Introduction

Vietnam’s national economy is still heavily dependent on agriculture and its productivity. After 1986, when the Vietnamese government introduced the Đổi mới (open door or renovation) policy, thus gradually shifting from a centrally planned to a market oriented economy, agriculture experienced a spectacular boom because farmers were allowed to retain all production beyond their farming quota and thus improve their private income (Raymond, 2008). Over the years, the country turned from a net agricultural importer to an exporting one. Major export items include rice, coffee, pepper, tea, cashews, rubber, seafood and other commodities; the main export markets are China, the EU, the USA, the ASEAN countries, Japan and South Korea.

The remarkable transformation was “facilitated by agricultural and economy-wide reforms that removed restrictions on private economic activity and connected farms to markets and competition by eliminating price controls and the state procurement system.” (Gray & Jones, 2022, 14). In order to liberalize the production of farmers and allow them to flexibly react to their specific circumstances, the government enacted successive Land Acts (1980, 1987, 1996, 2003, 2012 and 2022/2023 in draft). The Cooperative Laws of 1996, 2003 and 2012 intended to support the agricultural de-collectivization process. In addition, the government restructured the entire bureaucratic apparatus into a more dynamic administration. This indicates an important transition from top-down administrative management to a wider form of governance. The transition is reinforced by external factors such as wide-ranging international integration and collaboration such as ASEAN (Association of Southeast Asian Nations) in 1995, ASEM (Asia-Europe Meeting) in 1996, APEC (Asia–Pacific Economic Cooperation) in 1998, WTO (World Trade Organization) in 2007, CPTPP (Comprehensive and Progressive Partnership Agreement for Trans-Pacific Partnership) in 2018 and EVFTA (European Union—Vietnam Free Trade Agreement) in 2020.

Yet, in spite of improvements, governance structures were still not flexible enough and all too often “the left hand didn’t know what the right hand was doing.” This means that existing policy initiatives were not implemented and farmers felt left alone in the fields, as they often were not aware of the changes in national policies and of the newly created opportunities. Traders waited until the harvest and forced their low purchasing prices on farmers; businesses selling inputs did not give effective support for farmers; and researchers were not aware of what kind of research farmers needed.

In this context, it is obvious that new forms of governance needed to be developed and implemented to improve communication and networking among actors. Collaborative Governance (CG) is generally a bridge between the government and its public institutions with non-state stakeholders in formal, consensus-oriented and deliberative collective decision-making processes and aims to create or implement public policies or manage programs or public assets. Inter-organizational Governance (IOG) mechanisms refer to the formal and informal rules of exchange between organizations. When the economy is in transition, diversified or subject to fluctuations, a flexible use of IOG is very important. This means that the set of decisions or forms of governance, mechanisms and tools that an organization can use to manage relationships with others have to be adapted to the particular circumstances.

Figure 1 gives an overview of CG and IOG in the context of Vietnam’s agricultural development instigated through the promulgation of important laws and decisions and through its increasing integration into the global market. It is obvious that CG and IOG are very different between two periods, i.e., before and after the introduction of the Đổi mới policies in 1986. Preliminary stages to a true CG only developed after 2002. At the same time, IOG changed from weak and more hierarchical to strong and less hierarchical, while its flexibility increased from low to high state.

Fig. 1
figure 1

Collaborative and Inter-Organizational Governance in the context of Vietnamese agricultural development Source authors’ compilation

The question of how to generate CG and IOG structures was (implicitly) addressed in a letter sent by Dr. Nguyen Ngoc Luan, head of the Cooperative in Lam San commune, to Mr. Le Minh Hoan, Minister for Agriculture and Rural Development (MARD) on March 25, 2022.

“… In your opinion [Mr. Minister], the key to agricultural development lies in three keywords: “Cooperation - Linkage - Market”. We have implemented these three keywords, but reversed the order... [first Market, then Linkage, and Cooperation], yet still with a focus on the small farmers...” (Luan, 2022).

Here, two different views can be distinguished on how agricultural development can be promoted by Collaborative/Inter-Organizational Governance structures. The minister assesses the situation from the point of view of a government administrator specializing in policy-making (top-down perspective). He assumes that the wished-for cooperation can be instigated (“ordered”) when an appropriate legal framework (regulations, directives, guidelines, etc.) is built up and when government provides sufficient financial flows to authorities and stakeholders at all levels avoiding losses and corruption.

