Many dragon fruit growers link with enterprises for stable purchasing prices. (Photo: SGGP)
Farmers are struggling
In recent days, many consumers have joined hands to rescue purple sweet potatoes, with the price of only a few thousand Vietnamese dongs per kilogram. The reason is that purple sweet potatoes are usually exported to China through unofficial cross-border trade, but this market has temporarily halted importing. In 2017 and 2018, it also took a long time for the pig-farming industry to regain the price level that helps farmers to be profitable.
At that time, live pigs exported to China via unofficial cross-border trade were at higher prices than the domestic market. Raising pigs takes many months, and farmers have to put in a great deal of effort and investment capital. They expected their pigs to be exported at high prices, but the importing country suddenly stopped importing. It was once a painful lesson for farmers. However, at present, many farmers are still expanding their pig herds with the hope of exporting them to Cambodia and China via unofficial cross-border trade.
Currently, the most vulnerable are the growers of dragon fruit, jackfruit, and watermelon, as these agricultural products have called for help many times. In the last days of May, Thai jackfruits were sold at the orchard for a few thousand Vietnamese dongs per kg, while in the most recent purchase, the price was at VND50,000-VND70,000 per kg.
Similarly, the selling price of dragon fruits is currently not enough to cover production costs. Earlier, farmers in Dong Nai Province also called for the rescue of pink pomelos in February this year. During the pandemic in April this year, agricultural products in the Northern provinces also plunged steeply. For instance, tomatoes sank from VND20,000 per kg to VND2,000 per kg, and Tuyen Quang king mandarins declined from VND10,000 per kg to VND4,000 per kg.
Many farmers explained that purple sweet potato, watermelon, and jackfruit are easy to grow and require little capital. Because they are short-term crops, profits can be collected quickly. However, if traders stop buying, farmers will not be able to handle the situation. Meanwhile, traders only make oral contracts and usually deposit a small amount of money, so the situation of breaking the contract is easy to happen. However, according to a leader of the Department of Agriculture and Rural Development, many farmers have no choice but to maintain their production and continue to rely on even traders who used to turn their backs on them.
Planning of growing and farming areas needed
As one of the leading agricultural processing companies in Vietnam, in this rescue, Vinamit Company bought thousands of tons of jackfruits, as well as mangoes and sweet potatoes, to support farmers. To store a large number of fruits, the company has to hire many cold storages to process gradually. Because processed products have a certain shelf life, if they are mass-produced, the market will not consume them in time. As for farmers who are partners of the company, the company still buys their produce at contract prices.
“However, Vinamit is just a swallow, and a swallow cannot make a spring. Meanwhile, there are a few agro-processing enterprises," said Mr. Nguyen Lam Vien, CEO of Vinamit Company. He also suggested that the State should have the policy to support lending interest rates for agriculture from 1-2 percent to encourage farms and enterprises to invest in upgrading machinery systems, preservation storages, and processing technology.
Another factor is that enterprises need to grasp market information. For example, the agricultural market in Ho Chi Minh City usually consumes heavily on weekends, whereas on weekdays, the purchasing power is weakened by 30 percent. If enterprises understand the demand, they will cooperate with cooperatives and farmers to reduce output or increase deep processing, such as making flour or juice. Of course, to do this, enterprises must build a sustainable chain, and it cannot be done overnight.
To limit agricultural oversupply, according to Ms. Ngo Tuong Vy, Deputy Director of Chanh Thu Fruit Import-Export Limited Company, besides business strategies, enterprises should coordinate with ministries and agencies to promptly grasp market information. Typically, from May to August, many countries, namely Mexico, South Africa, and Pakistan, enter the harvest season of agricultural products and become fierce competitors with Vietnam. Therefore, enterprises need to recalculate each crop.
Currently, many countries have done a good job of planning. For example, in Thailand, agricultural production requires a license to be supported. If farmers arbitrarily produce, they will be sanctioned according to the law. Thailand manages durian products strictly. If enterprises cut young fruits, they will be fined and will not be allowed to export, and the domestic price is also low. Meanwhile, Vietnamese enterprises compete with each other in purchasing and exporting without strict and thorough management from the State.
In many countries, to develop agriculture, the State often invests in processing technology at the same time (accounting for 50-80 percent). Mr. Tram Quoc Thang, Director of Tien Phong Safe Pig Farming Cooperative, acknowledged that currently, because of various reasons, many companies have supply but lack markets and market information to produce appropriately.
Therefore, the State needs to make the planning for growing and farming areas, assess the total herd, and especially focus on industrial production factors instead of handmade production. When livestock production is industrialized and applied science and technology, it will be able to evaluate and control the production, productivity, disease, as well as quality, from which appropriate solutions can be made for adjustment.
Mr. Phan Minh Thong, Chairman of Phuc Sinh Joint Stock Company, commented that besides the interest rate issue, enterprises also encounter many difficulties in searching for land funds because land prices have increased sharply compared to 10 years ago. Moreover, the agricultural sector needs many small and medium-sized enterprises specializing in exporting and processing to serve when the supply is excessive. If there are only a few enterprises as currently, they will not be able to meet the demand.
For example, the pepper industry needs 20-30 enterprises like Phuc Sinh, then the price of pepper will increase without having to worry about traders squeezing the price. As for the rescued products, the company can preliminarily process them to preserve them for six months and continue to process them deeply for an additional six months of use. Fresh products can be sold at breakeven, but enterprises still have profits from preliminarily processed and deeply-processed products to compensate.
