Rich capital flows yet to blossom

Businesses active in the agricultural sector are facing big capital-related problems for sustained development.

Vietnam Forest Corporation (Vinafor) general director Pham Manh Hien said the firm was the developer of eight key afforestation projects but it was eligible to source state preferred loans in the first seven years of these projects only. Usually, planted forests cannot produce harvests or then bring in profits after seven years, whereas businesses are short of capital for further investment.

Similarly, Van Hung Tea Joint Stock Company director Nguyen Thi Minh said businesses planting tea were accessible to state preferred loans in the first seven years only while it needed several years more for tea fields to bring harvests.

Minh added that as much as VND100 million ($4,830) would be required to plant tea on one hectare of land against previous level of VND60-VND70 million ($3,000-$3,380).

Not only short of capital, many businesses active on woodwork manufacture, sugar, vegetable and fruit production could not recoup investments after spending a huge sum to help farmers develop material growing areas.

“We pumped money into planting forests in northern Hoa Binh province. However, at harvest seasons, farmers sold their products to private traders,” Hien said, adding that under signed contracts local farmers bound to sell over 100,000 cubic metres of lumber to Vinafor, however, contract validity was over but Vinafor could not recoup its investments.

A Viet-Dai Sugar Company representative in central Thanh Hoa province said wearily that unfair act by private traders on its 10,000 hectare material area adversely affected the company’s production.

Businesses viewed prime ministerial Decision 80/2002/QD-TTg dated June 24, 2002 encouraging contract-based consumption of agricultural produce as a good one but according to them concrete sanction measures must be put in place to ensure farmers and businesses property handle their obligations.

In this respect, former head of Ministry of Agriculture and Rural Development’s Department for Cooperative Economy and Rural Development Nguyen Phuong Vy said farmers and businesses were guilty of breaking contracts as farmers had poor sense for contract term obedience while businesses sometimes undervalued farmer products or unilaterally cancelled contracts with farmers in the absence of state sanction measures. – VIR

Tags: Vietnam agriculture