over-exploitation of natural resources. These dangers in turn seriously affect the whole agricultural and rural ecosystem, reduce production capacity of physically environmental elements, decrease productivity of crops and animals and threaten farmers’ health. 15 Although the government has formulated series of policy to address these issues, the impacts have been limited. It seems that no single solution can be found to remove the problems in natural resources and rural environmental management. Instead, a careful mix of integrated and consistent policies, supported by strong quantitative and scientific arguments, is needed. 2.2. Political and Legislative Environment 2.2.1. Land use and management Land ownership and administration. The Land Law 2003 states that all land belongs to the entire people with the State as the representative owner with five main responsibilities: (i) Formulate land use zoning and land use plans; (ii) Decide land use quota and duration; (iii) Grant land use rights to land users; (iv) Collect taxes related land use; and (v) Determine land prices. The state administration on land in Vietnam is executed at four levels: central, provincial, district and commune. While retaining ultimate control over legislation and policy, the central state has devolved land management to People Committees at provincial, district and communal levels. Land user, rights and duties of land users  Rights: Land users were allocated land for long-term and stable use and were granted seven rights of land use: transfer, exchange, lease, inheritance, mortgage, donation and using land use as capital contribution; and  Duties: Land users have to (i) farm appropriate crops and rotations; (ii) attend to maintaining the fertility of the land; (iii) pay taxes and fees on agricultural land. Land allocation. The Land Law 1993 and the Decree 64 CP 27/09/1993 allocated agricultural land to farmers in long-term with stable use. The most important principle of the land allocation was to maintain equality. Commonly, many localities in the North allocated a certain amount of land to each person. Other conditions that were taken into consideration during land allocation were social policies, land quality, the irrigation system, distance to plots and capacity for crop rotation. Land use planning. The land use zoning and planning is a bottom-up process based on geographical condition. The process begins at the commune level. At this level, land use zoning and planning is formulated in detail on the basis of parcels of land. Local production and investment plans will be formulated based on this physical planning framework. Then, they have to submit the formulation to the people councils at the same level and to district people committees. From the commune, the process then moves up to the district, provincial and national levels. The periodic cycle for land use zoning is ten years and for land use planning is five years. Agricultural land is classified by six categories: (i) Land for planting annual crops; (ii) Land for planting perennial crops; (iii) Forest land (production, protective forest, specialized use forest); (iv) Land for aquaculture; (v) Land for salt production; and (vi) Other agricultural land stipulated by the Government. 16 Land use duration and quota Land use purpose Duration Land quota Plant annual crop, aquaculture, salt production 20 years 2 ha (Central and Northern) 3 ha (Mekong River Delta) Plant perennial crop 50 years 10 ha Additional land to plant perennial crop 50 years 5 ha Forest 50 years 30 ha Additional land for protective forest and production forest 50 years 30 ha Tax on agricultural land Current taxes related to agricultural land in Vietnam include (i) tax on agricultural land use, (ii) tax on land use rights transfer, and (iii) tax on land over the land limit. In 2003, the Government passed legislation exempting most farmers from paying agricultural land use tax until 2010. Agricultural land market Land transactions: There are nine transactions related to land including transfer, exchange, lease, inheritance, mortgage, donation, tender, lend and using land as capital contribution. These transactions must have the approval of the state to be conducted. Then, the state will issue a new land use right certificate to land users. Land pricing: The government determines land prices on an annual basis but these prices have to be close to the market level. People committees of provinces and cities under central authority shall establish specific land prices within their localities and submit them to the people councils at the same level for comments prior to decision-making. Land mortgage: There are two ways that households can borrow money from the Bank using land use right: (i) collateral value of the land use right certificate (around 50–70 per cent of the land value); and (ii) ‘trustable mortgage’ (the land use right as the trust for a loan with support of local government and socio-political groups). Based on current regulations, the amount that can be borrowed from the Vietnam Bank for agricultural and rural development is not larger than VND 10 million for household farms and VND 20 million for commercial farms. 2.2.2. Water use and management Law on Water Resources 1998 indicates that ‘water resources belong to entire population under the unified management of the State’. Before 2002, MARD was in charge of overall management of the country’s water resources, but the government can delegate authority for specific water use purposes to other ministries. However, when the Ministry of Natural Resources and Environment (MONRE) was established in 2002, the state management function of water resources was handed over from MARD to MONRE. Irrigation At the provincial level, there are irrigation management companies (IMC) under MARD and provincial people committees, managing headworks, main canals, secondary and tertiary canals of medium and large scale irrigation schemes. Some provinces have equitized their IMC based on Decree 95/2006/ND-CP by the government. At commune level, there are water user organizations (WUO) which manage tertiary canals and 17 on-farm canals to provide full or partial irrigation services as required by farmers. There are six types of WUO: agricultural cooperative (main type), water user group, water management board, village’s water management board, water user association, and villages. Irrigation supply fee is collected from organizations and individuals using water resources for growing rice, vegetables, winter crops, short-term industrial crops, and salt production. A fee frame is set by the government and each province can determine a particular rate based on reality. Fee is in Vietnamese Dong (VND) charged based on the area of their irrigated crop land and type of crops instead of volume of water they use. Fees are typically collected by water user groups, which retain a part of the fee for their collection efforts. The remainder is forwarded to the IMC. However, fees cover typically not more than half of the operation and management expenditure of the IMCs. If natural disaster mitigation