Businesses and Farmers Share Common Interests

According to Professor Vo Tong Xuan, the model of big sample field is still posing enormous difficulties and challenges in deployment because of low profitability and high risks in agricultural investment. He analysed that, for long, businesses easily break contracts with farmers and the latter do not sell their products to the former without hesitation. This shows that the way of doing business is unfair and based on short-term benefits only. A typical example was witnessed in Dong Thap province. In the 2013-2014 winter crop, four companies signed contracts to buy all products grown on 1,200 ha in a cooperative. They agreed to buy IR 50404 variety and OM 6976 variety at VND100 and VND200 per kilogramme higher than the market price at the time of harvesting, respectively.

 

However, after farmers harvested their rice, two companies broke their contracts. With the contracts signed with farmers, the enterprises could access State-subsidised soft loans to build warehouses and milling systems while paying little heed to purchasing rice from farmers. This act actually upset farmers. “The core issue is the lack of clear regulations on settlement of disputes,” Xuan affirmed.

 

In fact, local governments and farmers are afraid of the big sample field model and distrust contracts signed with companies because they only buy when they only need and have many reasons to breach their contracts.

 

The relationship between farmers and enterprises is the way-out for rice grain, said Professor Pham Van Du, Deputy Director of Crop Plantation Department under the Ministry of Agriculture and Rural Development. He added that the relationship between farmers and businesses must be based on transparency and harmonised interests. That transparency is not only limited to selling/buying price and supply contracts but also profitability of each party. Fines in contract breach are ineffective in this bonding. Therefore, farmers and businesses need to build the bond of creditability rather than institutions and laws.

 

Du said we produce rice grain but what we need is the name of our rice. This factor not only decides the pricing but also strengths its position on the market. For that reason, there is a real need to build, maintain and protect the brand name of rice grain.

 

Only when it successfully builds the brand name for agricultural products, Vietnam will create momentums for farmers in particular and the agricultural sector in general. This work cannot be done without coordinated effort of the Government, branches, localities, businesses, enterprises, and farmers, he stressed.

 

Accordingly, the Government should focus building rice storing and drying facilities. It can stand out to buy rice from farmers at a guaranteed price to achieve two objectives: food security and commerciality. For commercial rice, when the market demand is high and the price is good, businesses must bid to buy. This way benefits farmers and increases sources of incomes for the State Budget.

 

In addition, the Government should have policies to provide loans for cooperatives to buy rice from farmers to wait for better market prices. The loan maturity is necessarily longer to at least a year, not some months as now.