In mid-August 2023, we (PV) went to Thai Hoa town and witnessed Mr. Duong Hoang Duc in Tay Hieu commune standing helplessly watching the papaya garden ripen, laden with fruit gradually falling off, along with the disease of the trees and even the green fruits. He tearfully said: “More than a year of investing hundreds of millions and working day and night to take care of 1 hectare of papaya with about 2,200 trees. Now it is harvest time, we thought we would have more profit after a long time of hard work, but suddenly the company announced that it would stop purchasing, making us devastated, the family is unstable because we are worried about losing hundreds of millions of dong”.
Also having to dump tons of papaya every day are 13 other households belonging to Tay Hieu Agricultural Cooperative, Thai Hoa town; such as Mr. Ho Huu Hung's household who invested in planting 1 hectare of papaya. In addition to buying seeds for 8,000 VND/tree, Mr. Hung also bought materials, machinery, connected more than 3 km of power lines, then installed drip irrigation pipes, dug wells... Not to mention the 1 year that Mr. Hung's family members focused on taking care of the trees waiting for the day to harvest the fruit, the cost was also more than 200 million VND. After the Cooperative signed a contract to plant and consume papaya products with Nafoods Passion Fruit Company, the member households simultaneously planted trees, and when the enterprise sent a notice of not purchasing, the households simultaneously fell into a situation of both crying and laughing as they watched their money fall with tons of ripe fruit falling every day.
On August 17, Nghe An Newspaper published an article reflecting the incident of nearly 14 hectares of papaya in Thai Hoa falling off due to not being purchased. The contract for supplying papaya seedlings and guaranteeing the consumption of papaya products between Nafoods Passion Fruit Joint Stock Company and Tay Hieu Agricultural Cooperative signed on November 21, 2022 clearly stated that the company would supply papaya seedlings and guarantee the consumption of all papaya products. In July 2023, when the entire papaya area entered the first harvest, representatives of Tay Hieu Agricultural Cooperative contacted the company many times to purchase, but the company hesitated and made no move to purchase. On July 19, 2023, the company announced the termination of the economic contract (regarding the supply of papaya seedlings and guaranteeing the consumption of papaya products), citing the negative impact of the Russia-Ukraine conflict on the export market. Mr. Nguyen Quang Trung - Director of Tay Hieu Agricultural Cooperative wondered: "The company announced that it would not purchase with the reason given being the impact of the war between Russia and Ukraine, while we signed the contract with the company when the war had already happened. Why is this reason given now, when it is time to harvest?"
Then, on August 18, representatives of Tay Hieu Agricultural Cooperative, cooperative members and representatives of Nafoods Passion Fruit Joint Stock Company had a meeting at Tay Hieu Commune People's Committee to resolve the issue of people having to cut down products that had signed a contract to grow and consume with the company. At the end of the meeting, the two sides agreed on a plan to liquidate the contract and compensate 225 million VND/ha; by August 21, 2023 at the latest, the contract liquidation procedures will be completed and the money will be transferred to the people. In addition, the company also agreed to support the people with 50% of the amount of money for buying seedlings that people still owe the company (specifically 8 million VND/ha).
At the meeting, Mr. Pham Duy Thai - Director of Nafoods Passion Fruit Joint Stock Company also said that the remaining trees and fruits can be consumed by the people as they wish, the company will work together to find outlets to help the people. Currently, many traders in markets in Vinh city and some supermarkets have connected to wish to purchase...
Ms. Nguyen Thi Trang - Director of Kingfoods Joint Stock Company, which signed a contract with Nafoods Passion Fruit Company to purchase and process dried papaya products for export to the Russian market, said: KingFoods Joint Stock Company is the enterprise that implements the purchasing contract and is a major partner of Nafoods Passion Fruit Joint Stock Company exporting agricultural products to the Russian market. However, due to the Russia-Ukraine war, the export of products to the Russian market was affected, leading to no source of consumption, so the company temporarily stopped purchasing as committed.
Fulfilling the commitment, by 2pm on August 21, Tay Hieu Agricultural Cooperative had received nearly 3 billion VND from Nafoods Passion Fruit Joint Stock Company. Mr. Nguyen Quang Trung - Tay Hieu Agricultural Cooperative said: "On average, each member of the cooperative plants from 2 sao to more than 2 hectares, the corresponding amount is from 45 million VND to more than 500 million VND/household. With the remaining papaya output (about more than 130 tons), the enterprise wants to buy from the people at 3,000 VND/kg, but currently people are selling it to the market at a higher price, about 3,500 VND/kg. Currently, people are harvesting the remaining fruit on the tree to sell, to compensate for the long-term care. It is expected that after harvesting and liquidating the papaya, we will deploy the planting of hot peppers for export to Korea".