In recent days, many consumers have joined hands to rescue purple sweet potatoes, with the price of only a few thousand Vietnamese dongs per kilogram. The reason is that purple sweet potatoes are usually exported to China through unofficial cross-border trade, but this market has temporarily halted importing. In 2017 and 2018, it also took a long time for the pig-farming industry to regain the price level that helps farmers to be profitable.
At that time, live pigs exported to China via unofficial cross-border trade were at higher prices than the domestic market. Raising pigs takes many months, and farmers have to put in a great deal of effort and investment capital. They expected their pigs to be exported at high prices, but the importing country suddenly stopped importing. It was once a painful lesson for farmers. However, at present, many farmers are still expanding their pig herds with the hope of exporting them to Cambodia and China via unofficial cross-border trade.
Currently, the most vulnerable are the growers of dragon fruit, jackfruit, and watermelon, as these agricultural products have called for help many times. In the last days of May, Thai jackfruits were sold at the orchard for a few thousand Vietnamese dongs per kg, while in the most recent purchase, the price was at VND50,000-VND70,000 per kg.
Similarly, the selling price of dragon fruits is currently not enough to cover production costs. Earlier, farmers in Dong Nai Province also called for the rescue of pink pomelos in February this year. During the pandemic in April this year, agricultural products in the Northern provinces also plunged steeply. For instance, tomatoes sank from VND20,000 per kg to VND2,000 per kg, and Tuyen Quang king mandarins declined from VND10,000 per kg to VND4,000 per kg.
Many farmers explained that purple sweet potato, watermelon, and jackfruit are easy to grow and require little capital. Because they are short-term crops, profits can be collected quickly. However, if traders stop buying, farmers will not be able to handle the situation. Meanwhile, traders only make oral contracts and usually deposit a small amount of money, so the situation of breaking the contract is easy to happen. However, according to a leader of the Department of Agriculture and Rural Development, many farmers have no choice but to maintain their production and continue to rely on even traders who used to turn their backs on them.
Planning of growing and farming areas needed
As one of the leading agricultural processing companies in Vietnam, in this rescue, Vinamit Company bought thousands of tons of jackfruits, as well as mangoes and sweet potatoes, to support farmers. To store a large number of fruits, the company has to hire many cold storages to process gradually. Because processed products have a certain shelf life, if they are mass-produced, the market will not consume them in time. As for farmers who are partners of the company, the company still buys their produce at contract prices.
“However, Vinamit is just a swallow, and a swallow cannot make a spring. Meanwhile, there are a few agro-processing enterprises," said Mr. Nguyen Lam Vien, CEO of Vinamit Company. He also suggested that the State should have the policy to support lending interest rates for agriculture from 1-2 percent to encourage farms and enterprises to invest in upgrading machinery systems, preservation storages, and processing technology.
Another factor is that enterprises need to grasp market information. For example, the agricultural market in Ho Chi Minh City usually consumes heavily on weekends, whereas on weekdays, the purchasing power is weakened by 30 percent. If enterprises understand the demand, they will cooperate with cooperatives and farmers to reduce output or increase deep processing, such as making flour or juice. Of course, to do this, enterprises must build a sustainable chain, and it cannot be done overnight.
To limit agricultural oversupply, according to Ms. Ngo Tuong Vy, Deputy Director of Chanh Thu Fruit Import-Export Limited Company, besides business strategies, enterprises should coordinate with ministries and agencies to promptly grasp market information. Typically, from May to August, many countries, namely Mexico, South Africa, and Pakistan, enter the harvest season of agricultural products and become fierce competitors with Vietnam. Therefore, enterprises need to recalculate each crop.
Currently, many countries have done a good job of planning. For example, in Thailand, agricultural production requires a license to be supported. If farmers arbitrarily produce, they will be sanctioned according to the law. Thailand manages durian products strictly. If enterprises cut young fruits, they will be fined and will not be allowed to export, and the domestic price is also low. Meanwhile, Vietnamese enterprises compete with each other in purchasing and exporting without strict and thorough management from the State.
In many countries, to develop agriculture, the State often invests in processing technology at the same time (accounting for 50-80 percent). Mr. Tram Quoc Thang, Director of Tien Phong Safe Pig Farming Cooperative, acknowledged that currently, because of various reasons, many companies have supply but lack markets and market information to produce appropriately.
Therefore, the State needs to make the planning for growing and farming areas, assess the total herd, and especially focus on industrial production factors instead of handmade production. When livestock production is industrialized and applied science and technology, it will be able to evaluate and control the production, productivity, disease, as well as quality, from which appropriate solutions can be made for adjustment.
Mr. Phan Minh Thong, Chairman of Phuc Sinh Joint Stock Company, commented that besides the interest rate issue, enterprises also encounter many difficulties in searching for land funds because land prices have increased sharply compared to 10 years ago. Moreover, the agricultural sector needs many small and medium-sized enterprises specializing in exporting and processing to serve when the supply is excessive. If there are only a few enterprises as currently, they will not be able to meet the demand.
For example, the pepper industry needs 20-30 enterprises like Phuc Sinh, then the price of pepper will increase without having to worry about traders squeezing the price. As for the rescued products, the company can preliminarily process them to preserve them for six months and continue to process them deeply for an additional six months of use. Fresh products can be sold at breakeven, but enterprises still have profits from preliminarily processed and deeply-processed products to compensate.
