Modernizing agri cooperatives: Lessons from around the world

Experience from the world

The development of agricultural cooperatives in Japan is clear evidence for the consolidation trend. In the 1950s, the country had 13,314 cooperatives operating in nearly all communes nationwide. However, their small and fragmented scale led to dispersed resources, and most cooperatives failed due to ineffective management.

After many policy adjustments, the Government of Japan introduced agricultural modernization laws in 1961, which included reforms for cooperatives. From the 1970s onward, Japan implemented multiple merger campaigns to establish farmer cooperatives known as JA. By 2025, the number of cooperatives in Japan had decreased to just 524, collectively referred to as JA.

According to Prof. Takanashi Fumie from Tokyo University of Agriculture, the outstanding benefit of consolidation is the creation of strong financial capacity for cooperatives, enabling them to gain greater bargaining power, diversify their service offerings, and acquire sufficient capability to undertake large-scale projects.

Each JA in Japan currently has an average of 15,000–20,000 members, consisting not only of official farmers but also associate members who use the cooperative's products and services. JAs play a role in implementing stages of the production process, while the trading and consumption phases are handled entirely through wholesale channels. Farmers and cooperatives therefore do not have to worry about signing contracts with enterprises for consumption. As a result, JA is not only a "shield" protecting the livelihoods of Japanese farmers but also a mechanism that enhances the competitiveness of agricultural products in the market.

Assoc. Prof. Dr. Nguyen Duy Can, Department of Development Economics (Can Tho University), shared experience from South Korea. Since 1961, this country has also issued the policy of consolidating agricultural cooperatives. By 1973, the consolidation process was completed, reducing the number of cooperatives from 21,042 in 1961 to fewer than 1,000 by 2010. In contrast, the membership scale rose from an average of 82 to more than 2,000 members per cooperative.

The strength of South Korea's agricultural cooperatives is their control over the entire value chain, particularly the processing stage. Farmers do not merely sell raw rice, but they also expand production into post-rice products such as rice, flour, and rice-based cakes, thereby generating higher added value. This is Vietnamese cooperatives’ limitation due to constraints in capital, scale, and organization.

Another example comes from the U.S., where agricultural cooperatives have a long history dating back to 1810. After a period of massive growth, reaching 12,000 cooperatives in the 1930s, the U.S. entered a phase of strong restructuring. By 2015, the number of cooperatives nationwide had fallen to just 2,047, while the average membership per cooperative had increased to nearly 1,000. Following the merger, U.S. agricultural cooperatives operate professionally and hold international-level brands, particularly in the dairy, grains, and fruit sectors.

Essential to consolidate for growth

In Viet Nam, the first cooperative was established in 1948. The number of cooperatives grew steadily afterward, reaching 46,000 by 1974 and peaking at 76,000 during the Doi Moi period in 1986.

After the Cooperative Law 2012 came into effect, the number of cooperatives increased rapidly due to a focus on quantity. In contrast, member numbers declined. Typically in 2013, Viet Nam had 9,939 cooperatives with an average of 415 members per cooperative. But in 2018, despite the number of cooperatives rising to 13,856, average membership had dropped to just 231 members per cooperative.

In 2024, Viet Nam had more than 20,000 cooperatives; however, the average membership had fallen to just 183 members per cooperative. In the Mekong Delta, the country's key agricultural production region, there are now over 2,700 agricultural cooperatives, yet each has an average scale of only 77 members.

A major weakness of agricultural cooperatives is their fragmentation, with many being established merely to "qualify for policy support." Some cooperatives lack offices and personnel or operate only nominally. Product consumption faces difficulties, as cooperatives often have to sign contracts with enterprises directly, taking on considerable risk. This results in uneven product quality and creates significant challenges in consumption and brand building.

This reality is in contrast to several countries around the world. For example, in Japan, during this period, the number of agricultural cooperatives has increasingly declined, while the number of members per cooperative has steadily increased.

Drawing from practical experiences in countries with strongly developed agricultural sectors, Assoc. Prof. Dr. Nguyen Duy Can assumed that consolidating cooperatives to increase scale and membership is an inevitable trend.

Within the same commune or province/city, the merger of agricultural cooperatives operating in the same field will create a sufficiently large organization with strong financial and human resources. This enables cooperatives to invest in processing, trade, and brand development, instead of stopping at raw production.

Resolution 57-NQ/TW underscores the goal of developing large-scale, modern, and digitized cooperatives, and consolidation is the key to achieving this. Only when reaching sufficient scale can the new-generation agricultural operatives apply high technology, carry out digital transformation, control quality, and establish traceability systems that meet market demands.

According to Assoc. Prof. Dr. Nguyen Duy Can, a clear strategy for cooperative consolidation is essential to avoid spontaneous mergers. The consolidation process must focus on democratic mechanisms and ensure members' voices are respected.

In addition, policies on capital, land, and infrastructure support are needed so that cooperatives after consolidation can invest in processing and trade. Particularly, it is essential to strengthen the training of managerial personnel and learn from international experiences to operate cooperatives professionally.