Vietnam

Vietnam is the country with the predominantly agricultural economy and comparative advantage in low labour cost, long coastline, diversified climate, natural resources which are favourable for development of diversified agricultural production and export given it small and backward industrial base. But before 1989 Vietnam ‘s agricultural balance of trade was usually deficit. The causes may be the constraints which agricultural products exporting countries often have to face. Since 1986, Vietnam implemented the economic reforms for the whole economy. The Sixth Congress of the Communist Party of Vietnam in late 1986 set a clear direction for the economic renovation process and brought the changes in economic thinking and experiment. Although the international context was unfavourable( such as the reduction of foreign aid from Soviet Union, the collapssion of CMEA block, the trade embargo of United States ) Vietnam achieved considerable successes such as: high growth rate, under controlled inflation rates and so on. The renovation has promoted the integration of Vietnam’s economy into the world economy. In such national and international situation, the development strategy of Vietnam has been moved from inward-looking strategy to out-ward looking strategy. In this process, Vietnam had many changes in aspect of agricultural exports. These changes are represented through the increase of quantity and the improvement in quality as well as the diversification of exported agricultural products. However, according to many economists, the efficiency of Vietnam’s agricultural exports is not high as it could be. The problems here are: (a) what were the constraints of Vietnam in aspect of agricultural exports and (b) how Vietnam has overcome them in past and will solve these constraints to develop further in coming years.

2- FOCUS, SCOPE, RESEARCH QUESTIONS AND METHOD OF THE THESIS

The thesis focuses on three main questions:

How did Vietnam’s agricultural exports perform during 1986-1995?

What are the main constraints of Vietnam’s agricultural exports development?

What should be the direction for further reforms in agricultural policies to solve those constraints in way of agricultural export promotion till to the year 2000?

The conclusion of thesis is that the main constraints in the way of Vietnam’s agricultural export development are the lower price and less competitive ability in comparison to the other competitors. These weaknesses are the result of inappropriate trade policy, weaknesses of agricultural marketing system, lacking of rural credit. These problems have been dealt with by the agricultural policy measures in the transformation process but at present they are still existing and lead to the low efficiency of Vietnam’s agricultural exports. Therefore, they are needed to be improved further by the appropriate policies. They are suggested as including : trade policy, agricultural marketing policy, agricultural production policies.

To investigate the above mentioned issues, the thesis relies mainly on data sources involving the practice of Vietnam agricultural exports and production since 1985, some results of study of international and national authors concerning agricultural production and trade of Vietnam and the World economy. The modest knowledge of the author will be supplementary. The thesis is written by using a combination of statistical analysis and system analysis.

The paper include an introduction, three main chapters and a conclusion

Chapter I is a review of theoretical issues, it covers comparative advantage- the foundation of agricultural exports, roles and constraints of agricultural exports to economic development and policy solutions.

Chapter II includes the presentation of Vietnam’s economic background and describes the economic reform in 1986-1995 and its impacts on Vietnam’s agricultural exports.

Chapter III focuses on the analyzing the performance of Vietnam’s agricultural exports during 1986-1995 by three case studies of: rice, coffee and shrimp. By those case studies, the main constraints and problems of Vietnam’s agricultural exports will be identified and policy suggestions will be explored.

The conclusion summarizes the findings of the study.

I-General trade theory

The theory of static comparative advantage in trade showed that the basis for trade is comparative advantage and any country, which engages in international trade, can benefit from trade by increasing income.

The Heckscher - Ohlin theory combined the theory of production’s factors (labour and capital) and the comparative advantage theory to get to the conclusion that a country would have comparative advantage in the products which uses intensively in its relatively abundant and cheap factor so would export these products and import the commodity intensive in its relatively scarce and expensive factor.

II-The roles and constraints of agricultural exports in economic development

The dynamic gains of trade in general and of agricultural exports in particular are the effects on growth:

First - "impact effect";

Second - " capital accumulation effect";

Third - " substitution effect";

Fourth - " income distribution effect";

Fifth - " the factor weight effect".

Backward linkages

Forward linkages

External constraints:

Firstly, the decline in world prices for the export commodities of developing countries.

Secondly, the falls in world demand for agricultural products.

Thirdly, the external shocks.

Internal constraints:

Firstly, economic policy constraints such as: exchange rate policy, trade policy.

Secondly, agricultural marketing system and the export capacity (production potential).

Thirdly, that is the agricultural production and national food security.

