VietNamNet Bridge - Policies supporting rice growers remains ineffective as the production cost remains high.

The rice production cost remains high

The Ministry of Finance (MOF) estimates that the production cost of the 2018 summer-autumn rice crop in Mekong Delta is VND3,261-4,985 per kilogram.

Though farmers can sell summer-autumn rice at prices higher than the previous crops, they can only make modest profits because of high production costs.

Also according to MOF, in many provinces, the rice production costs are higher than VND4,000 per kilogram. 

In Ben Tre, for example, the production cost is VND4,985 per kilogram. The figures are VND4,787 in Bac Lieu, VND4,782 in An Giang, VND4,503 in Tien Giang and VND4,388 in Tra Vinh.

Duong Van Chin, director of the Dinh Thanh Agriculture Research Center belonging to Loc Troi Group, said it is necessary to clarify if MOF counts opportunity costs, or the labor from farmers’ families when calculating the production cost. If not, the production cost would not be so high.

Chin noted that if following a standard production process, the cost would be around VND3,000 per kilogram.

Farmers have been enjoying a lot of preferences, including land tax and irrigation fee exemptions. Besides, the government offers VND500,000 per hectare per annum to wet rice growers. 

However, the policies haven’t brought the desired effects.

The policy on the financial support of VND500,000 per hectare, which aims to encourage farmers to keep land for rice cultivation, for example, is not significant.

In fact, many farmers would rather not receive support than spend time on following administrative procedures for the disbursement, because they think the amount of money is not worth the time invested.

Other farmers receive support, but they tend to use land for cultivating other crops and fruits which promise higher profits. As a result, though the State spends trillions of dong each year, it fails to retain land for rice cultivation.

Meanwhile, the State doesn’t give support in fertilizers and pesticides, which account for the highest proportion of the input cost. Both products are controlled by manufacturers and suppliers. When the fertilizer price escalates, the State does not intervene.

The fertilizer quality is uncontrolled. Counterfeit and low-quality products exist everywhere, pushing the production costs up. Eliminating counterfeit products in the market is the best way for the State to support farmers.

Chin thinks that Vietnam needs to encourage farmers to export safe high-quality products, because people are getting richer, and have become choosier in selecting rice products to buy.

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