and large-scale rehabilitation are included, the fees only cover about a quarter of total operation and management costs. Most recently, Decree 154/2007/ND-CP of the Government exempts the irrigation supply fee for farmers in the canal served by IMC. Nevertheless, farmers still have to pay on-farm irrigation. This policy has raised many concerns about its social economic impacts and efficiency. Drinking water in rural areas At central level, the National Centre for drinking water supply and rural hygiene of MARD is responsible for: (i) design national strategy and plan of drinking water supply and rural hygiene; (ii) Formulate technical standards for constructing drinking water supply works; (iii) monitor water quality. At provincial level, there are centres for drinking water supply and rural hygiene under the management of Provincial Department of Agriculture and Rural Development. Each year, these centres select some communes in a province constructing drinking water works (including community water supply work, small reservoir, deep well, and private water supply work) for rural population. The budget for water work building is shared by national budget, provincial budget and water users. The contribution of water users is at least 25 per cent of total cost. They can apply for credit from banks (the National Program’s total fund for credit is 5649 billion VND). When the construction of water supply works is completed, they will be transferred to and managed by rural communities. Apart from the public system, in some provinces, there are also private companies supplying drinking water in rural areas. Water users have to pay water supply fees for these companies. Standards of drinking water for rural area are regulated by Ministry of Health. Water quality monitoring implement by MONRE, MARD and Ministry of Health. However, the collaboration between these ministries is not close. 2.2.3. Agro biodiversity conservation The first document is the Biodiversity Action Plan 1995 which designed of action for conservation and sustainable use of the country’s biodiversity. In 2007 and 2008, the National Biodiversity Action Plan 2007-2010 with the vision up to 2020 and the Biodiversity Law were approved with the target of setting up policy framework for biodiversity conservation and sustainable development to harmonize regulations of different documents. Besides, biodiversity issues were also included in main strategies and plans at national level such the Comprehensive Poverty Reduction and Growth Strategy for 2001–10, the Socioeconomic Development Plan for 2006–10; the National Agenda 21 on Orientation strategy for advancing toward sustainable development(2002) and different laws: Environmental Protection Law 2005, Forest Protection and Development Law 2004, Law on Fisheries 2003, Commercial Law 2005, Criminal Law 1999, Ordinance 18 of Veterinary 2004, Ordinance of Plant Protection 2004. The issues related in agro biodiversity protection are as following: Agro biodiversity management system MONRE is responsible to coordinate activities of relevant ministries, agencies and localities about biodiversity protection in general. MARD has responsibilities to collaborate with MONRE, relevant ministries, agencies and local authorities to implement relevant legal documents on agro biodiversity issues such as plant seed protection, animal breed protection, fisheries protection, modified genetic agricultural products, forest and irrigation. Conservation of ecological system diversity The ecological system diversity protection includes two types: Inside protected areas (national park, natural reserved zone, species – landscape conserved zone and landscape protective area). Over the past 40 years, the national system of protected areas has increased in size dramatically. It includes 126 approved special-use forests (SUFs), comprising 28 national parks, 59 nature reserves, and 39 landscape-protected areas, with a total area of 2,541,675 ha. Outside the protected areas (buffer zones, landscape, planning, and mainstreaming conservation in production sectors). Conservation of species diversity MARD collaborates with other ministries, agencies to examine, assess endangered endemic plant seeds, husbandry animal breeds to include in the List of endangered valuable species and races that need to be protected. Custom agencies have to check, identify and address illegal imports of invasive exotic species. Provincial People Committees have to prepare the lists of invasive exotic species to report to MONRE and MARD. The production of exotic species is only permitted after the examination result shows that this species is harmless to biodiversity. Conservation of genetic diversity Ministries and agencies have to preserve and protect in long term the heredity elements of species and the List of endangered plant seeds and husbandry animal breeds for the purpose of research. The state encourages organizations and individuals to conserve and protect heredity elements to establish gene bank systems contributing to the biodiversity conservation. Until now, many research institutes of MARD have their own gene banks for their research field, such as Maize research institute, Food crops research institute, etc. MONRE manages the database on modified genes and heredity elements of genetically modified species related to biodiversity. Organizations and individuals conduct research to create genetically modified species have to register with Ministry of Science and Technology. 2.2.4. Rural environment protection In general, the rural environment protection is encapsulated in legal documents such as the Environmental Protection Law 2005, Degree 67/2003/ND-CP on environmental protection fee for waste water, and Degree 174/2007/ND-CP on environmental protection fee for solid waste, etc. Apart from those, this issue has been also regulated in strategies (Strategy for national environmental protection up to 2010, the National Agenda 21 on Orientation strategy for 19 advancing toward sustainable development 2002), National program of the government for clean water and rural hygienic development (NPCWRHD), and MARD’s directives such as Directive 36/2008/CT-BNN on promoting environment protection activities in agricultural and rural development sector. In the NPCWRHD, rural households have been partially financially supported to construct hygienic toilets. In 2005, 50% of rural households had hygienic toilets. MARD collaborates with MONRE, provincial people committees to instruct, monitor the environmental protection in agricultural production. For plantation, MARD issues the list of permitted plant protection chemicals (pesticide, herbicide, insecticide). Departments of agricultural and rural development collaborate with local authorities to randomly or periodically check the trade and use of these products of farmers and organizations. MARD also sets up standard procedures of using plant protection chemicals to ensure the safety of the products and good health of farmers. However, as lack of monitoring system and effective rewarding- punishment mechanism, the compliance