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How high commissions push up farm costs
Producers of fertilisers and pesticides pay their agents handsome commissions, but farmers are paying the price in increased production costs.
Tran Thanh, owner of a shop that sells agricultural inputs in southern Kien Giang Province’s Tan Hiep District, says most companies pay their agents commissions of between 7 per cent and 12 per cent.
However, there are some companies that "even pay between 15 and 40 per cent commission for microorganic fertilisers and pesticides," he adds.
His distributor recently paid him commissions of more than VND109 million (US$6,000) apart from many promotional gifts when he bought Hexavil 5SC, Fullcide 800WP, NP.Pheta and Bretilsuper 300ND pesticides worth VND398.5 million ($22,387).
According to Nguyen Thanh Kim, owner of another shop in the Mekong Delta Province’s Chau Thanh District, the prices of fertilisers and pesticides include all the commission that companies pay their agents, so the agricultural inputs are more costly to farmers.
Nguyen Van Linh, a farmer in Can Tho City’s Vinh Thanh District, says pesticide prices have increased significantly over last year.
The Hexavil 8SC fungicide currently costs VND195,000 ($11) per one-litre bottle, while the price last year was VND135,000 ($8).
Moreover, many agents raise the selling prices when there is an insect or pest epidemic because no one controls them.
Nguyen Thien Thuat, another farmer, complains that during a recent ray nau (brown hopper) epidemic, prices of the Chess-brand insecticide rose to VND39,000 from VND26,000 per bag.
Huynh Van Thon, general director of An Giang Plant Protection Joint-Stock Company (AGPPS), says that his company does not raise prices of plant protection chemicals and pesticides but in the market, retailers hike them by between 30 per cent and 40 per cent. He adds, however, that some producers have collaborated with distributors to hike prices of some chemicals over which they have monopolistic control.
According to Le Quoc Phong, director of Binh Dien Fertiliser Company, prices of agricultural inputs also increase when the crop planting begins.
Pham Van Du, deputy head of Department of Cultivation (DoC) under the Ministry of Agriculture and Rural Development says that the department is not able to manage increase in agricultural inputs’ prices.
Le Van Banh, head of Mekong Delta Rice Research Institute (MDRRI), also agrees with Du. He says it is difficult to control prices of agricultural inputs because most of them are imported.
According to Nguyen Van Hoa, another deputy head of DoC, the Government has issued many regulations on managing prices of agricultural inputs but, in fact, no one controls them. Distributors and retailers are the only ones to decide the prices in the market.
The price hikes make great profits for both fertiliser and pesticide producers and their agents.
Nguyen Minh Kien, a shop-owner in Can Tho City, says he is able to earn annual profits of around VND1 billion ($57,142) by selling agricultural inputs.
Farmers, meanwhile, see their profit margins falling or even suffer losses when input prices are high and output prices fall in the open market.
Linh says he was lucky to make up the money he spent on the last winter-spring crop. Experts say authorities should strengthen market inspections to minimise speculatory pricing and ensure a fair deal for farmers, and also act to ensure enough supply of agricultural inputs.
They also say that the agricultural input distribution system should be reorganised and prices published so farmers have the information. The number of intermediaries between farmers and producers should be minimised so that the former is not forced to pay higher prices, they add.
vietnamnet, vietnam news
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