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Rice growers grumble over meagre profits

Update: July, 16/2012 - 10:50

by Le Hung Vong

Despite a bumper summer-autumn rice crop, Cuu Long (Mekong) Delta farmers are unhappy as prices of paddy, including high-grade varieties, have dropped since the harvest began a few weeks ago.

Based on the average production cost of VND3,993 for each kilogramme of paddy for this crop, as estimated by the Finance Ministry, farmers say they have earned meagre or no profit for their labour.

Nguyen Thanh Mien of Dong Binh Commune in Can Tho City's Thoi Lai District said it cost farmers VND3,900 per kilo to produce rice on their own land and VND4,500 per kilo if they did it on leased land.

Nguyen Van Be, who has grown rice on three ha in An Giang Province's An Phu District, said his field had an average yield of 6 tonnes of paddy per ha and he sold it for VND4,250 per kilo, getting a "very small" profit.

Be said that farmers who had other "unexpected expenses" such as fees for pumping water from flooded fields and higher reaping costs for fallen rice plants are likely to suffer losses instead of making any profit.

The programme to purchase 500,000 tonnes of rice for reserves beginning last week has helped increase paddy prices in the Cuu Long (Mekong) Delta. To ensure the targeted 30 per cent profit for farmers, paddy must be sold for VND5,200 per kilo.

However, it is not easy at all for farmers to sell their paddy for over VND5,000 per kilo. Only farmers who harvested their summer-autumn crop in mid-July sold paddy for over VND5,000 per kilo while most of the paddy harvested before mid-July was sold for less than VND4,800 per kg at their fields because the farmers did not want to bring their paddy home.

Authorities in Can Tho City have announced production costs of VND4,016 per kilo for the summer-autumn crop and proposed a price of VND5,300 per kilo for the reserves purchase plan.

However, according to Nguyen Thi Kieu, deputy director of the Can Tho Agriculture and Rural Development Department, to earn bigger profits, many traders have been purchasing paddy at prices much lower than those proposed by the city.

Farmers are agreeing to sell paddy to traders at prices offered by the latter for fear that prices may drop in the future and inflict post-harvest losses if they do not sell their produce as soon as the crop is harvested.

The modest increase in paddy prices as a result of the reserves purchase programme, that began on July 8, has been disappointing for farmers. On July 12, prices of summer-autumn paddy stood at between VND4,350 and VND4,500 per kilo, up VND50 to VND150 per kilo compared to a week earlier. The increase is not enough to bring the 30 per cent profit for rice growers that policy makers target.

Tra fish breeders, processors seek assistance

As prices of tra fish products dropped to record lows last week, both breeders and processors have been crying out for help from the Government.

Tra fish processors are facing capital shortages while owners of breeding farms say they are suffering losses of VND3,000 to VND5,000 per kilo.

Nguyen Thi Kim, who owns five breeding farms covering 15,000 sq.m in Can Tho's Ninh Kieu District, said she had to pay some VND5.5 million ($261.9) per day for fish feed plus VND16 million ($761.9) in bank loan interest every month.

"Production costs and feed prices are on the rise while that of tra products are declining," said Kim. "I'm sure of going bankrupt if prices of tra fish products do not increase in the near future."

Nguyen Ngoc Hai, chairman of the Thoi An Tra Fish Breeding Co-op in Can Tho's O Mon District, said members of co-op have "voluntarily" sold the fish to processing enterprises on credit of one to two months.

"It's is better than forcing them to shut down [by not selling them the tra fish]. Then there would be no buyer for our tra fish," Hai told Viet Nam News.

He said the Government provided support for animal husbandry and rice farming whenever they were in trouble, but the tra fish industry and seafood processors had not been as lucky.

According to Huynh Van Tuan, chairman of the Labour Confederation at the Can Tho Export Processing Zones and Industrial Parks, the city has 18 tra fish processing enterprises, employing over 13,000 workers.

Seafood processors have offered employment opportunities for a large number of people in the Cuu Long (Mekong) Delta. Therefore, the Government should provide them with financial support and prevent thousands of workers from losing their jobs, he said.

Exporters buy Indonesian coffee to meet contracts

Many local traders have decided to ignore Vietnamese coffee and buy Indonesian coffee instead to ensure timely delivery to overseas buyers as local growers hold back, waiting for higher prices.

The director of a HCM City-based farm-produce trading firm said that many local traders have turned to Indonesia coffee which was priced US$21 lower per tonne.

In Viet Nam, the coffee crop is over and there is not much inventory left, while Indonesia has had a bumper coffee crop, and is offering abundant and cheap supplies, according to Pham Ngoc Bang, deputy director of the Dak Man Coffee Joint Venture Co.

"[Vietnamese] farmers have lost confidence in [local] traders and processors. They now harvest and process on their own, then stockpile their products waiting for good prices, resulting in dwindling supplies," Nguyen Nam Hai, general director of the Viet Nam Coffee and Agricultural Products Assessment for Export and Import JSC. told the Thoi Bao Kinh Te Sai Gon (Sai Gon Economic Times) newspaper.

Hai said local farmers kept the products themselves and did not know the right time to sell at good prices.

Doan Van Ha of the Ha Noi Trading Corporation said that in this situation, exporters with long-term contracts would suffer the most because they signed the contracts when local coffee prices were low, but would have to buy at higher prices now.

To deal with this problem, coffee exporters could develop stable material zones in many ways including cultivating the crop themselves or hiring farmers to do so, Hai said.

He said growers and traders should also ensure that coffee is cultivated and processed in accordance with the international standards.

According to figures from the Viet Nam Coffee and Cocoa Association, Viet Nam is currently the world's number one producer of robusta coffee, followed by Brazil and Indonesia. However, experts says Brazil is likely to take top spot in the next five years.

In a recent report, FO Licht experts forecast that Viet Nam is likely to produce 23.7 million bags of coffee in the 2012-13 crop. — VNS

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