Domestic and foreign businessmen scrambling for farm materials

The appearance of several foreign enterprises which are scrambling to purchase farm produce have given domestic enterprises a great deal of anxiety. The foreign enterprises have built up large networks with their agents reaching out to the farms in Central Highlands.

Tran Viet Thuan, a coffee grower in Nam Ban town in Lam Ha district of Lam Dong province, has confirmed that many foreign businessmen seeking to collect farm produce have appeared since the beginning of the year. This should be seen as a threat to domestic enterprises even though foreign enterprises’ networks are not very large and they still cannot purchase materials directly from farmers. Instead they have to purchase from merchants.

On February 28, at a meeting held in HCM City to review coffee production and export in the first two months of the year, Chair of the Vietnam Coffee and Cocoa Association (Vicofa) Luong Van Tu said the association has sent a document to the Ministry of Industry and Trade, reporting that foreign businessmen are scrambling to collect coffee in many provinces. Tu has affirmed that the enterprises have been collecting farm produce without cooperating with domestic enterprises, and this must be seen as a violation of the World Trade Organization’s (WTO) rules.

Also according to Tu, in 2010, the volume of coffee exported from Vietnam by foreign invested enterprises accounted for 40 percent of the total coffee exports. Meanwhile, domestic enterprises have said that the percentage has risen to 50 or 60 percent.

Vicofa has affirmed that under the current laws, foreign invested enterprises have the right to export coffee, but they do not have the right to develop the networks to collect goods in Vietnam for exporting.

Rice and coffee are the two most important farm products. As for rice, Vietnam has installed necessary technical barriers to foreign enterprises: they have to meet a lot of requirements in order to be able to trade in Vietnam. Meanwhile, there is no protection measure for domestic coffee enterprises.

In fact, in the last many years, foreign businessmen have got involved in the collection of farm produce, such as tea, pepper, and breeding products. The businessmen have set up joint ventures with domestic enterprises, or set up 100 percent foreign invested enterprises which send staff directly to different countries to seek material sources.

Especially, analysts say foreign enterprises are gaining the upper hand in the breeding industry. Most of the big foreign breeding groups in Vietnam are undertaking different phases, from importing materials, distributing breeding stock to slaughtering and selling products on the market.

Many experts believe that the appearance of foreign businessmen will benefit farmers because the competition between foreign and domestic businessmen will lead to the fact that farmers can sell their products at higher prices.

An expert said that in fact, the coffee industry has witnessed the involvement of foreign enterprises for the last ten years. Domestic and foreign businessmen have been competing with each other fairly, and there has been no unhealthy competition.

Thuan also said that farmers prefer selling to foreign businessmen. If they sell to domestic businessmen, they will only get money after three or four days, while if they sell to foreign businessmen, they will get money just after one day. Besides, farm products can go for good prices when they are sold to foreign businessmen. – Vietnamnet

Tags: Vietnam agriculture