Heads you win, tails I lose

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Farming in Vietnam has become a gamble. You never know if you will win or lose.

Truong Van Bay, a farmer in the Mekong Delta province of Tien Giang, said he still remembers the bitter lesson of the 2008 rice harvest.

Many farmers tried to stockpile rice, waiting for prices to go up. But things turned out much worse than they could imagine as prices plummeted 60 percent.

"Only dealers and rice companies win big from stockpiling... Farmers work really hard but end up earning nothing."

No matter how hard they try, local farmers do not have any real say in pricing.

Huynh Phong, who has been growing watermelons in the central province of Quang Ngai for more than 20 years, said all farmers in his area were really happy when their crop early this year was much more bountiful than usual. They did not know that it was a curse in disguise.

"After prices fell sharply from VND4,000 (US$0.2) per kilogram to a mere VND300, many farmers are now saddled with huge debts," he said.

Tran Ngoc Chung, who owns a small dragonfruit plantation in Binh Thuan Province, said farmers have to accept whatever prices are offered by dealers who purchase the fruits and resell them to exporters.

Some growers delayed harvesting in an attempt to push prices up, only to be paid even lower prices by dealers later, he said.

Director of Binh Thuan's Department of Industry and Trade, Tran Van Nhut, said dragonfruit farmers have been struggling with low prices in a buyer's market.

Things can get worse as annual output in the province is set to surge by more than 65 percent to 500,000 tons in the next five years, he said.

Paradox'

If they have to suffer losses because of a bumper crop, farmers do not stand to gain if output falls.

Le Duc Thong, an official of the Vietnam Coffee and Cocoa Association, said the market has seen prices fall so many times following a bumper harvest.

As a result, when natural disasters affected local coffee production and caused production to drop by up to 30 percent, everyone thought prices would go up, he said.

"But prices are still low. This is a paradox. It means the market is really unpredictable."

Coffee prices have hit a three-year low of VND23,000 ($1.23) per kilogram. According to the coffee association, Vietnam exported a large amount of coffee when the 2009-10 crop had just begun at the end of last year. Many coffee houses took the opportunity to stockpile enough to keep prices down.

The association said the unexpected price movements this year proved that Vietnam, a top coffee exporter, still has no effective sales or pricing strategy.

For farmers, flawed export planning downstream means another year of losses.

Is processing the answer?

Some experts say a strong processing industry can address the problem.

If tomato farmers can sign contracts with ketchup producers and those who grow pineapples do the same with jam makers, farmers no longer have to throw away fruits and vegetables or worry about prices, they say.

Ngo Van Hai, an expert with the Hanoi-based Institute of Policy and Strategy for Agriculture and Rural Development, said Vietnam's agricultural exports increase every year in terms of total value, but this is based on rising volumes, not on rising prices.

Most Vietnamese products fetch lower prices than those from Thailand and China as the country mostly exports raw materials.

The local food processing sector is underdeveloped, only using 68 percent of the country's total sugar output, 35 percent of tea, 5 percent of fruits and vegetables and only 1 percent of meat.

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