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Workshop Aims to Help Vietnam's Poor Take Advantage of Markets

An organization called M4P is exploring how poor Vietnamese can escape poverty by taking advantage of the free market. At a recent workshop in Hanoi, experts said that using market forces to fight poverty is promising, but far from easy.

It has been 20 years since Vietnam first began moving toward a market economy, and rapid economic growth has brought millions of its citizens out of poverty. But the rising tide has not lifted all of Vietnam's boats.

Vietnam's poorest people lack the resources or skills to take advantage of business opportunities. An organization called M4P is looking at how to help them use the market to escape poverty. The name M4P stands for "markets for the poor".

"The basic idea is that, rather than giving people handouts and so on, that people can help themselves if they're able to participate in markets, if they get better market opportunities and they're able to take advantage of those," explained Alan Johnson, M4P's project coordinator.

But getting more market opportunities is not easy. Individual farmers are too poor to use the market effectively. They have few skills, and banks will not lend them money.

So, to take advantage of Vietnam's market economy, poor farmers have to learn how to voluntarily do something they once were forced to do under communism: act collectively.

"I think that collective action is always necessary, not only in Vietnam, you know? Because without collective action, many things cannot be done by individual farmers. For example education, health, access to the market," said Professor Dao The Thuan, the head of Vietnam's Center for Rural Development.

Agronomist Ivan Cucco has studied the bamboo economy in Vietnam's Thanh Hoa province. He says the way for growers to make more money is to stop selling raw bamboo and start doing some of the processing themselves.

"You can cut it into poles or divide it into slats and provide that to a pre-processing producer at a more advanced stage, so actually more of the value that's generated inside the chain could be retained by smallholders and by poor producers," he said. "And that's where the idea of collective action steps in, because actually it's not something that you can do individually, but you need to pool resources, to pool bamboo, and to pool capital."

So far, bamboo growers in Thanh Hoa have not been able to improve their incomes. Their collectives are not effective, and the leaders are usually picked by the government, not by the members.

"So usually these end up with cooperatives being managed by leaders who are not really skilled in terms of marketing capacity and business ability," noted Cucco.

That means that some people make money in the bamboo business, but they are not usually bamboo farmers. They are more likely people like handicrafts entrepreneur Do Thi Ngoan.

The sound of sanding and polishing fills Do Thi Ngoan's workshop. Her 30 employees make bamboo and lacquer plates and bowls for export to Europe, Japan and the United States.

Ngoan says that as foreign demand has grown, her revenues have risen to $100,000 a year. She charges $1.50 for a small bowl that contains 75 cents worth of bamboo.

But that 75 cents does not all go to the farmers. Ngoan buys processed bamboo from traders like Bui Thi Muon.

Muon says the price of bamboo has gone from about $50 a ton to about $65 in the past two years. But the rising prices are not helping bamboo farmers much.

She says bamboo farmers are poor ethnic minorities, and they never get rich. Sometimes they have enough to eat, and sometimes they do not.

Business and development consultant Nigel Smith is an expert in the bamboo economy. He says the problem is not just that bamboo farmers' collectives do not work, but that the Vietnamese bamboo industry is not working yet.

He says Vietnam needs to imitate the world leader in the bamboo industry: China.

"The problem at the moment is that in China they use every inch of the bamboo that gets harvested, whereas here it's less than a third," explained Smith.

Bamboo harvesting is complicated. Different parts of the plant are used for different products by different customers.

To make the system work, Smith says, a lot of players need to get involved.

"The government has a big role to play in setting the right conditions. I think you need the big private sector players to be interested in doing it, but they naturally will be, because they can get their costs down," he said. "And you need the farmers, the growers, to be interested."

In China, bamboo has helped millions of farmers escape poverty. Experts say bamboo and other industries could do the same in Vietnam. But as in China, the government and others will have to intervene to make the market work for poor people.