of these regulations is limited. For husbandry and aquaculture, MARD also issues a list of permitted veterinary medicines and sets up the production process (food, cage construction, etc) to maintain the rural environment. Besides, extension service’ projects invest a lot to promote the biogas system. However, in 2005, there are only seven per cent of livestock cages having waste treatment system compared to the MARD’s target of 30 per cent. Coping with disease in husbandry sector is an important policy component recently with many adhoc policies such as Decision 719/QĐ-TTg 2008 of the Prime minister about the supportive policy to prevent and cope with livestock and poultry diseases. For craft village, until now there is no document to instruct the environmental protection in craft village. Some documents such as Degree 66/2006/ND-CP on craft village development have mentioned this issue but lack of specific regulation on waste treatment system. Consequently, in 2005, less than one per cent of craft villages have waste treatment system compared to MARD’s target of 10 per cent. 3. OPERATIONAL ENVIRONMENT AND KEY ISSUES 3.1. Land use and management Land fragmentation. Egalitarian land allocation makes land holdings very fragmented. Until now, in Vietnam there are only 700 communes in 20 provinces where plot exchanges have been implemented (MARD 2002). In Vietnam, it is estimated that there are 70–100 million parcels or plots of land, with around 10 per cent of these plots having an area of only 100 m2 or less (World Bank 2003). This situation leads to low productivity, and puts constraints on agricultural commercialization, application of modern technology, hence affecting efficiency in agricultural production for all farm households. Accompanied by imperfect land tenure and underdevelopment of land market institutions, land fragmentation creates disincentives for good farmers to invest in agriculture. Though policies to promote land consolidation and accumulation may lead to certain level of landlessness and rural differentiation, such policies are expected to accelerate agricultural commercialization and mechanization, and create incentives for technology innovation, which are critical for sustainable growth in Vietnam’s agriculture. Inefficient land use by state-owned farms. At the moment, in Vietnam there are 314 agricultural state-owned farms, and 353 forestry state-owned farms who manage about 4.6 million ha of agricultural land, mostly concentrated in remote and mountainous areas. However, the efficiency of their land use is very low because the management mechanism of these farms does not create 20 the incentives for farm households to increase productivity. In 2006, about 70 per cent of the state-owned farms experienced business losses. Frozen land market. In reality, apart from the official price system regulated by the state, there is another ‘underground’ land price system reflecting true market prices which is usually higher than regulated prices of the state. This failure of the land-use-rights market to accurately reflect market values restricts the ability of efficient farmers to take advantage of market opportunities to increase production, and encourage inefficient farmers to leave the sector. Land use tax exemption. The Government exempted agricultural land use tax in 2000. In fact, this tax contributes insignificantly to the government budget at only around 2-3 percent. Though releasing financial burden on farmers, land use tax exemption policy might lead to a relaxed approach to land management and have negative impacts on land use (Anh 2007). Low productivity agriculture with tax exemption and land fragmentation creates low incentives for farmers to utilize and investment on small plots of land. In addition, in order to cover their budgets from tax exemption, local governments may need to order farmers to pay additional fees or face a degradation of public service provision. Land accumulation and rural differentiation. Vietnam faces a dilemma about this issue. On the one hand, policy makers agree that land accumulation is beneficial because it helps raise the efficient use of land and promotes agricultural commercialization. On the other hand, land accumulation may lead to landlessness, which in turn may be a source of economic and social instability. Industrial zone development and sustainability of farmer’s livelihood. The government strives to fill up all the area of established industrial zones and is considering establishing new industries in a selective manner in Vietnam to increase the total area of industrial zones to about 40,000 to 45,000 ha in 2010. At the moment, industrial zones usually compensate a large amount of money to farmers and promise to recruit them to work in their companies. However, due to their low quality of education and professional skills, most farmers have not been qualified to work in industrial zones. After a certain time, they will run out of compensation money and become landless farmers. Forest protection and poverty reduction. Forest land is mostly concentrated in the remote and mountainous areas, where ethnic communities live. Communities are hesitant to receive allocated forest land because their livelihood is not guaranteed when they receive forestry land for protection purpose. It can be seen that apart from timber which need a long time to be benefited, other benefits including non-timber forest products and government’s support are small. Land quality degradation. Aiming at increasing their income, farmers have applied strongly intensive farming practices to improve the production of agricultural land. However, these practices have also degraded the land quality and productivity, including:  Overuse of chemical fertilizer and pesticides in cultivation;  Land erosion due to intensive cultivation on sloping land; and  Land salinity due to transformation from agricultural land to aquaculture land and unsustainable use of ground water for irrigation and subsequent intrusion by salt water. Climate change and food security. According to IUCN (2007), Vietnam is one of the five countries will be affected most seriously from climate change. It is estimated that the Mekong river delta will lose 40 per cent of agricultural land. Moreover, the total output of food production 21 of Vietnam will decrease by 12 per cent (approximately five million tons). Yet, it seems that Vietnam has not prepared comprehensive land zoning and planning to cope with this danger. 