Diskussionsschriften der Forschungsstelle für Internationale Wirtschafts- und Agrarentwicklung eV (FIA), Nr. 59, Heidelberg 1997
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C o n t e n t s
1 Introduction
2 Background
2.1 Renovation (doi moi)
2.2 Experience with Cooperative Organizations in Vietnam
2.2.1 Self-help Groups and Semi-formal Self-help Organisations
2.2.2 Classical Cooperative Societies
2.2.3 Collective Economy Organisations
3 Emergence of Agricultural Producers' Cooperatives: Transitional
Pseudo-Cooperative Forms towards Collective Economy Organisations
4 Decollectivisation of Agriculture
5 The Administrative Environment of Agricultural Cooperatives and the Vertical Structure of Cooperatives and Apex Organisations
6 Legal Environment of Agricultural Cooperatives
7 Present Situation of Agricultural Cooperatives
8 Case Studies
9 Conclusions
References
Vietnam, besides China, is one of the few socialist countries which, contrary to most of the former Soviet Union members, successfully decollectivised socialist agriculture and reintroduced individual farming.
The special Vietnamese way of decollectivisation, the present situation and future problems expected during the introduction of a new cooperative system will be discussed in this paper.
The so-called renovation (doi moi), introduced since 1986, was not a big leap forward but rather a step-by-step change to provide incentives to the agricultural producers. The socio-economic change was carefully guided by the government and the Communist Party. The economic liberalisation affected the various sector to a different extent. While the general economic system is still dominated by the central planning system, the agricultural sector has been gradually liberalised by party and government resolution since 1981. The last congress of the communist party in 1996 confirmed a more cautious approach to further reform.
Recently (1993), the new land law has arranged for property rights to be no longer controlled by the old agricultural (collective economy type) cooperatives and, consequently, a new cooperative law facilitating genuine service cooperatives has been discussed and finally agreed upon early 1997.
The government recognises that the current state-led agricultural cooperative system in the country will have to be radically reoriented if it is to play an effective role in the new free market environment or in the new organisation system combining different types of autonomous farmers organisations, which have been organised spontaneously to ensure that small producers can compete efficiently under the new market conditions.
2.2.1 Self-help Groups and Semi-formal Self-help Organisations
After 1956, in the precollectivisation period, informal and semi-formal self-help groups, organised as agricultural mutual assistant teams, were promoted to prepare the individual farmers for the more or less forced collectivisation of agriculture.
Later, during the decollectivisation process, again mutual self-help continuously developed to fill the service gap left by the complete collapse of the collective economy organisations. The spontaneously emerging new forms are avoiding the name cooperative, as emotionally the word cooperative still is linked with collective economy organisations.
At present, savings and credit groups are given a new push. A form of restrengthening thrift and credit in Vietnam can be found within informal self-help groups and joint liability groups linked on the basis of recommendations of Mass Organisations or the People's Committees with the Vietnamese Agricultural Bank.
Besides the emergence of savings and credit groups other organisations/self-help groups build and maintain irrigation systems, provide transport, marketing and mutual help for the family farms. Again, others promote craftsmanship, handicrafts and small-scale industries. For the time being there are no figures available about the size of those organisations focusing on other farm and non-farm activities in the rural areas. Similarly, it cannot be established at this stage whether single or multi-purpose organisations prevail.
Since June 1993 credit unions or People's Credit Funds (PCF) have been established by the State Bank of Vietnam, the Central Bank. These unions are commune level savings and credit cooperatives, inspired by the Desjardins model. A few of still viable rural credit cooperatives were transformed into a local PCF-group, but most have to be set- up from the scratch. By the end of 1995 there were 534 groups operating. By early 1997, their number stood at 881 groups already. In August 1995 an apex central people's credit fund has been created. The necessary regional and national structure is supposed to be strengthened by international agencies within the next few years, among others by German bilateral aid.
Supply and Marketing Cooperatives
The first supply and marketing cooperative was set up in 1955. The supply and marketing cooperatives (SMCs) are a form of collective trading enterprises where farmers invested shares in form of their products. In 1962, the SMCs were set up in every municipality in the North. They were to buy and market agricultural commodities produced by the farmers. They also supplied products obtained from state-trading organisations.
Producers' Organisations
The SMCs’ members represented two different types: (1) contracted private individuals and (2) cooperative or collective producers' organisations. The SMSs could have share capital, it was, however, not a precondition to pay share capital in order to become a cooperative member. Often, there was no distinction made between loans from members of the cooperatives and share capital, or between share capital and working capital.
By 1975 some 5,000 primary SMCs existed with a membership of 6 million. Later SMC unions were formed at district and provincial levels. A Central Council of Supply and Marketing Cooperatives (CCSMC) functions as a national level apex organisation of the SMCs still today. In 1975, after the liberation of the South, the concept of SMCs was introduced there, too. By 1988 there were 9,000 SMCs at primary level with 15,000 selling points, 486 district cooperative unions and 44 provincial cooperative unions.
