Joint Circular No. 171/2010/TTLT-BTC-BNNPTNT guiding the methods for investigation, survey, determination of production costs, and calculation of rice production cost prices for each crop in a year.

JOINT CIRCULAR

Guidelines on methods for investigating, surveying, determining production costs, and calculating production costs for rice in each crop season within a year.

 Calculating production costs for rice in each crop season within a year

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Pursuant to the Price Ordinance No. 40/2002/UBTVQH10 dated April 26, 2002;

Pursuant to the Government's Decree No. 170/2003/NĐ-CP dated December 25, 2003 detailing the implementation of certain provisions of the Price Ordinance;

Pursuant to the Government's Decree No. 75/2008/NĐ-CP dated June 9, 2008 amending and supplementing certain provisions of the Government's Decree No. 170/2003/NĐ-CP dated December 25, 2003 detailing the implementation of certain provisions of the Price Ordinance (hereinafter referred to as Decree No. 75/2008/NĐ-CP);

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 01/2008/ND-CP dated January 3, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Agriculture and Rural Development;

Implementing the Prime Minister's directive in Official Letter No. 430/TTg-KTN dated March 12, 2010 from the Government Office regarding the consumption of commercial rice for farmers;

The Ministry of Finance and the Ministry of Agriculture and Rural Development jointly issue guidelines on methods for investigating, surveying, determining production costs, and calculating production costs for rice in each crop season within a year as follows:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

These guidelines provide instructions on methods for investigating, surveying, determining production costs, and calculating production costs for rice in each crop season within a year under normal production conditions without drought, flooding, or severe pest infestations, serving as a basis for provincial People's Committees (hereinafter referred to as provincial People's Committees) to calculate production costs for rice and announce purchase prices for commercial rice in their respective areas.

Article 2. Applicability

These guidelines apply to organizations, households, and individuals involved in the management, production, and trading of rice and rice products in Vietnam.

Article 3. Methods for investigation, survey, and synthesis of results for determining production costs and calculating actual production costs for rice.

1. Basis

a) Level of production capacity and specific conditions, including: scale of production, technical infrastructure, supply conditions for materials; quantity and quality of labor; difficulties and advantages during the production and marketing processes;

b) Economic-technical norms system guided by the provincial People's Committee for application in the surveyed area, including: norms for seed investment, fertilizer, pesticide, irrigation norms, labor investment norms. In cases where there are no economic-technical norms, actual reasonable costs incurred will be used for calculation;

c) Documentation, interviews, investigations, and direct verification from workers;

d) Statistical data for up to three consecutive years;

d) Market prices at the time or close to the time when production costs need to be determined and rice production costs calculated.

2. Investigation and Survey Methods

a) Applying the representative sampling method to select survey subjects, specifically:

Select survey regions (or areas) within the province: including at least three districts/province.

Select survey regions (or areas) within the district: including at least three communes/district.

The selection of these survey regions must ensure common criteria chosen by the provincial People's Committee representing three actual production regions, including: regions with favorable production conditions, regions with average production conditions, and regions with difficult production conditions.

Select survey subjects as actual households producing rice within the selected commune survey areas to collect data. Each commune area needs to select at least 15 households producing rice according to criteria chosen by the provincial People's Committee representing three groups of rice-producing households (each group accounting for approximately 33% of the total number of selected households): including households with high rice yield, households with medium rice yield, and households with low rice yield, combined with quality criteria for rice.

b) Apply the method of compiling initial recorded data, the household production interview recall method combined with actual verification of production and business conditions, market situation, and comparison with economic-technical norms issued by competent authorities for application in the survey region (if available);

c) Apply comparative and verification methods: Compare and verify the results of actual surveys with statistical data and market prices at the time or close to the time when production costs need to be determined and rice production costs calculated. In cases:

Material and labor costs are calculated based on market prices at the time of investigation and survey; if market prices cannot be determined, the average price between the maximum statistics of the last three consecutive years and the average price provided by surveyed and interviewed households will be taken.

3. Data Synthesis Method

The investigative body bases itself on the following method to synthesize production costs, calculate actual production costs for rice, and monitor the organization and implementation of cost calculations for rice production.

General principle: Production costs and production costs for rice are calculated based on the actual production investigation results of individual rice-producing households, then proceed to synthesize data using the weighted average calculation method.

a) Compile investigation and survey results in one commune

- Synthesizing production costs: Accumulate each cost factor spent on rice production by all surveyed households into a total production cost, then divide (:) by the accumulated total area of the surveyed households to find the average production cost per factor and the total average cost per hectare of rice.

