Sunday, November 08, 2009

Reference: Farm coops are losing their competitive edge, Vietnam News, November 7, 2009

Farming and service sector cooperatives in the Saigon area, long used to easy credit from government banks, were able to offer their members high quality stock, cheap fertilizers, and guaranteed markets for their products. These days they find it hard to make good on these promises because a new Party directive to their banks to lend only on the basis of the ability to repay has dried up their credit. They tried to use their land as collateral for bank loans only to discover that they could not do so because the Party and not they are the legal owners of the land they farm. The cooperatives now have the smell of death for several reasons. First, members are disgruntled because of the coops' failure to deliver benefits and many of them have stopped making their annual contributions which, as it turns out, are voluntary. Second, productive members are leaving the coops to venture out on their own thus starting a Darwinian process that leaves behind by natural selection, cooperatives that are associations of the incompetent. Third, the worse things get the less interested farmers are in participating, the less likely members are to make voluntary contributions, and the less interested young and educated members of the community are in cooperatives and these in turn cause things to get even worse. It's a non-linear dynamic. The response by the Party has been a combination of too little too late and wrong diagnosis. The Party has decided that the problem is that the coop leaders lack managerial skills and its response has been to hold elaborate management education seminars. Predictably, these seminars have done little to turn the tide.

Cha-am Jamal

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