III-Policy measures for agricultural export development

In generally, the policy measurements to promote agricultural export in developing countries can be separated into two types: the direct and the indirect measures that affect directly or indirectly the efficiency of agricultural exports. The former concerns the macro policies such as: exchange rate policy, trade policy, price policy. The later includes agricultural production policies and other policies such as food security policy.

I- Economic background of Vietnam before 1986

In the period 1975-1979, the State controlled directly all important economic activities in the whole country through a system of production plans and goods distribution with the strict regulations on price, interest rate. After September 1979, the tentative reform was performed in Vietnam. There were two important regulations:

Firstly, the Directive 100 of the Central Committee created the " end product contract system " in agriculture.

Secondly, that was the Decree 25-CP which constituted the three plan system in industry.

These changes helped the Vietnam to overcome the recession taking the place in the years 1979-1980. However those changes were not made in the context of comprehensive reform in the whole country.

By the end of 1980s, Vietnam had to face with the unfavourable external environment due to the loss of main external trade markets and foreign financial assistance from CMEA countries. Moreover, the Soviet aid declined which pushed further for dramatic reforms in the structure of the economy. All of those formed the economic background for the economic reform in Vietnam since 1986.

In such context, the performance of Vietnam's agricultural exports before 1986 was very weak. By the Figure 2.1 we can see the export state of some agricultural products of Vietnam in 1975-1985. These products were seen as the potential export products by many economists but in this period their export earnings were very low. In general, before 1986, Vietnam’s agricultural exports were not developed and their operations were inefficient in the economic development process.

II-Economic reforms

The 1986-1995 transition period was the continuation of the early reforms in 1976-1986 period. And up to 1986-1989, it has really been carried out in "grass root".

The main points of this reform process are following:

Transformation in the ownership right and the privatization were presented in agricultural sector by the Resolution 10 of the Political Bureau of Communist Party of Vietnam Central Committee in April 1988 and the Land Law in 1988.

The development of the institutional system and management mechanism expressed by the establishment of the Law on Foreign Investment in 1987, the Land Law in 1993, the Law of Company, Business and Bankruptcy, the separating of Banking system into two levels: central bank and commercial bank has made the advantages for the central bank to perform efficiently its roles in monetary-credit policy and supervise money supply. Beside that, macro-economic environment have been improved also: control of inflation, improvement of trade balance and payment balance

a-Price policy reform:

During the years of renovation, the distortions in commodity prices and of agricultural product price in particular were step by step eliminated. Agricultural product prices were liberalized and now it is entirely decided by negotiation between the sellers and buyers at the market.

b-Trade policy reform: included the change in export taxes of agricultural products and the abolishing trade barriers. First, the reduction in agricultural export taxes. For agricultural products, the export tax was relative low (see Table 2.1).

Table 2.1: Export tax

Source: World Bank, Vietnam Agricultural Marketing Study, 1994. p.14

Second, trade barriers such as: market entry of private traders; legislative obstructions of commodity delivery were cancelled and the monopoly power of SOFEs in the export aspect were reduced.

c-Exchange rate policy reform

The fixed exchange rate mechanism was replaced gradually by the adjustable exchange rate mechanism following the market mechanism under regulation of State. The changes in exchange rate included: depreciation of the Vietnamese currency and introduce an official- floating-managed exchange rate so the gap between official exchange rate and free market exchange rate declined. The unification of exchange rates promoted the exports to non-CMEA countries, the depreciation of VND to USD created the competitive price levels of Vietnamese commodities in the world market.

d- Agricultural marketing policy reforms

These reforms were performed through following:

First, that was the reduction of monopoly power of the state sector in agricultural products market.

Second, the improvement in agricultural products processing industry.

In summary, the economic context of Vietnam in 1989-1995 period has had many reforms in all sectors and aspects of the economy. These reforms were performed in the situation of no outside aid flows and the breaking up of CMEA which was a large market for Vietnam‘s agricultural exports and also a source of production’s inputs and other commodities supply. However, the economic reforms had great impacts on agricultural product export of Vietnam and in return the later contributed a considerable part in the achievements of Vietnam economy.

III-Impacts of economic reforms on Vietnam’s agricultural exports in transition period

The result in 1989 was considerable with value of 2 times in compare to 1988. This sharp increasing had been contributed so much by the increasing in exported output of rice - about 10 times in compare to 1988.

Then in recent years, agricultural export value of Vietnam continued to increase in which the value in 1995 was very high: 2005 Mill.R.USD (two times in 1994).

