Controversy over rice purchase in the pilot model of the 1 million hectare project

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Tien Thuan Agricultural Cooperative (Hamlet H2, Thanh An Commune, Vinh Thanh District) is the first unit in Can Tho City to pilot the Project of 1 million hectares of high-quality rice from the summer-autumn crop of 2024.

On July 8, 2024, at the first pilot model review workshop of the Project, witnessed by the leaders of Can Tho City People's Committee and many professional units, Hoang Minh Nhat Joint Stock Company and Tien Thuan Cooperative signed an economic contract to buy and sell fresh rice in 3 consecutive crops including summer-autumn crop 2024, autumn-winter crop 2024 and winter-spring crop 2024 - 2025. However, up to now, after the end of the 3 pilot crops, the implementation of this contract has not been as smooth as expected.

Most recently, in the 2024-2025 winter-spring crop, Mr. Nguyen Cao Khai - Director of Tien Thuan Cooperative said that before the rice harvest, he contacted the staff directly in charge of the enterprise's raw material area to agree on the time and purchasing plan but received no response.

There has been no common ground between enterprises and cooperatives participating in the pilot model. Photo: Kim Anh.

According to Mr. Khai, this crop production under the 1 million hectare high-quality rice project went smoothly, with a yield of 8.6 - 9 tons/ha. However, the rice sown from the end of November 2024 to March 8, 2025 was harvested, about 10 days late. This delay caused the rice to overripe, and the market price for traders was 5,700 VND/kg (OM5451 rice variety).

It is known that previously, in the summer-autumn crop of 2024, due to the influence of the weather, the rice fell and the quality was not up to standard. Therefore, Hoang Minh Nhat Joint Stock Company purchased rice in limited quantities. In the autumn-winter crop of 2024, although it had cooperated with the enterprise, at harvest time, some members of the cooperative sold rice outside, forcing the enterprise to accept and let the people decide on their own consumption.

Mr. Nguyen Van Nhut - General Director of Hoang Minh Nhat Joint Stock Company said that the reason for the incident of not purchasing rice for the Cooperative in the winter-spring crop of 2024 - 2025 was due to the fact that the officer in charge of the raw material area assigned to directly discuss with the Cooperative had an internal "dispute" with the Company.

“The company suggested that if this officer could not handle the situation, he should inform the cooperative so that people could sell their rice. In addition, the winter-spring crop is too crowded, and the work cannot be handled,” Mr. Nhut explained.

This person also said that in the previous two crops (summer-autumn and autumn-winter 2024), some rice samples from the first pilot model of Can Tho City did not meet the standards due to the impact of the weather causing the rice to fall over, leading to a small purchase quantity.

The scale of 50 hectares in the pilot model is not a big obstacle for the enterprise. However, due to the unstable coordination between the two sides, partly due to the fault of the staff in charge of the raw material area of ​​the enterprise, it leads to a broken connection in the model.

The economic contract between the two parties sets out clear standards for rice quality. Photo: Kim Anh.

“The Department of Agriculture and Rural Development of Can Tho City (now the Department of Agriculture and Environment) has chosen Hoang Minh Nhat Company to join the Project. We fully support it, but we also need the cooperation of the Cooperative to manage it with the business. I think there are some things that are not binding at first, but we will prioritize the most convenient things for the people to solve, specifically for the people to sell outside,” said Mr. Nguyen Van Nhut.

Need a mechanism to monitor contract performance

According to the content of the agreement signed between Hoang Minh Nhat Joint Stock Company and Tien Thuan Cooperative, the enterprise will purchase all the rice in the pilot model under the Project of 1 million hectares of high-quality rice.

Tien Thuan Cooperative must ensure that fresh rice is cut by combine harvester and meets certain standards such as: Humidity (27 - 29%); impurities, half-empty, split (3%); green, unripe grains (5%); damaged grains (2%); white belly (3%); mixed rice (5%); cracked, broken grains (5%). If the ratio of green, unripe grains is 7:3, damaged grains is over 3%, impurities are over 5% of weight, mixed glutinous rice is over 2%, the enterprise will not purchase.

When the harvest begins, both parties will take representative rice samples for testing. If the rice meets residue standards and has a certificate of emission reduction according to the Project, the final purchase price will be added 300 VND/kg.

To date, Tien Thuan Agricultural Cooperative has completed three pilot crops of the 1 million hectare high-quality rice project. Photo: Kim Anh.

If prices fluctuate abnormally, affecting the purchase, the two parties will discuss and agree on the specific price and delivery quantity.

In case the rice is fallen or flooded due to weather, the enterprise will renegotiate the price with the cooperative. In addition, if the rice does not meet the prescribed standards, the enterprise has the right to refuse to buy.

Thus, the contract has clear provisions on rice purchasing standards, prices, purchasing methods and responsibilities of the parties. Although the enterprise has not yet had any impact, it has put the cooperative in a passive position when looking for consumers. At the same time, it has caused farmers to be hesitant when continuing to participate in association models.

On the other hand, the failure of cooperatives to comply with the agreements signed in the contract also causes instability in the supply chain, making it difficult for businesses to purchase according to plan and lose trust in cooperation.

The 1 million hectares of high-quality rice project is a correct policy of the Government aimed at increasing the value of Vietnamese rice products. However, the story of Tien Thuan Cooperative shows that without a sustainable chain, farmers are still at risk of losing their output. The biggest problem now is not only the production stage but also having a stable output, building a mechanism to monitor the implementation of contracts between enterprises and cooperatives is also an issue that needs to be considered.

After 1 year of participating in the pilot model, the leader of Hoang Minh Nhat Company assessed that in order for the model to be effective, the enterprises and cooperatives participating in the Project need to sit down to coordinate more closely, ensuring harmony of interests of all parties.

Businesses need to have a strong enough infrastructure to ensure uninterrupted rice purchasing. Photo: Kim Anh.

In the long term, the rice consumption linkage in the Project needs to be implemented more drastically and synchronously. In addition to solving problems in the rice chain, enterprises must have facilities and infrastructure (drying kilns, means of transport, processing plants) to ensure timely purchasing.

In particular, rice purchasing is seasonal, but almost every year, businesses are passive in terms of machinery, equipment, and especially capital. This is also a common difficulty that many rice exporting businesses in the Mekong Delta face.

If the 1 million hectare rice project is to be successfully implemented, participating enterprises need to have a strong enough infrastructure such as: a warehouse system and a drying oven to promptly process rice upon harvest; a team of qualified personnel to effectively coordinate raw material areas; and a large enough capital source to ensure uninterrupted purchasing.

On the cooperative side, it is necessary to more strictly manage the implementation of contracts to avoid farmers arbitrarily selling rice outside, and to be more proactive in coordinating with businesses to ensure continuous information. In addition, it is necessary to develop a seasonal risk contingency plan and better monitor the cultivation process to improve product quality.

Source: https://nongnghiep.vn/lum-xum-chuyen-mua-lua-trong-mo-hinh-thi-diem-de-an-1-trieu-ha-d744815.html