At present, only a few SMCs are working successfully. Most SMCs have been liquidated or sold to private entrepreneurs. The market share of cooperatives in the retail market has dropped to less than two per cent in 1991 from 12.6 per cent in 1987. Processing industries run by the SMCs and the state have been gradually disappearing. More than 70% of district and provincial unions of SMCs went bankrupt. The role of CCSMC is gradually decreasing.
Handicraft Cooperatives
Cooperatives have been part of government-guided strategies for industrial development since the first five-year plan (1961-65). Handicraft cooperatives were formed to use the same organisational structure as SMCs and agricultural cooperatives.
Agricultural Cooperatives
The so-called agricultural cooperatives were introduced with government support along with the land reform. These cooperatives, in fact, were producers' cooperatives, abolishing individual farming.
The term "cooperative" was used to connote the collectives in the early stage and, later on, government controlled enterprises with people's participation at village, district and provincial levels. Considering the evolution of agricultural cooperatives, Vietnam did not have a well established system of agricultural service cooperatives as found in open market economies. Regarding ideologies and management mechanisms, the Vietnamese agricultural cooperatives were similar to Chinese communes and, finally, to the Russian kolkhos model.
The process of collectivisation has been started in the North in the mid 1950s. As in all socialist countries, collectivisation followed the uniform way developed by the Soviet Union. In order to motivate the peasants towards large-scale cooperative farming, a so-called work-exchange movement (mutual assistant teams) was organised on a more or less voluntary basis. In 1956, there were 190,249 mutual assistant teams representing half of all farm households. The teams organised the joint production of rice seedlings, the pooling of draft animals, as well as the pooling of labour in order to harvest crops in due time and to improve cultivation technology. The teams were to provide mutual aid in production and daily life, while maintaining individual responsibility for agricultural production. At the same time (1958) there were 4,278 credit cooperatives consisting of 761,778 members and 238 supply and marketing cooperatives with 3,995 various shops in the villages.
In 1959, the land was collectivised and a great number of People's Committees created. In turn, the People's Committees transferred the land to communes or collectives to be cultivated on a collective basis by agricultural producers' cooperatives.
In 1960, the central leadership decided to push forward an agricultural cooperative movement. At the end of 1960, over 41,000 agricultural producers' cooperatives were formed by 2.4 million households (representing 84.8% of the rural population and cultivating 76% of the agricultural land).
In 1960, more then 90% of the agricultural cooperatives represented the elementary type of the agricultural producers' cooperative. Land was used collectively. Out of the proceeds of the cooperatives, farmers/members were compensated for the land, draft animals and farm implements they had contributed. The members were paid for their labour and the surplus was ploughed back into community services such as education and health after government dues had been deducted.
In the following decade, the agricultural producers' cooperatives were directly influenced by the 1965-75 war. A request for organising agricultural production and continuing the production was given first priority - along with fighting. During wartime the cooperatives mainly aimed at distributing an average food ratio to everybody, thus abandoning the principle of distributing surplus according to labour. The cooperatives were left with heavy contributions.
By 1975, the year of unification with the South, 95% of Northern rural households were members of agricultural producers' cooperatives cultivating 95% of agricultural lands and producing 92% of total agricultural output. The government started a mobilisation campaign for the "organisation of the agricultural production towards socialist large-scale production". Many cooperatives enlarged their size of membership and land under cultivation through almalgamation processes, thereby reducing the number from over 40,000 to less than 20,000. Due to weak management, specialisation efforts and the separation of labour and land did not yield the expected results. Instead of economies of scale, social diseconomies of scale were the result.
Along with amalgamation, agricultural producers' cooperatives in the North had been transformed into advanced agricultural producers' cooperatives of rather considerable size (300-500 households, 200-300 ha), organised similar to the Soviet kolkhos model, which treated the peasants like farm labourers. In the advanced agricultural producers' cooperatives, buffaloes, oxen, agricultural implements etc. were in collective ownership. Land was collectivised and profits distributed without considering the individual contribution of land to the society. In the early stages of collectivisation, in some cases compensation had been paid for the contributed land.
In the advanced agricultural producers' cooperatives, which were subdivided into brigades and/or production teams, the Three Contract System (production contract, cost-expenditure contract, work-point contract) was applied, with the result of heavy and inflexible bureaucratic structures. Besides brigades, responsible for the cultivation of parts of cooperative land, specialised teams (e.g. irrigation teams), were organised. The members of the advanced agricultural producers' cooperatives were more or less identical with as those of the communes administered by people's committees.
After the reunification of Vietnam in 1975, several attempts have been made to introduce collectivisation and forced cooperation in the South, too. To support this movement, land in Vietnam was nationalised in 1980. By 1980, 1,750 cooperatives were set up as well as 18,800 production teams. These units accounted for 50% of rural families and 36% of the cultivated land. Finally, all attempts proved to be largely unsuccessful. Often agricultural cooperatives were only created on paper, while members continued to organise individual landuse supported within mutual help groups. In the Mekong Delta, these mutual help groups included some 80% of all agricultural households. By 1985, only 750 of the agricultural cooperatives were active. However, the informal and semi-formal mutual help groups continued to work successfully on a voluntary basis.
