Inconsistency in production planning and irrational benefit sharing have recently led to disorders in the sale of agricultural products.
Competition for buying sugarcane began this October in the Mekong Delta and central Vietnam where there is a high concentration of the crop, and it has pushed the price of sugarcane up to more than VND1 million per tonne. It is expected to be fiercer in the future.
Businesses that were able to obtain sugarcane under such competition had to pay a very high price. Those that failed to do so had to either shut down production or to keep it at a low level.
However, farmers still suffer the most. Not long ago, quite a few farming households had to cut down or burn their sugarcane fields because the selling price fell too low – to the extent that they could not even afford to hire people for harvesting. Meanwhile, there was too much sugarcane so traders did not buy any more.
This state of both excess and shortage has also occurred repeatedly with many other Vietnamese farm products. Recently, it was difficult for traders to purchase rice from farmers to supply exporters in time so that they could fulfil their contracts. But a short time later, there was an oversupply of rice, which meant farmers could barely find buyers for their rice.
The same applies to tra fish in the Mekong Delta. There were times when businesses took turns raising their buying prices in order to get enough tra fish for processing but the next crop of tra fish immediately faced a sad fate when they were packed in small ponds and could swim nowhere because enterprises no longer wanted them. The farmers then could only manage to sell some at cheap prices, which sometimes didn’t even cover the costs to raise them.
This problem is attributed to inconsistency in production planning. For instance, rice variety IR 50404 proved not to meet the world market’s demand and sold badly but farmers still continued to invest in planting it because they found it difficult to purchase better varieties of rice.
When sugarcane growers face an excess of sugarcane, many of them immediately moved to plant other crops that seemed to be profitable at the time, resulting in an abrupt drop in the acreage and output of sugarcane for the next crop and a sudden surge in sugarcane prices, creating instability on the market and directly affecting consumers’ lives. When the prices of sugarcane soared, people once again rushed to grow it.
Another cause behind this imbalance is the unequal allocation of benefits between parties in the line of agricultural production. According to the Mekong Delta Development Research Institute, tra fish farmers receive only 19.4 percent of the total profits from their fish, while the corresponding figures for traders and processing companies are 2.1 percent and 78.5 percent respectively.
In this relationship, the farmers seem to have more disadvantages and depend greatly on the prices offered by the buyers and their workflows.
When prices are high, farmers tend to hoard their products and cause problems for enterprises that need materials for processing and can lose contracts due to delays in delivering goods on schedule. This is often seen in such commodities as rice, fish, shrimp, sugarcane, and coffee among others.
As one solution, the government has introduced policies to encourage businesses to buy farmers’ products through contracts.
However, the Ministry of Agriculture and Rural Development reports that only five out of 15 sugarcane factories in southern provinces had contracts to buy sugarcane from farmers on a long-term basis.
The government also has other measures to assist farmers but many of them have not been implemented seriously.
Professor Vo Tong Xuan said that government support packages will play an important role in reducing the risks of agricultural investment, facilitating land accumulation, and boosting technology transfers. Based on this, he said, businesses could invest more to help farmers produce high-quality products for export, thus creating a sustainable bond between businesses and farmers.
VOV