By contrast, the author of the letter takes the bottom-up perspective of farmers. They first have to be convinced of the logic of cooperation with others. This means that first a promising market for the respective agricultural product has to be found; then, farmers will work together and form a collaborative network. The second approach was adopted in the case of Lam San commune where small farmers gradually intensified their collaboration and inter-organizational relations and thus were able to advantageously integrate into the global pepper supply chain.

Using qualitative and quantitative data, this paper has two aims: (1) to give a brief general overview of CG and IOG and (2) to illustrate how in the Vietnamese context a flexible farmer-focused form of CG and IOG developed in Lam San commune. This Small Farmer-Focused Governance (SFFG) Model could serve as a model for other rural communities, not only in Vietnam but also in other Asian countries.

The Context of the Case Study

Agricultural Cooperative Among Different Production Units

Table 1 gives an overview of actors, including households, farms, cooperatives and enterprises in the agricultural sector (includes fishery) before and after the Đổi mới in 1986. Here are some explanations.

Table 1 Types of agricultural production units

“Between 1979 and 1993, one of the main concerns in the design of land institutions was to respond to the high expectations of a deeply rural society without making land an autonomous domain. During this time, the progressive dissolution of the cooperatives through the withdrawal of their land privileges took place” (Mellac et al., 2010: 7). Land use rights were formally only assigned to individuals, households and organizations by the Land Act of 1987. After that, land rights related to “land use” changed again with the Land Act of 1993, 1996 and 2003 (Hansen, 2013). On the basis of the Land Act of 2003, farmers were now free to decide what to produce on their own land and freely sell the products they produced. The following figures can prove it. The number of cooperatives fell from 17,496 (1986) to 7,237 (2005) and now 7,418 (2020). They were established on the basis of the Cooperative Law of 1996, 2003, 2012 according to GSO (2007), Ngoc et al. (2012), GSO (2017) and GSO (2021a, 2021b).

As mentioned above, the Vietnam’s agriculture is mainly smallholder farmers. Nearly 90% of agricultural land is farmed by either agricultural households or farms, about 10% by enterprises, the minute balance is held by other entities (OECD, 2015). An agricultural household is a single farming household, while a farm is a group of agricultural households voluntarily working together but not in the form of a cooperative. In addition, according to Ngoc Luan (2011), community-based farmer groups—a loose association of about three to ten agricultural households—must also continue to develop. Farmers groups help each other in production, buy agricultural products collectively and share experiences and information. Many of such groups became cooperatives when the new Cooperative Law of 2012 was implemented.

The Political/Legal Context of Collective and Inter-Organizational Governance in the Vietnamese Agricultural Sector

A first attempt to address the problem of collective and Inter-Organizational Governance was Decision 80/2002/QD-TTg dated June 24, 2002. This decision included measures to promote the sale of agricultural products and goods through marketing contracts and created the basis for a closer association between the four stakeholder groups (government–enterprises–farmers–scientists) (GEFS) in a period of accelerating industrialization, modernization and globalization. Here, cooperation was no longer understood in a narrow sense as a simple cooperation only between farmers, for example, in plowing, watering and harvesting, but in a broader sense as vertical, horizontal, and diagonal cooperation and/or collaboration between different stakeholders. In this sense, cooperation is collaboration at a higher level, which implies shared ownership and interest in a particular outcome. In order to produce safe, high-quality agricultural goods for export, farmers and organizations need to share knowledge, experience, and resources such as land, water, inputs and labor but also intangible resources like databases, the internet, software, platforms like existing B2B, B2C, etc. within a certain framework or organization for a common noble purpose.

Decision 80/2002/QD-TTg opened the door for the procurement of agricultural produce through contracts and thus for direct interaction between different actors. However, the implementation process did not strengthen the linkages between the four stakeholders GEFS as had been expected, as their roles were not clearly defined and as vertical and horizontal linkages proved difficult to form and develop. In particular, the linkages between enterprises and farmers as well as among farmers remained quite loose, not adequate for the interests, rights and responsibilities of the groups. From a legal perspective, the propagated purchase contracts are less binding for agricultural products and do not clarify the obligations and responsibilities between seller and buyer. The government had no means to sanction contract violations, which frequently occurred when there is a fluctuation in prices and markets. Another drawback of the policy was the focus on promoting products rather than on accessing the market. Therefore, Decision 62/2013/QD-TTg replaced Decision 80/2002/QD-TTg. The new policy aimed to establish a framework to encourage more cooperation and linkages between farmers and enterprises engaged in the processing, export and import of farm produce. Farmers could for instance use their land use right value for cooperation or joint ventures with enterprises, yet continue to farm their land.

