Farm produce prices escalating, but farmers cannot pocket profits

The prices of farm produce such as rice, coffee and pepper have been escalating, but farmers do not benefit from the price increases.

Farmers are the “outsiders”

According to Professor Vo Tong Xuan, a well known agricultural expert in Vietnam, though the rice price has been increasing steadily, now selling at 6000 dong per kilo. Only the farmers who harvest the winter-spring crop late and summer-autumn soon can get profits, while the ones who harvest the winter-spring crop soon cannot. Most of the profits have been falling into the hands of food companies and small merchants.

Le Van Banh, Head of the Mekong Delta Rice Institute, also said on Thoi bao Kinh te Saigon that though the prices of all kinds of farm produce have been increasing, farmers do not make profits from the price increases.

“If Vietnam’s rice export price goes up to 700 dollars or 1000 dollars per ton in the time to come, export companies, not farmers will make profits,” Banh said.

Also according to Banh, once the prices of farm produce like rice or coffee increase, the prices of food and other input materials for the cultivation of the new crops have also increased. That explains why the profits from rice cultivation do not increase in accordance with the farm produce price increases.

Saigon Tiep Thi has quoted a source from the Ministry of Industry and Trade as saying that by the end of April 2011, Vietnamese enterprises had registered to export 3869 million tons of rice, including 1857 million tons of rice (48 percent) to be exported under concentrated contracts (the contracts signed between partners based on the agreements reached by governments).

Meanwhile, the remaining volume of rice will be exported under commercial contracts. The registered rice export volume represents the 13.63 percent increase in comparison with that of the last year. To date, the enterprises have exported 2.293 million tons, valued at 1.091 billion dollars in accordance with FOB prices.

Do Ha Nam, Deputy Chair of the Vietnam Coffee and Cocoa Association and Chair of the Vietnam Pepper Association, also said that at the conference on reviewing the 2011 pepper production crop held some days ago, that the coffee prices have been increasing; but, this has not brought big profits to both enterprises and coffee growers.

Enterprises lack capital to collect coffee from farmers when farmers harvest the crop, while farmers have to sell coffee immediately to small merchants, because they need money to pay matured debts. The farmers had to borrow money to cultivate coffee, and they sometimes had to purchase fertilizer and fuel on credit.

It is foreign businessmen, who can enjoy fat profit from the coffee price increases. Thanks to the strong financial capability and experience on the international market, they well know when they should spend money to collect coffee and when to sell coffee in London and New York to get profits.

“Vietnam is the second biggest coffee producer in the world, but it cannot control the prices in the world market. Therefore, when the coffee price increases, Vietnam does not get much profit,” Nam said.

Experts urge to reconsider cooperation

According to Banh, it is necessary to reconsider the cooperation among the State, the scientists, enterprises and farmers in the production and distribution chain.

He said that though Vietnam is the second biggest rice exporter, it still does not have a Vietnamese rice brand. Vietnam is only exporting 5 percent and 25 percent broken rice. Enterprises mix different kinds of rice and sell rice under the name of “white rice”.

Banh complained that rice export companies never contract his institute to ask the institute to create new varieties of rice.

“Since enterprises do not support scientists, we have to rely on the state budget to create new varieties, but we do not know if the new varieties can be used. If the new varieties are not put into the production, the efforts by scientists will become in vain,” Banh said, adding that it is necessary to reconsider the cooperation of the four involved parties in the rice production and distribution chain. – Vietnamnet

Tags: Vietnam Farm produce prices