Concerns of farmers' representatives
The draft revised Law on Value Added Tax (VAT) was discussed in the hall on October 29, 2024, in which the revised content on tax rates for fertilizers was a content that many National Assembly deputies were interested in and commented on. There are still opinions that if the VAT rate is adjusted to 5%, farmers will be affected by increased prices.
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| Fertilizer is an indispensable input in agricultural production. (Photo: NH) |
Speaking to reporters from the Industry and Trade Newspaper, Mr. Phan Hoang Vu – Director of the Department of Agriculture and Rural Development of Ca Mau province – said that farmers are still facing difficulties due to the high cost of input materials. Although production is profitable, the profits are not commensurate with the efforts of farmers.
On the local government side, we also train and guide people to produce "3 reductions - 3 increases" to save maximum costs to compensate for the high cost of materials.
Returning to fertilizer tax, Mr. Phan Hoang Vu said that to support domestic production enterprises, the National Assembly and the Government will have many tools and means, not necessarily through tax tools. At the same time, he recommended that the National Assembly find ways to reduce input costs for the people.
According to Ms. Tran Thi Thien Thu - Vice President of the Farmers' Association of Can Tho province, farmers always have to face high input production costs, unstable output prices, and uncertain consumption. On the other hand, during the production process, farmers may encounter risks due to natural disasters, and sometimes when the harvest is good, the price drops. Therefore, farmers need to be given more priority because they are the main agricultural production force.
Applying a 5% VAT tax on fertilizers, farmers worry that fertilizer prices will increase. However, from the perspective of macroeconomic management, Party and State leaders have a department to advise and analyze the value-added chain, analyzing the advantages and disadvantages for farmers and businesses when changing the VAT policy on fertilizers.
As for farmers, their greatest wish is for fertilizer prices to decrease and stabilize so that farmers can benefit from production. Farmers always trust the leadership of the Party, the State and the Government's management with the aim of focusing on farmers.
“In the case of applying VAT on fertilizers at 5%, it is clear that businesses will benefit from the reduction in costs. We also expect that businesses will share part of the profits with farmers by maintaining or reducing selling prices, so that farmers can feel secure in production. At that time, both farmers and businesses will develop together,” said Ms. Tran Thi Thien Thu.
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| Mr. Huynh Quoc Hung - Chairman of Ca Mau Farmers' Association. (Photo: Nguyen Chuong) |
Mr. Huynh Quoc Hung - Chairman of the Farmers' Association of Ca Mau province expressed that in the rice growing area of Ca Mau province, in recent years, rice farmers have made a profit, but little. The reason is that the specific characteristics of Ca Mau land cannot apply full mechanization but still have to do it manually, making the production cost higher. Besides, the price of fertilizer greatly affects the production cost of farmers.
“ In the rice growing area of Ca Mau , 1 hectare gives a profit of about 3.3-3.5 million VND, a farming household has 4 people, the profit is not much. Thanks to eliminating some stages, using the direct labor of the family, people can live, they include the production cost to cover the living expenses ” , Mr. Huynh Quoc Hung shared.
Farmers are the core in the agricultural production process and are specified in Resolution No. 19-NQ/TW, dated June 16, 2022, the 5th Conference of the 13th Party Central Committee on agriculture, farmers, and rural areas to 2030, with a vision to 2045. From the perspective of a representative of farmers in Ca Mau province, Mr. Huynh Quoc Hung believes that, based on Resolution 19, any policies, guidelines, and policies related to farmers, rural areas, and agriculture must be for farmers, from farmers.
“It is also possible that the National Assembly will pass a VAT policy for fertilizers at 5%, but in addition, the Party and the State will have policies to intervene and support farmers to be able to properly implement the spirit of Resolution No. 19, so that farmers can have a stable life, rise up and achieve the goal of farmers being the subject of the process of building new rural areas, shortening the gap between rural and urban areas,” said Mr. Hung.
Businesses and farmers are in the same boat
The output of Vietnamese agricultural products is the input of other processing industries. If the VAT on fertilizers is raised to 5%, it will help increase the state budget from tax revenue, and domestic fertilizer production enterprises will benefit because all input VAT of production will not have to be accounted for in costs but will be deducted. However, for consumers, in this case farmers, whether or not fertilizer prices will decrease is certain, because this depends on fertilizer enterprises and market factors.
