VietNamNet Bridge - Given that all the stages of the agricultural production chain are "problematic," from policy to farmers and enterprises to export markets, Professor Vo Tong Xuan discuss solutions to restructure it.

No one is “free” as Vietnamese farmers are

Rice paradox 

 

 

Professor Vo Tong Xuan said:

I would like to tell this story. About 15 years ago, a U.S. rice trading company cooperated with a big state-owned food trading company to produce rice for exports. They set up some rice collection points in some rice-growing areas to directly buy rice from farmers. They only brought fresh rice certified as IR 64 variety, at higher prices offered by state enterprises. They dried and husked the rice to sell for $350 per ton compared to only $180 per ton earned by Vietnamese exporters.

Many people said that the foreign company was "killing" Vietnamese businesses in their home. The charman of that province asked my opinion, I said: "You should present them a medal because they buy rice from farmers at at high price."

The Chairman seemed to be confused because many enterprises suggested not allowing that foreign firm to buy rice directly from farmers, buth through Vietnamese businesses. The Chairman then asked me whether Vietnamese enterprises sell rice at high prices as the firm sells. I replied directly: "Never, because the foreign firm has brand names and they process rice in strict and standardized procedures, not the way our firms do."

It has been 15 years but no Vietnamese rice exporter has been aware of the importance that rice for export must be in a single variety! Any variety, just be single one, well maintained and processed will be sold at high price.

To achieve the quality of rice as you have said, how should we have to change?

In my opinion, we cannot definitely use rice traders as the way it has been so far – just as the intermediates to buy rice from farmers to supply to businesses. The reason is that rice traders cannot preserve rice at required standards.

In Thailand, there is absolutely no such a class of rice traders like us. In the rice-growing provinces, the Thai Ministry of Commerce has created a network of huge warehouses. These warehouses are equipped with adequate technical facilities to maintain the quality of rice. Before a rice crop, farmers must report to the authorities the variety of rice that they will plant and if the authorities approve, they can use it.

In the harvest season, farmers bring rice to warehouses with the rice variety certificate. The managers of warehouses will give the farmers checks that are equal to the value of the rice deposited in the warehouses. So farmers have money to spend. If later the price of rice increase, they will be paid more. The prices mainly rise because at the harvest time, prices will fall because of large supply.

The State will sell rice in stock for rice export companies if they buy at high prices through biddings.

This policy is called "rice mortgage” and it is very convenient for farmers.

Thai rice exporting companies also have warehouses but farmers still prefer to "send" their rice into the state warehouses.

Specialization based on the value chain

In Vietnam, the relationship between rice exporters and farmers like two people share a narrow blanket, with most of the blanket is for the rice exporters. In the years with high market prices, farmers earn a little, otherwise they suffer loss. How should we organize the system to support the farmers?

Decision 80 of the Government on combining the state, the scientists, the businesses and the farmers in one system to encourage agricultural consumption is not respected by the two sides of farmers and businesses. When rice prices are high, the farmers sell their product to the one who offers the highest price. When prices are low, businesses seek the farmers who sell rice at the lowest price. Nothing is "union" here.

It is needed to put businesses and farmers in the same value chain. Enterprises, based on the market demand for rice, have to help farmers organize rice production to meet the market demand. In the process of rice production, businesses have to supply farmers with fertilizers and pesticides. Scientists participate in training of farmers under GAP. The GAP process will help farmers use fewer drugs and fertilizers but obtain greater productivity.

When rice is harvested, businesses are responsible to collect rice and transport it to its warehouses to dry in accordance with the right method. Thus, the proportion of unbroken rice will be higher. Normally, the rate of unbroken rice is one percent higher; the proceeds from the sale will be five percent higher.

Thus, the link is very close and it is mutual benefit. By reducing costs, increasing the effectiveness of the processing stage, the final efficiency is much higher.

Regarding food security, do you think that Vietnam needs to keep the current 3.8 million hectares of rice?

In terms of food security, there is nothing to be worried. Every year we export 7-8 million tons of rice so it is unconvincing to worry about food security.

So why do not we cut down the rice growing area to plant other trees that are more effective than rice?

I have thought about it. In my opinion, in the north, the production cost of rice is high while the quality is as not high as in the South. We should reduce the rice area in the northern region to transfer to potato. The rice shortage can be transfer from the South.

Vietnam has very delicious potato varieties. Potatoes in Vietnam are different from Europe or America. In those countries, the potato season ends in around September or October before the winter. They have to store potatoes in the refrigerator for 4-5 months. The Northern region in Vietnam can grow potatoe in the winter to sell to many countries at the time they are covered by ice and snow. Our potatoes are fresh, high quality and very delicious.

However, the State must assign responsible agencies to make survey, identify markets, seek customers and organize farmers to produce potatoes. I think, if we do so, both the potato and rice growers will earn high income.

Duy Chien