VN Gov't urged to break up monopoly of big food corporations

VietNamNet Bridge - Vietnam needs a strong national rice brand. But to do this, it is necessary to eliminate the monopoly enjoyed by the two largest food corporations.


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CASRAD, the Research Center for Development and Agricultural System, has warned that Vietnamese rice exporters have been facing big problems in the last two years with exports down in both quantity and value. 

As the world market has become unstable and the competition is getting stiffer, Vietnam has been gradually losing its advantage in low export price. As Vietnamese farmers cannot enjoy large benefits in the value chain, they don’t want to continue growing rice.

According to CASRAD director Dao The Anh, there are 200 medium and large enterprises joining the export network. However, the enterprises do not export rice under their private brands, because they depend heavily on contracts that Vinafood 1 (the Northern Food Corporation) and Vinafood 2 (Southern Food Corporation) obtain through bidding. 

In other words, the ‘rice pots’ of the companies depend on jobs assigned to them by the two big rice exporters, who are the only Vietnamese enterprises that can attend international bids.

Anh pointed out that the current policy on concentrating power on two big exporters eliminates private enterprises’ dynamism and their ability to compete on quality. 

To implement the strategy on high quality rice, enterprises have no other choice than looking for export markets and making an appropriate investment in marketing. Private enterprises can do this, provided that they can play in a leveling playing field with two state-owned food corporations.

Currently, rice export rely on Vinafood 1 and Vinafood 2, which hold 60-70 percent of the export market share.

The big problem is, according to experts, the monopoly is not based on the corporations’ ability to control rice quality and growing areas. 

The current management policy is only suitable to the export of rice in large quantity which does not require high-quality exports such as government-to-government contracts.

“The conductors of rice value chains must be the enterprises or the cooperatives which have clear development strategies based on quality,” Anh noted.

“They must not be the enterprises which just focus on providing rice under government-to-government contracts or exporting low-cost rice,” he commented.

Experts say there are still many things that need to be done to be able to build a strong national brand. One of the most urgent is to establish a rice production association of Vietnam or reform the existing Vietnam Food Association (VFA) into an organization which represents rice producers and traders. VFA now is an organization of rice exporters.

PL TPHCM


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