Farmer co-operatives buy shares with land
Joint stock co-operatives and company models, comprised of farmers who buy shares with land instead of money, have become increasingly popular across the nation. And these co-operatives have met with success stories by building up local farmers’ confidence in them.
These co-operatives and companies are active mainly in agriculture and aquaculture, and have been formed in many of the country’s communes.
Farmers nod their heads in agreement when they find out that these joint-stock co-operatives and companies share profits and rights with them.
It means they’re all in the same boat, said Doan Dinh Thiem, former head of the Agriculture Enterprise Management and Renovation Unit.
"At first, it was very difficult for us to persuade farmers to take part in the joint stock co-operatives by using their land to buy shares," said Le Van Sinh, chairman of Vinh Tan Joint stock Co-operative, a success story in Soc Trang Province.
"I shook my head, told them no, after they proposed that I contribute my land to the joint stock co-operative. I was afraid," said Lam Xuan, a current shareholder in the co-operative.
Many farmers have assumed they would lose all their land if they took part in the co-operative.
The co-operative’s board then built up farmers’ confidence with their detailed contracts, said Sinh.
"The 10-year contract defines clearly that the land considered to be capital instead of money still belongs to the farmers. One hectare of land is equivalent to five stocks," said Sinh.
In the first five years, one stock was worth VND5 million (US$312), while in the last five years, it was worth VND10 million ($624).
"Moreover, the farmers, as shareholders, don’t need to care about production costs. The co-operative will be responsible for the rest of the process," said Son Hoang Na, the co-operative’s accountant.
The profits that farmers will enjoy are also defined in the contract.
"The profits will be divided equally for every stock after all costs are taken into account," said Lam Sen, deputy chairman of the co-operative.
Xuan said that they had succeeded in winning him over with the contracts.
"It took us half a year to gain their confidence, but it was worth it," said Sen.
Success and then some
The Vinh Tan Joint Stock Co-operative came into being in 2004, with 24 shareholders and 15ha land.
"The co-operative focuses on shrimp hatching," said Sinh.
After the first four months, the shareholders gained a profit of VND7.5 million ($468) for each hectare of land.
"It was a large sum of money which helped my family and others escape from poverty," said Xuan.
Now, during the latest shrimping season, this money has nearly tripled to VND21 million ($1,312).
Ninety-eight per cent of the shareholders are Khmer who used to live below the poverty line and were unable to send their children to school. But now, everything is different and their lives have changed for the better, said Sen.
Unlike the Vinh Tan Joint Stock Co-operative, many other joint stock co-operatives and companies have failed after starting up because "they did not make the farmers believe in them," said Thiem.
The Bac Vong Joint Stock Company, in Soc Son District’s Bac Phu Commune in Ha Noi, is one story of such failure.
"They were unable to persuade local farmers to buy shares in the company with their land because there was no base, nor any contract to believe in the company," said Nguyen Ba Lam, head of Bac Vong Village in Bac Phu Commune.
They only collected 30ha of land for aquaculture instead of the 50ha area they had planned. And the land they collected was among the land they could not collect, so they were unable to do anything with it.
Another problem was that the company filled the land plots it did get with water. And when the company could not continue, it abandoned the land, but left the water.
"I should have followed my neighbour’s advice; I shouldn’t have believed the company," said Nguyen Khac Luong, who contributed 3,600sq.m of land to the company.
It’s been four years and Luong and some other neighbours still have no land to plant rice and subsidiary crops on, because the land was turned into lakes.
"We are afraid of this model now," said Luong.
"It is necessary to show the farmers the short- and long-term benefits of joint stock co-operatives and companies," said Doan Dinh Thiem, former head of the Agriculture Enterprise Management and Renovation Unit.
"This is a sound policy, designed for the farmers to help them escape from poverty," said Thiem.
VNS
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