Challenges to Rural Poverty Reduction in Viet Nam - Oxfam Blogs

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Participatory poverty monitoring in rural communities in Viet Nam 88 Cooperatives and farmers’ groups can help farmers cope with changing prices, but this form of assistance is small and not very popular. Only 2 of the 10 monitoring points (Thanh Xuong-Dien Bien and Duc Huong-Ha Tinh) have cooperatives or mass organizations which are active in selling fertilizer to members through partnership with Agricultural Material Companies (Box 4.1). Due to fixed prices at the time of fertilizer delivery and late payment between 3 and 6 months with bank interest rate, members of cooperatives or mass organizations can lessen their difficulties when the price of fertilizer increased. In Duc Huong-Ha Tinh, in 2011, the price of fertilizer increased a lot, but the price of peanuts declined sharply, agents reduce the amount of fertilizer lent to farmers, therefore many households shifted over to borrowing fertilizer from the Farmers’ Association. In late 2011, the volume of fertilizer lent to farmers by the Farmers’ Association in Duc Huong commune-Ha Tinh was more than double that at the same time in 2010, making up 25-30% of the local fertilizer market share. BOX 4.1. Cooperatives support farmers in fertilizer Before 2009, members of the Management and team leaders of the Agricultural Cooperative in Thanh Xuong commune (Dien Bien district, Dien Bien province) had to use their personal red book as collateral for bank loans to buy fertilizer for its members. Since 2010, the purchase of fertilizer has been easier because the Dien Bien Provincial Agricultural Material Company has agreed to allow the Cooperative to guarantee for farmers to buy its supplies on credit and repay after crop harvests. One or two months prior to the crop, farmers register the amount of fertilizer needed to the head of the village (who is also the manager of the cooperative), and then villages report the total amount to the cooperative to sign a contract with the Agricultural Material Company. The price of fertilizer is fixed at the time of delivery to farmers. The interest rate of delayed payment is calculated according to the interest rate applied by the Bank of Agriculture and Rural Development at the time the contract is signed (in the 2010 Summer-Autumn crop it was 1.25%/month, that in 2011 was 1.68%/month). In addition, the Company gave a head of village VND50,000 per ton of fertilizer registered by farmers. In the context of high fertilizer price, partnership between Agricultural Material companies, cooperatives and villages in the sale of fertilizer on credit with delayed payment has helped households have more opportunities to invest in their production. By the end of 2011, 21 of 24 production teams in the whole commune registered to by fertilizer through the Cooperative totalling nearly 105 tons (accounting for 70% of the total volume consumed by the commune). Cooperative cadres and local residents said all households repaid on time. --- “The whole group borrowed fertilizer through the village head, following the announcement of the village head all villagers went to the store to get fertilizer. In the Spring-Summer crop, we have to repay on July 15, and in the Summer-Autumn Crop, October 15. Everyone repaid fully...” (poor men and women groups in Pa Dong village, Thanh Xuong commune). Small shops and vendors are not affected by price volatility. Shops and vendors form a supply network of rice, food, and necessities. They also purchase small amounts of agricultural produce in remote areas. A popular activity is to buy goods in district towns to be resold to local residents in cash or on credit with interest at a 10-30% profit. Poor households can only buy small amounts on credit, and they must repay quickly. Many of the poorest households are not allowed to buy on credit. Small volumes and rapid payment mean shops and are not affected by price volatility.
Five-year Synthesis Report Part 2: Challenges to Rural Poverty Reduction in Viet Nam Selling and buying practices of the poor Cash shortages and limited access to formal credit means that the poor often have to borrow rice, food, necessities, seeds and fertilizer from shops and sale agents on unfavourable terms. When selling their produce to shops and sales agents in part repayment of loans they often have to accept prices up to 10% lower than the market price. The poor also lack the means to store or preserve produce so are forced to sell at prevailing prices. 89 4.2. Impacts of price increase on livelihoods Impacts on productivity Intensive commodity rice farmers increased income. In the Kinh villages in Thanh Xuong-Dien Bien with a high level of intensive farming, fertile land in Dien Bien valley, favourable weather conditions, good irrigation for two rice crops a year, farmers often harvest bumper crops with average rice yield of above 6 tons/ha/crop. With the current price, the income (without calculating labour) of rice farmers in Thanh Xuong-Dien Bien from the main rice crop in 2011 was 30% higher than that in 2010 (Figure 4.1). FIGURE 4.1. Production accounting of 1 ha of rice in Thanh Xuong - Dien Bien SOURCE: Statistics provided by people and sales agents of Thanh Xuong commune-DB, November 2011 Coffee growers had increased incomes. In Cu Hue-Dak Lak, the average price for coffee beans rose by 50% between in October 2010 and October 2011, increasing incomes by 20%. Some farmers stored coffee, waiting for higher prices. Commodity maize producers had reduced incomes. Input prices (seeds, fertilizer, services and labour) increased faster than the price offered for the first maize crop (from April to July) in 2011 in Cu Hue-Dak Lak. Farmers calculated their incomes to be 10-15% than in 2010. Cassava producers saw their incomes from their main crop increase in 2011, but fall following the second crop. In Xy commune-Quang Tri, the price of fresh cassava in late 2010 and early 2011 was 2,200-2,400 VND/kg - an increase of about 40% over the same period of 2010. From mid-2011, the price of cassava fell in response
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PARTICIPATORY POVERTY MONITORING IN
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PREFACE 1 7 In early 2007, Viet Nam
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ABBREVIATIONS AND TERMS 10 ActionAi
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12 EXECUTIVE SUMMARY The last five
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14 and improve monitoring and evalu
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16 TABLE 1. The monitoring points C
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18 transparency, and accountability
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20 TABLE 2. Characteristics of the
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Part 1 Poverty Trends and Key Theme
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Participatory poverty monitoring in
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