Vietnam officials call for farming reforms as rice glut looms

By Dinh Tuyen - Hoang Phuong - Chi Nhan, Thanh Nien News

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Farmers harvest rice in the Mekong Delta. Photo by Chi Nhan

The winter-spring rice crop has reached harvest time and agricultural officials are again  complaining about excessive supply and poor incomes for farmers, and calling for reforms of the sector.
Farmers in the country’s rice basket, the Mekong Delta, said rice prices have dropped by around VND1,000 a kilogram to VND4,000-5,000, while figures from the agriculture ministry show that increased prices of inputs have pushed cost to around VND3,800 a kilogram.
“Rising costs and dropping prices have kept the incomes of many rice farmers’ households at VND500,000-600,000 (US$24-28) a person a month; there is hardly any other sector where the income is so low,” an agriculture official said at a meeting Saturday in the delta hub of Can Tho.
Officials from the ministry and Vietnam Food Association said that rice prices are falling to the large supply during the harvest time and export problems.
Thailand is planning to clear its rice inventory of around 20 million tons and has already offered prices lower than those of Vietnam.
Agriculture minister Cao Duc Phat said Vietnam in February offered 5-percent broken rice to Malaysia at US$391.5 a ton, and Thailand at $380.
“That led to a worrisome situation that Vietnam’s traditional rice importers like the Philippines and Indonesia have stopped buying to hear more from the market.”
The ministry said it is pushing more sales to China through both official export avenues and border trade.
The VFA said Vietnamese exporters are lowering their prices by around 3 percent to virtually break-even levels.
Vietnam exported 749,000 tons in the first two months.
Phat estimated that the delta to produce around 8.5 million tons of rice this season, meaning 4.3 million tons need to be exported or sold to other parts of the country.
Prime Minister Nguyen Tan Dung ordered the ministry, the Ministry of Finance, the central bank, and local authorities to get businesses to buy one million tons from the harvest as part of an inventory program meant to keep prices stable that is several years old now.
He also approved lowering of the loan interest rate ceiling from 9 percent to 8 percent for agriculture businesses and to 7 percent for businesses taking part in the inventory program.
They took effect Monday.
But experts said the inventory policy is not helpful when carried out after prices drop.
Agriculture Professor Vo Tong Xuan said the policy has not fulfilled its goal of ensuring at least 30 percent profit for farmers since it has brought profits of less than 10 percent and even losses.
He said instead of lending money to businesses, the government can give it directly to farmers and help them have more control over their production.
Le Van Thi, chairman of Kien Giang Province, which grows the largest quantity of rice in the delta, said the province plans to export around 1.1 million tons this year but has so far managed only 100,000 tons while the new harvest has increased its stocks by around 2.4 million tons.
He said many businesses have told him they are reluctant to join the inventory program since storage expenses have increased.
Nguyen Minh Nhi, former chairman of An Giang Province, said since it is harvest time the program would only be able to stop prices from falling further, not push them back up.
The program is only a temporary solution and the government needs to think of more effective plans, he said.
It should do more research on world demand to fix supply limits and focus cultivation in areas where the cost can be minimized.
“We cannot keep planting rice on any land we have and then find there is no one to sell to.”
The agriculture ministry said it is planning to reduce area under the grain by around 112,000 hectares to around 4 million hectares in 2020 and has called on  related agencies to study options for alternative plans.

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