However, a report of MARD written three years after the promulgation of Decision 62/2013/QD-TTg revealed several shortcomings: As the focus of this Decision had been on rice cultivation in the Mekong Delta, the regulations did not fully support production linkages along the value chain, but focused too much on raw materials and primary products. Although the policy was fairly widely disseminated, it did not sufficiently contribute to the solution of the urgent problems in the organization of production and sale of agricultural products. For instance, the sanctions for violations of the contract in connection with the production and sale of products were not specified; thus, they were difficult to apply, leading to risks of both farmers and enterprises. It is hoped that the more flexible use of IOG in Decree 98/2018/ND-CP will eliminate these disadvantages as it not only encourages farming households, cooperatives and enterprises to develop value chain linkages in the production and sale of agricultural produce but also supports the parties assuming prime responsibility for forming associations financially.

In September 2021, a Symposium on “Connecting production and consumption/sale of agricultural produce” took place in Hanoi with the purpose of bringing together stakeholders from the stages of production, harvesting, processing, transport and sale of agricultural produce. The meeting aimed at creating a close and multi-dimensional collaboration between management agencies, businesses and farmers (MARD, 2021). It was emphasized that government authorities and agencies must facilitate and promote all linkages and connections in agriculture. Inter-organizational relations are to be researched and put into practice within the increasingly open policy framework of the government. It thus has been acknowledged that CG and IOG are at the core of further development of Vietnamese agriculture, in the following exemplified by the experiences with them in the case of pepper production in Lam San commune.

Pepper Production in Vietnam

The pepper plant (Piper nigrum) is a flowering vine in the family Piperaceae and is cultivated for its fruit, known as a peppercorn, which is usually dried and used as a spice. Originating from India, it was first cultivated in Vietnam in the seventeenth century. However, by the late nineteenth and early twentieth centuries, pepper had become an important export good from Indochina alongside rice from the Mekong Delta (Doumer, 1905: 50), and by the end of the twentieth and beginning of the twenty-first century, the Vietnamese pepper industry had been integrated into the global economy. As the economic reform policies became more and more effective, Vietnam achieved an astonishing breakthrough in the pepper industry with a significant rise in terms of cultivated area, area productivity, production volume, as well as product quality. There were also innovations in the organization of production, product distribution and international trade promotion.

The developments in Vietnam’s pepper industry can be illustrated by some statistical data in Fig. 2. The acreage under pepper plants grew from 48,800 hectares (2003) to 51,000 (2010) and 140,000 (2019) (VPA, 2020). Vietnam ist the world’s largest pepper export, followed by Brazil, Indonesia, India, Cambodia, Sri Lanka, Malaysia, China and Thailand. Vietnam exported 74,639 tons (32% of total global pepper exports) in 2003, 116,872 tons in 2010 (43.4%) and 255,000 tons in 2019 (nearly 70%) (VPA, 2020, 09 29). The annual export turnover increased from 421.5 million USD (2010) to 1.44 billion USD (2016) and then decreased to 714 million USD (2019) (GSO, 2021a, 2021b, 06 07). In 2022, the market share of Vietnamese export to Asia will be 44%, to the Americas 26.4%, to Europe 23.9% and to Africa 5.3% (VnE, 2022).

Fig. 2
figure 2

Pepper production in Vietnam—area and export volume Source data from IPC (2020)

Vietnam strives to produce clean/safe as well as organic pepper: clean/safe pepper is produced in accordance with modern technical standards (the pepper is steamed for sterilization and has at least fair average quality; in cultivation, the use of chemical fertilizers, pesticides and stimulants is minimized). Organic pepper is grown under completely natural conditions, without the use of synthetic fertilizers, pesticides, herbicides and genetically modified organisms.

