Agritech start-ups struggle under complex legal regime

Dam Quang Thang, adviser for the National Start-up programme, tells the newspaper Viet Nam Economic Times that the toughest challenge facing Vietnamese Agritech start ups is the legal requirements they contend with.

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A startup forum for young farmers. 

What are the factors keeping Vietnamese start-ups in agriculture from catching up with their foreign peers?

As we all know the land area under agriculture production in Viet Nam is quite large, with some 12 million ha, excluding forest land and water space reserved for aquaculture. The majority of some 90 million Vietnamese people are engaged in agricultural production. That’s why the potential for start-ups in agriculture technology for Viet Nam is very big.

On the other hand it is not easy for Vietnamese people to create successful start-ups in healthcare, education and other fields.

In my opinion, Viet Nam has three favourable conditions for start-ups in agriculture technology to develop.

First, agricultural technology (Agritech) products have high value added, high yield and better quality. However, a market for Vietnamese agriculture technology products has not yet been established. There are various reasons for this. The products’ prices are higher than traditional products or the consumers are not ready to pay for such high prices. Whenever anyone wants to introduce a new product, he or she should conduct a study on its supply and demand in the market. It is undeniable that many consumers want to have safe food. Realising the demand for safe food is increasing, many young people are interested in building start-ups in this field. But there are few people who are successful in this field.

Second, the capital investment in infrastructure and technology in Agritech is huge. In order to have a workable Agritech product, one must invest a lot of time and a long trial period. 

The first line product may be good on a small scale. But then it must be tested on a larger scale. In real life, some plant species bear fruit only one season in a year. This is a tough issue for start-ups to cope with. In some cases, start-ups fail to become profitable and quickly run out of funding.

And third, many start-ups have faced many legal difficulties with Agritech.  However, some start-ups have won prices in international start-up contests, yet their projects cannot be applied in Việt Nam due to some difficulties in administrative procedures, including licensing. 

A case in point is microbiology or nanotechnology. They have been applied widely in many countries, but it took the Vietnamese start-ups quite a lot of time to complete the required legal documents from the authorities to apply them in their projects.

What is the greatest difficulty that Vietnamese start-ups have to face?

The legal matter is the hardest issue that Vietnamese start-ups have to face in order to win investor support and then enter the market.

Besides, introducing some agricultural technology models into a supply chain requires involvement from various parties, including the local administration and financial investors.

It is almost impossible for a project to be implemented without the support of the local administration and the management agency. It often takes about three years to put a project into a production chain, but sometimes projects have struggled towards implementation for 10 years.

What we need now is a working legal framework to help accelerate the research on agriculture technology and apply them in real life.

So in your opinion, what support do Vietnamese start-ups need?

Agriculture start-ups should receive stronger support from concerned government agencies. The biggest comparative advantage of Agritech start ups is the value added from technology. It is unquestionable that advanced technology application will help cut down the production costs. So agriculture start-ups desperately need a clear legal framework and a transparent supporting mechanism.

Quite a few Agritech start-up models have been applied by Vietnamese start ups, particularly the beta version of Origin Trail for poultry and vegetable products. In your opinion, which model is the most suitable for Viet Nam these days?

These days many Vietnamese consumers want to buy products which are clean and have clear origins. This is a favourable condition for projects in this field to develop.

But, in reality things are not easy at all as they require involvement from the producers and consumers. That means the products must be traced back from “farm to fork”.

Regarding the application of new technology in agriculture, some projects in Việt Nam have already applied it. But these projects have faced many difficulties during their implementation due to the shortage of funding.

In short, Agritech start-ups are not something that can’t be done. But it must start from the application of new technology and a new working model.

I desperately hope that Agritech start-ups using nanotechnology in agriculture will soon be implemented in real life to replace pesticides or the micro-organism projects.

It is undisputable that with a good legal framework, many new Agritech start-ups will be established with a hope to produce many advanced technology products for Vietnamese consumers.

Source: VietNamNet

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