Vietnamese enterprises started buying one tonne of rice each in March for temporary storage in the Mekong Delta, Do Anh Tuan, deputy director of the Institute of Policy and Strategy for Agriculture and Rural Development, told Nong thon Ngay nay (Countryside Today).
Some argue that Prime Minister Nguyen Tan Dung's policy to temporarily keep rice off the market by storing it has benefited enterprises, not farmers. What's your position on this?
Our rice production is still fragmented. While effective contracts on purchasing agricultural products and the value chain between farmers, enterprises and the international market have not yet been formulated, the government's policy is still necessary in my opinion.
The benefits from good export prices following temporary storage will be shared between the farmers and the enterprises, even though enterprises have to share their benefits with middlemen.
However, this policy is just a short-term market intervention. To ensure farmers benefit, it is important to implement more long-term measures.
Enterprises say they don't benefit from the government's policy, due to the low process of disbursement because the benefits are smaller than the interest. What are your thoughts on that?
I think this story reflects a weak link between enterprises and farmers. On the farmers' side, immediately following the harvest the farmers sell their rice paddies to middlemen. And then the enterprises buy the paddies from the middlemen. As a result, the farmers didn't benefit. And in some cases most of the profit went to the middlemen, not the enterprises. The middlemen bought the paddies at low prices and sold them at very high prices.
However, with the Government's decision to buy up rice for temporary storage, the enterprises will be given subsidised loan interest rates. The actual buying price depends on the enterprise's ability to look for export contracts while rice demand in the international market is fluctuating – particularly when rice export prices drop. This reality has stopped many enterprises from temporarily storing rice.
Last but not least, many Vietnamese export enterprises don't have good storage systems to keep rice quality and prevent losses while looking for importers.
So if the enterprises have good storage systems and good business plans, as well as access to credit, they may not need the Government's subsidised loan interest rates.
The final objective of the Government's policy is to help farmers sell their rice paddies at higher, more stable prices. Do you think the Government should adopt other measures to support the policy?
In my opinion, the decision to buy up rice for temporary storage should not be made by enterprises alone. The Government should buy up about 20 to 30 per cent of rice from farmers after each harvest season. In addition, enterprises affiliated with the Viet Nam Food Association should buy up by 20 to 30 per cent of farmers' rice . Farmers' co-operatives should also buy 10 to 20 per cent. Of courses, both the enterprises and co-operatives will be given subsidised loans from the Government. — VNS