“Incidents” that occur between farmers and businesses in the linkage of growing and consuming agricultural products, such as the recent incident between Nafoods Passion Fruit Joint Stock Company and Tay Hieu Agricultural Cooperative, are not rare. Previously, these incidents also occurred in other localities, causing economic disadvantages and losses as well as the trust of producers, businesses, and organizations that trade and consume agricultural products.
For example, the signing of a contract to grow and consume potato products between the enterprise and Thuan Son Agricultural Service Center, Thuan Son Commune, Do Luong District in 2022. According to the signed contract, the enterprise will consume all white potato products, the People's Committee of Thuan Son Commune and the Agricultural Service Center will guide and gather households to grow potatoes on an area of 25 hectares. This is also the first potato crop that Thuan Son Commune has grown on a large area with the aim of increasing farmers' income with an estimated yield of 18 - 20 tons/ha. If well cared for, the yield can reach an income value of 130 - 140 million VND/ha.
However, according to the staff of the Department of Agriculture and Rural Development, Do Luong District People's Committee, Thuan Son's potato crop failed after a period of planting and care due to the effects of drought. The entire area of nearly 25 hectares of potatoes had to be harvested early. According to the signed contract, when the product quality did not meet the requirements, the enterprise would not be responsible for purchasing, and would even have to compensate for the raw material supply contract. However, the enterprise did not force the people, but still purchased almost all of the early-harvested potatoes even though the quality did not meet the requirements. After the failed planting, Thuan Son Commune People's Committee invested in more pumps, partially overcoming the effects of drought, but people were no longer interested in growing potatoes. Therefore, the enterprise also gave up on investing in the raw material area in Thuan Son. This is a lesson for farmers as well as localities when signing production contracts with businesses, it is necessary to consider feasibility, anticipate the ability to meet the terms of the contract before signing to minimize risks for both parties.
At the same time, it is also a lesson on signing contracts to purchase agricultural products. Previously, in Van Son commune, Do Luong district, there was also a case where people signed a contract to grow chili peppers to supply raw materials to a purchasing company. “In the first year, the company purchased all the chili peppers, and the households were very excited. However, in the second year, after planting and harvesting the chili peppers, the company came to buy them, loaded the “goods” onto the truck, and promised the people that they would pay in full. However, after the goods were shipped, the people waited for the company to pay but did not see them. Only then did they look for the company’s address and realize they had been scammed. Up to now, after nearly 10 years, the amount of more than 100 million VND, equivalent to the amount of chili peppers that the people planted and gave to the scam company, has not been recovered. Because the chili planting contract was signed by the company directly with the households, not through the government, when the people reported it, the scammer had disappeared without a trace,” said a former official of the Van Son Commune People’s Committee.
Also in Thai Hoa town, regarding the contract to purchase Korean chili peppers for export, an official from the People's Committee of Nghia Thuan commune said that in 2020, more than 10 farming households in the commune were also tricked into signing a contract by a purchasing company. After the first chili season, the purchasing company owed money in the second season, and then cut off contact, causing people to lose tens of millions of dong. It has been 3 years now, but the money has not been recovered because the buyer's whereabouts have not been found. People had to reluctantly switch to other crops.
When asked why the information and address of the legal entity of the signatory were not checked when signing the contract, the official of the People's Committee of Nghia Thuan commune said that it was because the people did not understand the regulations, were not proficient in legal procedures and subjectively did not check. Furthermore, the enterprise worked directly with the households, signed the contract without going through the government or notarization, so when an incident occurred, the consequences and damage could not be saved (!?)
First of all, it must be affirmed that the production and consumption of agricultural products through contracts is an inevitable trend and the right direction; fully institutionalized in the State's policies and laws. Resolution No. 48-NQ/TW dated May 24, 2005 of the Politburo on the Strategy for building and perfecting the Vietnamese legal system until 2010, with a vision to 2020, clearly states: "Perfecting the law on contracts in the direction of respecting the agreements of the contracting parties, not contrary to social ethics, not violating public order, in accordance with international trade customs and practices".
Resolution No. 49-NQ/TW dated June 2, 2005 of the Politburo on Judicial Reform Strategy to 2020 also affirmed: “Perfecting civil law, ensuring the legitimate rights and interests of individuals and organizations when participating in transactions, promoting the healthy development of civil relations; perfecting the system of contracts, compensation, and reimbursement…”.