Theoretical Overview of Collaborative and Inter-Organizational Governance

The world’s agro-based economies are mainly concentrated in developing and transition countries. In these countries, agriculture still plays an important role in poverty reduction and in securing rural livelihoods. In order to enhance agriculture, one of the critical conditions is to ensure that good governance structures can develop at all levels. Good (state) governance can be assessed by a number of indicators such as political stability, the rule of law, voice and accountability, effective government, regulatory quality and control of corruption. However, particularly in agro-based countries, values for these indicators are often poor or very poor (UNEP, 2008) and CG and IOG could provide the opportunity/means to replace adversarial and managerial methods of policy-making and implementation (Gulati et al., 2020; Yigzaw, 2020).

CG is a concept with two foci: collaboration and governance. According to Rasche (2010), collaboration aims at a new form of relationship of a wide set of different actors, while governance includes the formal and informal processes and institutions that guide and limit the collective activities of this group of actors. Ansell and Gash (2007) understand CG as a harmonious combination of public and private stakeholders and public agencies to achieve consensus-based decision-making. One important benefit of CG solutions is therefore the increased legitimacy of governance.

CG has been widely applied in various countries and in various sectors as it promises several benefits. According to Yigzaw (2020), CG has received so much attention because it helps to resolve socio-economic problems and achieve sustainable development goals. The author argues that multi-stakeholders (public and private, national and international organizations, and civil society organizations) work together to resolve societal challenges, assure economic development and bring about institutional transformation. Since the introduction of CG, variations in the degree of cooperation between the stakeholders and in the activities involved have been distinguished, for example, good governance, multi-level governance, partnerships, political networks, interactive governance, and contemporary governance.

Over time, CG has become broader, more complex and more diverse, constantly changing, in response to challenges in development. For example, Waardenburg et al. (2020) have identified three types of challenges facing CG: problem-solving challenges (e.g., defining the problem), collaborative process challenges (e.g., finding common objectives, building trust) and multi- relational accountability challenges (e.g., accountability to collaborators).

Emerson and Nabatchi (2015) introduced an integrative CG frame that specifies general sets of variables (and the relationships among the variables) (Fig. 3). The essential drivers for collaboration include leadership, consequential incentives, interdependence and uncertainty. Drivers mobilize the three components of CG dynamics (shared motivation, principled participation and joint capacity) to produce actions and impacts, and in turn adaption. In a study, Hikmawan et al. (2020) presented the Collaborative Governance Model on Agricultural Business in Indonesia. In this paper, it will be shown that Lam San has succeeded in creating collaboration dynamics based on drivers such as loosening legal and economic frameworks for action, good local leadership, price incentives from the international pepper market, stimulating contacts with foreign companies.

Fig. 3
figure 3

(Source: Emerson & Nabatchi, 2015)

Integrative CG frame

CG dynamics are also well suited to new situations in a turbulent world with many overlapping and crisscrossing relationships, which include inter-organizational relationships (IORs).) The governance of IORs (IOG) comprises formal and informal rules of exchange between organizations, whose deployment not only affects the performance of focal organizations but also of their partners. Formal rules are mainly laid down as contracts; informal rules are derived from trust and social norms. The study of IORs focuses on the characteristics and patterns, origins, rationales and consequences of such relationships (Roehrich et al., 2020). This study examines the development and characteristics of IORs with smallholder farmers in Lam San commune at the center.

Data and Methods

The following research methods were used to collect relevant data:

Secondary data from the General Statistics Office (GSO) of Vietnam and other official sources (World Bank, MARD, DARD, Web portal of IPC, etc.) were gathered to understand the general background and scope of action for farmers and other stakeholders. In addition, reports, statistical data, conference presentations by Dr. Nguyen Ngoc Luan—head of Lam San Cocoa Club and Lam San Farmers’ Cooperative—in the period from 2010 to 2022 were used to develop an appropriate research design. Of particular relevance was the project document on “Large fields of cooperation, linking production and purchase of safe/organic pepper in Lam San commune, Cam My District, Dong Nai Province.” This is a summary document on the development process of Lam San Farmers' Cooperative (Luan, 2017) from which a very rough idea of a stepwise model of flexible cooperation and governance emerged.

