Agricultural product prices have increased, farmers are happy because of higher profits, but the problem of whether to increase herds, expand the area or cut down old trees and plant new ones is still a headache..., not to mention the problem of balancing costs. If we make a wrong decision, the risk will be huge because agricultural product prices are always difficult to predict.

After durian and rice, next are coffee, pepper, pork... which are hot in price in the first months of 2024. Pig prices are entering a new increasing cycle with purchasing levels in the range of 64,000 - 68,000 VND/kg. This is a price that helps farmers and businesses make a profit, and is also a price that even large livestock enterprises can hardly believe that the price of live pigs can achieve.

Farmers and businesses win the price

Rising pig prices have helped many livestock enterprises turn their business around, such as Dabaco Vietnam Group, which recorded a profit of nearly 73 billion VND in the first quarter of this year, compared to a loss of 321 billion VND in the same period. Dabaco enjoyed good results thanks to the bold investment decision to import 10,000 breeding pigs during a difficult period for the industry. If this company had not boldly imported pigs last year, it would have lost revenue.

Export rice prices are high, world demand is large, this helps in the first quarter of 2024, Loc Troi Group Joint Stock Company's revenue reached VND 3,849 billion, an increase of 57% over the same period in 2023.

Meanwhile, Mr. Doan Nguyen Duc, Chairman of Hoang Anh Gia Lai Group (HAGL) expressed his regret for not restocking the herd by the end of 2023, so there are currently not many pigs to sell. However, HAGL Chairman believes that the price increase cycle of the pig industry usually takes place in 2 years, the immediate cycle is expected to last from 2024 to 2025.

"HAGL expects to "eat" all the profits of the pig segment next year amid the complicated developments of the African swine fever epidemic. Only large enterprises that have met disease safety conditions can restock..." , Chairman of HAGL confidently said.

The "big guy" raises pigs to increase herds, but small farmers are quite considerate because a wrong decision can cause the family to fall into debt like the situation that happened before; That's ""The pig ate all the red ink" of people.

Besides pork products, the Ministry of Industry and Trade said that in the first 4 months of 2024, the agricultural product group will continue its growth momentum from 2023 to present, the total export turnover of this product group is estimated to reach 11.98 billion USD; increase 26% over the same period in 2023, accounting for 9.69% of the country's total export turnover.

Due to increased export prices, most products in this group achieved high double-digit export turnover growth rates compared to the same period last year, such as: coffee increased by 57.9%; rice increased by 36.5%; Tea of all kinds increased by 25.5%; vegetables and fruits increased by 32.1%; Cashew kernels increased by 21.2%; Cassava and cassava products increased by 19.2%

In Dak Lak, Mr. Tran Dinh Trong, Director of Eatu Agricultural and Equitable Services Cooperative, said that many pepper and coffee farmers won the price, while this year's durian products are still waiting... Specifically, for each hectare of coffee, this year farmers can earn 200 - 300 million VND.

Regarding the question at this time, should we expand the area? Mr. Trong said that the price is increasing but it needs to be carefully considered because production must be linked to quality, not to mention that currently there is not much land area, so if you want to expand, you have to cut down other crops to grow coffee. Is it possible that when the harvest comes, the price will still be at a high level?

In fact, many farmers were regretful when they cut down pepper and coffee last year to grow durian when they saw the sky-high prices of these products.

Recall the multi-value lesson

According to Mr. Pham Quang Anh, Director of Vietnam Commodity News Center, while agricultural products are seasonal, supply cannot be replenished immediately. Therefore, even if there is no further increase, he believes that agricultural product prices will continue to be anchored in the high price range in the short and medium term, at least until the end of the second quarter of this year.

"That is in the short and medium term, but in the long term, increasing the value of agricultural products must still consider more sustainable options," Mr. Anh noted.

It is worth mentioning that catching the rising price wave cannot avoid "burning your hands" as the story of the rice industry shows through the not very bright business results of many large enterprises.

Export rice prices are high, world demand is large, this helps in the first quarter of 2024, Loc Troi Group Joint Stock Company's revenue reached VND 3,849 billion, an increase of 57% over the same period in 2023. However, due to decreased profit margin and increased financial costs, the company's pre-tax profit recorded negative 86.4 billion VND, higher than negative 77.2 billion VND in the first quarter of last year.

Recently, Loc Troi Group still owes hundreds of billions of dong for rice purchases from farmers. This business said that the reason for the above debt is due to the simultaneous harvest of rice, leading to difficulties in arranging cash flow from loans from banks to pay farmers in a timely manner. Along with that, banks' lending methods have changed, so businesses have difficulty accessing loans.

Or another large rice enterprise, Trung An High-tech Agriculture Joint Stock Company, also encountered a similar situation. In the first quarter, the company's net revenue reached 715 billion VND, down 23% over the same period last year. After deducting expenses, Trung An High-tech Agriculture Joint Stock Company reported a profit after tax of 2.7 billion VND, a sharp decrease of 67% compared to the same period last year. The reason the company said was that production costs increased higher than the same period every year.

Facing the price increase of many agricultural products, Minister of Agriculture and Rural Development Le Minh Hoan stated that output prices are always something we cannot decide, due to the law of supply and demand. But one thing we can decide is to reduce input costs, reduce input by one dong, which means income increases by one dong. If you want to reduce costs and reduce output price risks, you must have a cooperative mindset.

According to Minister Hoan, farmers need to go to cooperatives to buy input materials together. Looking at reality, we all see that most price risks come from farmers not joining cooperatives, not having access to support resources...

Therefore, when we look at the structure of the industry, we need to see how much value will increase per unit area, not how much a grain of rice costs today.

“I told Dong Thap farmers that rice prices will stop at a certain level; So farmers need to know how to develop on this unit of area, so they can grow more plants and raise more animals to add more value," Mr. Hoan said.

Source: Vnbusiness Newspaper