Difficulties in purchasing and stockpiling agricultural products need to be removed.
The temporary purchase and storage of agricultural products such as rice, coffee, and salt is a direct intervention by the State in the market to ensure price stability. This allows farmers who directly produce these products to not only cover their costs but also make a profit (around 30%). This approach is applied when supply increases, meaning agricultural products are in their main harvest season but market prices are low.
(Baonghean)The temporary purchase and storage of agricultural products such as rice, coffee, and salt is a direct intervention by the State in the market to ensure price stability. This allows farmers who directly produce these products to not only cover their costs but also make a profit (around 30%). This approach is applied when supply increases, meaning agricultural products are in their main harvest season but market prices are low.
To prevent farmers' products from being exploited by traders, the State directs key enterprises or uses policies to encourage large enterprises to purchase products at their recommended prices, thereby helping farmers so they can sell their produce when market prices are favorable. In reality, the policy of purchasing and stockpiling rice for farmers in the southern provinces over the past years has been somewhat effective.
However, recent reports suggest that the Association of Food Procurement Enterprises, which has long been responsible for purchasing and stockpiling rice, has proposed transferring this function to local authorities. This has caused concern not only among farmers but also among administrators. While transferring the function of purchasing and stockpiling agricultural products to local authorities is straightforward in terms of administrative procedures, it presents numerous challenges. Currently, the procurement system and warehousing capacity in local areas are very limited; furthermore, what kind of financial support will be provided to local authorities, and who will represent the local authorities in the procurement process?
Farmers, especially those in the southern provinces, produce a considerable amount of rice, coffee, and salt annually. Due to economic constraints and a lack of storage facilities, farmers cannot stockpile their produce and wait for prices to rise; they must sell immediately. Meanwhile, major food procurement companies, with their warehouse systems and transportation infrastructure, are best positioned to purchase and temporarily store goods for farmers. The issue here is what mechanisms the government should implement to ensure that when these companies purchase goods for temporary storage, both the farmers and the businesses themselves make a profit.
In a market economy, commodity prices are quite clear; when prices rise, both consumers and businesses benefit, and vice versa. If prices fluctuate, there's no problem, but if prices are on a downward trend, businesses usually have to calculate and wait for the lowest possible price before buying. However, because the government's market regulation policy aims to "cut" the downward price trend, businesses are forced to continue buying. Furthermore, they must buy at the government-recommended price, which significantly increases the risk of losses. In this case, businesses need support from the government in addition to warehousing facilities, through timely and efficient loan or interest rate subsidies.
However, this seems to be a weakness in the current mechanism for managing the temporary stockpiling of agricultural products. Farmers, when selling their products to businesses implementing the temporary stockpiling policy, often want to be paid immediately, while these businesses lack capital. Not paying farmers immediately is complicated, but if agricultural product prices rise after the purchase, the situation becomes even more complicated and troublesome.
Currently, due to a severe shortage of working capital, businesses are reluctant to purchase goods for temporary storage. If they must participate, the preferred method is to buy through agents or private traders. This way, businesses have less trouble and can delay payment; they simply purchase the goods, complete the procedures, and then pay the agents. However, this approach distorts and misrepresents the policy of purchasing goods for temporary storage…
To address the difficulties and obstacles in implementing the current agricultural product procurement and storage policy, in addition to deciding on the task of purchasing and storing goods for temporary storage to the Food Association or local authorities, the State needs to provide some support to businesses and create mechanisms to encourage them to invest in and upgrade their storage capacity. Only when storage facilities are rationally and safely distributed can the temporary storage policy be effectively implemented. Furthermore, when implementing the procurement and storage policy, the State also needs to strengthen supervision to ensure that regardless of who undertakes the procurement, farmers are the ones who benefit most from this policy.
Nguyen Hai