3.2. Water management Water use inefficiency. As water for irrigation and drinking is free or under-priced, it is likely to be used wastefully by farmers. Some case studies in Red River Delta indicate that too much water in used for irrigation in rice production. Lack of financial budget for maintaining and upgrading irrigation schemes and drinking water supply works. Because fees collected for water use are insufficient to cover the proper maintenance of water storage and distribution systems, the performance of this system declines seriously. This in turn increases the inefficiency for water supply. Water users may thus achieve a 'false economy' in which they pay little or nothing for their water directly, but as a consequence are subject to declining income resulting from deteriorating water supply services. According to MARD (2006), due to degradation, the current irrigation system only operates at 55 to 65 per cent of designed capacity. Governmental budget deficit for water supply services. At the moment, as both irrigation and rural drinking water supply are subsidized, the government has to spend a large amount of budget to maintain these services. Services Amount Irrigation Governmental budget: from 2000 to 3000 billion VND yearly Rural drinking water supply Governmental budget: 4500 billion VND in 2006-2010 Local state budget: 2300 billion VND in 2006-2010 Lack of drinking water supply for rural living. Lack of drink water for rural living has led to a problem causing the inequality between rural and urban population. UNICEF and Ministry of Health (2008) show that while 76 per cent of urban population has obtained fresh water, only 48 per cent of farmers can access fresh water and drilled-well water. Although Vietnam is acknowledged as a country redundant in water, about 60 to 70 per cent of water sources is derived from outside. That upstream countries like China and Thailand are preparing to construct large-scale hydropower dams may seriously change water regime and volume in Vietnam. Water quality degradation. As both MARD and MONRE do not have effective policy to monitor and control pollution sources discharged to water, the water quality is deteriorating. Dung of poultry and pig has been used to feed fish. This results in pollution in ponds, rivers and reservoirs. Moreover, the overuse of chemical fertilizers and pesticides also seriously degrades both surface and underground water resources. Moreover, due to dyke system planning and management, salt water intrusion has become a serious problem particularly in Mekong River Delta. Impact of climate change. According to World Bank (2007), Vietnam will be affected seriously by climate change. The sea level might increase by 0.3 – 1 meter, and then many low areas in Mekong River Delta, Red River Delta and Central Coastal will be underwater. If the sea water rises by 1 meter, the flooded areas will be 40000 square kilometres, mainly in Mekong River Delta and about 17 million people would be adversely impacted. There is no plan or zoning for water resource to cope with this danger. 3.3. Agro biodiversity conservation 22 Conversion of forest to agriculture is a major cause of biodiversity loss throughout the region. In Vietnam, 50,000 hectares per year of forest are lost to unplanned agricultural clearances, the same amount to forest fires, and the rest to fuel wood and timber harvesting. In response, a large- scale reforestation program is under way. Unfortunately, most of the land that is being deforested is natural woodland, while the reforestation is largely made up of industrial forest plantations of pines, rubber and eucalyptus that add little in terms of ecosystem restoration. Despite worthy government efforts for biodiversity conservation, existing programs for protection of forests and watersheds have not met the need for integrated and sustainable approach to forest and community development. Conversion from farm to non-farm land. Due to the industrialization and urbanization, the agricultural land has been reduced. This seriously damages the agro biodiversity. Switching to new varieties and species. This poses a danger to traditional Varieties and species adapted to local conditions, which may have long-term rather than short- term benefits. Modern farming practices that rely heavily on pesticides and chemical fertilizers seriously affect the conservation and use of biodiversity. In many parts of the region, such practices have displaced traditional rice paddies where fish, frogs, and other species once supplemented local diets. Few of these species can survive with inputs of pesticides and chemical fertilizers. Issues such as genetically modified organisms are relatively poorly regulated and may pose a risk, especially if Vietnam is used as a testing ground for GMOs. Rice monoculture. The predominant farming system in Vietnam is rice-based agriculture. The intensive rice production has degraded the soil quality, reduce water volume and increase the capacity of harmful insect and diseases against plant protection chemicals. Wild animal trade. There is increasing trade with neighbouring countries in human and animal food, medicinal plants, and raw materials for handicrafts and industry, which is difficult to manage sustainably. Limited definition of agro biodiversity. A major weakness in interpreting agricultural biodiversity issues is that national documents appear to restrict the definition of agro biodiversity to crop and livestock species and their wild relatives, rather than the broader ecosystems in which these exist. Such views exclude wild species that provide services to agriculture, such as pollinators, natural enemies, soil organisms, and other species that make up the agro ecosystem. 3.4. Rural environmental protection Lack of monitoring system. There is no clear distinction between MARD, MONRE and Ministry of Health’s responsibilities related to rural environmental management regarding: water quality control, solid waste management, disease control, etc. Lack of rewarding – punishment mechanism. Currently, there is no effective mechanism to control the farmer’s practices that affect the environment, such as chemicals and fertilizer use, livestock waste treatments, etc. Lack of land fund for pollution control. Due to intensive agricultural development policies, the pollution from pesticides, husbandry wastes and handicraft industries has become serious in many localities. It is reported that local governments cannot implement public-health related policies, such as relocating animal husbandry and handicraft industries, because no land is available for these purposes. Industrialization. Industrial zones have increasingly caused serious pollution to rural 23 environment and degradation of farmer’s health. Climate change. Mekong River Delta and coastal areas will be flooded in the future due to climate change. This would dramatically damage the rural environment due to lack of fresh water, epidemic, etc. 4. RESEARCH AND DEVELOPMENT INFORMATION Main Research Areas 4.1. Land use and management Farm size and productivity Some studies using survey data in a number of locations show that small and scattered land holdings distribution hampers technology adoption, leading to more time and labour costs for farming activities, higher production costs and disputes, which reduce productivity in agricultural production (Hung et al 2004, Blarel et al 1992, Lan 2001, Bentley 1987). Sally et al (2006), by using survey data in some Northern provinces, estimate the relationship between productivity and fragmentation and farm size based on the approach of production function. The empirical results show that the number of plots per farm has negative impacts on crop