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| Dragon fruit growing area in Son La. (Photo: NH) |
Recently, the continuous increase in fertilizer prices has directly affected the production and cultivation of farmers. Along with that, transportation costs have also increased, while the prices of some agricultural products have decreased, and the consumption market has been limited. This situation has greatly affected the psychology of farmers, as well as causing many difficulties in reproduction.
The story of agricultural materials in general and fertilizers in particular does not only affect farmers. Rising costs force farmers to abandon their “rice fields and honey fields” and find other jobs because farming is not profitable, or force them to increase their output prices, although this is not easy.
Meanwhile, the output of agricultural production, such as rice, fruit, pepper, cashew nuts, coffee, etc., is the input of other processing industries. In the case of increasing output prices, there will be a domino effect causing the input prices of processing industries to increase, increasing production costs and reducing the competitiveness of enterprises.
From the perspective of a fertilizer manufacturing enterprise, Mr. Nguyen Van Son - Deputy Director of Ca Mau Fertilizer Plant - said that farmers and enterprises have a close relationship with each other. When a business has a fund from reducing production costs for scientific research, they will invest a lot in improving and developing technology. This helps increase capacity, reduce costs and farmers, who are the end consumers, will benefit.
“People need food to live. To have food, they need to grow crops and have fertilizer. For farmers, selling rice must be profitable so they can stick with the fields. If production costs are too high, farmers will abandon their fields. Who will sell the fertilizer to?
On the other hand, businesses also want to sell fertilizers at low prices. To do so, businesses must have budget resources to invest in scientific research and technological innovation. Then, fertilizer manufacturing businesses will be profitable and sustainable ,” said Mr. Nguyen Van Son.
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| Mr. Nguyen Van Son - Deputy Director of Ca Mau Fertilizer Plant |
With the result of 51.74 billion USD achieved after 10 months, agricultural, forestry and fishery exports are very close to the target of 54 - 55 billion USD for the whole year of 2024, and are confident to aim for a new record of 60 billion USD...
In the 10 months, many product groups had high export value increases such as seafood up 12%; forestry products up nearly 20%; agricultural products up nearly 26%. Rice exports in the 10 months reached nearly 7.8 million tons with 4.86 billion USD, up 10.2% in volume and 23.4% in value over the same period in 2023.
In the context of Vietnam's growing economy and deeper integration, agriculture continues to affirm its role as a pillar for the Vietnamese economy. Therefore, what management agencies, experts and farmers always want is how to maintain the sustainable development of the agricultural sector.
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| Workers are transporting fertilizer in the warehouse at Ca Mau Fertilizer Plant. (Photo: NH) |
According to Mr. Nguyen Tri Ngoc - Vice President of Vietnam Fertilizer Association, any policy that is issued will have both positive and negative impacts on farmers. The question is, how can farmers benefit? How can we ensure the interests of the three parties, the State, enterprises, and farmers? Therefore, the responsibility of State management from the beginning is even more important.
Of course, the problem is not only in fertilizers. Agricultural production in many places is still fragmented and small-scale. That is why the price and quality of agricultural products are not competitive in the market. Moreover, agricultural products do not have growing area codes, farming area codes, etc. This is also the reason why agricultural products in many localities always face great challenges in bringing them to market and exporting.
How to increase production value and improve farmers' lives is not only a problem for the agricultural sector, for management agencies or input enterprises for production, as well as output enterprises for agricultural products. The story here is also due to farmers, they also have to be more aware of their products, in which, habitual production, overuse of fertilizers and pesticides will become an invisible "double-edged sword" that leaves many negative consequences in production.
Using fertilizers economically and effectively will help reduce production costs and improve the quality of agricultural products. Then, farmers' products will not only be sustainable at the input stage but also at the final stages of reaching the market.
Ms. Bui Thi Thom - Vice President of the Central Committee of Vietnam Farmers' Union: Currently, fertilizers are not subject to VAT. Should this item be subject to VAT or not, and if so, what would be the appropriate tax rate? Obviously, each option has its pros and cons. Choosing which option to bring about harmonious benefits between the state, enterprises and farmers is an issue that needs to be considered; analyzing and dissecting the positive points, concerns and difficulties if implemented and proposing solutions to bring the regulation into social life most effectively. In the context of many concerns about the content of amending the VAT on fertilizers, the National Assembly should seek separate opinions on this issue before submitting the full draft of the VAT Law for approval. |
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