The concept of cooperative society in the recent past, particularly among South Vietnamese farmers, meant collectivisation, comprising all aspects of agricultural economic activity, including land ownership and equipment. The peasant identified himself with an agricultural worker employed by a quasi state-owned enterprise which traditionally offered few, if any, incentives for increasing output or efficiency.
Egalitarian distribution of income in the advanced agricultural producers' cooperatives produced a strong disincentive. Peasants concentrated on the cultivation of their small private kitchen gardens (5% of the cultivated land of the agricultural producers' cooperatives was allotted to the members). These private plots generated more than 70% of the income derived by the cooperative members.
The production responsibility contract (khoan), which divided the responsibility for the eight stages of production between the members and their cooperatives resulted in what was finally called the "empty contract". The agricultural cooperatives were responsible for supplying (1) fertiliser, (2) seed, (3) insecticides, arranging for (4) draft animals or tractors for soil preparation, coordinating (5) irrigation and water supply, whereas the farmers/members were responsible for (6) transplanting the rice seedlings, (7) weeding and (8) harvesting. Due to bureaucratic inflexibility, the cooperatives were not able to fulfil their responsibilities in time, thus making it practically impossible for the peasants to improve land productivity. In reality, the peasant members had to do all the work but were not supported by their cooperatives with timely input supplies.
The khoan contracts provided for the distribution of the land on lease to families for 3-5 years on the basis of a fixed quota of yields. Immediately after the introduction of the khoan system, rice production increased by 20%. The khoan-contract system was operational in about 90% of all cooperatives. But with contracts involving the arbitrary redistribution of land through the cooperative leadership, new problems arose, e.g. difficulties with equitable management and the use of jointly (cooperatively) owned machinery equipment, irrigation systems and land. In addition, the value of the contracts was permanently increased according to the average increase of productivity achieved by the members.
In late 1986, Vietnam introduced a new economic strategy called doi moi (renovation). This strategy, which allows the introduction of mechanisms generally found in market economies, was adopted by the 6th Party Congress and is known as the "strategy for the transitional period". As regards the renovation of agricultural economic management, Resolution No. 10 (1988) of the Vietnamese Communist Party was meant to overcome the difficulties of the so-called empty contracts. Under Resolution No. 10, cooperatives contracted for their landholdings with individual members/farmers (package contract). The farm household, and not the cooperative, was considered the basic unit of agricultural production.
In the renovation process (doi moi) the farmers were free to sell their surplus paddy in the open market at village fairs or via private wholesalers. The cooperatives were then facing the problem of how to maintain community services with the contribution paid by the members gradually decreasing. The leaders and board members of agricultural cooperatives were not familiar with market economy-related management techniques. For the cooperatives, the consequences of Resolution No. 10 meant a radical change. Many cooperatives were dissolved or amalgamated into larger units, serving primarily as collection agencies for government agricultural taxes. In order to survive, cooperatives had to shift the focus of their activities, i.e. mainly providing services.
Key issues in implementing provisions of Resolution No. 10 were the redistribution of cooperatively managed land holdings, the ownership of collective assets, etc. With little or no shareholder equity brought into the cooperative structure, the issue of reallocating both the ownership and the use of these assets either by the cooperative or by individual members is largely unresolved. In those communities, where cooperative organisations remained an active participant in the local economy, the cooperative members have retained their assets under collective ownership through the cooperative, and consider their cooperatives to provide services to the community. In communities, where the cooperatives have been weakened through Resolution No. 10, the ownership of assets has been reallocated, often inequitably, on an ad hoc basis.
People's committees are party organs. Central party committees provides guidance to the council of ministers and the planning bodies. The structure of the Communist Party of Vietnam (VCP) follows the lines of the administration as do all other mass organisations such as the women's union, the youth union, the farmers' association, the agricultural and/or other cooperatives. All these organisations are found at communal level, as well as at higher hierarchical district, provincial and national levels. At each level, they create a network of horizontal relations in which certain persons may be represented in several organisations simultaneously.
The vertical organisation of SMCs was an offspring of the basic administrative structure, resulting in district SMCs, provincial SMCs and a central council. At these levels, the SMCs collaborated with and were guided by Departments of the Ministry of Trade, Commerce and Tourism. The Ministry furthermore appointed and seconded key staff to the district and provincial SMCs. At commune level, the locally elected management board of a SMC was guided by all other organisations discussed above.
Whereas SMCs and handicraft cooperatives have formed unions and central councils (e.g. CCSMC), the agricultural cooperatives function in an uncoordinated way. Neither secondary nor tertiary cooperative structures existed until recently. Given the importance agriculture has for the national economy, and the prominence of agricultural cooperatives in the communities, promoting cooperative organisations is one of the responsibilities of the now Ministry of Agriculture and Rural Development (MARD). In 1997, the first unions of agricultural cooperative societies emerged. Since there was no autonomous apex structure in the past, the MARD provided all necessary services such as guidance, training of officer bearers and audit.
For the time being both the still existing agricultural production cooperatives and the newly set-up informal self-help groups are hampered by the fact that they are not guided by an efficient apex organisation. During the period of collectivisation these functions were fulfilled by the respective ministries, e.g. for the agricultural production cooperatives the Ministry of Agriculture.