productivity, increased family labour use and other farm costs. Furthermore, they also show that fragmentation is a significant factor to force crop diversification. Hung et al (2006) investigate factors affecting the net value of farm production. By using a regression analysis, the study shows that the net value of farm production is positively but non- linearly related to farm size, and positively influenced by a higher percentage of better quality cultivated land and higher education levels of the household head. They suggest that policies are needed to encourage the consolidations of land holdings. Tarp et al (2007) use the household data from 2006 Vietnam Access to Resources Household Survey to estimate the effects of crop specification on Vietnam's agricultural production. They find that such restrictions are widespread and prevent crop diversification. Although they find no direct effect of restrictions on cultivation income, the paper uncovers an indirect effect working through the returns to land titling. Efficiency versus equity of land structure and rural differentiation process. Land loss is an issue of concern in Vietnam as landlessness or near landlessness is often associated with poverty (ADB et al 2004; Lan 2001; World Bank 2000). Using qualitative approach, Oxfam (1999) and AusAid (2003) identify eight reasons for landlessness in Vietnam such as inability to return loans, production failures as a result of natural disasters, and health problem, etc. Using the Vietnam Living Standards Survey (VLSS) data, many researchers working for the World Bank and mainstream international donors have argued that there is no clear signal that land market has been developed sufficiently to promote strong land accumulation, and the existing land distribution cannot create serious rural differentiation. Van de Walle and Cratty (2003) claim that households that undertake rural non-farm activities have a significantly higher probability of being non-poor. Ravallion & van de Walle (2001) analyze VHLSS 1993 and conclude that the land allocation process under Contract 100 in 1988 and the Land Law of 1993 was not dominated by the rich or influential, and results in an egalitarian land distribution. However, they found some differences 24 when using the 1997-1998 VLSS and suggest that some degree of land accumulation by more wealthy and educated households was taking place. Other studies show that land markets in Vietnam are pro-poor (Deininger and Jin 2003; Ravallion and van de Walle 2003). These authors used VHLSS 1993, 1998 and 2002 to estimate impacts of land allocation on rural differentiation in Vietnam. They claim that land distribution has improved in favour of households in the relatively poorer per capita expenditure quintiles. Similarly, Schipper (2003) finds evidence based on the VHLSS 1993 and 1998 to indicate strongly that the distribution of land has become more equal over the 1990s. Moreover, this conclusion seems to have been confirmed in a number of econometric studies of Vietnam’s land market that have examined the panel data in the VHLSS (Joint Donor Report 2003; ADB 2002). Ravallion and van de Walle (2003) argue that the land market serve to iron out some of the inefficiencies in land allocation generated by initial administrative decisions. Deininger and Jin (2003) reinforce this finding, and argue that in addition to the equity enhancements generated by the land market, land transfer have improved efficiencies because the demand for land, either to buy or to rent, is driven by those households who are more productive but have lower endowments. In contrast, Akram-Lodhi (2005) argues that rural differentiation in terms of access to land in Vietnam proceeded during the 1990s. His argument is provided by the case studies conducted in Northern, Central and Southern Vietnam between 1998 and 2002. He questions how rural households were able to finance land purchases when the average price of crop land per hectare jumped from VND 11.9 million in 1993 to VND 26.1 million in 1998. With unequal access to credit, relatively poorer rural households would not be able to purchase land. Consequently, land sales market might be segmented on the basis of wealth. Akram-Lodhi (2004) also provides five findings regarding to land structure and rural differentiation. First, overall land markets appear to have been pro-poor, but lack consistency. Second, tenancy relations including sharecropping have returned to rural area. Third, landlessness in rural area is rising. Land sales and mortgage losses, along with the growth of non-farm household economy among relatively richer rural households appears to result in the landlessness. Fourth, land fragmentation has increased significantly since 1988 despite the emergence of land markets. Finally, there is a clear trend in land concentration in rural Vietnam, which shows the increasing land stratification. Akram-Lodhi (2005) argues that processes of peasant class differentiation are underway, with the emergence of rich peasants with relatively larger land holdings, capital stock and resource to hire labours. This is the key structural feature of the development of capitalism in agriculture, and the evidence further demonstrates the rapid growth of a class of rural landless, who are separated from means of production and survive by selling their labour and are the poorest segment of rural Vietnam. Operation of land market in the linkage with other markets Most of the studies have covered the development of land-use-right markets in Vietnam. Marsh and MacAulay (2002) show that although a land-use-right transfer is emerging in Vietnam in response to reforms that have given a degree of security and tenure to land holdings, it is still constrained. They claim that there are official restrictions for land-use-right transactions, which control the circumstances under which, and to whom, land-use-rights can be transferred. Humphries (1999), Kerkvliet (2000) and World Bank (2003) found that land transfers were occurring, but many illegally. They show reasons for illegal transactions including costs with 25 registering land-use-right transactions, time consuming, cumbersome procedures, unclear regulations and opportunistic rent-seeking behaviours. Mash et al (2006) also found that there was an active market for land-use-right but the level of activity varies considerably between provinces. Rental transactions are reported more often in the Northern provinces and sales more often in the Southern provinces. Land is rented out for a variety of reasons, including a lack of capacity to invest in productivity enhancements, fragmentation of holdings, lack of access to labour, economic shocks at the household level such as illness, and because of income and asset diversification into rural non- farm household enterprises (Deininger and Jin, 2003; Ravallion and van de Walle, 2003; Haughton, 2000). Although fixed rents are more common than sharecropping, perhaps the most interesting aspect of the land rental market is that in terms of both renting in and renting out it is most common for land to be leased for free, a finding that requires further research but which may be a consequence of the enhanced power of local officials to intervene in the land market as a consequence of land market legislation (Ravallion and van de Walle, 2003). 