Source: Vietnam Ministry of Trade, 1993.

We can see the change in structure of Vietnamese agricultural export in case of fresh banana and cashew nut (Figure 2.3). Agricultural products export increased not only in quantity but also were improved in quality so the new market was found out. It could be seen that the solution for the loss of CMEA market was the reorientation the market to the other potential market, in particular, the new market was Asia market. In general, thank to "doi moi " program, the agricultural exports of Vietnam has been increased in quantity, improved quality and could access to new markets with diversified products.

Since 1986 to 1995, Vietnam’s economy has been changed sharply. Along with the transition of the whole country, Vietnam’s agricultural exports have also big change. The combination between comparative advantage and suitable economic reforms made the improvement of the state of agricultural exports both in quantity and quality.

Looking into the Figure 3.1, we can see that four products: rice, coffee, rubber and sea-products are main exported agricultural products of Vietnam in recent years. Because rice, coffee and shrimp are representative for food crops, industrial crops and sea-products so to understand the performance of Vietnamese agricultural export we can focus on the analyses of these products.

I-The performance of Vietnam’s agricultural exports in 1986-1995:

1-Rice product

In 1989, Vietnam exported rice but only SOEs were allowed to export. Since 1991 to 1993, the number of SOEs allowed to participate in rice exports was reduced. Based on the plan to export rice, the Ministry of Trade distributed rice export quotas to various exporting units at the beginning of the year.

Up to 1994, this was the period of further restrictions and regulations. The yearly quota for rice export was approved by the Prime Minister, based on recommendations by the Ministry of Agricultural, the Ministry of Trade and the State Planning Committee. In July 1995, two general companies: VINAFOOD I (in the North) and VINAFOOD II (in the South) were approved by the government. Up to early 1996, the rice export units included 15 units and the quota for exporting rice was initially set at 2 million tons for 1996.

Figure 3.1-Vietnam’s agricultural export structure in 1995.

Up to November - 1996, the export quota of rice was increased to 2.8 million tons for 1996.

The changes of export quotas and export mechanism of rice have affected deeply the result from rice exports. In the period 1989-1995, rice export volume grew at a rate of 8 percent in comparison to the period 1985-1988. In the Figure 3.2 we can see a sharp increase in export volume of rice since 1989 then it has grown continuously during 1990-1995.

One remarkable achievement of Vietnam was the growth of rice export without serious food insecurity. It can be seen at the continuous increase of food per capita from 1985 to 1995 in Table 3.2.

Source: Collected from Vietnam General Statistical Office, Vietnam Statistical Data of Agricultural, Forestry and Fishery 1985-1995, 1996.

Note: region I : North Mountain and Midland; II: RedRiverDelta; III : North Central Coast; IV: South Central Coast; V: Central Highland; VI North East South; VII Mekong River Delta

Beside the increasing export volume, exported rice of Vietnam has been improved in quality (see Table 3.3).

Thank to the higher quality, in the period 1989-1995 Vietnam's rice has got the new markets such as Asia- a full potential market of rice- according to FAO.

In general, the performance of rice export in Vietnam has changed better than before 1986 in quantity, quality and mechanism. However, it can not be said that its efficiency is as high as it could be. There are some constraints including: credit, export quotas, export price and marketing system which should be solved to get higher efficiency in rice export.

2-Coffee product Since 1986, export volume of coffee has rapidly grown and coffee became one of the country’s strategic exportable commodities. (See Figure 3.3). Likely rice, coffee production has been affected deeply by 1986 "doimoi " program. With the combination of the highly intensive farming of coffee and favourable weather conditions, Vietnam has reached the highest yield of the world: 1.4 tons per hectare in 1994. Moreover, Vietnam’s coffee export did not only increase the volume but also increased the value and contributed about 21 percent in total agricultural export value.

Source: Collected from Vietnam General Statistical Office, Vietnam Statistical Data of Agricultural, Forestry and Fishery 1985-1995, 1996.

The trade policy of Vietnam has supported the coffee exports with 1 percent - 3 percent tax rate on unprocessed coffee in the period 1989-1995 and no trade restrictions. The implementation of such trade policy in case of coffee exports aimed to enforce processing in order to improving quality and to raising export value by taking comparative advantage in cheap labour cost.

Since 14-October-1996, Vietnam has integrated to the International Coffee Organization (ICO), this is one more step to develop the coffee export of Vietnam.