Since 1986, an apex organisation has been established, i.e. the Vietnam Union for Cooperatives and Small & Medium Enterprises (VICOOPSME), out of a merger of the former Ministry of Cooperatives and the Ministry of Industry. This organisation is the internationally recognised representative of the Vietnamese cooperative movement although it is mainly concerned with the promotion of small and medium enterprises, so far. Recently, first discussions have been started to set-up a Vietnam Cooperatives Union (VCU) out of VICOOPSME. In any way, VICOOPSME, or at a later stage VCU, are needed in organising agricultural cooperatives and self-help groups at the district, regional and national level. With respect to the PCFs the State Bank has set up 9 Regional Credit Funds and one Central Credit Fund, which will function as the apex structure in the long run.
Until 1993, a general cooperative law has never been existing so far. However, on the basis of several government decrees and party resolutions, the legal environment of the agricultural cooperatives was changed drastically in the past. Resolution No. 6 (1970) of the Central Committee of the Party decreed to reorganise the structure of the agricultural cooperatives. Different specialised production brigades were set up within the cooperatives for land preparation, irrigation, plant protection, rice transplanting and harvesting, animal breeding, machinery management, processing etc. The managing board of the cooperative was to work like the board of an industrial factory and farmers were treated as factory workers. As mentioned above, the result of this reorganisation was a change towards large-scale collective farming.
A first attempt to turn the military-like organisation of agricultural workers/members of cooperatives into a structure based on individual responsibility was made with Decree No. 100 (1981), which allowed for the delegation of production responsibilities to the individual members.
As this renewal process - due to bureaucratic attitudes within cooperatives - did not yield the expected results, but rather led to the so-called empty contracts, Resolution No. 10 of the Politburo of the CPV (1988) constituted the essential parts of a real renovation programme (doi moi) not only in agricultural management mechanisms but also in cooperative organisation. Under Resolution No. 10, cooperatives contracted their land use rights to their members/individual farmers. The farm household, and not the cooperative, was considered the basic unit of agricultural production. The open market provisions of the contract system (Decree No. 100/1981) were expanded to include the supply of agricultural input, the marketing of products, the right of determining what crops can be grown and, last but not least, the right to transfer the land use contract to the children of the members. Traditionally centralised structures administering the agricultural sector were reduced in size and influence and free market forces could determine both supply and demand of agricultural commodities. In order to create an efficient market, the previously fixed price system based on subsidies was abolished.
In practice, collective and forced cooperative systems were replaced by a system in which farmers leased land from the state, thus leaving the initiative of action to the farmer. Land was irrevocably allocated to the individual farm households for a period of 15 years. Farmers still had to pay taxes and deliver a share to the state, including the agricultural tax and the dues to the people's committee and to the cooperatives for special services (irrigation etc.).
For making most use of the potential of the private farm households, further policy measures were implemented. Meant to fully free the members from arbitrary decisions and revocations of land allocations by cooperative chairpersons, Resolution No. 10 finally led to the formulation of a new Land Law amended in 1993 shifting the power over the main production resource ‘land’ away from the agricultural cooperatives to the people's committees. The new Land Law provides for cadastral maps, a land use right of up to 20 years for annual crops and 50 years for perennial crops. Besides, allocation can be renewed. Long-term use applies to housing plots, too. Individual land use rights are inheritable, transferable and can be colateralised, mortgaged and rented. Individual holdings are limited to three ha. Authorised state bodies are granting land tenure certificates to the land users. Taxes to be paid are fixed according to the quality of the land classified in six different categories. With the Land Law of 1993, Resolution No. 10 (1988) was optimised, thus practically changing the agricultural cooperatives to voluntary service organisations, as they lost their monopolistic position in land issues.
Giving up the concept of the agricultural cooperative as a collective economy organisation, the new freedom of association and voluntary membership required a general Cooperative Law. The final draft (No. 15) of the Cooperative Law covers all the various types of cooperatives and reflects the will to renovate cooperative principles.
Only in March 1996,draft No. 15 has been adopted by the general assembly as a general Cooperative Law which became effective 1 January 1997. Up to that time no cooperative law has been existing in Vietnam. The new Law covers all the various types of cooperatives and reflects the will to renovate cooperative principles. In fact, the legal basis has been laid to use genuine cooperative structures in order to ensure the autonomous development of farmers' self-help. The law provides for modern service cooperatives and allows the organisation of very small cooperatives and groups (pre-cooperatives) between 5 to 15 members with a simplified management structure.
In the South, there are at present 1,936 cooperatives, 1,137 of which are in transition. Only about 440 cooperatives are well organised. Besides these, there are 6,381 informal production groups and 21,422 self-help groups. The production groups emerged after reunification with the north and the attempts to collectivise agriculture. They were never formalized.
In the North, the cooperatives comprise almost 98% of rural households. In the South, only 6% of rural households are members of cooperatives, while approximately 80% of all farm households are members of self-help groups.
