Chinese try to corner farm produce market in Vietnam

13:07 | 09/06/2015 Trade

The Central Highlands’ pepper market has heated up with the presence of Chinese businessmen who are scrambling to compete with Vietnamese to buy pepper.

Chinese try to corner farm produce market in Vietnam

The Dak Lak provincial police have warned of the tricks played by Chinese businessmen who are trying to cause chaos in the local pepper market.

Many Chinese businessmen have been present in the locality since April, collecting pepper from farmers in large quantities at prices VND3,000 per kilo higher than the market price.

The Chinese also ordered Vietnamese trading companies to collect pepper at high prices, aiming to create an artificial short supply in the market. However, Vietnamese farmers don’t have pepper to sell because they have sold out. 

Chinese businessmen use the products they have collected to sell for huge profits and cancel contracts signed with Vietnamese trading companies. 

As a result, the trading companies incurred big losses because they could not sell the hundreds of tons of collected pepper to Chinese businessmen to take back the investment capital.

Meanwhile, Huynh Ngoc Duong, deputy director of the Dak Lak provincial Industry and Trade Department, believes that both Chinese and Vietnamese businessmen collect pepper in the locality to mislead farmers about the pepper market.

Phan Trong Ho, director of the Binh Dinh provincial Agriculture and Rural Development Department, said there were signs showing that Vietnamese businessmen lent a hand to Chinese to corner the domestic market.

Ho complained that the farmer-exporter cooperation program run on a trial basis by the agriculture department has been damaged by the merchants.

Under the contracts signed between farmers and export companies, farmers sell peanuts to companies at VND5,500 per kilo, a price high enough for them to make a 40-50% profit. However, farmers then sold them to merchants who accepted to buy them at higher prices.

As a result, export companies have to pay VND10,000-11,000 per kilo so as to collect enough materials to fulfill export contracts, taking a big loss.

Export companies warned that they would give up the farmer-export company cooperation program next year if farmers continued to break contracts. 

Ho said that local agriculture departments alone cannot settle the problem because the their main function is to help farmers organize agricultural production. 

“The Ministry of Industry and Trade needs to instruct its local departments to build up reasonable strategies to deal with the merchants who try to corner the farm produce market,” he said.

An analyst noted that if trade and agriculture departments can cooperate well, the problems would be settled. 

“Trade departments can help check if the products Chinese businessmen collect in the domestic market are carried across the border gates to China,” he said. “Trade counselors can help check which Chinese businesses buy Vietnamese goods./.”

Source Vietnamnet