3-Shrimp and other aquatic products

Shrimp and other aquatic products are evaluated as the potential exporting products of Vietnam (by World Bank). The economic transformation in 1986-1995 has stimulated the development of aquatic exports. This can be seen by the increasing output, export volume and value (Figure 3.4 and 3.5). The aquatic export value contributed about 15 percent in total agricultural export value annually. Because of the increasing output, the export volume has been gone up and export value has increased from 123 millions USD in 1986 to 600 millions USD in 1995 (nearly equal to 5 times).

In summing up, the general performance of Vietnam’s agricultural exports in the economic transformation was successive. This can be seen by the improvement of quality, the increasing export volume, and the accessibility to new markets.

Although Vietnam’s agricultural exports have concerned comparative advantage but the efficiency was not high. This point expresses at the lower price of Vietnam’s products (i.e. rice, coffee) in comparison to products of the other countries such as Thailand and at the world market.

In next section, some main causes which lead to the above problems and the other constraints of Vietnam’s agricultural exports will be concerned to obtain the policy solutions to develop agricultural exports efficiently in Vietnam.

4- The roles of agricultural exports in economic development process of Vietnam.

In recent year, agricultural exports of Vietnam have developed quickly and contributed continuously to total export value of country. By Figure 3.6, it can be seen that agricultural export value was on average about 40 percent to 50 percent of total export value during 1985 -1995.

The first, agricultural exports of Vietnam contribute to growth in national income, larger production scale, and the expansion of employment and real wages. Specialization is very necessary to get high efficiency in production, processing and export. Agricultural exports with high standards of quality would require and promote the agricultural production and the agricultural processing industry to develop.

The second, the earnings of agricultural exports are the resources that permit a country to build technology capabilities, upgrade infrastructure, human resource development through imports of advanced capital goods, modern technology or management experiences.

The third, role of Vietnam’s agricultural exports can be seen in the linkage effects. The rice export operation has promoted the rice milling industry. In rural area, rice-milling industry is dominated by family - owned mills. This contribution of Vietnam’s agricultural exports is clear in the exportation of products such as: shrimp, pork, rubber, and coffee that required the processing well. Beside that, if the export of those products develop, the their input production industry also are promoted (i.e. pig feeding).

II- Main constraints and problems of Vietnam’s agricultural exports

1-Export quotas

This constraint is most striking one in case of rice export of Vietnam. Vietnam rice surplus is mostly produced in the MRD and partly in the RRD; other regions of the country are either food deficit or marginally self-sufficient. In this situation, the first priority of rice export policy has been to guarantee enough domestic consumption and to export a certain amount of the remaining food surplus. This food security priority is the main cause of allowing only SOEs to export rice, which was raised by Vietnam policy makers. The general effects of the rice export quota include: reduction of demand for rice, lower domestic price of rice. The lower price of rice benefits rice consumers, makes rice more affordable to low income families in Vietnam. But on the other hand, the export quota also means that rice farmers get a lower price for their paddy and the country earns less foreign exchange than it would have without quota. The quota policy is implemented to ensure national food security and it would benefits the country when the gains in terms of food security are greater than the costs in terms of reduced foreign exchange earnings. The export quota of rice in generally takes part into the difference of rice price between domestic price and world price and reduces exported quantity. This gap creates a strong incentive to rice export illegally. The smuggling of rice out of the country is largely due to the difference in price created by the export quota. Moreover, this gap means that the export permits are valuable and leads to the rent seeking of traders. If the contributions by the SOEs to the state budget are adjusted to match the value of the economic rents associated with the quota, this sum is belonged to the government revenue but alternatively, if SOE contributions are not tied to the volume of exports, the sum should be SOE’s profit. By 1997, Vietnam still continue to set up rice export quota, at 10- May – 1997, Government of Vietnam had raised the export quota of rice in 1997 to 3.8 million tons. Up to October – 1997, according to Vietnam General Statistic Office, projected output of rice in 1997 would be 20 million tons ( excess 900,000 tons in comparison to output of 1996). Beside that, the volume in stock of 1996 is about 300,000 tons so Vietnam could export about 1.1 million tons in 3 last months of 1997. Adding into the export volume of 9 first months of 1997 (about 2.8 million tons), it is possible Vietnam would export about 3.9 million tons of rice in 1997 harvest. In sum up, if the output of rice in 1997 is smaller or equal to 20 million tons as predication, this quota level is suitable and it could not affect negatively the rice export and farmers. But if the output would pass the projected output (over 20 million tons) the farm gate price would be decreased and may be Vietnam would have to expand export quota of rice to face to negative impacts of export quota.