The impact of Resolution No. 10 on agricultural cooperatives was dramatic, and the new Land Law of 1993 is stressing these effects. Collective framing as the main purpose of cooperation has disappeared giving room to the following changes:
Without exception, all societies are managed by elected board members. The board members are receiving a small compensation for their work, financed either out of the surplus realised by the peasants of the cooperative or via dues. In the case of well-managed societies which have adapted their activities within the renovation phase to become service organisations, there is little fluctuation among the board members or chairpersons.
Even the successfully operating cooperatives have not yet changed their structure to become voluntary cooperatives with members contributing shares. They are still collective community organisations comprising all farmers of a certain locality. Profit surplus is not distributed as patronage refund or profit to members but ploughed back into community services (electricity supply; social services, such as health etc.). The majority of these cooperatives are still operating at communal level, some have been scaled down to village level. The capital owned by these societies, often comprising a membership of up to 350 households, can amount to 100,000 US$, particularly in cases where the cooperative had to invest into irrigation facilities in the past. 80% of the capital of these cooperatives is fixed capital, the rest is working capital. The cooperatives are maintaining a simple entry-bookkeeping system.
In the well-functioning cooperatives, members are supplied with inputs via their cooperatives, often on a credit basis. In most cooperatives, however, the marketing of agricultural products, contrary to the purchase and supply of inputs, is not carried out via the cooperative, but by the members themselves.
In most agricultural cooperatives, even in the well-functioning ones, the farmers/members organise themselves within informal self-help groups for different purposes (technology transfer, coordination of irrigation, soil preparation groups, credit groups linked with the banks via mass organisations, handicraft etc.). A special case are the soil preparation groups organising the joint use of machinery. Often, tractors have been transferred or sold to individual members, since it proved difficult to maintain machinery in cooperatives and groups. But for joint use, soil preparation groups have been formed to negotiate between the tractor owners and the potential clients asking for ploughing services. The soil preparation group tries to bring together all farmers living in a certain part of the village to arrange for big parcels to be ploughed regardless of individual boundaries, thus optimising the use of tractors.
In a few cases, particularly in the south, cooperatives have been organised not by the collective of farmers of a certain locality, but by selected members. During the renovation phase, those farmers who contributed land to the cooperative during the collectivisation phase, managed to get back the respective land and continued work as individual farmers. The landless farmers remained within the societies sharing communal land, which was ultimately transferred to these farmers for individual use. Like all other cooperatives, even these voluntary cooperatives have not yet adopted the concept of shareholding cooperative societies.
In general, however, cooperative management neither has the capacity nor charismatic leadership described above. Most services are taken over by small specialised self-help groups. Experience with specialised groups, especially in technology transfer to support extension services, as well as irrigation management, has been gained in the specialisation phase of the advanced agricultural producers' cooperatives, where brigades and working teams were not only organised to cultivate certain land areas within the village, but also took over additional specialised functions.
Thus, the great number of weak and inactive societies, some of which are maintaining no more than rudimentary services, does not have any negative consequences for the farmers. Particularly in the central part of Vietnam, which is far away from either Hanoi or Saigon, the traditional leaders are trying to avoid dramatic renovation. But with a new legal environment supporting the autonomy of the farm households, in particular the Land Law of 1993, the quasi-monopolistic position of the former cooperative structure is weakened. Due to workable alternatives (self-help groups, credit groups linked with banks via mass organisations etc.) farmers are not helpless when old cooperatives collapse.
As the successful functioning of some agricultural cooperatives and their acceptance by members depends on the quality and charisma of the respective leaders, it seems impossible to simply transfer leadership abilities to other cooperatives by means of training and guidance. In contrary, cooperatives that are collapsing are leaving their members with a deep mistrust against old leadership structures. The best way to make a fresh start, for the time being, is to strengthen and support mutual aid in self-help groups until the concept of voluntary cooperative service societies based on share capital will have been spread amongst farmers and extension agents.
For more details see the following Case Studies.
The Long Xuyen agricultural cooperative in Phuc Tho District of the Ha Tay Province (Red-River Zone) cultivates 503 ha of agricultural land. The Long Xuyen commune's total population of 7,108 comprises 1,800 farm households. Before 1976, six small agricultural producers' cooperatives existed in six villages. They were amalgamated in 1976 to form the present large agricultural cooperative. During the period of collective farming, the agricultural producers' cooperative was sub-divided into 14 production teams.
With doi moi each family was allotted 360 m2 per family member for individual cultivation, in addition to the private kitchen gardens of 360 m2 per family.
The agricultural cooperative's principal task is to provide a wide range of services (supply, irrigation service, technology transfer and extension service including the planning of time tables for the cultivation of each plot optimizing irrigation and cultivation). The cooperative is also providing inputs on a credit basis to needy farmers. The loan is to be re-paid after harvesting. The cooperative credit scheme is financed by a bank loan. The farmers arrange for the marketing of paddy themselves.
The membership of the agricultural cooperative society is identical with the population of the commune. The Board of Directors and the elected office bearers have been constantly reduced from 40 in 1989 to 29 in 1992 and finally 15 in 1994. This reduction was possible due to the re-organization of the cooperative becoming a service provider.
