Rice is a traditional and important production sector of Vietnam, providing livelihoods for tens of millions of farmers across the country. According to statistics, rice output in 2023 is estimated at 43-43.4 million tons. Rice output not only meets domestic consumption demand, ensuring food security, but also exports about 8 million tons of rice this year, earning about 4.5 billion USD.
Rice prices in 2023 also set a historical record. Rice purchased at the field had an average price of nearly 9,000 VND/kg, the export price of 5% broken rice peaked at 663 USD/ton - the most expensive among the top rice exporting countries in the world.
Frequently breaking trust
However, at the workshop on Developing the Vietnamese Rice Value Chain on the morning of December 13, Mr. Le Thanh Tung - Deputy Director of the Department of Crop Production (Ministry of Agriculture and Rural Development) - commented that there are still many limitations that the rice industry has not yet completely overcome, such as small-scale production and high production costs. The volume of exported rice is large but the value is not high, and the income of rice growers is still low.
Meanwhile, rice production in the Mekong Delta is facing challenges in water resources as floods no longer occur according to the law and saltwater intrusion is increasing.
Associate Professor, Dr. Nguyen Phu Son (Can Tho University) pointed out 10 main bottlenecks in developing the rice value chain in a responsible and sustainable manner. Among them, there are bottlenecks that are “known, very painful, and talked about forever”.
Mr. Son cited that the actors participating in the value chain have not yet fully and correctly understood the nature of the linkage. Therefore, their linkage goal is only to achieve short-term profits, rather than long-term ones. As a result, the linkage contract is only seasonal.
The problem is that the production and business thinking of the actors in the chain has not been transformed towards the market and sustainability. There is a lack of sharing of risks and benefits between the parties in the value chain. Mr. Son said that this bottleneck is most evident in the contract negotiation and purchase stage and the rice purchasing stage. The consequence is that there is often a situation of breach of trust and broken contracts.
According to him, the rice industry has not yet built a large database. This is a major bottleneck that affects the ability to forecast the market as well as manage the industry well to optimize the gap between supply and demand. Lack of market forecasting reduces the operational efficiency of all actors in the chain.
Dr. Cao Thang Binh - senior expert of the World Bank - said that the tendency of exporting countries to reduce production, even temporarily suspend exports, has created an opportunity for Vietnamese rice to dominate the market. However, Vietnam's rice productivity has almost reached its ceiling, and it is difficult to increase further. Farmers often use a lot of input materials, especially fertilizers, to achieve high productivity.
Farmer to farmer linkage is most important
According to Mr. Nguyen Duy Thuan, General Director of Loc Troi Group Joint Stock Company, to develop sustainably there are barriers we need to overcome, aiming at key criteria.
Firstly, production must be sustainable in all three factors: economic, environmental and social. Currently, rice prices help farmers have a stable income, even the largest in all economic sectors today. Spending 1,000 USD to invest on 1 hectare at this time, the revenue is from 3,000-3,500 USD, not to mention that the investment does not require capital, from which it can be affirmed that on a scale, rice farmers are completely profitable.
Production linkage helps reduce costs and stabilize supply capacity. This is an important issue, because the rice industry is very large in scale, with demand in the millions of tons. Therefore, it is impossible not to link production to create large scale. We must remove barriers to link production.
Second, credit barriers must be removed. Although there are currently many incentives for farmers, cooperatives, and rice production and trading enterprises, they are not completely suitable for the characteristics of the industry. It is like having clothes but not being able to wear them, still having to endure the cold.
Third, legal environment barriers. The situation of people and businesses violating, breaking deals, violating contracts or many other violations is still common.
Finally, synchronous mechanization, it is necessary to improve mechanization to increase labor productivity and economic efficiency. If using synchronous mechanization, it will reduce loss in harvesting.
Large production area with more than 10 million rice farming households, 300 enterprises, 20,000 rice buyers... According to Mr. Bui Ba Bong - Chairman of the Vietnam Rice Industry Association - the space and elements in the Vietnamese rice industry chain are very complex, making it very difficult to operate smoothly.
“The industry chain has many levels, in which the shortest and most effective level is from the farmer straight to the processing factory. In Thailand, it is easy to see the image of farmers using cars to transport fresh rice straight to the factory, weigh it and put the money into their account. Just a few hours later, that fresh rice has become rice that can be exported. That is a super short rice chain,” said Mr. Bong.
Vietnam has a number of enterprises operating super short chains. However, we cannot immediately cover this short level for 4.3 million hectares of rice fields. We need to have diverse awareness, gradually upgrade and determine the connection of actors in the chain is very important.
He believes that the most important link in the rice industry chain must still be between farmers. Because when farmers can link with each other, they will be able to link with businesses. 10 million farmers, each of whom is an individual, cannot build a value chain, linking from farmers first and then linking to other chains.
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