- Synthesizing unit product cost: Accumulate the total rice yield of all surveyed households into a total yield, then divide (:) by the accumulated total area of the surveyed households to find the average yield per hectare. Then divide the average production cost per hectare by the average yield per hectare to find the average cost per kilogram of rice.

b) Compile investigation and survey results in one district

- Synthesizing production costs: Take the calculated average production cost per commune, sum it up, and divide by the number of surveyed communes (for each cost factor and total cost per hectare).

- Consolidating the cost of one unit of product: Sum the average product cost calculation results of each commune and divide by the average.

c) Consolidating the survey results in one province

- Consolidating production costs: Sum the average production cost calculation results of each district and divide by the number of surveyed districts (each cost factor and total cost for one hectare).

- Consolidating the cost of one unit of product: Sum the average product cost calculation results of each district and divide by the average.

Article 4. Utilization of economic and technical norms

Economic and technical norms guided by the People's Committee of the province shall serve as the basis for calculating the production cost of rice for subsequent crops. During the production process, if necessary, the People's Committee of the province may adjust the norms to be consistent with the actual production conditions of the locality.

Chapter II

CALCULATION METHOD

Article 5. Method for calculating actual production costs of rice

1. Principles of Calculation

Production costs include reasonable expenses incurred by the producer household during one crop cycle of rice. In cases where there are shared expenses (expenses for rice production and expenses for other crop production), these must be reasonably allocated to each type of crop.

Reasonable production costs are those necessary for production that the rice-producing household has actually incurred during the production process, in accordance with the bases stipulated in Clause 1, Article 3 of this Circular.

Each item of production cost for calculating the production cost of rice must be analyzed and clearly identified in terms of quantity, value, time, and location of expenditure.

2. Units of measurement

Calculate production costs according to each cost factor and convert to Vietnamese dong (VND) and standardize to one hectare (VND/ha).

Calculate the cost of rice production according to specific items and express in Vietnamese dong (VND) for one kilogram of rice (VND/kg).

3. Calculation method

a) Yield (W): Calculate the actual yield.

When calculating the actual yield, it is necessary to collect data from records and directly interview the producer households; combine with reviewing statistical data on yields of adjacent crops (years) provided by the statistical agency, and consider the relationship between investment rates and rice yields with existing economic-technical standards (if available) and the long-term practical experience of agricultural agencies, statistics...

The unit of measurement for rice yield is unified as: hundredweight/hectare.

b) Determining the total actual production cost (TCtt)

Formula: TCtt = C + V – Pth

Where:

- TCtt is the total actual production cost per hectare (VND).

- P is the Value of Recovered By-products (VND).

- V is the labor cost per hectare (VND).

- Pth is the value of by-products recovered (VND).

- Material costs (C): These are all actual and reasonable material costs incurred during one crop cycle of rice, including seeds, fertilizers, depreciation of fixed assets, irrigation, land preparation, plant protection chemicals, water management fees, small tools, inexpensive items prone to wear and tear, bank loan interest, and other costs. The determination is as follows:

+ Seed costs:

Seed cost (VND) = quantity of seeds (kg) multiplied (x) by the unit price of seeds (VND/kg).

Determining the quantity of seeds: Depending on farming practices, surveys should be conducted and the collected data must be clearly analyzed, wherein:

In cases where rice is produced using the direct broadcasting method, the quantity of seeds actually sown according to the recollection of the producer household at the time of investment is calculated, compared with economic-technical standards (if available) to exclude quantities incorrectly spent due to improper procedures, exceeding average losses in the province.

In cases where households produce their own seeds, calculate based on market prices or mutual purchase prices among households.

Determining the unit price of seeds: Depending on the source of seeds used, the price is calculated based on the principle of being consistent with the market price at the time of purchase, including prices from seed production units, prices from other producer households, market prices, and transportation costs to the rice production site (if applicable).

Land Preparation Cost includes all reasonable actual expenses incurred by households during the rice production season, including land preparation costs (broadcast seeding or transplanting from seedlings) and costs for improving and enhancing soil quality (such as leveling fields, acid and salt treatment, remediation of siltation and erosion) consistent with market prices at the time of land preparation.

+ Land preparation costs: These are all actual and reasonable land preparation costs incurred by the producer household during the rice production cycle, following the planting process (direct seeding or transplanting from seedlings), and costs incurred for improving and enhancing the quality of the land (such as leveling fields, acid and salt treatment, remediation of sedimentation and erosion...), consistent with market prices at the time of land preparation.

+ Fertilizer costs:

Determining the Unit Price of Fertilizer: Based on the actual purchase price consistent with market prices at the time of purchase for investment and transportation costs to the production site (if applicable).

