Large-Scale Field Model: A Policy Implication for Viet Nam? ANH H. LA Centre for Analysis and Forecasting Viet Nam Academy of Social Sciences Virtual Institute Seminar on Trade and Poverty Geneva, September 8-10, 2014

Content The Large-Scale Field Model implementation: Technical problems facing An Giang Plant Protection Joint Stock Company Policy design: technical issue Conclusions

Technical problems facing An Giang Plant Protection Joint Stock Company (1) Could not invest in building more milling plants and warehouses because of their underuse (two crops per year) and lack of budget (only loans with market interest rates available). Uneven rice quality due to lack of drying facilities with same quality at harvest time while opportunity cost of building drying plants is too high. Face broken commitment to deploy LSFM when a outputs contract is unenforceable or any crop is affected by weather or natural disasters.

Technical problems facing An Giang Plant Protection Joint Stock Company (2) Difficult to get bank loans for paddy seed or fertilizer purchase to supply to farmers because of contract breach risk from farmers (paddy sold to collectors with higher prices or poor crop) Cannot predict the impact of climate change and sea level rise on rice production Underdeveloped agricultural insurance instruments

Policy design: Technical issue Lack of competition in rice exports Lack of investment in rice growers from exporters Habit of small-scale rice producers and lack of mutual trust between enterprises and farmers, causes the breaking of the contract. No clear rules for handling cases of dispute 30% profit to rice farmers is not guaranteed Inherent conflict of interest in regulating rice exports Lack of rice farmers’ participation in policy- making

Conclusions LSFM cannot be expanded if farmers’ benefit is not guaranteed. Successful implementation of the LSFM would require some level of competition among Vietnamese rice exporters and hence access to the rice export quota.