The commune assembly also elects the members of the People's Committee. As a rule, the members of the cooperative serving as people's committees members are not eligible to the board of the cooperative. The people's committee members are getting salaries from the government, whereas the members of the cooperatives management board are receiving a compensation (allowance for their work) out of a contribution of the members based on a fee per cultivated area. Irrigation fee is also charged on the basis of cultivated area. The cooperative collects the tax/land-use fee, which is calculated on the basis of cultivated area according to quality classes of the cultivated land. This tax is to be paid to the government.
In the past, surplus realised by the cooperative was invested in local infrastructure, in particular electricity supply, which is considered to be important not only as a community service, but also as a means of production necessary to run irrigation pumps. Investments made for electricity supply account for some 60,000 US$.
The main problem voiced by the members is underemployment caused by an unfavourable men/land ratio. Due to the lack of funds, it is difficult for the farm households to develop sideline activities. The members are eager to develop agricultural processing including rice milling, pig fattening and chicken raising, either individually or within small self-help groups.
Nam Son Cooperative
The Nam Son agricultural cooperative in Tam Hane Commune of Vu Ban District in Nam Ha Province is a typical medium-grade cooperative of Nam Ha Province in the centre of the Red River delta, 100 kilometres south of Hanoi. The province has a well organized department of agriculture and forestry maintaining excellent statistical data on cooperatives. Within the province, 482 cooperatives are organized in 393 communes.
The population density is 636 persons/km2. Per active labour, there are 0.1873 ha of cultivated land available.
On average, each cooperative in the province is comprising 1,094 households, with 4,200 persons and 1,730 active labourers. The cultivated area allotted to each cooperative amounts to 244 ha. The average capital per cooperative is 50,000 US$ of which 80% are fixed assets (irrigation works etc.) and 20% working capital. Ten per cent of the capital is borrowed capital. On average, the board of management is comprising 21 persons (two or three directors and deputy directors, three to five accountants and bookkeepers, eight team leaders). The cooperatives provide basic services (seed supply, irrigation management, plant protection, animal health care) and agreed services (voluntary participation) like fertilizer/pesticides supply, ploughing and land preparation and marketing.
The literacy rate of the members is generally high. Amongst the management boards, there are 7% university graduates, 37% college graduates and 40% of office bearers who participated in short-term specialized training courses. Some of the board members have served in the army. In all cooperatives, board members and office bearers are farmers/members of the cooperatives. There are no employed managers.
The main problem in the province is scarcity of land. 90% of the cultivated land has been allotted to farm households, but, so far, only 15% of these farm households have received land certificates which guarantee them to make use of the so-called five rights which make up the land title (right to transfer, mortgage, inherit, collateralize and rent).
The Nam Son cooperative can be considered an average society within the province with a membership of 1,050 households, 4,300 family members and cultivating 281 ha. In 1992, all land was allotted to members for individual land use.
The Board of Management comprises 11 members, including the chairmen, two vice-chairmen, two bookkeepers, one cashier and a number of teamleaders). The members are paying a fee for basic services, which is calculated on the basis of cultivated area. The same applies to irrigation services. Another contribution per cultivated area paid by farmers is used to compensate the office bearers for their work. The agreed services (fertilizer supply, land preparation by tractor, etc.) are paid at cost. Tractor ploughing is organized by specialised groups within the cooperative, who are renting the tractors from private owners from among the members. The specialized groups are trying to organize tractor ploughing on the ² long line ² without following the individual boundaries of the plots in order to optimize the use of machinery.
Fertilizer supplies are partly realized on a credit basis; the cooperative is using loans from the Vietnamese Agricultural Bank to finance input supply services. Marketing is not carried out via the cooperative but by the farmers themselves.
The Nam Son cooperative is not organized at a communal basis, it comprises half of the commune's four villages. The cooperative was founded in 1960.
An Phong Agricultural Cooperative
An Phong cooperative in the Hoa Lu District of the Ninh Binh Province is one agricultural cooperative among three in the commune of Ning Phong. Its membership comprises 473 households with 1,817 family members. Total agricultural land including water surface accounts for 115 ha, of which 100 ha are cultivated land. The entire land area has been distributed to the members for a period of 20 years. Licences or land titles are being prepared but the issuing process is slow. Among farmers hopes are growing that in 1994 they will all receive licences. Until now, only one cooperative in the provinces has completed the process of issuing land titles. Each cooperative member has been allotted three different plots, according to different land qualities.
The board of management comprises eight members (chairman, vice-chairman, bookkeeper/ accountant, cashier, four teamleaders).
Total capital of the society amounts to 28,000 US$, of which 2,000 are working capital, the rest being fixed assets. Among these, the infrastructure for electricity supply accounts for 60%, the rest has been invested into improving irrigation works, magazines, meeting halls, kindergarten etc. The appreciation rate applied for fixed assets is eight per cent.
The fees collected by the societies from members for basic services amounts to 143 kg paddy/ha per season, including basic services such as animal vaccination, irrigation management, field guarding etc. The share collected on behalf of the government is 337 kg paddy/ha per season, out of which 189 account for agricultural tax/land use and 148 for irrigation fees charged by the irrigation department. The society, furthermore, provides seedlings, fertilizer and pesticides at cost. Members are free to obtain their inputs either from the cooperative, on the free market or from government enterprises. 70% of the members prefer the cooperative because they consider the goods supplied to be of high quality standards, they consider the prices calculated by the cooperative to be reasonable and, third, they can obtain input supplies on a credit basis.
