Rice farmers to be ensured of a minimum profit of 30 percent

The Ministry of Finance is working on a policy to support rice farmers by allowing them to ensure a minimum profit of 30 percent.

Farmers do not make profits with rice

Statistics show that Mekong Delta provinces every year deliver between nine and ten million tonnes of merchandise rice.

In general, farmers expect high profits from the winter-spring crops which provide high quality rice. The winter-spring crop is always harvested on time, when world demand is high.  It allows farmers to sell rice at higher prices and receive higher profit than on other crops

The rice price is always lower for the summer-autumn crop in August, September and October because of the lower quality of rice and lower world demand.  In 2008 and 2009, in many areas, farmers reported losses since they had to sell rice at prices below the production cost.

To date, farmers have been mostly selling rice to small merchants, who then sell rice to exporters and processors.  They have been unable to sell directly to exporters. Small merchants, who play an intermediary role, always try to force the prices down, leading to low profit for farmers and producers.

The Ministry of Finance (MOF) has pointed out that difficulties in production and losses may prompt farmers to give up rice fields because they fear they would continue incurring loss, stressing that the State needs to give support to farmers to persuade them not to leave rice fields.

Ensuring 30 percent profit for farmers, how?

MOF has proposed to apply both direct and indirect support policies and help reduce both the input production cost and raise sale prices.

The ministry has proposed the 100 percent interest rate subsidy scheme is applied to farmers who purchase agriculture materials for the summer-autumn crop nationwide. In order to avoid risks (in case farmers cannot pay debts), the State can apply measures to ensure the reasonable prices for fertilizer, fuel and electricity and ensure a normal supply of agricultural materials.

In some special cases, government agencies may set the price guidelines for key agriculture materials and control stocks. Tax incentives would also be considered. Besides, the State may consider exempting tax on use of agricultural land.

In order to help farmers sell rice at stable prices high enough to ensure a 30 percent profit minimum, MOF said enterprises would purchase rice from farmers at no less than floor prices.

The enterprises would have the right to use the money from the rice stabilization fund to offset losses they incur when they have to purchase rice from farmers at prices higher than the market price.

The State may consider compensating the loss incurred by exporters when their export prices are lower than cost prices.

MOF has pointed out that the most important factors that allow farmers to get deserving profits is that export companies collect rice directly from farmers.

Enterprises, according to MOF, should set two types of rice prices, firstly, the price of rice sold right at farmers’ houses,  which is high enough to ensure a minimum profit of 30 percent; and secondly the price of rice sold at the stocks of enterprises, or places selected by enterprises, which include the transport expenses.

VietNamNet/TP

Tags: Vietnam Rice prices