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Insurance trial for rice farmers
Cuu Long (Mekong) Delta provinces are expecting a bumper harvest from this year's winter-spring crop and local farmers will make profits of at least 40 percent if the Viet Nam Food Association starts a new rice price insurance scheme.
Professor Vo Tong Xuan, former rector of An Giang University and one of the country's leading rice experts, said he was expecting a bumper harvest from the 1.6 million hectares of crops thanks to favourable weather conditions and under control diseases.
While other countries like India, China, Pakistan, the Philippines and the South of Thailand had seen declines in rice production due to bad weather conditions, Viet Nam would certainly have a bumper crop, Xuan said.
However, the rice expert said it was hard to predict how much farmers would earn from this crop as export prices are determined by various factors, including the management of the Viet Nam Food Association (VFA).
VFA Chairman Truong Thanh Phong said a recent survey carried out by the association found that the average production cost of the crop was VND2,200 (US$0.12)per kilogram, relatively low thanks to favourable cultivation conditions.
Members of the association would buy unhusked rice from farmers at a minimum of VND4,000 per kilogram even if market prices fell below that level, Phong said.
The price insurance scheme for the winter-spring crop would be launched after the Lunar New Year festival, Phong said, noting that the margin promised by his association was higher than the 30 per cent margin set by the Government.
Therefore, local farmers should not rush to make panic sales on seeing prices drop, he stressed.
Farmer concerns
Nguyen Van Thanh, a farmer in Vinh Thoi Commune, Lai Vung District, Dong Thap Province, said that this year, the harvest was early. Before Tet, the price of unhusked rice was VND5,000 per kilogram but it has dropped to VND4,200 per kilogram.
"So, if demand increases and the price stays the same, the farmers' profits will be narrowed," Thanh said.
Tran Van Giau, a farmer from Vinh Long Province's Binh Tan District, said that this year, farmers were finding it difficult to sell their rice. Normally, after harvesting, traders come and buy the rice at the paddy fields, but this year, farmers are still waiting for traders to arrive.
Huynh Phu Loc, a trader in Vinh Thoi Commune, said the reason why traders were not buying the rice was that retail prices had declined by VND1,000-1,500 per kilogram compared to levels before Tet.
According to Xuan, the problem lies in the management of the VFA. For a long time, the association has taken the responsibility of allocating export quotas to enterprises. The VFA allocates large quotas to its two big subsidiaries but they only buy the rice at the last minute when the deadline for delivery approaches, Xuan said.
Meanwhile, food companies in the Mekong Delta provinces have limited purchasing quotas. Therefore, the price is often unstable which is damaging to the farmers.
"To ensure that farmers make stable profits, it is necessary to have a more transparent and practical rice export management mechanism," Xuan highlighted.
To help farmers avoid being forced to sell their rice at prices offered by middlemen, Phong said that VFA members would recruit traders as parts of the enterprises. These traders would buy unhusked rice and process in line with company directions.
The trial project would be implemented in Hau Giang, Long An and Tra Vinh provinces and Can Tho City, Phong said.
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