Marketing of the produce is carried out individually by the farmers, the cooperative is situated near the central town of the province. Prices are fluctuating considerably. Although it would be an advantage to keep stocks, members, as well as the cooperatives, are short of funds. Theres is a need to improve credit supply. The credit system spread all over Vietnam is based on the organization of joint guarantee groups which are recognized either by the people's committees or by the mass organizations such as farmers' organizations, women's organizations and youth organizations. With the guarantee of their counterpart organizations, the groups are linked with the Vietnamese Agricultural Bank, thus getting loans from there. Within the An Phong cooperative, there are 10-12 groups, with an average of 10 members, organized as joint liability groups. Self-help groups within the cooperative play a very prominent role. There are more than 50 self-help groups organized within the society: four groups of joint tractor use with three to five members each, often relatives, who are co-owners of the tractor; five groups are sharing small tractors to offer transport services; three groups are organizing rice-milling services; 20 groups are formed by women to promote traditional handicraft; 10 groups are organized to offer construction services; there are four carpenter groups; one group of brickmakers; three groups organizing joint aquaculture; two groups provide pumping services to other members for irrigation purposes. Some 30% of the above groups have applied for legal registration by the people's committee.
The members of the cooperatives consider their board of directors trustworthy, while they also consider the lack of funds one of the most serious problems. Another main issue is the need for specialized training, particular management training, as regards the organization of voluntary self-help organizations based on the contribution of share capital. As far as training organization is concerned, board members prefer short-term training within the province instead of long-term training in far away centres. For the board members, who are all farmers themselves, it is nearly impossible to stay away from their farms for a long time.
Chanh Loc Agricultural Cooperative
The Chanh Loc cooperative in Son Be Province in the South goes back to a cooperative which was founded in 1978 with some 400 farm households as members. When collectivization and forced cooperation was introduced in the South, members tried to avoid the equalization tendencies that were fostered by the higher leadership. They also tried to avoid collective farming as far as possible and contracted the collectivized and, later on, nationalized land to member households, using family sizes as their distribution key. The contracts were somehow in line with Decree 100/1981, but did not strictly stick to the five stages of production organization to be arranged for by the cooperative and the three stages for which members are made responsible. In fact, members were fully responsible for the cultivation of the allotted land delivering a certain quota of the produce to the cooperative. Out of the proceeds of the cooperative, within the first three years after collectivization, members obtained a certain compensation for their land distributed to the cooperative. With doi moi, the farmers managed to be given back their land and they are now continuing to cultivate their land autonomously, organizing mutual assistance in small voluntary self-help groups.
In the case of the Chanh Loc cooperative, the majority of the previous land owners left the society and only 126 former tenant farmers and landless members remained, sharing some 24 ha which were allotted to the cooperative as former communal land during the collectivization phase.
The capital of the society amounts to 35,000 US$, out of which 25,000 US$ are fixed capital.
The management board is formed by five members (chairman, vice-chairman, chief accountant, team coordinator and secretary). The team coordinator is responsible for ten specialized groups (irrigation, technology transfer, etc.). There is no control committee, but one elected supervisor.
The main activities of the cooperative comprise input supply and marketing assistance. In marketing, the cooperative is only acting as an intermediary for transactions.
The chairman is a rather young but very sincere leader. His work is compensated for by 30% of the net surplus of the society. Last year this amounted to some 18 US$ per month. The chairman is a member of the People's Congress of the Commune Congress but he is not a member of the people's committee which is elected by the People's Congress. As party member, the chairman maintains contacts to mass organizations who are favouring all kinds of mutual assistance and self-help groups, as well as to joint liability groups linked with banks. The reorganization of the old collective economy type cooperatives into voluntary service organizations based on the members holding shares within their society is considered an important objective. However, information on this subject is poor and experience in this field totally missing.
Tan Ba Agricultural Cooperative
The Tan Ba cooperative in Song Be Province of the South was established in 1978 comprising some 418 members cultivating 126 ha. Today, the society is left with 218 households. The present rudimentary society goes back to five brigades mainly concentrating on sideline production (brick-making, food processing and reclaiming new land). The society has reclaimed some 80 ha of land (former forestry land) and is mainly cultivating it with cashew nuts and rubber. The entire land area is now allotted to the farming households. The agricultural members organize irrigation services and input supply, but no joint marketing. The non-agricultural households are contracting their labour to the brick-making units, wood processing factory and fishing units. Total capital of the society amounts to 70,000 US$, out of which 50,000 US$ are working capital.
The main problem in the society is income disparity between agricultural and non-agricultural families. There are discussions to change the society into a shareholding cooperative to allow the agricultural families to participate in the income generated in the brick-making unit via dividends of share capital. The members are, however, missing guidelines telling them how to deal with share capital: such guidelines are, at present, only available to state enterprises.
