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Capital contribution model for farmers fails completely
Most of the farmers do not want to make capital contributions by agricultural land as suggested, because they fear that they would lose the land forever.
The model of joint stock companies with the shareholders--farmers, who contribute capital with agricultural land has not succeeded as expected--by the authors of the model, who once hoped to make a breakthrough in agricultural production.
However, most of the enterprises that apply the model have tasted failure. Only two enterprises still operate with the model, but no one can say for sure how long more the model can survive.
As the average land cultivation area per household is very low, about 0.4 hectares, the production scale is very small. Meanwhile, agriculture enterprises do not have capital and do not have land for production.
A solution was once suggested that it is necessary to push up the land agglomeration process in order to create large cultivation areas and develop the mechanization. However, if this happens, a lot of households would lose cultivation land.
As such, a solution which is hoped to allow to both protect farmers’ land and create large land areas for production, has been put forward; under which, farmers make capital contribution to joint stock companies with the land use right recognized by the Vietnamese laws.
However, the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), has pointed out the failure of the model, after it carried out research on the issue.
All the polled farmers and enterprises in four provinces of Thanh Hoa, Hoa Binh, Thai Nguyen and Vinh Phuc all said that they do not agree with the solution.
If farmers transfer their land use right to enterprises and get money for the land, they would not have many choices with the money. They would be able to do the types of business they want. Meanwhile, if they contribute capital with their land, their capital contributions are always undervalued.
A lot of farmers complained that the joint stock companies where they contributed capital have been taking losses, which have made them suffer. As a result, the farmers have lost all their land after several years of the enterprises’ operation.
Therefore, farmers do not want to contribute capital with land, because they fear they would lose the land one day. Meanwhile, though contributing capital with land, they cannot manage the enterprises because of the limited knowledge and the limited capital contribution.
Meanwhile, 80 percent of investors in agricultural production decided to set up limited companies instead of joint stock companies. The investors say that the farmers’ capital contribution would not help ease the enterprises’ thirst for capital. Meanwhile, there are too many shareholders – farmers in an enterprise, which would make it more complicated to manage businesses.
There are only two joint stock companies to which farmers contribute capital with their land use right, namely the Lam Son Sugar Company in Thanh Hoa province and Son La Rubber Company.
At the former company, farmers contribute capital with the land use right for 20 years. After the duration, the land would be returned to farmers. The company can have stable material growing areas, have conditions to develop infrastructure items and push up the mechanization in production. Meanwhile, farmers still can cultivate on their land, but do not have to worry about the investment capital, while they can get pay for their works.
However, the difficulty enterprises would face with the model is that they need huge capital for the initial investment, about 20 billion dong for every 100 hectares. The joint stock companies would meet high risks, because the companies’ profits would not be high and depending on the parent groups.
The model cannot help joint stock companies control the quality of the products. Besides, risks would appear if the companies use the land use right as the mortgage assets for bank loans.
vietnamnet
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