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Farm produce trading: regulation doesn’t encourage contracting   2012-05-27 - TBKTSG

In order to march towards a modern competitive agricultural production which operates in accordance with market rules, it’s necessary to reform the current legal framework on farm produce transactions.

Farmers in the passive voice

In general, enterprises have a hold over farmers in farm produce transactions. In principle, the parties in the active voice would set up the contract provisions beneficial to them. And the parties in the active voice are always enterprises, while farmers, who generally do not take care for contract provisions and the legitimacy, are always in the passive voice.

Besides, farmers do not have many opportunities to get involved in big trade deals and do not well understand businesses’ performance, the market price fluctuations and the government’s policies. Therefore, they seem to be “ignorant” about necessary information.

A lawyer has said that most of the provisions in the contracts are compiled and set up by enterprises, while farmers do not get advices on the issue. Therefore, in most of cases, they would lose in disputes.

There is another disadvantage for tra fish farmers. As they cannot keep tra fish for a long time, because oversize fish would be unsalable, they would not be able to take initiative in setting up the prices, while enterprises would try to force the prices down. Meanwhile, farmers would get payment after 30-45 days, depending on businesses’ financial capability.

In fact, not only farmers suffer. Enterprises, which usually win in the trade with farmers, usually fall into disgrace when trading with foreign partners. A lot of Vietnamese enterprises reportedly lost money in the deals of importing materials for making feed for fish.

The enterprises signed contracts, paid a deposit, but they did not get deliveries, or got deliveries, but the products have low quality. The biggest problem is that Vietnamese enterprises did not know where to sue the foreign partners and what to do to take legal proceedings against them, because the contracts did not mention the bodies to settle disputes.

The regulation ineffective

The legal framework and the law enforcement still do not encourage subjects to strictly follow the signed contracts. It always takes a long time to follow legal proceedings, which discourages the involved parties and makes them hesitant to bring the cases to the court.

This explains why many enterprises and farmers deliberately break contracts for their interests.

Some law offices in Can Tho City said that they have received complaints from farmers. However, lawyers themselves are not sure about the results of the cases. In principle, it would take 1.5-2 years to handle with the case. Farmers would not be able to wait for too long and afford the expenses needed to follow the case.

Recently, farmers sued the Binh An Seafood Company for the company’s refusal to pay for farmers’ sold fish. However, the problem is that the farmers should ask for the consultancy of lawyers instead of asking for the support from professional associations, cooperatives or farmers’ association.

Meanwhile, enterprises argue that farmers themselves also break the committed contracts. They use unlicensed chemicals and play tricks to raise the sale prices. They well know that enterprises would not sue them to the court, because of the lack of the legal framework.

A businessman admitted that he would say goodbye to the farmers who break contracts, rather than spending money to raise lawsuits against the farmers.

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