Falling prices bring Vietnam farmers a poor New Year (Feature)

By Matt Steinglass Jan 20, 2009, 5:20 GMT

Hanoi - Just two months ago, vegetable farmer Pham Van Chuan was looking forward eagerly to the Vietnamese lunar New Year, or Tet, on January 26. With prices riding high after autumn floods destroyed much of northern Vietnam's crop, Chuan expected to make enough money to buy new furniture for his family.

Instead, vegetable prices have plummeted, and Chuan, 53, is struggling to support his wife and son. After deducting expenses, the harvest from his one-acre plot some 50 kilometres south-east of Hanoi, which he spent 3 months growing, will bring in about 400 dollars.

'Still, compared with other families, we're much better off,' said Chuan.

Prices for Chuan's cabbage, cauliflower and kohlrabi have fallen by half since the autumn. But his neighbors grow kale, which has fallen by two-thirds.

A combination of plentiful harvests and falling international demand, due to the global financial crisis, are adding up to a bad Tet for Vietnam's farmers. They are short of cash at just the time of year when Vietnamese culture demands they spend freely on gifts and holiday feasts.

Vegetable farmers have seen their revenues fall the most, but other farmers are having bad seasons as well.

'Tea farmers are in a very tough spot,' said Nguyen Van Thu, deputy chairman of the Vietnam Tea Association.

Thu said early last year, a kilogramme of tea sold for 30,000 dong (1.7 dollars). That has fallen to 23.000 dong (1.3 dollars).

'It is extremely hard to find buyers these days,' said Thu.

Vietnam's tea exports fell from 115 thousand tons in 2007 to 104 thousand tons last year.

Coffee, a mainstay of Vietnam's agricultural exports, has been falling as well, said Doan Trieu Nhan of the Vietnam Coffee Association.

Dinh Ha Tinh, 54, a coffee farmer in Lam Dong province in Vietnam's central highlands, said prices had dropped from 40,000 dong (2.3 dollars) per kilogramme in early 2008 to 23,000 dong (1.3 dollars) today.

Rice farmers have seen prices fall by over half from their highs in May. Dairy farmers were hit by a precipitous drop in demand after the Chinese melamine scare last fall, and are only now beginning to recover.

In part, farmers have been victims of bad timing. Fertilizer costs were extremely high last summer, as oil prices rose well over 100 dollars a barrel drove the price of the most common fertilizer, urea, over 50 cents per kilogram.

Since then, oil has fallen under 40 dollars a barrel, and fertilizer now sells for just 34 cents per kilogram. But agricultural commodity prices are falling too, and farmers who had to shell out high prices for fertilizer over the summer are finding it hard to recoup expenses.

Meanwhile, Vietnamese culture demands that at Tet, families purchase a long list of luxury goods - meat, fish, sweets, rice wine, new clothes, traditional 'banh chung' meat cakes, and decorative plants such as kumquat trees and blossoming peach branches. Many families must travel long distances to visit their native villages, particularly if their ancestors are buried there.

All of this must be done before the 23rd day of the 12th lunar month, when, according to tradition, the Kitchen God journeys to heaven to report to the Jade Emperor on the year's events. In addition to putting their houses in order with gifts and celebrations, Vietnamese try to placate the Kitchen God with offerings, often of paper horses and carps, which they burn at altars.

This year, the Kitchen God is likely to report that things have not gone well for Vietnam's farmers.

'I hope vegetable prices go up after Tet,' said Chuan, who has another acre of crops ready for harvesting in mid-February. 'Maybe I can make up some of my losses.'