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Vietnam Business » Vietnam Agriculture News » The Vietnam Food Association (VFA) and farmers are arguing about rice price for winter-spring crop

The Vietnam Food Association (VFA) and farmers are arguing about rice price for winter-spring crop

The Vietnam Food Association (VFA) and farmers are still arguing about how much VFA should pay farmers for the winter-spring rice crop. A story from Thoi Bao Kinh Te analyzes their quarrel.

Mekong Delta farmers have already harvested two-thirds of the winter-spring rice crop. Its been a bountiful year; the farmers are averaging 6.2 to 6.5 tonnes per hectare. But, as always, when the crop is big, the price falls. In Hong Ngu and, Tan Hong districts of Dong Thap province, merchants are paying farmers only 4000 dong per kilo for normal rice and 4300 dong per kilo for long grain rice.

Are production costs really just 2800 dong per kilo?

VFA has announced that it is collecting one million tones of rice to store up for export, a move that should push the domestic price up. The association said that it will pay farmers no less than 4000 dong per kilo of dried rice, a price it believes will ensure a minimum profit of 30-40 percent for farmers.

Why 4000 dong per kilo? VFA calculates the production cost to be from 2500 to 2800 dong per kilo. If thats correct, the collection price of 3800 dong per kilo would be high enough to ensure a 30 percent profit for farmers

However, farmers do not think this way. "I cannot understand why VFA thinks that the production cost is just 2500-2800 dong per kilo," said Lam Van Bon, a farmer in Hong Ngu district. By Bons calculation, it costs him 1.5 million dong per hectare to repair the dikes, till and level the soil. Pumping water into the fields to irrigate them uses up another million, and buying seed rice yet another 1.5 million per hectare.

Pesticides, weed-killer, fertilizer, transplantation eat up another 9.5 million dong per hectare. Harvesting, threshing and transporting the rice to the buyer demands another 3.5 million dong. The variable expenses of a rice crop thus mount to 17 million dong per hectare.

If that were all he had to spend, Bon says, and he sold the seven tons of rice hes harvested for 4000 dong per kilo, hed realize a profit of 11 million dong per hectare. However, the calculation isnt realistic; it doesnt include the cost of leasing the land, and when thats included, the cost of producing a kilo of rice rises to 3930 dong per kilo!

Farmers do not get what they deserve

Nguyen Minh Nhi, former Chairman of An Giang province, also agreed with Bons calculation. When people calculate the production cost, he said, they often overlook land leasing and management fees.

Nhi said that farmers should be considered as the managers of enterprises and they need to get salaries. As the heads of the families, they need to feed children or parents who cannot work.

The land leasing fee is now 1-2.5 million dong per 360 square metres per annum.

Deputy Minister of Agriculture and Rural Development Bui Ba Bong also said that farmers still do not agree to how profit is being shared in the value chain. They think that processors and exporters obtain bigger profits than farmers, while farmers have to do most of the work. Bong said that the Government has been well aware of the problem and is taking necessary steps to harmonise the profit of farmers, enterprises and exporters, while helping the State ensure food security.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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