2-Rural credit

Rural credit is important to improve and expand agricultural production and marketing system. However, VBA’s scope of operation is very limited: 80 percent of its loans to farmers are less than 1 year and VBA lacks sufficient funds to provide medium term loans which are required strengthly by farm households. With such limited accessibility to credit, it really impedes farm households in the investment into production (typically in case of: coffee, rubber that require rather large volume of capital and longer time to invest). On the side of agricultural traders (SOEs or private traders), the lack of capital did not stimulate them in the processing stage improvement, marketing information system development. Moreover, the interest rate is still too high which is not conducive to the farmers to invest effectively in production and repayment. It is difficult for the sector which have great risk, low efficiency to have enough money to pay the interest to the bank and it would restrict agricultural export.

It can be said that with present rural credit state, it is one of most important constraint to further growth of agricultural exports in Vietnam.

3-Constraints and problems of agricultural marketing system on agricultural exports in Vietnam

One of the weakness in agricultural marketing system is the lack of market information and less knowledge to analysis the market state so exporters can not predict the fluctuation of price in the world market. Vietnam marketing system’s infrastructure in general is backward and bad. This represented through bad roads, old and dammed storage house, backward technology in processing industry slow circulation and distribution system and inefficient.

Vietnam’s agricultural processing industry including storage is simple and out of date. The small rice millings dominated in the rural and many handicraft measures are used for farm output processing. In the process of making relationship with outside, the problems such as: inflexibility of bureaucratic management mechanism; the absence of a clear set of policy ruler and the lack of open marketing channels are also considerable. Therefore, Vietnam exported mainly raw materials of agricultural products with low quality and high marketing margin.

4-Price fluctuation in world market.

One of problems in the world market is price fluctuation. This constraint is expressed most clearly in case of coffee export, the fluctuation in coffee price is very clear (Figure 3.7).

Therefore, the domestic buying price of coffee also has declined sharply. The reduction in coffee price affected badly the farm households: their income decease strongly, they would want to eliminate coffee crop and to change to another crops.

The price fluctuation does not only happen with coffee but also with rice, shrimps and makes Vietnam’s agricultural exports to have to face with many risks in trading

5-Production factors constraint

The production factor problems which affect directly to agricultural production of Vietnam are: limited cultivated land, low skilled labour, backward technology, shortage in agricultural machines, weak and old agricultural infrastructure.

All them exist together in the Vietnam’s economy and restrict the potential production in agriculture of Vietnam. They impact badly on volume and quality of exporting agricultural products of Vietnam.

In general, the above constraints are the main constraints of Vietnam’s agricultural exports and they resulted the lower price of Vietnam’s agricultural products, less competitive ability and low efficiency. By the Table 3.8 we can see the gap of average price of exported rice between Vietnam and world market.

Table 3.8: Average Price of Exported rice (USD/ton)

Source: -World Bank. Commodity Price Forecast. October 17.1988

-Bui Thi Sy, Agro-Processing Industry and Markets on Agricultural Products in Vietnam, Follow-up the Project on " Agricultural Sector Review" VIE/95-01T-TSS-1. Hanoi: Centre for Agriculture and Rural Development, April 1996.

- Collected from Special Volume " The economy 96-97,Vietnam and the World" in Vietnam Economic Times, January-1997.

The reason is: Vietnam has to export its agricultural products through intermediate businessman so suffering losses in price. Being a new comer in the world market of agricultural products, Vietnam’s agricultural products has not enough yet its credibility and customers’ confidence and be low competitiveness in terms of both of its quality, packaging and of its trademark. In fact, the agricultural products from Vietnam do not still ensure its homogeneity, concerning both its composition and its quality

The difference in price resulted the low efficiency in agricultural exports of Vietnam. If Vietnam’s products are improved the quality, packaged and processed to respond the world requirements then the gap in price will be fulfilled, with the same export volume as before, the export value will be higher.

III-Policy suggestions

In coming years, Vietnam will continue to integrate into the world by taking part in the AFTA and WTO. The integration will support the export oriented development strategy of Vietnam. In the economic environment of ASEAN with AFTA, Vietnam's competitiveness may be increased because of comparative advantage in combination with the alleviation of tariff in ASEAN. However, main export products of Vietnam and the other countries in ASEAN are nearly the same; beside that export value of processed products of Vietnam take only 18 percent in total export value (while priority is given to processed products in AFTA) and the quality is not rather high so Vietnam should improve the quality of export products.

