Joint Circular No. 23/2015/TTLT-BTC-BNNPTNT guiding the methods for investigation, determination of production costs, and calculation of production cost prices for commercial rice crops throughout the year.

JOINT CIRCULAR

Guidelines on methods for investigating, determining production costs,calculating production costfor commercial rice crops throughout the year

_____________________________ 

Pursuant to the Price Law No. 11/2012/QH13 dated June 20, 2012;

On the basis of Decree No. 177/2013/NĐ-CP dated November 14, 2013 of the Government detailing and guiding the implementation of certain provisions of the Law on Prices;

On the basis of Decree No. 109/2010/NĐ-CP dated November 4, 2010 of the Government on trading and exporting rice;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

BASED ON THE DECREE NO. 199/2013/NĐ-CP OF NOVEMBER 26, 2013 OF THE GOVERNMENT PROVIDING FOR THE FUNCTIONS, TASKS, POWERS, AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT;

The Minister of Finance and the Minister of Agriculture and Rural Development issue this Joint Circular providing guidelines on methods for investigating, determining production costs, calculating production cost for commercial rice crops throughout the year.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides guidelines on methods for investigating, determining production costs, calculating actual production cost for commercial rice (hereinafter referred to as rice) and estimating average production cost for rice under normal production conditions without natural disasters or epidemics.

Article 2. Applicability

This Circular applies to agencies, organizations, households, and individuals related to management, production, and trading of rice and rice products in Vietnam.

Article 3. Principles for investigation, survey, compilation of investigation data, determination of production costs, calculation of actual production cost for rice, and estimation of average production cost for rice

1. Conducting investigations, surveys, and compiling data based on the following grounds:

a) Level and conditions of production, specifically: scale of production, technical infrastructure, supply conditions for materials; quantity and quality of labor; ecological system, cultivation system, intensive farming level, degree of application of scientific and technological progress, degree of initiative regarding infrastructure and difficulties and advantages during production and product consumption;

b) Economic-technical norms: Based on economic-technical norms issued by competent authorities for application in the surveyed area including norms for seed investment, fertilizer, plant protection chemicals, irrigation, labor investment, and other relevant norms (if applicable). In cases where there are no economic-technical norms, the costs specified in Clause 2, Article 6 of this Circular shall be used for calculation;

c) Records, interviews, direct investigations, and verifications from organizations (if any), rice-producing households, and workers;

d) Statistical data for up to three consecutive years;

đ) Market prices at the time or closest to the time when production costs need to be determined and rice production cost calculated.

2. Production costs and actual production cost for rice are calculated based on the results of real production investigations and surveys of individual rice-producing households and then compiled using a weighted average method.

3. Estimated average production cost for rice is calculated based on the actual average production cost for rice in the entire production area and the projected Consumer Price Index (CPI) for the planning year announced by the National Assembly.

Chapter II

SPECIFIC PROVISIONS

Article 4. Methods for investigation, survey, compilation of data, and results of investigations and surveys to determine production costs, calculate actual production cost for rice, and estimate average production cost for rice

1. Select typical broad samples to choose survey subjects, specifically:

a) Select survey areas within a province: including a minimum of 3 districts/province.

b) Select survey areas within a district: including a minimum of 3 communes/district. The selection of survey areas at this level is chosen by the People's Committee of the province representing three actual rice production areas, including: areas with favorable production conditions, areas with average production conditions, and areas with difficult production conditions combined with criteria on the ecological system and rice cultivation system.

c) Select survey subjects: the selected survey subjects are actual rice-producing households within the surveyed commune area chosen above to collect data. Each commune selects a minimum of 15 rice-producing households according to criteria chosen by the People's Committee of the province representing three groups of rice-producing households (each group accounting for approximately 1/3 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 criteria on rice quality.

2. Compile initial recorded data, use the recall interview method of rice-producing households combined with verification of actual production and business conditions, market situation, and compare with economic-technical norms issued by competent authorities for application in the surveyed area (if applicable);

3. Compare and verify Compare and verify the results of actual investigations with statistical data and market prices at the time or closest to the time when production costs need to be determined and rice production cost calculated. If material and labor costs have market prices, use those prices. If market prices cannot be determined, use the average between the maximum statistical data for the last three consecutive years and the average of the surveyed households' provided data.

4. Compile data, investigation results

a) Compile investigation and survey results in one commune

- Compile production costs: Sum up each reasonable cost factor spent on rice production by all surveyed households into a total production cost, then divide by the total accumulated area of the surveyed households to find the average production cost per factor and the total average cost per hectare of rice.

