The Domestic Rice Value Chain in the Mekong Delta

Dao The Anh, Thai Tinh and Nguyen Ngoc Vang
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Dao The Anh: Vietnam Academy of Agricultural Sciences
Thai Tinh: Centre for Agricultural Policy, Institute of Policy and Strategy for Agriculture and Rural Development, Ministry of Agriculture and Rural Development
Nguyen Ngoc Vang: An Giang University

Chapter Chapter 18 in White Gold: The Commercialisation of Rice Farming in the Lower Mekong Basin, 2020, pp 375-395 from Springer

Abstract: Abstract The rice value chain in the Mekong Delta is a large and complex system, linking 1.5 million small-scale rice farmers to large numbers of traders, processors, wholesalers, retailers, and exporters. About 30% of production enters the domestic market and 70% is exported, accounting for over 90% of national exports. Input suppliers are widely dispersed, providing seeds, fertilizers, and other inputs competitively to farmers. Agricultural extension is provided by both public and private sectors through farmer groups. There has been rapid mechanization with two-wheeled tractors and combined harvesters, the latter mainly provided through contract services. However, there is limited availability of driers at the farm or commune level, meaning that most farmers sell wet paddy at a discount to be dried at the mills. Almost all the rice crop is sold to local traders—small, independent operators who transport paddy by boat to the rice mills. Most paddy goes through small mills that produce white rice, some of which are sold directly to domestic wholesalers but most of which go to exporters for polishing and bagging. Wholesalers are medium-sized enterprises, buying from polishing factories, traders, and directly from millers. Most of their sales are to traditional retailers who are spread widely across the region, operating small stores. The rice is sold loose and packaged after purchase. Modern retailers selling pre-packaged and labeled rice at higher prices have a small share of the domestic market. None of the actors in the domestic value chain appears to gain an excessive margin, with returns on working capital around 7–10%. Credit to enable producers, service providers, and processors to invest in improved technology may improve the efficiency of the value chain. The government should implement a policy to promote the quality of rice through contract farming between cooperatives and private enterprises based on quality standards. The export market should be opened up to private enterprises that obtain export contracts based on quality.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-15-0998-8_18

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DOI: 10.1007/978-981-15-0998-8_18

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