Vietnam's Agrarian Reform, Rural Livelihood and Policy ... - Rimisp

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1. Agrarian Reform Process in VietnamBy the mid-1980s, it became painfully clear that Vietnam’s system of collective agriculture was notworking. In 1987, after several years of slow growth, food production actually declined by 4.4 percentand famine struck parts of the country. Making matters worse, inflation had risen from 92 percent in1985 to 775 percent in 1986, making food more and more expensive for the country’s population of 60million.At the Sixth National Party Congress in December 1986, the Vietnamese Communist Party enacted aseries of reforms that would ultimately transform Vietnam from a centrally planned economy to amarket-oriented one. The reform process, known as Doi Moi, did not really take hold until 1988, butonce the collectives were dismantled, land-use rights were assigned to farmers, agricultural marketswere liberalized, and wider economic reforms were implemented. As a result, Vietnam’s economy tookoff. For about a decade starting in the early 1990s, the country’s gross domestic product (GDP) grewat an annual rate of 7.6 percent thanks in large part to the rapid increase in agricultural growth, whichgrew 4.9 percent annually between 1996 and 2000, when the growth rate reached an all-time high(Minot et al., 2006; Sephri and Akram-Lodhi, 2002).The reforms unleashed a new entrepreneurial spirit in Vietnam, both in agriculture and in othersectors. Farmers intensified rice production, diversified into new crops such as coffee and cashews,and improved the quality of the food they produced. By stimulating agricultural and overall economicgrowth, the reforms helped reduce rural poverty, hunger, and malnutrition. In just five years—from1993 to 1998—the share of people living in poverty fell by 21 percent. Among children younger thanfive, the rate of stunting—meaning a low height for age, a symptom of poor nutrition—declined from 53to 33 percent during the same period (Fritzen, 2002).1.1. Collective Agriculture in Vietnam: 1954-1988When Vietnam achieved independence from France in 1954, the Geneva Accords divided it into twocountries with opposing ideologies—the Democratic Republic of Vietnam in the north adopted asocialist ideology influenced by China and the Soviet Union, and the Republic of Vietnam in the southpursued a capitalist ideology influenced by the United States. Civil war soon followed.2
The rural economies of the two countries were very different. In North Vietnam’s collectivizedagriculture, groups of households formed production brigades, which were responsible for meetinggovernment quotas for agricultural production. In South Vietnam, agriculture was highlycommercialized and more oriented to the export market, and tenant farmers or sharecropperscultivated land owned by landlords (Do and Iyer, 2003; Watts, 1998).Following reunification in 1975, the Vietnamese Communist Party attempted to extend its centrallyplanned system—in particular, its large-scale agricultural collectivization—to the whole country. In thesouth, however, collectivization did not take hold. By 1980, only 24.5 percent of farm householdsbelonged to a collective, and in many cases, southern farms were collectives on paper only (Kerkvliet,1995; Nguyen, T.M, 1995).Moreover, collective agriculture was performing poorly. In 1976 and 1977, agricultural productioncontracted by 0.5 percent and 6.6 percent, respectively. The amount of grain available in the countrywas falling, forcing the government to increase grain imports sharply. Government procurement offood also dropped, as farmers sought to avoid the state procurement system and instead sold theiroutput through informal private markets, where prices were reported to be 10 times higher (Akram-Lodhi, 2001; Chu, V.L. et al., 1992; Fforde and de Vylder, 1996; Nguyen, D.A.T., 2006).By the early 1980s, Vietnam faced an economic crisis. Western and Chinese aid to the country wasdeclining, government food procurements were falling, and a food crisis was emerging. The unpopularsystem of collective agriculture was on the verge of spontaneous breakdown (Fforde and de Vylder,1996; Lang, 1985). The Vietnamese Communist Party responded by issuing Directive 100 on January13, 1981. This directive allowed collectives to contract with individual households to produce a certainamount of agricultural goods and then sell any surplus they produced in the private market or to statetrading agencies. In mid-1981, procurement prices of agricultural goods were increased to the samelevel as market prices.At first, this partial reform seemed promising—agricultural growth reached 10.6 percent in 1982.Success, however, was short-lived. The reforms, designed to make collective agriculture moreefficient, were not deep enough to give farmers real incentives to produce more. Agricultural growthstarted to slow in 1983 and became negative by 1987. Inflation rose sharply, reaching 775 percent in3
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Vietnam's Agrarian Reform, Rural Livelihood and Policy ... - Rimisp

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