The price stabilisation cooperation programme between Ho Chi Minh City and the Mekong Delta has brought many benefits for both sides. HCM City has a plentiful supply while the Mekong Delta has a huge consumption market. However, according to experts, this model still has shortcomings which need to be addressed and regulated. The most important point is to create a beneficially harmonised linkage model to ensure development and sustainability.
Mutual benefit
To successfully utilize supply chains, create an organic, delicious food supply and stabilise prices, the city signed a joint cooperation agreement with 13 Mekong Delta provinces, covering a total of 800 projects worth VND200 trillion (almost US$10 billion). Specifically, the largest city of Vietnam has simultaneously deployed branching schemes and programmes such as livestock development strategy with the purpose of stabilising food prices in HCM City until 2015; food safety and hygiene guarantee scheme; safe food chain management scheme; and husbandry cooperation scheme towards 2015. Thanks to this collaboration, in 2012, price-stabilised foods increased their market share, particularly essential commodities like sugar, oil, egg, meat and rice, meeting 30-40 per cent of market demand.
This linkage not only provides abundant food for HCM City but also brings benefits for participatory provinces. For example, Dong Nai and Lam Dong provinces’ livestock supply to HCM City account for 70 per cent of their production output. Each day, HCM City consumes 1,000 - 1,100 tonnes of meat (including imported frozen items) and 3-3.5 million eggs. The city’s agricultural production only meet 15 - 20 per cent of the demand while the rest must made up by supplies from other provinces and imports.
Besides, enterprises involved in this programme also have benefits. According to large-scaled participating companies, a company hardly handles all stages of production because of high quality requirements for processed foods. Therefore, joining this programme, they will have more opportunity to link with other localities to source best input supplies. The programme also helps boost up the name of participatory companies. This in turn polishes their images and boost credits before banks.
Difficulties exist
This nexus has made good results in the past time. The city plays an important role in consuming agricultural goods supplied by other provinces while the Mekong Delta is in turn an important supplier of goods to the city. However, according to experts attending the workshop on "Improving efficiency of price stabilisation in HCM City market by strengthening Mekong Delta connectivity” held recently in the city, results fall short of existing potentials. The most explicit expression is the buying side and the selling side do not meet each other. Sellers want higher prices while buyers expect them to be lower. This results in dissimilar and unsustainable models.
Mr Nguyen Minh Toai, Director of the Department of Industry and Trade of Can Tho City, said, in recent months, prices of many agricultural products in Mekong Delta provinces dropped but price-stabilising businesses in Ho Chi Minh City failed to play their price-regulating roles. If businesses are more flexible to this effect, farmers will suffer less hardship.
On the perspective of a company, Ba Huan Company said prices are determined by market supply and demand. A company cannot do this alone. So, it is groundless to reproach price-stabilising companies for “putting difficulties in farmers’ way.” “We are engaged in production and distribution. Taking part in this programme, my company gets thinner profit margin and we can only offset with big enough sales. This is the way we build up our brand name,” said the company.
Partaking businesses also complain about difficulties when they associate with farmers in the Mekong Delta. Cau Tre Export Joint Stock Company said suppliers still hold onto the thinking that they sell commodities when they see prices high enough even though they already have signed contracts with companies. This troubled companies a lot.
Mr Van Duc Muoi, General Director of Vissan Company, said, up to 85 per cent of households in the Mekong Delta do extensive, self-subsistence farming while only 15 per cent uses industrial methods. This makes it hard for businesses to represent origins when they are required. Besides, currently, slaughterhouses also meet difficulties in sourcing quality inputs in large quantity because of smallholding livestock and aquatic farming in the Mekong Delta.
Working toward a beneficially harmonised linkage model
According to experts, to sustain and develop linkage model between Ho Chi Minh City and the Mekong Delta, the stakeholders must find common voice and interests must be addressed. The city's price stabilisation programme must also ensure benefits for all stakeholders and increase incomes for farmers. Farmers must be showed long-term and sustainable benefits.
Master Tran Huu Hiep, of Southern Region Steering Committee, said, the linkage needs a clearer and stronger legal mechanism. Ho Chi Minh City and Mekong Delta provinces should build up close and sustainable link chains and exploit each other’s strengths to strengthen cohesion.
Ms Le Ngoc Dao, Deputy Director of HCM City Department of Industry and Trade, admitted that Mekong Delta enterprises are unaware of building brand names, thus, they cause a lot of difficulties in supply chain development.
She said HCM City will support enterprises to develop distribution networks in the provinces. They distribute goods made by the city on the one hand and collect input supplies for the city on the other. State agencies only function as coordinators and stakeholders discuss terms of benefits. This is the groundwork for the development of this model.
Ha Linh
Vietnamese