Nghe An is a province with great potential and advantages in agricultural development. In recent years, despite facing many difficulties and challenges, Nghe An's agricultural production has basically remained stable, with some key products growing quite well. According to aggregated data, in 2022, the total value of agricultural, forestry and fishery products for the whole year of the whole industry is estimated at 20,380,333 billion VND, the GRDP growth rate is estimated at 4.78%, the highest in the North Central region. The ability to supply agricultural, forestry and fishery products of some key products of Nghe An province is highly appreciated, such as: Rice: 38,000 tons/month; vegetables, tubers, fruits: 35,000 - 40,000 tons/month; fresh meat of all kinds: 27,000 - 28,700 tons/month; seafood of all kinds: 15,000 - 20,000 tons/month; Poultry eggs: 55,000 – 57,000 eggs/month…
In order to exploit the potential and advantages, in recent times, the province, departments, branches and localities have organized many forums to connect the consumption of regional agricultural products with the aim of introducing key agricultural products and specialties of Nghe An and other provinces to enterprises, corporations distributing and consuming agricultural products nationwide. At the same time, building a chain of production, business and consumption of agricultural products between cooperatives, production cooperatives and enterprises purchasing, processing and consuming agricultural products. Thereby, many contracts between corporations, enterprises processing and trading agricultural products with farmers in localities in the province have been connected and signed for consumption. This activity also helps farmers produce according to market orientation, link value chains, avoid spontaneous production, reduce risks in production. At the same time, encourage investment attraction, apply scientific and technical advances in agricultural production...
Agricultural engineer Doan Tri Tue - who has been involved in the industry for many years, said: After many incidents, it has been shown that agricultural cooperatives when entering into joint ventures with businesses must have strict contract terms. The recent papaya purchase incident in Tay Hieu commune is not the first time a contract has been broken, but before that, the story of purchasing pineapples in Quy Chau and Quynh Luu districts, or Tri Le passion fruit in Que Phong district also had a similar situation, when businesses did not purchase at the price initially stated in the contract but arbitrarily reduced the price, causing losses to farmers.
“The principle of the contract after signing between the agricultural cooperative and the enterprise, the cooperative members must have the witness of the local government; so that if any problems arise during the implementation of the contract, the government must know and can help to handle them. However, in reality, many contracts are signed without this factor, and even the contract between Tay Hieu Commune Agricultural Cooperative and Nafoods Passion Fruit Joint Stock Company does not have it” – Mr. Doan Tri Tue shared.
With the same viewpoint, Mr. Tran Khanh Son, Standing Deputy Secretary of Thai Hoa City Party Committee, said that Thai Hoa farmers are farmers and forestry workers in the area. They are dynamic, have techniques and a lot of experience in agricultural production, from design to production organization. The most difficult problem is the output for the products. In the product consumption contract, the State's policy is "4 houses", at least there must be "3 houses": the State, farmers and enterprises. However, the recent papaya contract only has 2 houses: farmers and enterprises, showing the looseness of the economic contract. Fortunately, the two sides have reached an agreement and found a common voice, but through the incident, there are lessons learned in signing contracts.
To increase the value and efficiency of production, linking to find outlets for agricultural products is essential and is gradually becoming more popular. In fact, a company cannot directly sign contracts with thousands of farming households to consume products; therefore, the role of cooperatives and cooperative groups representing farmers to negotiate and sign contracts with the company plays an important role. However, the content of the signed contract must be very strict.
“Enterprises do business, they take the initiative to make the market and determine prices, so the terms are often beneficial to the enterprise. Therefore, it is necessary for the contract to be witnessed by the local government. And it is necessary to talk about the responsibility of the cooperative. For a long time, contracts have been signed between enterprises and farmers, but in reality, enterprises only know how to implement them through Agricultural Service Cooperatives. Between farmers and enterprises - the two main subjects in the contract - there is no legal obligation in that contract. Therefore, the story of contract breach still happens often" - Mr. Son emphasized.
The reason for contract breaking is not only from the enterprise, but the implementation of the contract is also quite loose from the farmers. There have been many cases where farmers arbitrarily sell their products outside, even though they have signed a contract with the enterprise. In many cases, when the harvest season comes, people hoard their products waiting for the price, or when the market price is higher, they leave the enterprise and follow private traders... After the incident of signing a contract to produce and consume papaya products in Tay Hieu, Thai Hoa town, it shows that the story of breaking agricultural product consumption contracts is still happening and perhaps has not cooled down yet. The contract is signed but lacks sustainability and is loose, making the connection between enterprises and farmers not really sustainable. The implementation of agricultural product consumption contracts is extremely necessary, but there are many limitations and shortcomings. Contract breaking in agricultural production has many causes, both objective and subjective; it has happened in many localities. If this situation is not thoroughly remedied, it will set a bad precedent, causing significant consequences in agricultural production and social order and security.
In reality, behind each signed contract is the responsibility of the entire political system, not just stopping at the relationship between 2 or 3 parties as has happened. The agricultural sector needs to continue researching to meet the requirements, protect the interests of both people and businesses; as well as the intermediary linking cooperatives and cooperative groups. At the same time, it is necessary to propagate and mobilize farmers to join farmers' associations to protect their rights. Cooperatives and cooperative groups also need to be more closely connected with associations. And the last issue is to "choose the right person to entrust", choose reputable enterprises to do business with, and associate with...