Primary data were needed to check and refine the model; these were collected by rapid rural appraisal and face-to-face interviews with 15 farmers, 2 staff members of Lam San Cooperative and 5 representatives of local authorities (4 village heads and 1 commune leader) using unstructured questionnaires in the years 2010, 2016 and 2021. The content of the questionnaire for farmers included qualitative questions on cooperation and collaboration between farm households, between farmers and cooperatives, as well as on their personal opinions and suggestions, while the focus of the questionnaire for staff members and commune representatives was on IOG.

Findings on the Case Study: Small Farmer-Focused Governance Model of Lam San Commune

General About Lam San Commune

At the end of the Vietnam War in April 1975, the area of Lam San was still a natural forest. Immediately after the war, Song Ray Collective Farm was established by the Vietnam People's Army and soldiers turned into farmworkers. In addition, a first wave of migrants (mostly farmers) from Central Vietnam arrived. Later in the 1980s, organized by the government, a second wave of new settlers from North Vietnam followed. Today’s Lam San is a commune in Cam My District of Dong Nai Province with an area of 32.65 km2 and about 10,000 inhabitants (Fig. 4). In the period of national food shortages from 1976 to1989, Lam San farmers gave emphasis to rice, corn and cassava production at the request of the local authorities. However, as soon as the economic reform policy took effect after 1986, farmers sought to expand their income through diversification beyond traditional crops.

Fig. 4
figure 4

Geographical location of Lam San Commune Source Google maps

Pepper had previously been planted during the French colonial period and took up this as a potential regional strongpoint. Yet, pepper cultivation and marketing were not coordinated and people produced and sold their harvest to traders individually. As a consequence, pepper farmers of Lam San faced several challenges. Although the land is fertile and suitable for pepper cultivation, water shortages occur in the dry season from October to April, when there is not enough water for irrigation. River Ray Reservoir and some small reservoirs nearby have a limited water supply capacity. Irrigation costs are very high here due to the mountainous terrain. For three consecutive years from 2007 to 2009, 300 hectares of young pepper trees died due to drought. Another problem is soil pollution from past abuses of chemical fertilizers and pesticides, making replanting difficult. Lam San farmers had experience in growing pepper, but these traditional methods were no longer suitable for safe pepper cultivation.

SFFG Model in Lam San commune–A Flexible Form of CG and IOG

None of the above problems could be solved by individual farmers. As Michelson (2020: 9) pointed out, “small farmer competitiveness is often impeded by structural market failures, including credit constraints; limited ability to mitigate price and production risks; lack of scale in market input purchases and output sales; problems accessing production and marketing information, and prohibitive search and transactions costs.” This was clearly evident in Lam San commune where almost all households farm less than 1 hectare of agricultural land. In an interview, the head of the Cooperative, Dr. Nguyen Ngoc Luan, saidFootnote 1:

“... I noticed from the start that the farmers in Lam San only produced and traded [individually]. They lacked productive capital, lacked experience in pepper production and export, and lacked inter-household cooperation, particularly in pepper harvesting. Also, they didn’t have access to government credit for production and government support... As a result, the quality of the pepper varied significantly and was rarely controlled. Dealers always tried to lower the purchase price and apply the principle of “no liability after the sale”. It’s a shame because natural resources and human effort have been wasted here and poverty reigns supremely. So I pondered about how to better organize production and marketing for the profit of smallholders...”.

From 2008 to date, he helped to develop the SFFG model which resembles a “bubble” that can expand or contract and thus flexibly adapt to changes in institutional and political circumstances of government as well as import market of foreign consumer. Figure 5 shows the relationship between farmers A, B, C, D as producers and retailers/traders X, Y and exporters 1 and 2 in the middle of the figure. This form of buying and selling as part of a traditional pepper supply chain needed to be changed by increasing cooperation and collaboration among farmers, initially in crop care and pepper harvesting (because of high labor costs and manual harvesting). The next step has been to increase the quality and thus enhance the value of pepper. Finally, farmers needed to get more profit from exporting high-quality pepper.

Fig. 5
figure 5

SFFG model of Lam San community embedded in the context of the available IOG—Farmers and Enterprise under one roof

The SFFG model is fundamentally different from the model of setting up a state or private company with state participation. This latter model is encouraged by the state in the form of land accumulation, production support, product consumption, etc. Under the SFFG model, farmers can keep their land and farm it in new ways. The SFFG is characterized by the following features: (1) governance mechanisms are community and democracy, (2) cooperation principles are common norms and values, and reciprocity, (3) coordination principles are common cognitive frameworks and multiple interactions. In the next section, the SFFG model is explained in greater detail with an emphasis on the establishment of the Cocoa Club, the Farmers’ Cooperative, and the Agricultural Company (Table 2).

