A coffee bank – a place where farmers can easily deposit or sell their products – if established, could solve the current difficulties and disadvantages faced by coffee farmers.
The Difficulties Farmers Face When They Have Products
Farmers, or 70% of Vietnam’s population, not only face the hardships of cultivation but also deal with many risks and market fluctuations when they have the products in hand. Let’s go through some of the major difficulties coffee farmers and small coffee traders (who stand by the farmers) face when they have the products.
Firstly, coffee farmers must store unsold products with companies or dealers because they do not have enough space to store them; they use the product as collateral to borrow money for business or consumption before deciding to sell. Over the years, we’ve witnessed a number of companies and dealers going bankrupt, taking with them large amounts of farmers’ assets.
Besides this outright loss, there’s another more dangerous and persistent type of loss. This involves the practice of setting prices for the goods deposited at the dealer’s location or company. While some reputable businesses do business honestly, others, both foreign and domestic companies, also accept deposits. However, instead of offering farmers favorable prices when selling, which is essentially a form of interest-free loan, the reality is often different.
When farmers want to lock in prices as they see market prices rise, many dealers may be unreachable or offer prices lower than the market price at the same time. This is not just price manipulation but a form of commercial fraud. The danger is that this issue is becoming increasingly common. It’s time to ask: why do farmers still store their goods despite knowing these practices? Why does this continue year after year, and why haven’t we found a solution yet?
Furthermore, when looking at the prices that companies or dealers are offering on various websites, it’s easy to notice significant price discrepancies between different regions, even when they are not far apart.
Before expecting the world to reference Vietnamese market prices, the first thing we need to do is establish a price standard within our domestic market. If we haven’t stabilized prices at home, how can we expect to create waves in the global market?
Coffee Bank – A Dream Come True
The government’s direction in establishing the Buon Ma Thuot Coffee Exchange is expected to resolve all of the above issues if combined with certain methods.
-
Call for Investment: Encourage both domestic and foreign resources to invest in storage facilities up to the district level, prioritizing investors who can store goods at the warehouses in the region they invest in when they buy from the exchange. These storage facilities will operate as a coffee bank, according to the government’s regulations, providing a convenient place for farmers to deposit or sell their goods. Naturally, the products will be managed by the exchange based on buying and selling conditions and delivery deadlines.
-
Electronic Information System: Build an electronic information system that allows farmers to directly connect with the exchange via their mobile phones to receive real-time prices, place sales orders, or even purchase products if their deposited goods meet the exchange’s margin requirements.
-
Inclusive Business Participation: Any business, domestic or foreign, can now directly purchase from farmers through the exchange’s auction system. This is the main goal of the exchange – to place products at their correct value according to the market’s natural mechanism.
-
Warehouse Network: The exchange-managed warehouse network will carry out the delivery of goods from farmers to the buyers’ factories, based on the most geographically convenient terms, not necessarily fixed at the current processing location.
The State Bank will have the basis to lend to the coffee bank based on the collateral provided by the farmers. The true owners of the coffee bank will be the farmers themselves, empowered by government policies and the clear assets they hold.
Future Vision
The future of life is always shaped and developed by the dreams of the past. Why shouldn’t we view our current dream as the past of the future and pursue it? Particularly, what we are thinking about now has already been done long ago in other parts of the world.
It’s not about copying, but rather learning from the world’s experiences to establish a robust exchange system, which can then be expanded to other provinces growing coffee, rice, cashews, pepper, and more. A well-thought-out policy supporting farmers will not only boost the value of exportable agricultural products but, more importantly, stabilize the economy for over 70% of the population.