4.2. Water use and management Irrigation management Participatory Management for Agricultural Water Control in Vietnam: Challenges and Opportunities (Bryan Bruns 1997). After analysing strengths, weakness and opportunities and challenges to improve the operation and maintenance mechanism of irrigation schemes in Vietnam, the study recommends a participatory irrigation management including pilot projects and its roadmap for implementing in some corresponding irrigation schemes. A framework for improving the management of irrigation schemes in Vietnam (ACIAR 2004). By investigating three case studies in Ha Tay province and Ho Chi Minh City, the project focused on analysing the operation and management of publicly managed irrigation systems comprising: system operation, asset management, system economics and institutional analysis. Findings include:  Low water productivity: very low output of rice per unit volume of water; and  Sustainability of financial management for IMCs: (i) They are heavily reliant on government subsidies to carry out their operations; (ii) the level of government subsidies is insufficient to ensure the long-term sustainability of IMC assets; (iii) the level of expenditure on maintenance is consistently below the standard needed to prevent the rapid decay of the company assets. Aligning Public Expenditure and Sectoral Institution to cope with Agriculture and Rural Development Challenges (World Bank 2005). The report presents some key findings as follows:  The trend of irrigation expenditure decentralization, and shifts in emphasis from building new structures to upgrading and completing existing works;  Capacity of irrigation and drainage is low; and  Funding for operating and maintenance irrigation system is not enough. Studying the effective and sustainable irrigation management model for agriculture and rural development (Economic Research Centre - Institute of Science Irrigation, 2007). In this research, a survey was undertaken on organization and management status of irrigation schemes in 528 districts of 53 provinces in Vietnam. Main findings: 26  Apparatus of state management on exploitation and protection of irrigation schemes is not synchronized in terms of organization, functions and tasks;  Administration decentralization is not clear and difficult to operate and manage;  Organization and management of irrigation model exists in many forms;  Management sphere of the IMCs is too broad and thus leading to low effectiveness; and  Unfairness on finance mechanism for IMC. Irrigation investment efficiency Impacts of poverty reduction to the irrigation expenditure of the large-scale irrigation system in Vietnam (Asian Development Bank and World Bank, 2004).The study assessed the impact of public investments on (i) rehabilitation of irrigation infrastructure alone, (ii) improvement of management system alone, (iii) combination between rehabilitation of irrigation infrastructure and improved system management. After measuring the changes in water availability, rice yields, farm profits, production cost, production uncertainties, and poverty in three different large-scale irrigation schemes in the North, Central and South of Vietnam, the research found that investment in both infrastructure rehabilitation and management improvement is more efficient. Policy recommendations included: (i) rehabilitation of existing systems needs to be accompanied by management improvements in order to realize their design potential; and (ii) for poverty reduction purpose, investment should be preferential to irrigation rehabilitation rather than system management improvement. Macro Policy and Investment Priorities for Irrigated Agriculture in Vietnam (International Water Management Institute, MARD and IFPRI, 2004): The research assessed the impacts of public irrigation investment on the development of agricultural output. By conducting an econometric analysis using data of 54 provinces in Vietnam, the result showed that public irrigation investment had contributed 28 per cent of total agricultural output growth during 1991- 99. The study concluded that if public irrigation investment would be reduced in the future for other priorities, it was necessary to find other sources for investment. Underground water Environmental and socio-economic impacts of institutional reforms on the agricultural sector of Vietnam, Land suitability assessment for Robusta coffee in the Dak Gan region (D’haeze et al. 2004); and Groundwater extraction for irrigation of Coffea canephora in Ea Tul watershed, Vietnam - A risk evaluation (D’haeze et al. 2004). These papers show that the over-plantation of coffee results in underground water depletion in Dak lak province. Impacts of climate change on water resources Project ‘Climate change in Asia: Vietnam’, implemented by Institute for Water Resource Zoning – Ministry of Irrigation, and General Office of Hydrometeology (1992-1994) funded by Asian Development Bank. Project’s activities include: (i) Monitoring Greenhouse Gas based on 1990’s data, (ii) Assessing the impacts of climate change on agriculture, water resource, forestry, community health and disaster; (iii) proposing solutions to mitigate the impacts of climate change in terms of energy, construction, transportation, agriculture, forestry, and land use; and (iv) proposing policy to cope with climate change. 27 Project ‘Assessing the vulnerability of coastal areas in Vietnam – Phase 1’, implemented by General Office of Hydrometeology under the fund of Netherlands’s Government (1996). The research assessed the vulnerability of all coastal areas of Vietnam under the impacts of sea level rising and outlined some initial steps for the general management of coastal areas in Vietnam. The provinces selected included Nam Dinh, Thua Thien Hue, and Ba Ria Vung Tau. Flood in Mekong River Delta, Nguyen Huu Ninh (2007). This research presented an overview about (i) climate change and flood; (ii) the current state of disaster management and adaptation to climate change. The report indicated that in long-term, climate change would affect hydrographical regime and the social economic development of Mekong River Delta. Although Mekong River Delta is abundant at natural resources and has great potential for development, the poverty in this region would be a big challenge to cope with climate change. The most vulnerable sector should be agriculture, aquaculture and forestry. 