Rural residents sell food at a market in suburban Ha Noi. Inflation and rising food prices have made life particularly harder for farmers. Experts call on more support to those most vulnerable. (Photo: VNS)Former Deputy Prime Minister Vu Khoan said yesterday, June 28, the people hardest hit by inflation were the poor - and most of them were farmers.

Khoan suggested the Vietnamese Government focus on restructuring the agricultural sector to mitigate the severe impacts of rising costs on the most vulnerable.

He was speaking at a workshop on Macro-economic Instability and Welfare Impact: International Experience and Lessons for Viet Nam held by the World Bank and the Government Office.

"Crisis brings us a lesson that as the number of people living in rural areas still makes up a large part in the country's population, we cannot neglect agricultural production while pursuing industrialisation progress," he said.

"Preventing growth slowdown, curbing inflationary pressure and protecting the poor are among top priorities of governments, especially in developing countries," World Bank Country Director Victoria Kwakwa said.

She said that since the second half of 2010, Viet Nam had experienced high inflation, tensions in foreign-exchange markets, and decreasing reserves.

Among the problems, the high rises in prices for food, fuel and electricity were factors having an adverse impact on the poor.

According to William Martin, agricultural research manager at the World Bank, the poorest people spent often 75 per cent of their incomes on food, making them vulnerable to high food prices.

And three quarters of poor people worldwide live in rural areas and earned most of their income from farming.

Khoan said that "now, despite increases in food demand and exports which helped Vietnamese farmers, price hikes of input materials such as fertiliser and cattle food were lessening their real incomes".

He said that developing the agricultural sector would help ensure social welfare and food security.

However, the quality and efficiency of agricultural development were still low, therefore, the Government must take drastic measures to restructure the sector.

Currently, farmers made great contributions to the economy, but they enjoyed little of its benefits, therefore it was time to reverse things to encourage them, Khoan said.

The development of agricultural production and the processing industry were unbalanced, making the added value of agricultural products low, he added.

Tran Dinh Thien, director of the Viet Nam Institute of Economics, agreed, saying "for long-term development, we must turn it into a technology-intensive sector".

Martin said productivity growth was hugely important for any country and raising productivity in Viet Nam required increasing investments in public research and development.

He said a higher productivity growth rate would help maintain or increase competitiveness and market share, thereby helping raise farm incomes and lower poverty.

Pham Minh Tuan, a representative from the Ministry of Industry and Trade, said the Government should adjust policies related to land for agricultural production as the land fund was limited due to industrialisation and urbanisation.

Moreover, the Government must raise the level of support to farmers and provide the support directly to the production phase rather than intermediate phases, Khoan said.

Workshop participants also called on the Government to persevere with measures to curb inflation and stabilise the macro-economy.

"If we continue facing high inflation, we cannot reach a high growth rate," Vo Tri Thanh, deputy director of the Central Institute for Economic Management said, adding that growth must be based on real productivity.

The Vice Chairman of the Financial Supervisory Committee, Le Xuan Nghia, said the Government must calculate and consider macro-economic indicators in line with international rules to make management solutions match international regulations.

Source: VNS