Determining the quantity of fertilizer: Collect data from receipts, invoices, and delivery notes when the producer household purchases fertilizer, or through their recollection at the time of investment, considering comparisons with existing economic-technical standards (if available) and the relationship between investment levels and rice yields based on the producer household's and agricultural agencies' long-term experience.

The method of calculating depreciation of tangible fixed assets follows the guidance of the Ministry of Finance on management, use, and depreciation allocation for enterprises.

+ Depreciation costs of fixed assets (Tangible Fixed Assets):

General principle:

For land allocated by the state without payment for land use: Depreciation of land value is not included in the production cost of rice because, according to the Land Law 2003, land belongs to the entire people, and producer households do not have to pay rent to produce on the land, which is "allocated by the state without payment for land use for households directly engaged in agriculture, forestry, aquaculture, and salt production."

In cases where the producer household rents land from another household for rice production: Renting costs cannot be included in the production cost of rice, and the renting household must calculate profits from the rented land to compensate the landowner.

Method for calculating depreciation of fixed assets: apply the depreciation calculation and allocation methods prescribed by the State in Circular No. 203/2009/TT-BTC dated October 20, 2009, issued by the Ministry of Finance, guiding the management, use, and depreciation of fixed assets, and current regulations.

Determine which types of assets used for production fall under fixed assets according to current regulations of the Ministry of Finance. When calculating depreciation costs, classify TFA into groups and types according to the principle of including only those used in production and excluding those serving other needs. In cases where the producer household rents fixed assets for production, the actual rental cost at the time of investment is applied.

+ Irrigation and drainage costs: These are all actual and reasonable irrigation and drainage costs incurred by the rice-producing household during one crop cycle of rice, consistent with market prices at the time of rice production, applicable to areas without irrigation systems and not exempted from water management fees, including:

In cases where a producing household rents pump equipment, the cost shall be calculated based on the actual rental price, consistent with the market level at the time of rice production.

In cases where the producer household uses self-owned water pumps, it is necessary to verify whether the pump runs on gasoline or diesel.

If the pump runs on gasoline, calculate according to the market rental rate for gasoline-powered pumps, and if it runs on diesel, calculate according to the market rental rate for diesel-powered pumps.

||| Plant protection chemical costs: are all actual and reasonable expenses incurred for purchasing plant protection chemicals (insecticides, fungicides, herbicides, etc.) during the production of one rice crop, consistent with market prices at the time of purchase.

||| Water management fees: Apply to areas with water management systems that charge water management fees, calculated based on actual collection rates (if applicable) or according to Article 19 of Decree No. 143/2003/NĐ-CP dated November 28, 2003, detailing certain provisions of the Ordinance on Exploitation and Protection of Waterworks Projects, and Decree No. 115/2008/NĐ-CP dated November 14, 2008, amending and supplementing certain articles of Decree No. 143/2003/NĐ-CP dated November 28, 2003.

||| Small tool and inexpensive item costs:

||| Investigators together with the rice producers will specifically list small tools and inexpensive items used in production, then calculate based on the actual purchase price consistent with market prices at the time of investigation, and allocate these costs over two rice production seasons in a year.

||| Bank loan interest costs: Are all actual interest expenses on the total amount of real capital borrowed for rice production that the producer must pay during one production season, calculated based on the prevailing annual lending rate of commercial banks at the time of borrowing.

||| Interest cost (VND) = Total loan amount (VND) x monthly interest rate (%) x number of months required to borrow money for that rice production season.

||| In cases where the rice producer uses their own funds without borrowing from the bank, interest costs are not included because this amount is already part of the producer's profit.

||| Other costs: Actual and reasonable expenses related to the production of one rice crop, other than those mentioned above, depending on the specific conditions of each production area.

||| Labor costs (V): Are all actual and reasonable labor wage expenses incurred, including various types of work (plowing, repairing embankments, sowing, fertilizing, weeding, spraying, harvesting, transporting, threshing, drying, other work) during one rice production season, consistent with market labor wages at the time of hiring.

||| If the producer hires irrigation and drainage services (including machines, fuel, and labor), or contracts out pest control services (including chemicals, machine rental, and spraying labor), or rents combine harvesters (including machines, harvesting labor, and threshing labor), and has recorded these costs under material costs, they shall not be counted under labor costs.

Labor cost (VND) = Number of working days (working days) multiplied by the daily wage rate (VND/day).

||| Determining the number of working days for each type of work:

||| Determining the actual number of working days invested: Since the amount of labor time spent on each type of work and different stages within a day varies, it needs to be converted to standard working days of 8 hours.