4.3. Agro biodiversity conservation Hannal, D, Managing Agricultural Resources for Biodiversity Conservation – Case studies for India, Philippines and Vietnam (2001): Although in Vietnam indigenous domesticated crops and livestock hold a rich diversity of species and varieties, and other organisms around them hold the key to healthy agro ecosystems, little has been done to catalogue, conserve, and promote them. Indeed, many are in the process of disappearing as biodiversity traditional agricultural systems are replaced by monocultures of high-yielding, high-risk exotic species and varieties, often with disastrous consequences. MONRE, Vietnam Environment Monitor – Biodiversity (2005) funded by World Bank: This is a national report of MONRE that provides an overview of the biodiversity situation in Vietnam. The Monitor provides an assessment of biodiversity status and trends, highlights key issues, and identifies experiences and lessons which can guide decision makers in setting priorities for future action to improve the management of Vietnam’s ecosystems, species and genetic resources. Nguyen Thi Ngoc Hue et al., Instruction of agro biodiversity conservation in Vietnam (2008) funded by IUCN and Danish Government: This research was based on the framework of a similar study conducted in Thailand. This provides readers with information about the general situation of biodiversity and threats to biodiversity in eight ecological systems in order to help agricultural staff and local authorities to protect and sustainably use this kind of natural resources. 4.4. Rural environment protection Rural Environment Project KC 08.05 of Ministry of Science and Technology on studying Vietnam’s rural environmental issues in specific ecological zones to forecast the evolution, propose policy and monitoring solutions (2004): implemented by Dao Can et al. The research covers: (i) general natural conditions of eight ecological zones; (ii) exploitation situation of natural resources, (iii) Health condition and rural environmental sanitation, (iv) policy recommendation. Nguyen Dinh Huong, Nguyen The Chinh (1999) using the Input – Output model to study the relationship between economic growth and production wastes in Red River Delta. The results show that the correlation between economic growth and production wastes is statistically insignificant. Craft villages Project KC 08-29 of MONRE on studying the scientific and practical basis for designing policy 28 and solutions to solve environmental problems in Vietnam’s craft village (2005) implemented by Dang Kim Chi et al. The research group conducted interviews and biological-physical-chemical experiments to examine the pollution level of 52 craft villages. The results show that 46 per cent of craft villages have serious pollution (water, soil or air), 27 per cent are medium polluted and 27 per cent are lightly polluted. Research project of MONRE (2000) on assessing the pollution situation of some craft villages in Ha Tay, Bac Minh and Hung Yen provinces and suggest policy to reduce pollution implemented by Dang Kim Chi et al. The results shows that the environmental quality of most craft villages were below the national standard. Workers had to work in dangerous conditions: 95 per cent directly contact with dust, 85 per cent with high temperature, and 60 per cent with chemicals. Impacts of agricultural production Nguyen Huu Dung (1997) Investigating the Impacts of Pesticide Use in the Mekong Delta The study involved 180 farmers, who were surveyed during the 1996 winter/spring rice growing season. Dung found that more than 90% of farmers in the Mekong Delta use pesticides (such as insecticides, herbicides, fungicides, and other chemicals), including several products that have either been banned or restricted because of their toxicity. Although approximately 65% of the surveyed group is able to read instruction labels, just 39% actually understand and follow the directions. As a result, most farmers do not wear protective equipment such as rubber boots, face masks, and long sleeves, preferring to work in traditional shorts and singlets. 5. KEY POTENTIAL RESEARCH POLICY ISSUES Includes research and policy advice on:  Complete set of database on land use efficiency, land transaction, and land and income distribution, water supply and demand, agro biodiversity, factors related rural environment (quality of air, solid waste, farmer health, etc.);  Analysis on land use efficiency: (i) measurement of agricultural productivity and economies of scale in agricultural production; (ii) optimum level of farm size and land plot;  Analysis on the relationship between land accumulation and rural differentiation: (i) dimensions of rural poverty and income inequality in particular; (ii) causality between land distribution and rural differentiation; (iii) impacts of land policy on rural income and inequality;  Analysis on the operation of land markets: (i) transaction costs of land transactions; (ii) equilibrium of land market; (iii) administrative controls over land transactions; (iv) linkages between land markets with other markets (commodity, labour, capital); (v) farm household behaviours to rent-in/out land;  Analysis on irrigation and drinking water demand and supply capacity;  Analysis on efficiency of irrigation and drinking water supply institutions;  Study on the market operation for irrigation and drinking water supply services;  Study on water resource zoning and planning;  Study on the economic impacts of agro biodiversity on agricultural production (the role of pollinators on production yield, the relationship between agro biodiversity and plant and husbandry diseases); 29  Conduct the analysis on impacts of genetically modified application on agricultural development;  Study on the impacts of agricultural production on agro biodiversity;  Study on the impacts of agricultural production on rural environment (use of plant protection chemicals and fertilizer, husbandry waste, craft village’s wastes on rural environment, farmers’ health); and  Study the impacts of quality of rural environment (quality of soil, air, water on agricultural production yield, farmer’s income). Research providers Many research institutions have conducted studies related to natural resources and rural environmental management so far, including: MARD: Water Resource Research Institute, Aquaculture Research Institute, National Institute for Agricultural Projection and Planning, Rural Planning and Zoning Institute, Vietnamese Academy for Agricultural Science, Southern Institute for Agricultural Science, Institute of Policy & strategy for Agriculture and Rural Development, MONRE: Institute of Hydrometeorology and Climate Change, National Hydro-Meteorology Centre, Institute of Strategy and Policy for Natural Resources and Environment, Land Management Research Institute Universities: Hanoi National University, Water Resource University, Hanoi Agricultural University, Hanoi Polytechniques, Ho Chi Minh Agriculture and Forestry University, Can Tho University Government: Vietnam Union of Science and Technology Associations, Institute of Environment and Sustainable Development (Vietnamese Academy of Social Sciences), Ministry of Health, Ministry of Science and Technology, etc Others: ABARE, World Bank, IFPRI, ACIAR, International Water Management Institute in Southeast Asia, UNESCO, FAO, UNDP, WHO, IFAD, UNICEF, WMO, etc. IPSARD Capacity At this moment, natural resources and rural environmental management issues are still quite new to IPSARD researchers. The institute has only implemented 3 