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Little reward

Released at: 16:22, 29/05/2015 Agriculture Invesment

Little reward

Support from authorities is needed to improve the incomes of Vietnamese farmers and expand markets for the consumption of agricultural products.

by Hoang Thu

Watermelons have a sweet taste but for Nguyen Thi Muoi, a farmer in Son Tinh district in central Quang Ngai province, it was a bitter harvest this year. Tears were shed as unexpected flash floods inundated her crops. She planted one hectare of watermelon this year but the price paid by traders was only VND500 ($0.02) - VND800 ($0.04) at harvest time. “The price is so low that I didn’t want to harvest them,” she said. She is one of thousands of farmers who are facing severe losses as the price of watermelons in key growing areas such as Ngai, Quang Tri, and Binh Dinh provinces fell from VND4,400 to VND500 ($0.2) a kilo last year.

Tough conditions

Supply and demand and their effect on prices is the most basic of all economic principles. Vietnamese farmers, however, fail to grasp this again and again. In October last year farmers in the central highlands province of Lam Dong let their cattle eat their tomatoes because the price was far too low. Many roads were colored red as discarded tomatoes were squashed by cars and motorbikes. Last August, farmers in several provinces in the south such as Binh Thuan and Tien Giang threw away a lot of their dragonfruit. They also found their way onto roadsides and were used as cattle feed after traders bought them for VND1,000 ($0.05) a kilo. A similar fate befell farmers growing sugarcane.

In all of these cases there was no market research on supply and demand undertaken beforehand. The farmers apparently just grew what they wanted. When the weather is favorable or when one or a few farmers do well with one crop, many others then grow the same crop and a familiar story repeats itself, of good crops accompanied by falling prices.

The agriculture sector saw growth of 3.31 per cent and recorded total export turnover of $30.86 billion in 2014. Vietnam was the largest exporter of wooden furniture, coffee, pepper, cashew nuts, and vegetables, Minister of Agriculture and Rural Development Cao Duc Phat told a forum on promoting the agricultural goods market and strengthening cooperative relations in the agriculture sector, organized by the Ministry of Agriculture and Rural Development (MARD) in February.

Farmers, though, who work hard all year long to grow these products, do not receive adequate compensation for their efforts. “Most agricultural products are exported as raw materials and adding value to them is a major challenge, so farmers’ incomes remain low and are unstable,” the Minister said.

Among others, Vietnam’s rice exports stood at 6.5 million tonnes in 2014, making the country the world’s second-largest exporter. In the Mekong Delta, however, which accounts for the majority Vietnam’s rice exports, farmers of the crop earn among the lowest incomes. “Per capita incomes of rice farmers are around the poverty level,” according to Mr. Nguyen Van Sanh, Director of the Mekong Delta Research and Development Institute. In Vietnam, poor households are classed as those that earn an average monthly income of VND400,000 ($18.5).

“Only about 7 per cent of rice farmers can sell their rice directly to enterprises,” Mr. Sanh explained. Most must go through a number of intermediaries before reaching consumers. While prices for major agricultural inputs such as fertilizers, pesticides, and veterinary medicines continue to increase, the earnings of rice farmers are heading in the other direction. For many farmers it’s actually more profitable to simply let their land lie fallow. They leave their homeland and head to the city to become vendors, motorbike taxi drivers, or household helpers. These jobs are also unstable but at least pay higher.

Solving shortcomings

In some northern and central cities and provinces, including in Hanoi, many people, such as officers at the Ministry of Industry and Trade and certain organizations, have purchased watermelons from farmers in the central region to resell locally. The ministry purchased 14 tonnes at fair prices. From an economic standpoint, however, such efforts are neither an effective nor stable solution as consumers will not buy watermelons or other agricultural products simply out of philanthropy.

Poorly planned cultivation is to blame for tumbling prices at harvest time. According to industry analysts, proper forecasts on market demand must be made so that farmers can set growing strategies. The absence of well-planned cultivation easily and quickly leads to oversupply. Workable links between the government, farmers, scientists and distributors are therefore paramount. “The government needs to develop better policies to help farmers sell their products,” a representative from MARD’s Cultivation Department said. It should work with China over the possibility of signing agricultural import and export agreements, and help farmers better access other regional markets such as Laos and Cambodia.

To boost exports, Vietnamese companies also need to first focus on food safety. Efforts in this regard by local authorities have seen litchi growers face a better fate. The northern province of Bac Giang is promoting litchi exports to the US, the EU, Japan and South Korea by implementing a master plan to zone off and grow litchi in accordance with modern food quality and hygiene standards such as GlobalGAP and VietGAP.

The Luc Ngan litchi brand name has received protection certification in Japan, South Korea and Cambodia and is expected gain similar certification in China and Cambodia during the second quarter of this year. MARD’s Cultivation Department is working to help it register for brand name protection in the US, Australia, Singapore, Israel, Germany, France and Russia and is also preparing a number of conferences to promote consumption and working with Vietnam Airlines to discuss ways of putting litchi on the carrier’s in-flight food menu.

In order to increase the value of agricultural products, techniques and systems at every stage of production, transport, processing and sales must all be properly considered. As Vietnam is a tropical country, post-harvest losses account for 20 per cent of total fruit output due to incorrect methods in harvesting, packaging, transport and preservation, according to Dr. Nguyen Minh Chau, the former director of the Southern Fruit Research Institute under the Vietnam Academy of Agricultural Sciences. Several techniques to preserve fresh agricultural products and foodstuff have been used, such as high and low temperature preservation methods through the use of non-toxic chemicals and irradiation. “More investment in research and advanced technologies is needed to address this situation,” he said.

In the Mekong Delta there are five vapor heat treatment facilities and two irradiation plants for the post-harvest treatment of fruit so it meets the requirements of export markets. “South Korea and New Zealand have accepted Vietnamese dragonfruit treated by vapor heat treatment,” said Mr. Nguyen Hoang Huy, Director of the Hoang Phat Fruit Co. Dragonfruit gained New Zealand import approval in April last year after the country’s Ministry for Primary Industries decided they was safe to import having been subject to sanitary certification requiring they be treated by vapor heat for at least 45 minutes.

Among others, CAS technology is regarded as an advanced and positive technology to prolong the ripening process without spoiling fresh post-harvest products. The technology helps farmers and fishermen or cattle raisers have a better life, the Chairman of the ABI Group and exclusive inventor of the CAS technology, Mr. Norio Owada, was quoted as saying when he decided to transfer the technology to Vietnam.

According to Mr. Tran Ngoc Lan, Deputy Director of the Institute of Regional Research and Development under the Ministry of Science and Technology, who is in charge of a project promoting the use of CAS technology, in Vietnam fruit and vegetables using preservatives will only stay fresh for a maximum of two months, while in Japan they can be stored for up to five years. Rice in Vietnam decays after one or two years but is preserved for up to ten years in Japan. “The wide application of this technology will help Vietnam’s agricultural products be exported to many countries worldwide at higher prices,” Mr. Lan told VET. Scientists are now conducting pilot projects on improving the preservation of litchi in Bac Giang and tuna fish in Phu Yen province for export to Japan using CAS technology.

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