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Impacts of Price Hikes on the Lives and Livelihoods of Poor People in Viet Nam At all three sites the cost of manual labour - a common source of income of the poor - has increased by 40- 50 percent on average and is often higher in places with labour-intensive production processes. It is highest in Dak Lak (80,000 VND/day), average in Dien Bien (60,000 VND/day) and lowest in Quang Tri (40,000 VND/day). On the one hand, the increase in labour costs helps improve the income of labourers and on the other hand, means higher costs to those households that have to hire simple labour for such jobs as planting, tending and harvesting. However, the jobs are often irregular and seasonal and depend greatly on weather conditions or the progress of construction projects. The cost of mechanical services (for example, ploughing, husking, milling and transport) has increased by 40- 50 percent due to increased oil and gas prices. Seed prices have also surged by 40-50 percent including rice seeds and maize hybrid seeds (provided by foreign invested enterprises) which have risen by 70-120 percent. The costs of piglets and animal feed are also increasing fast. In Dien Bien, the price of piglets has doubled between June 2007 and June 2008, while the cost of animal feed has increased by 60 percent. In Dak Lak, the price of piglets and animal feed has risen by 40 percent and 20 percent respectively over the same period. Veterinary drugs also have increased by 30-50 percent while the sale price of hogs has only increased by 30-40 percent has fluctuated because of seasonal and disease-related factors. Food prices have increased to different extents: pork by 30-50 percent, fish by 40-50 percent, cooking oil and salt by 100 percent and MSG by 30 percent. It is noteworthy that buying prices of certain food products (for example, pork fat, pork side and dried fish) commonly consumed by poorer people have been rising faster than the prices of those more commonly consumed by the better-off (e.g. pork thigh, pork shoulder and fresh fish). In Dien Bien, for example, prices of pork thigh and shoulder have risen by 20-30 percent while prices of pork fat and pork side have gone up by as much as 60-80 percent. In Dak Lak, the price of fresh fish has increased by seven percent and that of dried fish by more than 130 percent. Chicken which is often purchased by the better off households has only become slightly more expensive. Prices of electronic appliances and motorbikes have almost remained the same. The “double-edged” price effect has had a significant impact on production efficacy and overall purchasing power. Figure 3.2 below exhibits changes in purchasing power over the last one year by converting the cost of a man-day or the value of a certain quantity of products recorded at the study sites into weight units of regular rice and pork. Except for Dien Bien where the cost of an average man-day when converted into rice terms indicates a slight increase, calculations for the other two sites all show that the purchasing power has declined, most evidently in Dak Lak for rice and in Dien Bien for pork meat. Although, Quang Tri is the poorest purchasing power is the least affected. Figure 3.2: Changes in comparative purchasing power due to “double-edged“ prices, 6/2007 – 6/2008 5 % 0 -5 -10 -15 -20 -25 Income per day of simple waged labor in Thanh Xuong (Dien Bien) Giá trị 1 tạ ngô tươi tại xã Cư Huê (Eakar, Đắc Lắc) Value of 1 ton of fresh cassava in Xy (Huong Hoa, Quang Tri) Equivalent purchasing power on Rice Equivalent purchasing power on Pork -30 26
Impacts of Price Hikes on the Lives and Livelihoods of the Rural Poor 3.1.2 Price Factors Price signals from major markets are transmitted rapidly to the study sites which are located in remote and mountain areas through a network of agents, private traders and manufacturing/processing enterprises. A good example is the “virtual hike” of prices that lasted for only two days in April 2008. It was even experienced by farmers in Dien Bien. In Quang Tri, because of the distance between the site and the district centre, local farmers did not receive price information immediately and ended up having to “buy more expensive and sell cheaper" than elsewhere. “Price information now reaches us very fast. We learn about maize prices from the buying price offered by a primary agent (Lai Vi or Thanh Quang). Often we also know about prices by double-checking with the various agents and the CP Company. As for coffee prices, we can check by asking the agents directly or telephoning the warehouses of the Foreign Trade Company or watching the TV daily.” (V.T.C., Dong Tam village, Cu Hue commune, Eakar, Dak Lak) “Back in April there were 1-2 days when we were able to sell paddy at as much as 6,600- 7000 VND/kg which was a suddenly high price as there were a lot of trucks coming to purchase. Right after that the price went down to 5,000-6,000 VND/kg. Only for these two days there were so may trucks coming that we did not have enough to sell to them.