quantitative pilot research projects on: (i) impacts of land policy on ethnic minority groups in the Central Highland; (ii) transformation of paddy land to industrial and commercial land in Ha Tay province; (iii) impacts of irrigation fee exemption on farmer’s livelihood. IPSARD has made some statistical descriptions and qualitative report on land conflicts and land accumulation process in Vietnam. In addition, IPSARD is going to collaborate with Harvard University to conduct case studies to serve urgent needs of MARD leaders to reform land policies. Needs include: (i) comprehensive information, database and fieldwork skills to conduct surveys on natural resources and rural environmental management issues (ii) strong support for the expertise and experience to formulate research issues, questionnaires and survey methods on natural resources use and rural environmental management (iii) certain skill in regression and impact assessment techniques (iv) technical support for applying quantitative techniques for the analysis on land use efficiency, poverty and inequality, bioeconomic simulation models for water, agro biodiversity and rural environment management. 30 6. SWOT ANALYSIS Strengths Weaknesses Common Issues  Many government polices formulated to address natural resources and environmental issues  Certain levels of established legal and regulatory framework for land, water, agro- biodiversity, and rural environmental management;  Certain level of established institutions for land, water, agro-biodiversity, and rural environmental management;  Certain development of rural public social services, and the ability of farmers to invest more on natural resources and rural environmental is likely to increase compared to before  Impacts and compliance with policies and regulations have been limited.  Lack of database for land management and administration, water management, agro- biodiversity and rural environment management;  Unclear natural resources ownership, low capacity for natural resources use and environmental management planning, low capacity for natural resources management and administration;  Lack of market institutions for natural resources (land, water, biodiversity) and environmental services;  Government’s slow progress in reforming natural resources and rural environmental management policy  Lack of coordination between agencies responsible for management of natural resources and environment  Red-tape and corruption behaviours of government staff and state-owned farms, who will resist against the reform toward a more transparent and market- oriented natural resources policy  Limited awareness of farmers and relevant actors on newly emerging issues: effective use of water, rural environment protection, agro-biodiversity conservation. Land Use and Management  Equal land distribution, and income distribution;  High, but declining area of land ownership or use by rural households  Flexible regulations allowing a variety of options for good farmers to accumulate land resources (transfer rent etc)  Reduction of area farmer by state-owned farms is falling, resulting in increase rural household use rights  Allocation of production forests to households and protection forests to communities should result in improved land use  Demand for land, either to buy or rent is driven by households who are better educated, more productive and have lower levels of debt.  Farmers have a habit to contribute a high level of resources for community purposes such as environmental production activities in rural areas, by comparison with most other countries.  Land holdings very small and fragmented with a low level of plot exchanges and land aggregation seen as hindering more commercial agricultural productions systems, diversification and the adoption if advanced technology  Small holdings and lack of credit discourages good farmers investing more in agriculture  Land aggregation may lead to an increasing level of landless farmers  Poor land use/rights market with prices often well below market prices reduces opportunities for good farmers to expand their operations and poor farmers to exit  The sale of rural land for industrialisation, often at less than market prices and the relatively poor skills of ex-farmers for industrial work also increases the number of landless farmers.  Exempting land tax may result in inefficient or low productivity options for land use  Efficiency of land use of state owned farms is low, 31 and their management mechanism does not provide incentives for households to increase productivity. About 70% of state owned farms are unprofitable.  Low availability of credit at the household level and a relatively high level of household debt Water Use and Management  Development of Irrigation Management Companies some of which have been equitized  Development of Water User Groups with ability to collect fees for IMCs for operational and maintenance costs  Large government budget for irrigation and drinking water supply  Farmers are currently exempt from irrigation fees for IMCs furthers worsening a situation where fees provide less than half the operation, management and maintenance costs, resulting in severe degradation of irrigation systems.  In spite of government budget lack of resources for maintaining and upgrading existing irrigation schemes results in lowered water access and inefficient water utilisation  Low water productivity from rice and cotton (low output of rice per unit of water) compared with other more profitable crops  Policies and compliance with regulations for controlling sources of water pollution, both urban (industrial) and rural, has severely impact on water quality Agro-Biodiversity Conservation  Establishment of gene banks  Data base of modified genes managed by MONRE and GMOs registered with MoST  Little coordination, consolidation of gene banks resulting in duplication in some instances and major gaps in others.  Management and control of spread of GMOs introduced for research purposes is limited.  Regulations relating to agro-biodiversity restrict definitions to crop and livestock species rather than the ecosystems within which they exist Rural Environment Protection  Regulations on rural environmental protection is strong  Development of biogas systems for livestock heavily promoted by national and international agencies  Farmers have a habit to contribute a high level of resources for community purposes such as environmental production activities in rural areas, by comparison with most other countries.  Recognition of the impacts of climate change on land use options in the future and large national and international resources directed at researching the impacts and remediation options  Poor rural environmental monitoring systems and reward/punishment mechanisms reduces compliance with and impact of regulations  Larger scale producers are the main adopters of biogas, with less than 10% of rural livestock producers with waste treatment systems  Regulations for waste treatment and environmental protection for craft villages weak and poorly enforced  Lack of budget. Rural infrastructur