- Compile unit product cost: Sum up the total rice output of all surveyed households into a total output, then divide by the total accumulated 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

- Compile 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 5. Principles of Calculation and Units of Measurement

1. Principles of Calculation

a) Production costs include actual expenses incurred by households during one rice crop season. If there are additional expenses (for rice production and other crops), they must be reasonably allocated to each type of crop.

b) Reasonable production costs are those actual expenses incurred by rice-producing households during the production process as stipulated in Clause 2, Article 6, and consistent with the bases specified in Clause 1, Article 3 of this Circular.

Each item of production cost for calculating the cost of rice production must be analyzed and clearly defined regarding 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).

Article 6. Calculating Actual Harvest Yield and Actual Production Costs

1. Calculating yield (W): Calculating actual harvest yield.

When calculating actual harvest yield, collect real data from accounting records and direct interviews with households; consider statistical data on yields of adjacent seasons from statistical agencies, and examine the relationship between investment rates and rice yields with economic-technical standards (if applicable) and long-term monitoring experience of agricultural and statistical agencies.

The unit of measurement for rice yield is unified as: tons/ha.

2. Calculating Total Actual Production Costs for Rice (TCtt)

Formula: TC = C + V - P_tt - TC is the Total Actual Production Cost (VND/ha)._ENVIRONMENT - P_ht

(tonnes CO

- C is Material Cost per hectare (VND)._tt - V is Labor Cost per hectare (VND).

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

- Pht is the amount of support received (if any) (VND).

- P_ENVIRONMENT a) Calculating Material Cost (C)

Material Cost (C) includes all reasonable material expenses incurred during one rice crop season, including seeds, fertilizers, depreciation of fixed assets, irrigation, land preparation, plant protection chemicals, water management fees, small tools, expendable items, bank loan interest, and other expenses. Determination method as follows:

- Seed Cost

Seed Cost (VND) = Quantity of Seeds (kg) multiplied (x) Unit Price of Seeds (VND/kg).

Determining the Quantity of Seeds: Depending on farming practices, conduct surveys and clearly analyze when collecting data, wherein:

In cases where paddy is produced using the "broadcast seeding" method directly with seeds, calculate based on the actual amount sown according to the household's recollection at the time of investment, compared with economic-technical standards (if applicable) to exclude excessive seed loss beyond the average provincial level.

In cases where paddy is produced using the "transplanting from seedlings" method, determine the seed quantity according to the above calculation method and add transplanting costs.

Determining the Unit Price of Seeds: Depending on the seed source, the unit price of each type of seed is determined according to market prices at the time of purchase, including: actual purchase price of the household; purchase price of other households; price announcements from seed companies and agricultural supplies operating in the local area; market purchase prices and transportation costs to the production site (if applicable).

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

- Land Preparation Cost

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.

- Fertilizer Cost

Fertilizer Cost (VND) = Quantity of Fertilizer (kg) multiplied (x) Unit Price (VND/kg)

Determining the Quantity of Fertilizer: Aggregate through receipts, invoices, and delivery notes when households purchase fertilizer or through their recollections at the time of investment, considering economic-technical standards (if applicable) and the relationship between investment levels and rice yields over many years of experience of households, agricultural and statistical agencies.

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).

- Depreciation Cost of Fixed Assets (Tangible Fixed Assets)

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.

Determine which assets used for production fall under fixed assets according to current regulations of the Ministry of Finance. When calculating depreciation costs, classify tangible fixed assets into groups and types according to the principle of counting only those in use and not counting those not in use, and do not allocate depreciation costs for assets serving other needs to rice production. In cases where households rent fixed assets for production, calculate based on the actual rental price at the time of investment.

- Land Rent Cost

Land Rent Cost includes all actual expenses incurred by rice-producing households to rent land during one rice crop season. Land rent cost is determined through contracts or agreements between the renting households and the organizations or individuals providing the land.

In cases where households are granted land use rights by the State, land rent cost is not included in rice production costs.

- Irrigation and Drainage Cost

In the case where a rice-producing household is granted the right to use land by the State, such household shall not be allowed to include land rental costs in the production expenses for rice.

