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Food association chastised for mis-managing rice exports
The Vietnam Food Association (VFA) should be stripped of its authority to control rice exports, experts and officials say, arguing that its sloppy management of export quotas has hurt small exporters.
“Although VFA is only an industry association, it has been unreasonably given too much power, including the right to allocate quotas to each exporter in each locality,” said Professor Vo Tong Xuan, a leading agricultural expert in Vietnam.
The association has allocated the grain irrationally, he said, pointing out that VFA always grants disproportionately larger quotas to the country’s two largest food companies, Vietnam Northern Food Corporation (Vinafood 1) and Vietnam Southern Food Corporation (Vinafood 2).
Meanwhile, many smaller southern exporters are only allowed to export small volumes even though yields are huge in the country’s largest granary, the Mekong Delta, Xuan said.
According to VFA, the Mekong Delta produces about 60 percent of the national rice crop and accounts for 99 percent of rice exports.
Nguyen Van Bau, deputy director of Kien Giang Province Department of Industry and Trade, said some provinces with low rice outputs have been given large export quotas.
“Some companies in the north even have to buy rice from the south to export,” he said. “On the other hand, Kien Giang Province [in the south] is the second largest rice producer in the country with an annual output of 3.4 million tons, but its exports are restricted by VFA.”
Nguyen Van Duong, general director of Dong Thap Province Department of Agriculture and Rural Development, said his province can produce around 2.7 million tons of rice a year, but only two companies in Dong Thap are allocated a combined annual quota of 300,000 tons.
Xuan said it was particularly unreasonable that rice exporters were put at risk by the fact that VFA can halt exports abruptly at any time while at the same time also being subject to export quotas.
A 2006 decree stated that rice export activities would be managed together by the Ministry of Trade (now the Ministry of Industry and Trade), the Ministry of Agriculture and Rural Development, VFA and provincial authorities with high rice outputs. VFA has been the main regulator of quotas for both companies and provinces for at least two years.
‘Arbitrary’ decisions
On February 20, VFA ordered exporters not to sign new rice export contracts until July and delayed the execution of several signed contracts, saying the year’s quota of 5.2 million tons had nearly been filled already.
The sudden halt caused difficulties for many exporters.
Kien Giang Trade and Tourism Company, for instance, said it had signed contracts to export 53,500 tons of rice in March and April before the VFA ordered all shipments to be delayed.
Although VFA later allowed Kien Giang to ship the consignments after Prime Minister Nguyen Tan Dung intervened in April, it obligated the company to share 13,000 tons of the export order with seven other businesses, five of which were Vinafood 2 subsidiaries.
Recalling the case, company General Director Nguyen Hung Linh said VFA’s decision was “arbitrary.” VFA Chairman Truong Thanh Phong is also the general director of Vinafood 2, Linh said, implying that there may be a conflict of interest.
Le Van Nguyen, director of Kien Giang Agricultural Products Trading Joint Stock Company, said his company was eligible for VFA membership but that its application “hasn’t been considered after a long period of waiting.”
Though a non-member, the company still has to comply to pricing policies set by VFA. It plans to ship 150,000 tons of rice abroad this year but is still struggling with VFA’s policies, Nguyen said.
Power to the people
Many exporters said VFA should not be given any power over export quotas and should just play its original role as an industry association.
Professor Xuan said the association should only provide market information for businesses. Allocating rice export quotas should be the job of the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development, he said.
Xuan said localities should be allowed to make plans for rice exports by themselves as they are the ones who know how much rice they can produce.
Several Mekong Delta provinces proposed last week that the government increase this year’s rice export target to some six million as they have large stockpiles and are expecting two more bumper crops by the end of 2009. The delta harvested 9.92 million tons from the winter-spring crop, up 0.9 percent over the previous winter-spring harvest. A total of 20.7 million tons of rice is expected to be harvested in the delta over the year’s three crops.
Better care
VFA has at least once claimed food security as a reason for halting rice exports, but it would no longer be an issue if the national rice reserve was taken better care of, according to exporters.
Cao Minh Lam, director of the An Giang Import Export Company, said the government should have Vinafood 1 and Vinafood 2 buy rice for the nation’s food security reserve.
Once enough rice has been stored for the reserve, all export quotas should be eliminated so that farmers and exporters can sell all the remaining rice they have, Lam said.
Vietnam, the world’s second-largest rice exporter, earned about US$3 billion from exporting 4.7 million tons of rice last year.
Deputy Prime Minister Hoang Trung Hai said last week the government does not cap rice export volumes, and encouraged localities to seek more markets abroad.
However, the adjustment of rice export volumes needed to be carefully considered, he said, adding that prices could continue to plummet if the rice export target increases to six million tons this year as proposed.
The government has asked the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development to assess the current rice export quota system and VFA’s role in it.
thanhnien, vietnamplus
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