Vitality of plantation: Opportunity to attract major investors to agricultural and forestry farms

Equitizing agricultural and forestry farms is an inevitable requirement. However, during the equitization process, proper valuation is essential so that no individual enriches illicitly from state-owned land.

Appeal to the Prime Minister

Agricultural and forestry farms were established in the 1950s and 1960s, helping to redistribute labor across provinces, particularly in mountainous areas that had previously suffered from severe labor shortages. By mobilizing young and strong workers from the lowlands, these farms promoted economic and social development and safeguarded border security. Thanks to the establishment of these farms, Nghe An and other provinces could export products such as oranges and timber, which households and cooperatives could not meet the requirements of at the time.

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However, the development of agricultural and forestry farms failed to keep pace with the country's growth. The planning of these farms remains precise today, reflecting the foresight of earlier generations, but the challenge lies in aligning mechanisms to support their growth.

I sought approval from Prime Minister Vo Van Kiet, who authorized Minister of Agriculture Nguyen Cong Tan to resolve the issue. The Ministry subsequently transferred all agricultural and forestry farms in Nghe An to provincial management, including major farms such as 3/2, Co Do, and Dong Hieu.

Mr. Ho Xuan Hung, former Deputy Minister of Agriculture and Rural Development and Chairman of the General Council of Agriculture and Rural Development of Vietnam, said, "During my tenure as Chairman of the Nghe An Provincial People's Committee (1994–1999), planning the province's western region encountered bottlenecks because the agricultural and forestry farms were still managed by the Ministry of Agriculture (now the Ministry of Agriculture and Environment). Limitations on using farm land hampered the development of the farm as well as the province."

He sought approval from Prime Minister Vo Van Kiet, who authorized Minister of Agriculture Nguyen Cong Tan to resolve the issue. The Ministry subsequently transferred all agricultural and forestry farms in Nghe An to provincial management, including major farms such as 3/2, Co Do, and Dong Hieu.

When management was transferred to the province, Nghe An kept the existing organizational structure of the agricultural and forestry farms, gradually replacing underperforming personnel. Thus, the province successfully integrated these farms into its overall plan, enabling projects such as the Tate & Lyle sugar mill and the Phu Quy orange-growing area to develop.

Yet the farms were still run under a collective management model that operated like tenant farming, which was too outdated for a market economy. Around 2004–2005, the Central Government began discussing the equitization of state-owned enterprises, including agricultural and forestry farms. At first, the process faced significant obstacles because of land issues, with many fearing that the farms would fall into private hands. Moreover, as long as the State continued holding a share after equitization, it remained difficult for these farms to develop.

At Chieng Sung Farm in Son La province, three options were considered: dissolving the farm and handing over the land to the province; equitizing while keeping the state control to avoid losing land; or equitizing with the State holding no shares. After on-site consultations, the Secretary of the Son La Provincial Party Committee supported the option of full equitization with no state ownership.

Today, Chieng Sung Agriculture JSC is well developed, investing in new rural infrastructure and linking with local farmers to raise their incomes. Not only Chieng Sung but also many farms in Son La that converted early have thrived, helping turn the province into the fruit production hub of Northern Vietnam. Similarly, Lam Son Sugar in Thanh Hoa and Dong Giao Pineapple in Ninh Binh have also prospered after equitization.

Too many fears

However, many other agricultural and forestry farms have yet to be equitized. Even after being converted into companies, their management mechanisms remained unchanged. Around 2004–2005, the Central Government issued a resolution on reorganizing farm operations, allowing equitization. Regrettably, a subsequent directive restricted large units, with an area of over 1,000 ha for agricultural farms and over 5,000 ha for forestry farms (if recalled correctly), to forming two-member limited liability companies, with the State retaining a controlling share.

When the State held a controlling share, it was difficult to attract enterprises' investment. The tenant farming model remained widespread. In several agricultural and forestry companies where the State held a share, attempts to raise charter capital were blocked because the provinces feared that without additional contributions, their ownership percentage would decrease. Without an increase in capital, there was no funding to expand production or processing capacity.

Equitizing also posed challenges in valuing land assets of agricultural and forestry farms, with many worried that initial valuations could later be contested. Policy was another bottleneck. Some large farms in border areas feared equitization might compromise national security. Yet no one safeguards the border better than the local population. When farms are equitized and allowed to develop, it is precisely their staff and workers who ensure border security.

Currently, there are more than 250 agricultural and forestry farms across the country, most of which remain under the State’s control, with nearly 100 still fully state-owned. As a result, the transition to the market mechanism has been slow. Mr. Hung hopes to see these agricultural and forestry companies equitized soon, with a reduction in the State's shareholding and the removal of land-related policy bottlenecks, thereby granting enterprises greater autonomy in investment and in changing land-use purposes.

It is encouraging that the Party and the State now recognize the pressing issues and challenges of agricultural and forestry farms. In prosperous farms such as Chieng Sung, Dong Giao, and Lam Son, local communities wish to maintain the current operational model rather than return to the former system of state management.

The Politburo's Resolution 68 on the private economy presents an opportunity for the agricultural sector to address the challenges of agricultural and forestry farms. For localities, it is also a chance to attract major enterprises to invest in agriculture, including acquiring controlling shares in agricultural and forestry companies. Today, agriculture is not only a pillar of the economy but also a national economic advantage. It is regrettable that many regions with potential for development, not only in crop and livestock production but also in tourism, remain deadlocked.

Meanwhile, former agricultural and forestry farms such as Phu Quy and Tay Hieu have now been transformed into raw material zones for TH Group. This shift has significantly improved local people's incomes and created a new dynamic in the western region of Nghe An province.