VietNamNet Bridge – The conclusion of "not yet finding group interests in agriculture" by Minister of Agriculture and Rural Development -- Cao Duc Phat, in the recent hearings of the National Assembly (NA) seemed to displease NA deputies.

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Perhaps group interest is not necessarily shown in the form of guilty as being referred to by Phat for being “caught in the act,” so to have access to the agricultural interest group, it is necessary to approach in terms of the mechanism of production, distribution and export of agricultural products through "groups" in the rice supply chain of the country.

From the "interest group"of exporters

From the question of deputy Nguyen Thi Kim Be of Kien Giang province: "The quality of Vietnamese rice is highly appreciated and the world's rice purchasing power keeps increasing, but why is the price for Vietnam rice reducing?" The issue of group benefits start to show up.

Under the market competition mechanism, when the demand rises, quality increases, the price tends to rise to a certain level. However, this can only happen when the people who sell rice to the world market are farmers or the rice prices are not affected by anyone.

Everyone knows that buying rice from farmers will be much easier than selling rice to the world.

Because of difficult life and limited information on the world market, rice farmers have to accept to sell paddy at cheap prices to earn a living or accept losses when hearing information from the rice exporters that they cannot sell rice to the world.

Meanwhile, the competition on the world market with the rivals like Thailand and India makes it harder for rice traders to make money. To have profit, rice traders must be competitive through enhancing the brand of Vietnamese rice, increase rice quality, and the vision in selecting potential partners.

But at present, Vietnamese rice is still categorized at low level of quality while Vietnamese rice exporters are weak in doing business and search for potential partners. Rice export to China – the market that the Vietnam Food Association (VFA) assesses as the potential and key one – only brings about continuous losses for Vietnam. Thus, to have profit, rice exporters must find way to force the rice price down in the local market to create competitive advantage. The VFA recently declared to sell rice at cheap prices to seek markets. In this game, despite selling rice at low prices, the group of exporters does not get losses because they purchase rice from farmers at dirt cheap prices. The one that suffers losses is the rice farmers.

Congressmen are also concerned about the policy on temporary storage of rice. This policy is released to support farmers but in fact the farmers sell rice and then buy rice. So who benefits from this policy?

The answer is the businesses that buy rice for temporary storage. This "group" enjoys zero percent interest rate to buy rice for temporary storage but they are not bound by any mechanism. So in the early time of the temporary storage program, they do not purchase rice until the rice market is saturated, when farmers do not have enough space for containing rice and are out of capital for reinvestment. This helps them to benefit from the state’s policy and buy rice at very cheap prices.

To the "interest group" of traders

According to the state’s rice supply chain, it is the model involving four parties: The State issues policies, scientists make agricultural research works, businesses support rice production and export and farmers focus on rice production. This means Vietnamese rice goes only through two stages: from the field to the rice trading businesses and being exported to the world.

In fact, rice has to go through a lot of stages before reaching local consumers and the world. From the fields, rice is traded several times through the hands of small and large traders, through several mixing stage and storage. This process has affected not only the quality but also the price of rice.

Thus, the problems in the management of the rice supply chain have led to the disruption of the four-party model. The profit from rice is divided to a number of traders who just wait, buy and sell rice for profit. The "interest group" of intermediate traders makes the rice price at the field is low and farmers have to "buy their rice" at high prices.

SGTT