- Irrigation and drainage costs

Irrigation costs include all actual and reasonable expenses incurred for irrigation, drainage, and repairs to canals and ditches (if any) that a rice-producing household has paid out to produce a single rice crop, consistent with market prices at the time of production, applicable to areas without irrigation systems or exempt from irrigation fees, or areas with irrigation systems and exempt from irrigation fees but still required to pay pumping costs for irrigation and drainage, 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 a producing household uses its own pump equipment, it is necessary to verify whether the machine runs on gasoline, diesel, or electricity, and determine the cost according to the rental price of gasoline-run, diesel-run, or electric-run machines on the market.

- Plant protection chemical costs include all actual and reasonable expenses incurred for purchasing plant protection chemicals (insecticides, fungicides, herbicides, and other chemicals) that a rice-producing household has paid out during the production of a single rice crop, consistent with market prices at the time of purchasing plant protection chemicals.

- Irrigation fees: Applicable to areas with irrigation systems and irrigation fee charges, calculated based on the actual collection rate (if any) or according to current laws and regulations regarding irrigation fee rates.

- Small tool and inexpensive item costs

Investigators and the producing household should specifically list all small tools and inexpensive items used for production, then calculate their costs based on the actual purchase price, consistent with the market price level at the time of investigation, and allocate them to two rice production seasons in a year.

- Bank loan interest costs include all actual interest expenses on the total amount of real loans taken for rice production that a producing household must pay during a single production season.

For households borrowing from banks, the interest expense is calculated based on the loan amount, loan interest rate, and loan duration stipulated in the credit agreement between the household and the local commercial bank.

For households borrowing from other sources (individual loans, retail suppliers selling on credit with interest, cooperative agricultural loans), the interest expense is calculated at a maximum rate equal to the annual loan interest rate of local commercial banks at the time of borrowing.

If a household borrows money from a bank for purposes other than rice production, this cost shall not be included in rice production expenses.

- Other costs

Other costs include all actual and reasonable expenses related to the production of a single rice crop, excluding the aforementioned costs, depending on the specific conditions of each production area.

b) Calculate labor costs (V)

Labor costs (V) include all actual and reasonable wage expenses incurred for various tasks (land preparation - border repair (plowing, harrowing, leveling), seed soaking and germination, transplanting, fertilizing, weeding, replanting, spraying, harvesting-transportation, threshing, drying, milling, field inspection, other work) that a producing household has paid out during a single rice production season, consistent with market wage levels at the time of hiring labor.

In cases where a producing household hires irrigation services (including machines, fuel, and labor), or contracts pest control services (including chemicals, machine rental, and spraying labor), or hires combine harvesters (including machines, harvesting labor, and threshing labor), and transports rice back home, and these costs have been recorded 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).

- Determine the number of working days for each type of work

The actual number of working days invested in labor should be determined: 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 an 8-hour working day (standard working day).

The conversion method is as follows:

Where:

- V (VND/year): is the total investment capital allocated annually for the usable area of social housing for rent, ensuring the preservation of capital, calculated according to the following formula:_{Economic life of the power plant as specified in the Appendix attached to this Circular (years).} is the standard working day (days);

- V (VND/year): is the total investment capital allocated annually for the usable area of social housing for rent, ensuring the preservation of capital, calculated according to the following formula:_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} is the actual working days invested (days);

- T_{organize credit institutions, foreign bank branches are responsible for organizing the implementation of this Circular.} is the actual working hours in a working day recalled or recorded by the household (hours);

- T_{Article 24} is the standardized 8-hour working day.

Example:

- In cases where a producing household 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 actual number of working days for conversion is as follows:

If there are labor working day standards in economic-technical norms guided by the Department of Agriculture and Rural Development, follow those standards.

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

- Determine the unit wage rate:

When a rice-producing household hires labor for production or performs production tasks themselves, the unit wage rate is calculated based on the actual rental price on the market, consistent with the task stage at the time of rice production.

c) Calculate the value of by-products recovered (P)_ENVIRONMENT - Column (7): Land area in land allocation decisions, lease decisions, or documents of the competent authority or actual land area managed and used (applicable to assets that are buildings and land).

Determine the value of by-products recovered to exclude from main production costs. By-products of rice are straw and husks.

In cases where a producing household recovers by-products for sale, deduct the value of by-products from production costs to calculate the production cost of rice (the value of recovered by-products is calculated as the quantity of by-products recovered multiplied by the sales price of by-products).

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

d) Calculate supported amounts (P)_ht - Column (7): Land area in land allocation decisions, lease decisions, or documents of the competent authority or actual land area managed and used (applicable to assets that are buildings and land).