“ (Group discussion at Chan Nuoi 2 village, Thanh Xuong commune, Dien Bien) Prices of agricultural products in rural areas are highly seasonal. The sale prices of rice, maize, coffee and cassava are often 20-30 percent higher at the end than at the beginning or in the middle of the harvest time. The scope of the market also affects price fluctuations. For products directly influenced by the world market or domestic supply and demand prices often change rapidly within a large range. Conversely products only sold in small local markets are less affected. In Dak Lak, the buying prices of coffee offered by local agents can vary by several thousand VND/kg within a single day. In Quang Tri a comparison of the prices of sticky rice (from neighbouring provinces or even from Laos which is a small market) and regular rice (from lowland provinces, affected by export prices) revealed that the situation in June 2007 when the price of sticky rice (7,000 VND/kg) was 15 percent higher than regular rice (6,000 VND/kg) was reversed in June 2008 when the price of regular rice (11,000 VND/kg) was 20 percent higher than sticky rice (9,000 VND/kg). “Given the surplus supply of Laotian sticky rice, some Vietnamese people have moved to the border with Laos and set up rice mills to purchase sticky rice from Laos. The sticky rice is milled right there and then transported inland through the Lao Bao Border Gate. The cost of Laotian sticky rice is lower than that of Vietnamese regular rice. There are also many agents transporting Laotian sticky to Viet Nam so the price is very competitive. For this reason the price of Laotian sticky rice has been stable and always lower than Vietnamese regular rice.“ (Rice agent N.V.V., Tan Long commune, Huong Hoa, Quang Tri) The retail price of oil and gas also rose (gas up by more than 20 percent, diesel up by more than 60 percent) between mid 2007 and mid 2008 (disregarding the price hike at the end of July 2008), which had a direct impact on the prices of local mechanical services such as ploughing, milling and transport. By June 2008, the freight price of transporting by the multi-purpose vehicle (known as “xe cong nong“) from mill stations to main roads (in Dien Bien) for forwarding to lowland provinces or from the villages to whole-sale shops in district centres (in Dak Lak) has increased by 50-70 percent from the level of the same period in 2007. In Quang Tri in particular, the freight price of transporting cassava from farmers’ households to processing plants has only gone up by 10-20 percent (within a 25 km distance the freight has increased from 450,000-500,000 VND/trip of 5-7 tons in 2007 to 550,000-570,000 VND/trip in 2008), because the freight is defined by the processing plants who send the 27
Page 3 and 4: Preface 1 Viet Nam has made strikin
Page 5 and 6: Table of Contents Executive Summary
Page 7 and 8: Executive Summary 1. Between May an
Page 9 and 10: Tóm tt budget. Women also tend to
Page 11 and 12: Tóm tt 34. A frequently asked ques
Page 13 and 14: 1. Introduction 1.1 Context Rising
Page 15 and 16: Introduction • Go Vap district (H
Page 17 and 18: 2. Overview 2.1 Inflation Rising in
Page 19 and 20: Overview Table 2.2: Percentage of N
Page 21 and 22: Overview Maize. The average output
Page 23: Overview and policies for new targe
Page 28 and 29: Impacts of Price Hikes on the Lives
Page 52 and 53: away…. we go into the forests up
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Impacts of Price Hikes on the Lives
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Impacts of Price Hikes on the Lives
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Annex: Brief description of study s
Page 82 and 83:
Province/ City (Urban/rural) Distri
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