The conversion method is as follows:

Where:

||| - VTC is the standard working day;

||| - Vn is the actual working days invested;

||| - Tt is the actual working hours in a working day as recalled (or recorded) by the producer;

||| - TQ is the standardized working day of 8 hours.

||| Example: In cases where the producer actually works 6 hours per working day, the conversion to an 8-hour working day is as follows:

- In cases where a producing household actually works 12 hours per working day, the conversion to an 8-hour working day is as follows:

||| The method to determine the specific number of working days for conversion is as follows:

||| If there are established working day standards in economic-technical norms guided by the Provincial People's Committee, follow those standards.

||| If there are no such economic-technical norms, base the determination on the actual working days invested by the producer, or the most recent statistical data.

||| Determining the unit price of labor wages:

||| For rice producers who hire labor or perform production tasks themselves, the unit labor wage is calculated based on the actual market rental price for each task at the time of rice production.

||| Determining the value of by-products recovered (Pth):

||| Determine the value of by-products recovered to exclude them from primary production costs. By-products of rice include straw, husks, etc.

||| If the producer recovers by-products for sale, deduct the value of the by-products from the production costs to calculate the production cost of rice (the value of recovered by-products is equal to the quantity of by-products recovered multiplied by the selling price of the by-products).

Households that do not recover by-products for sale shall not be deducted.

Article 6. Methods for determining the actual production cost of rice and the planned production cost of rice

1. Determining the actual production cost of rice (Ztt)

Where:

- Ztt is the actual production cost of one kilogram of rice (VND/kg);

- TCtt is the total actual production cost of rice per hectare (VND/ha);

- W is the actual yield (kg/ha).

2. Determining the planned production cost of rice

The People's Committee of the province shall base on the actual production cost of rice in the same crop of the previous year on its territory and the Consumer Price Index (CPI) forecast for the whole country for the planning year announced by the National Assembly to determine the planned production cost of rice and announce the purchase price of rice at the beginning of each crop.

Formula:

Zkh(i,k) = Ztt(i-1,k) x (1 + CPIkh(i))

Where:

- Zkh(i,k) is the planned production cost of rice in year i of crop k;

- Ztt(i-1,k) is the actual production cost of rice in the same crop of the previous year;

- CPIkh(i) is the forecasted CPI for planning year i.

Example:

- The actual production cost of the Summer-Autumn crop of 2009 in Province A is: Ztt(2009, SA) = 3,116 VND/kg

- Forecasted CPI for 2010: CPIkh(2010) = 7%

=> The planned production cost of the Summer-Autumn crop of Province A in 2010:

Zkh(2010,SA) = 3,116 VND/kg x (1 + 7%) = 3,334 VND/kg.

or = 3,116 VND/kg x 107% = 3,334 VND/kg.

Chapter III

IMPLEMENTING PROVISIONS

Article 7. Implementation Organization

1. The Ministry of Finance

Take the lead and coordinate with the Ministry of Agriculture and Rural Development to monitor the organization and implementation of surveys on production costs, calculation of rice production costs by provincial People's Committees. At the same time, compile and report production costs, actual production costs, and planned production costs of provinces and cities to the central authorities.

2. Ministry of Agriculture and Rural Development

Direct the provincial People's Committees to establish and guide economic and technical standards for rice production according to each crop to serve as a basis for calculating production costs and actual production costs of rice.

3. Provincial People's Committees

Establish and guide economic and technical standards for rice production for each crop in the year that are suitable for local production conditions, serving as a basis for calculating production costs and production costs of rice;

Based on the guidance provided in this Circular, direct the Department of Finance and the Department of Agriculture and Rural Development and relevant departments to organize surveys and investigations on production costs and production costs of rice for each crop in the year within their respective provinces; compile survey results according to the attached annexes;

Based on the survey results, announce the planned production cost of rice and the guiding purchase price of rice for each crop at the beginning of each crop within their respective provinces; be responsible for the data from the surveys on production costs and calculation of rice production costs; compile and submit reports on the calculations to the Ministry of Finance and the Ministry of Agriculture and Rural Development for consolidation and monitoring.

4. Rice producers

Provide truthful information about actual production costs and actual yields when surveyed or interviewed.

Article 8. Implementation funds

Funding for surveys and investigations to determine production costs and calculate production costs of rice shall be applied according to current regulations on the management, use, and settlement of funds for conducting surveys funded from the budgets of provinces and centrally-administered cities.

Article 9. Effective Date

1. This Circular shall take effect 45 days from the date of signature.

2. During the implementation process, if there are difficulties or obstacles, please reflect them to the People's Committees of provinces and centrally-administered cities for timely guidance and resolution by the Ministry of Finance and the Ministry of Agriculture and Rural Development./.