VietNamNet Bridge - The slow construction of a modern
rice-storage system in the country has caused high post-harvest losses,
according to industry insiders.

If provinces
had modern silos and other facilities, post-harvest losses would fall by at
least 3 per cent, equal to hundreds of millions of US dollar.

Poorly-equipped
storage facilities only cut losses by 1 and 2 per cent, experts have said.

Viet Nam harvests around 38 million tonnes of paddy rice
annually with half coming from the country’s rice-bowl, the Cuu Long (Mekong) Delta.

However,
current storage facilities can contain only 2 million tonnes. Most of the
facilities were built in the 1980s with old, unsophisticated equipment that
does not offer proper storage conditions.

Post-harvest
losses arising from both drying and storing processes have climbed to 4 and 5
per cent of the country’s total production, experts have said.

Because
the rice-storage system has such low capacity and outdated equipment,
Vietnamese rice producers are unable to store their rice until they can sell it
at a decent price. They have to sell their rice as soon as it is harvested at
unattractive rates.

Ambitious plan

The
Ministry of Agriculture and Rural Development has carried out a VND7.62
trillion (US$390 million) plan under which a modern rice storage system will be
built in the Mekong Delta between 2009 and 2010 to store up to 4 million tonnes
of rice, according to Pham Van Tan of the Sub-institute of Agricultural
Engineering and Post-Harvest Technology. The
system, when completed, would include new storage with a combined capacity of
2.8 million tonnes and the existing storage chain, which would be repaired and
upgraded, will meet required standards.

The new
silos would be located near seaports in Long An, Dong Thap, An Giang provinces
and Can Tho and HCM
City for easy
transportation, he said.

To
encourage enterprises to participate in the development of the rice-storage
construction plan, the Government has allowed builders to have access to bank
loans with soft interest rates of 6.5 per cent per year. Equipment importers
can get loans with a zero interest rate.

The
investors are also exempted from paying land rental for the first five years
after the new storage facilities are put into use.

With such
attractive conditions, many enterprises in the Cuu Long (Mekong)
Delta have got involved in the construction of rice storage facilities.

The Kien
Giang Trade and Tourism Company typifies the trend. In April 2009, the company
invested VND55 billion ($2.9 million) in the building of a 40,000-tonne storage
in Tan Hiep District.

The Tra
Vinh Food Company followed and started the construction of a rice storage in
Cau Ke District’s An Phu Commune in January this year.

The
facility was invested with VND62 billion ($3.2 million) and has a designed
capacity of 70,000 tonnes of rice.

Meanwhile,
the Southern Food Corporation (Vinacooking 2) in early 2009 announced that it would
spend VND600 billion ($30.7 million) to build a chain of rice silos with a
total capacity of 200,000 tonnes in Can Tho City’s Thot Not rice market.

Investors
in other provinces have also been active in building silos.

Since the
Government launched its storage plan two years ago, development had been slow,
with the deadline to build facilities coming in slightly more than one month,
Tan said.

In Dong
Thap Province, one of the delta’s big rice producers, for instance, only one
rice storage facility with a capacity of 30,000 tonnes has been built on
schedule.

Vinafood
2’s construction of silos in the Thot Not market is still completing land
clearance procedures.

Another
problem is that newly built storage facilities do not meet all necessary
technical standards as required for a real silo, such as foundation height,
ventilation, drying grounds, rice husking and polishing facilities and
automatic packaging. They are built as simple sheds only.

Rice
industry experts attributed the slow construction of rice storage facilities to
several reasons, one of which was a lack of capital.

Complicated procedures

Although
the Prime Minister has asked banks to provide capital for storage investors, it
has not been easy for them to get bank loans because of complicated procedures.

Obtaining
land has been another obstacle since costs for renting land are a considerable
burden for builders.

Truong
Thanh Phong, chairman of the Viet Nam Food Association, said that the agency
would not be able to implement a plan to increase its storage chain’s capacity
from current 3.5 million tonnes of rice to 4.3 million this year as it
targeted.

Land
clearance and capital were the biggest problems for the association’s member
companies, Phong said.

Despite
such difficulties, experts have said more storage facilities must be built.

Source:
VNS