Is the rice market a monopoly?

Only two Food Corporations, Vinafood 1 and Vinafood 2, account for more than 50% of the market share, and VFA can influence policy.

A recent study by the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) has shown that farmers are not currently benefiting from 30% of rice production as the Government's target. Even when rice prices on the world market are high, farmers still do not benefit from the price increase. To overcome this situation, we must start with the policy system.

Does VFA have the ability to influence policy?

According to Professor Vo Tong Xuan, in the profit chain from rice production, currently only traders and export enterprises benefit the most. The reason is that export enterprises are not closely linked with farmers (through providing inputs, technical support, building raw material areas and consuming products). Enterprises do not want to reinvest in farmers, enterprises mainly invest in other business areas such as agricultural materials, industrial goods, real estate, etc. to seek profits.

Economist Pham Chi Lan said, “It is unreasonable that the profits from rice trading are falling into the hands of traders. The Farmers' Association has a high reputation, but in reality its role is vague and does little to serve farmers. Meanwhile, the Vietnam Food Association (VFA) has too great a position and too many advantages in proposing policies. They do not care about farmers when proposing policies to purchase and temporarily store rice, but instead protect the interests of exporting enterprises. Obviously, the rice market is in a monopoly position, because only the Northern Food Corporation (Vinafood 1) and the Southern Food Corporation (Vinafood 2) account for more than 50% of our country's rice export market share. This situation eliminates the role and creativity of private enterprises.”

Faced with the reality that farmers have not benefited from rice prices, despite the high prices, IPSARD Institute proposes that future rice industry development policies should focus on international cooperation to meet the political needs of rice, instead of economic contracts having to be investment contracts with countries that specialize in importing rice.

With this policy, according to Mr. Tran Cong Thang (IPSARD Institute), it will partly contribute to enhancing Vietnam's position, on the other hand, it will contribute to connecting importers with production areas, shortening the intermediary stage and increasing selling prices for producers.

Along with that, specialized areas for commercial rice production must be planned for large-scale production, carefully invested, high-quality rice, suitable for tastes. These are the "large-scale field" models that the state is interested in. However, the state's investment support policies for these specialized areas are still unclear.

Therefore, "policies should focus on upgrading the rice value chain in specialized areas with the participation of farmers and policies to support actors in the value chain from production to trading and exporting rice" - Mr. Thang emphasized.

However, production according to the value chain with specialized areas is currently stuck in linking businesses and farmers together. Mr. Thang gave an example: The implementation of the large-scale field model is currently stuck in linking farmers together. Therefore, in terms of policy, "it is necessary to add conditions for rice exporting enterprises stipulated in Decree 109 that there must be a link with farmers expressed in agricultural product contracts. Cooperative organizations should be strengthened to effectively link farmers, especially small-scale farmers".

Rice policy must originate from the market.

In addition to strengthening the connection between enterprises and farmers, IPSARD believes that support policies should only focus on the main specialized growing areas instead of the whole country in developing infrastructure, processing and trading systems. Other areas should be proactive in diversifying production according to market signals. From there, the price in the specialized growing area is the reference price, serving the management of rice business nationwide.

Dr. Dao The Anh, Director of the Center for Agricultural Systems Research and Development, also said that “there needs to be regional and national policies for the rice industry. In particular, it is necessary to clearly define the position of farmers in the value chain. If the position is weak, it will be difficult for farmers to benefit in this chain.”

According to IPSARD Institute: Regarding management policy, the State must establish a Rice Management Board with the participation of businesses and farmers. This board is responsible for market forecasting, trade promotion, and rice growing area planning. To achieve sustainable development of the rice industry in Vietnam, everyone must benefit equally.

Emphasizing the guiding role of policy, economic expert Pham Chi Lan pointed out: Recently, the State has had many policies to support farmers, but the final benefits have not yet reached the farmers. The situation of farmers abandoning their fields is the clearest reaction to the policy towards farmers and the rice industry being inappropriate, not bringing benefits to farmers as it has potential.

To overcome this situation, along with the formation of specialized areas, Ms. Pham Chi Lan suggested that the State's policy must begin with approaching the rice industry from a market perspective. Rice exporters need to connect with farmers and participate in the production process.

Along with the above solutions, IPSARD Institute proposes: It is necessary to improve the competitiveness of rice by improving productivity and competitiveness by investing in research, supporting agricultural extension, new varieties, especially high-quality varieties (fragrant rice), and varieties resistant to climate change. Gradually support large exporting enterprises to build Vietnamese rice brands.

In particular, the Government needs to have a master plan for the rice industry with two different but complementary policy objectives, including large-scale commodity production and small-scale production for self-consumption or for sale within local communities.

Considering and calculating all production costs while making efforts to improve competitiveness, build brands, and ensure competitive prices but not lower than other types of rice of the same type are things that need special attention./.

According to VOV - HV