Table 2 Process of CG and IOG applied in Lam San commune

Cocoa Club and Lam San Farmers' Cooperative

In 2007/2008, pepper prices fell sharply and were at their lowest level for several years (Fig. 6). Farmers cut down pepper vines or stopped caring for them. Instead, they focused on growing cocoa. The idea of establishing a Cocoa Club (Lam San Club or simply Club) was initiated by Dr. Nguyen Ngoc Luan. The club was promoted by the Commune People's Committee (CPC), the Commune Party Committee and the Peasant Union. However, there was no material and financial support from the CPC. The Club meets regularly, mainly on weekends to exchange production experience and farming knowledge as well as market situation. Thus, the Club has helped farmers improve cocoa cultivation and, in contrast to its misleading name, also to develop a long-term sustainable strategy for pepper as an important asset of the commune.

Fig. 6
figure 6

(Source: Luan (2019a), modified by the authors)

Milestones of the Lam San Cocoa Club and Cooperative from 2005 to 2019

Lam San Farmers' Cooperative and Lam San Agricultural Company Ltd.

The Club operated very effectively, so in 2014, on the basis of new collaborative dynamics (new motivation, principled participation, and joint capacity of Club members), the Cooperative was established, operating under the Cooperative Law 2012. This new law removed the provision “Cooperative operating as a business” of the Cooperative Law 2003, which means that the cooperatives act only as an organization where farmers support each other. Cooperatives have several objectives. The main activity of the Lam San Farmers’ Cooperative is firstly to promote the cooperation and collaboration of smallholder farmers, and secondly to promote the export of safe pepper.

Another objective of the Cooperative is to act as a wholesaler for rice, corn, and other grains for its members. Unlike normal wholesalers; however, the production and purchase of products are based on CG. Moreover, the Cooperative supplies fertilizers and chemicals for agriculture. The main area of activity is Cam My District. The Cooperative ensures fairness among its members and operates according to fair trade principles (WFTO, 2016). It helps farmers develop sustainable production methods and promotes best practices such as water and energy-saving irrigation and the use of fewer chemical fertilizers as well as pesticides.

The number of farmers participating in the Cooperative is now more than 700 households; participation is voluntary, does not require a capital contribution and offers various benefits as required by the Cooperative Law. Members who sell produce to the Cooperative receive a higher price if the pepper meets international (European) standards. Buying and selling are based on trust: Almost all cooperative farmers claim that their pepper production complies with the technical requirements of EU regulations and is ready for traceability. Indeed, experience has shown that almost all farmers actually have kept their promises. They know that the Cooperative always pays 200 to 250 USD/ton more than other traders or dealers in the national pepper supply chain. As a result, the production of peppers exported by the Cooperative increased from 250 tons (in 2015) to 350 tons (2016), 700 (2017), 800 (2018) and 850 (2019) (Luan, 2019b).

In the beginning, the relationship between the Club and the single farmer was still very limited. It grew stronger with the establishment of the Cooperative, but the area of activity in Lam San commune was still limited. To overcome this weakness, in 2020 Lam San Company Ltd. was founded under the Enterprise Law 2014. According to Article 7 of this law, the company operates with many rights in the market. Hence, the Company’s scope and area have been expanding to neighboring communes, districts and provinces. This significantly increases the possibility of exporting pepper to (high-paying) countries with an improved market position.

Over time, the SFFG model has gradually become the core of the newly established supply chain and inter-organizational networking. The main objective of this type of governance is to enable farmers to come up with the appropriate strategic decisions in the face of changes in government policy, agricultural production, export of agricultural products, foreign regulatory barriers, climate change, pandemic situations, as well as conflicts or wars in the world. The model is focused on small farmers and uses inter-organizational relations to their advantage. The thick frame in Fig. 5 is not like a rigid box but very flexible and can be adapted to changing circumstances. Therefore, it could be interpreted as a “governance bubble” that sometimes expands or contracts.

