Farm stockpile plan founders

The Government has carried out plans to stockpile surplus agricultural commodities to help stabilise prices on the domestic market and ensure farm incomes while supplies are abundant.

“The primary purpose of this plan is to stabilise prices and help farmers maintain a profit margin,” said Deputy Minister of Agriculture and Rural Development Bui Ba Bong.

Under the plans, when there is a significant price decrease of a particular commodity on the domestic market, the Government will provide major distributors with low-interest loans to help them buy up excess and store excess supply.

In theory, not only farmers but also distributors themselves should benefit from the programme. In reality, however, recent moves to stockpile coffee, rice and salt have had little impact on market prices and benefited farmers and traders far less than expected.

For instance, the Government approved a plan to stockpile 200,000 tonnes of coffee beans over a three-month period ending July 15 and hold the supplies through October 15 to shore up prices.

However, distributors were only able to access the low-interest bank loans at mid-June, according to Viet Nam Coffee Corporation (Vinacafe) deputy director Nguyen Cong Hoang. Distributors were therefore only able to buy up about 7-8 per cent of the 200,000 tonnes directed by the Government.

People’s Committee vice chairman Le Viet Phu of Central Highland Lam Dong Province said that many of the involved distributors already carried huge debt loads, preventing them from qualifying for the new loans.

Due to the slow implementation of the stockpiling programme, farmers were unable to wait and sold their produce at low prices to service their own debts and cover costs for the next crop.

When coffee prices then surged from VND20,700 per kilo in April to a recent price of VND30,700 on the back of gains on the world market, farmers had no supplies on hand to sell.

Viet Nam Coffee and Cacao Association (Vicofa) chairman Luong Van Tu said that export coffee was currently priced at US$1,600 per tonne and farmers could have earned $200 per tonne more than before.

“If the stockpile had been made earlier, it would have been more helpful,” Tu said.

Hoang agreed, estimating that distributors’ profits could have been as much as VND200 billion ($10.5 million) if they had met the target of the stockpiling programme in time.

The Government’s plan to stockpile a million tonnes of rice has hit similar snags. It has directed the Viet Nam Food Association to buy rice from July 15 to November 11. But slow implementation has resulted in little impact on domestic rice prices, which have been increasing steadily. Meanwhile, farmers are unable to wait for a higher price and continue to sell out at low prices. Salt makers are also suffering losses due to the recent decline in salt prices.

Salt makers in southern Bac Lieu Province, for instance, were currently selling at a very low price, VND250-500 per kilo. Le Kim Hung, director of the Department for Industry and Trade of central Ninh Thuan Province, the nation’s leading salt-producing province, said that his department had asked the provincial salt company to buy up salt as soon as possible to insure salt makers against further price declines and ensure them a reasonable profit.

However, only about 1,000 tonnes of salt has been bought to date out of 10,000 tonnes targeted under the stockpiling programme. Temporary stockpiles to prevent market fluctuations would be more effective if carried out in time, said the director of the Department for Agriculture and Rural Development of Lam Dong Province, Pham Van An, who recommended that trade associations and administrative agencies propose measures to ensure stockpiling takes place in a timely manner.

“The Government should establish a national co-ordinating committee on this issue to flexibly respond when there are changes in the domestic prices of agricultural commodities,” suggested Hoang. — VNS

Tags: Vietnam Farm stockpile