In cases where a producing household receives support for rice production according to state regulations, this amount must be deducted to calculate the production cost of rice.

Households that do not receive support shall not be deducted.

Article 7. Methods for determining actual production costs of rice and estimated production costs 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 per hectare (tonnes/ha).

2. Determining the estimated production cost of rice

The Ministry of Finance bases on the actual production cost of rice of each province and city in the previous crop year and the projected Consumer Price Index (CPI) for the entire country for the planning year announced by the National Assembly to determine and announce the average estimated production cost of rice in the entire production region at the beginning of each crop season.

a) Estimated production cost of rice for each province

Formula:

Zd_k(i,k) : is the price of solid waste management services for one ton of solid waste excluding value-added tax (VAT). Unit: dong._tt(i-1,k) x (1 + CPI_dk(i)) 

Where:

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_dk(i,k) is the estimated production cost of rice in year i, crop k;

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_tt(i-1,k) is the actual production cost of rice in the same crop of the previous year;

- CPI_dk(j) is the projected CPI for the entire country in year i announced by the National Assembly.

b) Determining the average estimated production cost of rice for the entire production region

Formula:

Z_bqdk(i,k) : is the price of solid waste management services for one ton of solid waste excluding value-added tax (VAT). Unit: dong._bqtt(i-1,k) x (1 + CPI_dk(i)) 

Where:

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_bqdk(i,k) is the average estimated production cost of rice in year i, crop k;

Clause 2. The total cost to process one ton of solid waste (Z) is determined according to the following formula:_bqtt(i-1,k) is the average actual production cost of rice in the same crop of the previous year for the entire production region calculated by dividing the total actual production cost of rice of the provinces in the production region by the total number of provinces conducting surveys and investigations.

- CPI_dk(j) is the projected CPI for the entire country in year i announced by the National Assembly.

Chapter III

IMPLEMENTING PROVISIONS

Article 8. Implementation organization

1. The Ministry of Finance

To take the lead and coordinate with the Ministry of Agriculture and Rural Development to guide the contents stipulated in this Circular; compile the average estimated price of rice for each crop of the provinces and centrally-administered cities and determine the average estimated production cost of rice for each crop of the entire production region at the beginning of each rice crop season.

2. Ministry of Agriculture and Rural Development

a) Coordinate with the Ministry of Finance to guide the contents stipulated in this Circular and determine the average estimated production cost of rice for each crop of the entire production region.

b) Guide localities to apply economic-technical norms for rice production according to each crop as a basis for determining production costs and calculating the actual production cost of rice.

3. Provincial People's Committees

a) Direct the Department of Agriculture and Rural Development to base on the economic-technical norms issued by competent authorities to guide their application for each crop in the year suitable to the local production conditions, as a basis for calculating production costs and the production cost of rice.

b) Direct the Department of Finance to take the lead and coordinate with the Department of Agriculture and Rural Development, People's Committees of districts and relevant sectors to organize surveys and investigations on production costs, calculate the production cost of rice for each crop in the year within the provincial territory, and compile the results of surveys and investigations according to the model attached as Appendix I and Appendix II to this Circular.

c) Determine and announce the average estimated production cost of rice throughout the province at the beginning of each crop in the year.

d) Inspect the surveys and investigations on production costs and calculation of the production cost of rice within the provincial territory.

đ) Implement sending the average estimated production cost of rice throughout the province that has been announced and direct the Department of Finance to send the results of surveys and investigations to the Ministry of Finance for compilation and determination of the average estimated production cost of rice for each crop of the entire production region. The time to send the results of surveys and investigations for one rice crop is immediately after the end of the harvest of that crop.

4. Rice producers

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

Article 9. Funding for Implementation

The budget for surveying and investigating to determine costs and calculate the production cost of rice shall be implemented in accordance with current regulations on the management, use, and settlement of funds for conducting surveys, which are funded from the budgets of provinces and centrally-administered cities.

Article 10. Effective Date

1. This Circular takes effect from March 29, 2015.

2. This Circular replaces Joint Circular No. 171/2010/TTLT-BTC-BNNPTNT dated November 1, 2010 of the Ministry of Finance and the Ministry of Agriculture and Rural Development on guiding methods for surveying, investigating, determining production costs, and calculating the production cost of rice for each crop in the year.

3. In the course of implementation, if there are difficulties or obstacles, please report to the People's Committees of provinces and centrally-administered cities for guidance and timely resolution by the Ministry of Finance and the Ministry of Agriculture and Rural Development./.