Experiences with the SFFG Model in Lam San Commune

Strengthening International Cooperation for Market-Oriented Production and Reduction in GHG Emissions

From early on, Lam San Farmers’ Cooperative had been aware of the importance of international relationships and took the first steps to establish them in 2015, when MARD supported cooperative representatives to attend ANUGA (Allgemeine Nahrungs- und Genussmittelausstellung), the world’s largest trade fair for the food and beverage industry, in Cologne (Germany). Lam San's pepper was presented at this international food fair for the first time and found interested customers in the German Fuchs Group, which is the largest European spice manufacturer and the leading privately-owned global spice company. The relationship with the Fuchs Group follows a market-based approach with fair trade elements.

In addition, visitors from other German businesses, the German Agency for International Cooperation GmbH (GIZ), German universities, and others have encouraged Lam San's work in pepper production. Besides, media agencies (VTV Vietnam Television, VOV Voice of Vietnam, Newspapers) have reported of the Lam San experiences and thus created incentives for the replication of Lam San's governance model elsewhere.

There have been clear economic, technological and environmental benefits from this inter-organizational cooperation with enterprises and scientists. For example, Fuchs Group pays a higher price to farmers who dry pepper with the clean technology instead of drying it on PVC tarpaulin sheets along the village road and even more to farmers who dry pepper with biochar from rice husks (Luan, 2020). This method is strongly supported by businesses in Europe where all policies are aimed at reducing GHG emissions or even carbon–neutral production. Using solar energy would be ideal, but investing in this drying technology is expensive. Scientific cooperation with the University of Agriculture and Forestry in Ho Chi Minh City was promoted.

Adapting Production to International Standards

As indicated above, IOG requires the adherence to formal rules of exchange between partners, increasingly in the form of quality product and processing standards. Since 2014, more and more pepper marketed by the Cooperative has voluntarily been produced to Global Good Agricultural Practice standards, which is the most widely used sustainable agricultural production scheme today. Initially, only 20 farmers received certificates; now there are 1500 with a total area of 1000 hectares. Farmers are linked and organized in groups in the safe pepper supply chain. Safe production methods are applied, mainly through the use of organic and biological fertilizers and integrated pest management. Drip irrigation was introduced to save water and pump energy. As a result, annual pepper yields have increased from 6–7 tons/hectare to 8 tons/hectare. In 2015, the Cooperative exported 200 tons to the EU and in the following years up to 1500 tons/year. However, to ensure the quantity and quality of the traded goods, the Cooperative has informal binding contracts with farmers in which the unit price is 10,000 VND/kg higher than the usual market price (1 USD is 23,000 VND in 2021).

One step further to improve product quality and market value was the intention to produce organically. There are three major certification systems in use around the world: USDA organic certification of the US Department of Agriculture, EU Organic Farming certification of the European Union and JAS organic certification of the Japanese Ministry of Agriculture, Forestry and Fisheries. The organic standards mentioned are almost 95% consistent with regard to process validation criteria and level of difficulty. So far, the regulation of applying for organic certification in Vietnam is still difficult and causes high transaction costs. Therefore, one important step for the Cooperative has been to obtain organic certification from/for the target market. The Cooperative developed a strategy to move from conventional to organic pepper production by combining this move with international market expansion, an idea supported by public authorities through Cam My District government. In 2018, about 3.5 hectares of pepper grown in Lam San received a Certification of Environmental Standards for organic farming issued by CERES (Phong, 2018; VOV, 2018a, 2018b). This international certification company offers certification for organic farming and food processing, for organic textiles, for good agricultural and good manufacturing practices in the food industry, and also certification according to several agricultural sustainability standards.

Reacting to Low Market Prices and Labor Shortages

For partners in an inter-organizational network, it is important to react appropriately to changes and disturbances. For farmers, an efficient and stable supply chain is vital as the basic demand for their product in the market is always fluctuating (Bahrani & Khamseh, 2020; Ben Amara & Chen, 2021; Chaudhary & Suri, 2021). Therefore, the risk of oversupply or decline in demand and its effect on prices and farmers’ market position has to be addressed. From 2019 to 2022, during the COVID-19 epidemic and the Russo-Ukrainian war, the farm-gate price of pepper fell to a low of 50,000–54,000 VND/kg and many Vietnamese smallholders were alarmed as they suffered losses of 25,000 to 30,000 VND/kg. Farmers cut down pepper vines in many communes and switched to other crops. However, in Lam San commune, the Cooperative and the farmers jointly reviewed the existing pepper-growing area and agreed to uproot only old plants on low-productivity fields. The result was a reduction in the area under pepper vines by 700 hectares. Moreover, the Cooperative advised farmers not to sell the pepper immediately after harvest and, if possible, to process more white pepper, as the European buyer continues to import this pepper at higher prices.

