Guangzhou, China- “Vietnamese farmers in the provinces of Can Tho and Long An are benefiting from the ‘small farmers, large field’ (SFLF) scheme,” reported Dr. Pham Van Du, deputy director general, Department of Crop Production of Vietnam’s Ministry of Agriculture and Rural Development.
He reported this during the 2nd review and planning meeting of the project, Closing Rice Yield Gaps in Asia (CORIGAP) held in Guangzhou on 11-15 May 2015.
The “small farmers, large field” allows small landholding farmers to benefit from economies of scale by organizing themselves and integrating their small rice areas into one large field. This way, they can improve their bargaining power vis-à-vis input companies, such as fertilizer companies, as well as output companies such as traders and exporters. In Vietnam, farmers organize themselves into a “club” or a group and enter into a contract with rice exporters.
“It is a win-win strategy,” says Dr. Nguyen Ngoc De, associate professor at Can Tho University. “Aside from the bargaining power with input and output companies, farmers benefit largely from the use of technologies such as farm machineries like combines and dryers, storage, among other technologies.” With large rice areas, it is already possible for them to use combine harvesters, which would have not been possible with smaller rice fields.
“Fertilizer companies also benefit through reduced transaction costs because they are now dealing with one farmers’ group instead of hundreds of individual farmers,” explains De.
Likewise, exporters benefit from fewer transactions. “They are assured of a homogenous supply of high quality rice because a farmers’ group grows a rice variety based on market demand,” explains De. “Milling rice of the same variety or grains with uniform physical traits has a higher milling recovery rate and less broken grains.”
“Some exporter companies even provide the certified seed at the beginning of the production season in order to be assured of seed purity and quality, while others invest even more in the relationship by pre-financing other inputs such as fertilizers and pesticides,” says Dr. Matty Demont, market research and value chain specialist at the International Rice Research Institute (IRRI). “Contract farming is on the rise, thanks to a successful government program which brings farmers into contact with exporters through public-private partnerships.”
“CORIGAP is now looking at how to reconcile contract farming with the triple bottom line of sustainability, which considers economic, social, and environmental aspects,” says Demont. He said that research should also look into increasing trust between companies and farmers in order to ensure success in the long run.
Du says that “38 smallholder farmers participated in SFLF, covering 186 hectares during the dry season of 2013-14.” The farmers entered into contract farming and were able to sell their paddy to traders at rates higher than the market price at the time. And, during the wet season, another 38 farmers joined SFLF, forming a 201-hectare rice area. They were also able to sell their paddy at a higher-than-market price.
This result can be attributed to VietGAP, a package of “good agricultural practices” developed by the government and inspired by previous recommendations by IRRI and its partners under the Irrigated Rice Research Consortium.
In Co Do district alone, big export companies, such as Trung An, Gentraco, Ngoc Tien, Trung Hung, Tan Thanh, entered into an agreement with farmers through SFLF schemes covering 11,430 hectares.
The SFLF scheme is now being considered by CORIGAP as a model for other countries in Asia, particularly rice exporting countries such as Thailand.
The CORIGAP team will continue to explore the best entry points for sustainability in rice value chains. Simultaneously targeting all entry points will increase the likelihood of success and make Vietnamese rice value chains more sustainable.
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