To overcome the above constraints for agricultural exports development efficiently in coming years, in general I think that following solutions maybe appropriated:

1-Eliminate the export quota and internal restrictions

There are two measures that may make it better.

First, that is the eliminating the export quotas of exporting agricultural products that would rise domestic price of these products. The net effect on the Vietnam economy is the increase in foreign exchange earnings because of higher agricultural export volume.

Second, if Vietnam replaces the agricultural export quota with a suitable rate of tax in agricultural exports, prices would rise but the gains are the increase in export earnings and the government revenue. This measure also reduces the incentives for smuggling and the need for internal restriction.

In addition, the elimination of barriers to the private sector and internal restrictions in agricultural exports should be considered.

2-Develop the rural credit system

The VBA should be developed within the rural credit co-operatives network to respond sufficiently the demand on capital of farm households and traders. The loans should be enclosed the direction and management to ensure that the capital is used in right target, in production of suitable products

The credit procedures and conditions; saving mobilization should be improved to create more credit to the farmers in the country according to their production requirement and repayment capacity.

3-Improve the agricultural marketing system

Agricultural exports should be promoted with a set of measures to improve quality, reduce marketing margin by lower shipping costs and improve the reputation of Vietnam exporters among foreign buyers. The investment in storage, conversation, transport and processing stages should be increased. The procurement stage is needed to improve to avoid the bureaucratic procedures, take part the reduction of marketing margin. The marketing information system should be upgraded and concentrated to be sure the access to world market, to get right information of price, production of competitors.

4-Stabilize the macro-economic environment

Macro-economic policies should be monitored in order to avoid penalizing farmers with real exchange rate appreciation that will reduce exports and discourage farmers. Policy decisions of macro economy have the predominant price effect on exporting products. Not only producers of agricultural exporting products but also of other tradable products will benefit if the fiscal and monetary authorities succeed in further reducing the difference between domestic and foreign inflation rates.

5-Improve the national buffer stock

In the international trade, the risks of external shocks are inevitable. Vietnam is in case of the new trader in world market so the ability to overcome these shocks is very weak (for example, the case of above coffee price fluctuation). Therefore, the national buffer stock should be develop to ensure the stabilization with producers, traders of export commodities.

6-Invest into agricultural research

Finally, as we have known, Vietnam’s agricultural exports have restrained by limited land, poor and old equipment, backward technology meanwhile the capital for import them is lacking. Thus, the agricultural research should be considered to get the improvement in yield, quality and technology.

In summary, the results of Vietnam’s economic renovation process are very considerable. It is proved by the high growth rate, stabilization of macro-economy, significant restructuring of economy toward service and industry, improvement in balance of trade. In that reform process, agricultural exports of Vietnam have also changed sharply. By the impacts of agricultural policy measurements in combination to macro-economic environment stabilization, many constraints of Vietnam’s agricultural export have been removed. The agricultural production responds fully for domestic demand and still can export a part to world market. The national food security and minimal living standards of farmers have been ensured while amount of exported food increases gradually. The quality of agricultural products and agricultural marketing system has been improved so price level of exported agricultural products have reached closely to the common price level in the international market. Therefore, the exported output of agricultural products has increased in the years after renovation period. More over, the diversification of exported agricultural products has respond to different requirements of the world market.

However, beside the removed constraints, there are existing some of problems which restraint the development of agricultural exports. They are the lacking of rural credit, the constraints of export quotas, and the weaknesses in agricultural marketing system. These problems lead to the relative low price and less competitive ability of Vietnam’s exporting agricultural products in comparison to the other agricultural exporting countries such as Thailand, USA. Therefore, the efficiency of Vietnam agricultural exports is still far from expectation. Beside that, in coming years, the targets of Vietnam agricultural export are rather high in comparing to 1995 (5200 Mill.USD in 2000 while in 1995 - 2702 Mln.USD). Although the agricultural productivity increase continuously in recent years but the remarkable problem is the increasing of population with growth rate is about 2.3 percent per annum so the problems of national food security are very important too. More over, the price fluctuations in international market ( i.e. the sharp declining in price of coffee in this year) should be considered. The solution for these problems includes the combination of many policies: eliminate the export quota, develop the rural credit system, improve and upgrade the agricultural marketing system, ensure the operations of national buffer stock and enforce the agricultural research. In general, in the economic and political context of Vietnam now, the development of agricultural exports is very necessary and its efficiency may be higher if the above policy suggestions are performed well in solving the existing constraints.

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