Another problem in 2020 and 2021 was increasing labor costs for picking pepper. They rose to 230,000 VND/day, as there were no migrant workers because of the COVID-19 epidemic and the travel restrictions between communes, districts and regions under the Vietnamese Zero-COVID policy. The Cooperative therefore suggested that farmers help each other with the harvest and use tarps to reduce crop losses.

Finally, to help poor farmers during the period of low pepper prices, the Cooperative purchased pepper at a price higher than the market price. The total price is made up of the base price and the premium for the high quality produce. However, to ensure the verification process, the Cooperative initially only pays the base price until the international importer sees no quality problems and the Cooperative pays the remaining difference.

Discussion and Conclusion

Since the introduction of the Đổi mới policies in 1986, Vietnam’s agriculture has undergone significant changes but the governance of the agricultural sector remained for a long time rigidly bureaucratic in spite of a plethora of government decisions, decrees, plans and regulations. Thus, the wished-for outcome was often poor because of conflicting or confusing objectives, contradictions, and overlapping policies (Dasgupta, 2011). Only since 2002, MARD has called for a closer cooperation of the four major stakeholders GEFS. That means that the ministry itself also has to change its way of interaction with other stakeholders, from purely top-down administration to a flexible form of governance. This is necessary because until now, the central and local governments directly managing the agricultural sector and other related agencies have been fully structured, but the IORs need to be flexibly changed to suit.

It should be emphasized that Vietnam’s agriculture is smallholder agriculture with 9.1 million peasant households. They not only have to be taken onboard to develop a truly flexible form of governance but put in the center of it. This is where the example of Lam San can be extremely useful.

Until 2006/2007, when the SFFG model had not yet emerged, farmers in Lam San commune were de facto still left alone in their fields and cooperation was only nominal. With the formation of the Cocoa Club, genuine cooperation among farmers began and, over time with the formation of the Cooperative and the Enterprise, a collaborative network also with other actors (enterprises, scientists, media) emerged. State government supported this development (e.g., by funding the search for international buyers).

The Lam San Cooperative has been working as a motor for establishing and maintaining inter-organizational relations. The major economic basis is its robust connections with key European spice manufacturers. The Cooperative not only has a considerate leadership, it also works as a discussion forum, and it is a source of ideas to flexibly respond to new challenges. When the European Union introduced a novel regulation on the quality of agricultural products, the Cooperative quickly grasped the situation and suggested to farmers to produce organically; at the same time, it identified a company with a laboratory facility to perform the necessary tests.

In addition, the Cooperative itself acts as an enterprise and has signed contracts with farmers to procure their produce. In order to retain farmers in the Cooperative, it buys good quality pepper at higher price than the market price. The Cooperative helps farmers to improve agricultural production as well as primary processing, and it negotiates with international buyers for the benefit of farmers. A part of the procurement costs previously paid to the companies that buy and export agricultural products from farmers at a cheap price now goes to Lam San farmers. As a result, farmers benefit from both increased income and reduced transaction costs. Step by step, the Cooperative has brought farmers to participate in the global pepper supply chain where their products have been designated a specific address for traceability.

The Lam San model has shown that it is possible to help smallholder farmers to integrate into global supply chains, to reduce or at least mitigate economic uncertainties or shocks (common price pressures from traders and even major global price fluctuations) and support farmers to participate in agro-technological and environmental development to their advantage.

Thanks to the innovations in pepper production and export, Lam San commune is no longer on the list of poor communes in Dong Nai Province. As the first commune in Cam My District, Lam San received the title of “New Rural Commune” and later was recognized as “Model New-style Rural Commune.” In addition, Lam San pepper has been selected as an OCOP product in the national program “One Commune One Product” to facilitate the development of regional agricultural specialties and thereby improve the income and livelihoods of the local people.

This article has demonstrated how Lam San farmers have taken up elements of CG and IOG and flexibly adapted them to their needs. Variations in this model could be widely applied in Vietnam and in other agrarian countries with a predominance of smallholder producers.