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Futures contracts find favor with farmers
More Vietnamese farmers are signing “futures” contracts with export companies to sell their next harvest for a guaranteed profit.
The contracts ensure the exporters are supplied with an agreed quantity of products of consistent quality, while farmers are guaranteed a certain price and have access to technical support.
However, only large-scale farmers are able to sign such contracts. Those who work smaller plots can band together to form cooperatives in order to negotiate a “futures” deal.
No formal survey of this new trend has been conducted. However, import and export companies in the Mekong Delta say they have been signing futures contracts with farmers since 2005 and are happy with the model.
According to An Giang-based Nam Viet Holdings Company, which can process up to 500 tons of tra and basa catfish a day, 50 percent of its fish is supplied through futures contracts with individual farmers. The remaining 50 percent is supplied by its own fish farms.
Nam Viet Director Doan Toi told Tuoi Tre newspaper he is seeking to sign more contracts with farmers.
Toi said he hoped contracts would be signed over about 200 hectares of fish farms to meet Nam Viet’s future supply needs.
In 2005, An Giang Seafood Import-Export Company (Agifish) set up a “club” of 30 fish-raising households, which provide 60 percent – or 10,000 tons – of fish processed for export.
With contracts signed before a “crop” is raised, the fish farmers are ensured of a profit of at least VND1,000 (6 U.S. cents) per kilogram this season.
Before the introduction of “futures” contracts, farmers sold their fish to retail traders, sometimes making a loss because of fluctuating fish prices.
Duc Vinh
vietnews
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