Long Khanh Commune
In the Long Khanh Commune in Tien Giang Province in the South, the agricultural cooperative society exists only on paper. With Resolution No. 10 and the subsequent provincal decrees, land was distributed for individual cultivation to the households of the commune (some 2,100 farming households). Five specialized groups for irrigation coordination and 27 groups for technology transfer have been formed to provide essential services to the farm households. The members of these groups work on a voluntary basis. The technology transfer groups are guided by an agricultural technician who is employed by the commune. The agricultural extension service of the commune is guided by the district's agricultural service. Members of the agricultural cooperative are not paying any fees or contributions to their inactive cooperative.
The commune members, instead of being served by an agricultural cooperative, are enjoying the support of a gardeners' association (VINA VAC). The local gardeners' association, being linked with the national gardeners' associations of Vietnam, is one of the youngest mass organization amongst the agricultural mass organizations. The gardeners' association of the commune has 860 members cultivating 369 ha, of which only 121 ha are planted with improved varieties of fruit trees. The gardeners' association gives the members access to credit facilities provided out of a national fund from an NGO. The loans are channelled to the beneficiaries via the Vietnamese Agricultural Bank. The list of borrowers is provided to the banks by the gardeners' association and co-signed by the district agricultural service. The land-use rights serve as collateral for the loans. The gardeners' association of the commune is based on voluntary membership. Less than one-third of the communal gardeners have joined the association. The supply of agricultural inputs is ensured by the former government supply enterprise, which in the meantime has been changed to become a mixed-economy enterprise shared by some well-to-do farmers.
Binh Tay Agricultural Cooperative
The Binh Tay cooperative in Go Cong Tay District of Tien Giang Province of the South is one of the few cooperatives in the South, which, due to charismatic leadership, continued to work successfully also during the period of doi moi. The society comprises 635 households with 3,275 family members, of which 1,560 account for active labour. The agricultural area is 455 ha, out of which 332 ha are cultivated land.
The cooperative started activities in December 1978. At that time, due to insufficient progress in land improvement, farmers could cultivate one crop per year only. Within the first three years, the then advanced agricultural producers' cooperative followed the work contract system based on strict controls of the labour force (working time was announced by bells). The society managed to improve the land and made it possible to cultivate three crops in the third year. In the dry season, the cultivation of sweet water melons was introduced. Between 1983-84, the society was able to export water melons to Russia.
From 1982-90, following Decree 100/1981, the 5/3 stage contract system was applied. Land was distributed to the households according to the labour force per family. Men and women were treated equally, but active labour age for men was 16-60 years and that of women 16-55. Three persons below labour age were counted as one active labourer and so were two persons above labour age. Since 1990, based on Resolution No. 10, the entire land area has been allotted to households. In principle, family size served as a distribution key. The first action, however, was to return the land brought in by the families during the collectivization phase. The landless members shared the newly reclaimed land.
The activities of the cooperatives since doi moi imply:
The management board consists of 17 members. It is controlled by a control committee of three members. In addition, the society has 25 employees working in the different units. The compensation paid for board members and staff amounts to 20 US$ per month.
The surplus of the society is used to build up:
In 1993 gross profit totalled 15,000 US$ and, after deduction of management costs, the remaining net surplus was 11,000 US$.
Bookkeeping today is carried out according to the single-entry system. In former times the double-entry system was applied, according to regulations of the Ministry of Finance. This, however, has proved too complicated for the cooperative.
Xuan Loc Agricultural Cooperative
The Xuan Loc cooperative in Thanh Loc Village of Hoc Mon District of Ho Chi Minh City was established on the basis of seven production groups, comprising 470 households with 300 ha of agricultural land. 50% of the land is paddy land, one-third being grown with sugar-cane and the rest cultivated with fruit trees. The land cultivated by the households is still the same land they had cultivated before the cooperativization and collectivization campaigns started. The cooperative only advises the members and provides services such as input supply. The most recent activity realized by the cooperative is to establish contacts between interested families and the cow-breeding project which organizes the milk supply of Saigon.
The society is managed by a board of eleven members including a chairman/manager, two assistant managers, agricultural planners/coordinators, accountants and bookkeepers. General meetings and board-member elections are organized every two years, while in the beginning the society held general meetings each year. The board of management is supervised by a control committee consisting of two members.
The activities of the society are:
In this context, it is helpful to remind that the cooperative society is a hybrid organisational form which, as an independent unit of entrepreneurial activities combines market and hierarchical elements. In centrally planned economies, this mix is completely unbalanced. Solely the hierarchical elements are remaining and the cooperative structures are fully integrated within the planned economy giving no room for entrepreneurial decisions of individual members. With this background, members have difficulties to experience and value the voluntary principle of auxiliary cooperative service organisations as the essential element.
Farmers, who experienced the hierarchical elements of the cooperative system being overstressed, and not balanced by the subsidiarity principle based on a "bottom-up hierarchy" (associations have to serve their basis and not vice versa) may find it difficult to believe in the difference between so-called cooperatives (pseudo-cooperatives) of collectivised agriculture within centrally planned economies and voluntary service cooperatives strengthening the position of individual farmers in market economies. However, service cooperatives could help small farmers who still benefit of "advantages of smallness" to survive in an economic environment where concentration and "economies of scale" are more and more dominating.
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