Decision No. 80/2002/QD-TTg on policies to encourage the consumption of agricultural products through contracts

Pursuant to …;

On policies to encourage the consumption of agricultural products through contracts

__________________________

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

PURSUANT TO THE PROPOSAL OF THE MINISTER OF AGRICULTURE AND RURAL DEVELOPMENT.

Pursuant to …;:

Article 1. The State encourages enterprises of various economic sectors to enter into contracts for the consumption of agricultural products (including agricultural, forestry, aquatic products) and salt with producers (cooperatives, farming households, farms, representatives of farming households) in order to link production with processing and consumption of agricultural products to develop stable and sustainable production.

After signing, the contract serves as a legal basis to bind the responsibilities and obligations of the parties, protect the rights and legitimate interests between raw material producers and manufacturing, trading, processing, and exporting enterprises according to the provisions of the contract.

Article 2. Contracts for the consumption of agricultural products must be signed with producers from the beginning of the production season, at the start of the year, or at the beginning of the production cycle. For now, contracts should be concluded for major export products such as rice, aquatic products, tea, coffee, pepper, rubber, cashew nuts, fruits, mulberry leaves, meat,... and major domestic consumption products that go through industrial processing such as cotton, sugar cane, tobacco leaves, forest raw materials for paper industry, wood processing industry, milk, and salt...

Contracts for the consumption of agricultural products signed between enterprises and producers shall take the following forms:

- Advance funding, materials, technical support, technology transfer, and purchase of agricultural products;

- Sale of materials and purchase of agricultural products;

- Direct consumption of agricultural products;

- Production linkage: farming households can use the value of land use rights to contribute capital shares, joint ventures, or partnerships with enterprises, or lease land to enterprises after which farmers produce on the contributed shareholding, joint venture, partnership land, or leased land and sell agricultural products back to enterprises, creating a sustainable bond between farmers and enterprises.

Contracts for the consumption of agricultural products must ensure content and form as prescribed by law.

Article 3. Some main policies to encourage enterprises to sign consumption contracts with producers.

1. Regarding land

Provincial People's Committees create favorable conditions for farmers to fully and correctly exercise their rights to land use, use the value of land use rights to contribute capital shares or joint ventures with agricultural product processing and trading-export enterprises; direct the construction and completion of planning for concentrated agricultural product production areas, creating conditions for producers and enterprises to organize production and sign consumption contracts for agricultural products; direct the implementation of land consolidation and exchange where necessary. Processing, consumption, and export enterprises requiring land for building processing plants or warehouses, storage facilities, and transportation terminals shall be given priority in leasing land. Provincial People's Committees have specific regulations to facilitate procedures and prices to support enterprises in receiving land for investment.

2. On Investment

Concentrated raw material production areas linked with processing and consumption bases of agricultural products under consumption contracts shall be supported by the state budget for part of the investment in infrastructure construction (roads, irrigation, electricity,...), wholesale market systems, storage facilities, market information networks, quality inspection facilities for agricultural products. Financial mechanisms and budget support shall be implemented as stipulated in Article 3 of Decision No. 132/2001/QĐ-TTg dated September 7, 2001. The Prime Minister.

3. Regarding credit

- For commercial credit, commercial banks ensure loan demand for producers and enterprises participating in contract signing at agreed interest rates with favorable conditions and procedures. Producers and enterprises can mortgage assets formed from loans to obtain bank loans, borrow on credit, and borrow for effective production and business projects.

- Producers and enterprises signing consumption contracts for agricultural products with export production projects shall benefit from state investment forms from the Development Support Fund as prescribed in Decree No. 43/1999/NĐ-CP dated June 29, 1999 of the Government on State Investment Credit and Decision No. 02/2001/QĐ-TTg dated January 2, 2001. The Prime Minister.

- Enterprises signing consumption contracts for agricultural products for export with export production and business projects shall borrow funds from the Export Support Fund as prescribed in Decision No. 133/2001/QĐ-TTg dated September 10, 2001 of the Prime Minister on the issuance of export support credit regulations. Seasonal agricultural product consumption enterprises shall borrow funds from the Export Support Fund to purchase agricultural products under contracts and apply credit or mortgage assets formed from loans to borrow funds.

- In remote, mountainous, extremely difficult, border, and island areas, in addition to current credit policies for producers and enterprises to borrow such as poverty household loans, reduced interest rates for repayment,... the following policy shall also be implemented:

+ For investment projects in agricultural product processing and consumption of agricultural products, borrowing from the Development Support Fund at an interest rate of 3% per annum. In cases where the project is carried out by state-owned enterprises, when the project goes into operation, the state budget will provide sufficient working capital of 30%;

+ Provincial People's Committees decide on the use of local budgets to subsidize interest rates on bank loans for each production, processing, and consumption of agricultural products project suitable to the specific conditions of each locality.

4. Regarding the transfer of advanced technology and technology

Annually, the state budget allocates funds to support enterprises and producers with agricultural product consumption contracts: applying and rapidly popularizing (including imports) new types of seeds, advanced techniques, and new technologies in preservation and processing of agricultural, forestry, and aquatic products; investing in new production bases and breeding facilities for crops and livestock; diversifying forms of propaganda and education (VIDEO programs, radio, television, Internet, etc.) to rapidly popularize new advanced techniques and technologies, market information, and prices to producers and enterprises.

Concentrated commodity production areas with agricultural product consumption contracts shall be prioritized for implementation and support in agricultural extension work.

5. On markets and trade promotion

In addition to current policies, concentrated commodity production areas where enterprises from various economic sectors have signed agricultural product consumption contracts with farmers from the beginning of the crop season shall be given priority to participate in implementing government trade contracts and trade promotion programs organized by the Ministry of Trade, relevant ministries and sectors, industry associations, and localities.

Article 4. The signing and implementation of agricultural product consumption contracts between producers and enterprises must comply with the provisions of the law on contracts.

Agricultural product consumption contracts shall be confirmed by the People's Committee of the commune or certified by the Notary Office of the district.

Enterprises and producers are responsible for fulfilling their commitments under the contract; if either party fails to fulfill its obligations as agreed and causes damage, it must compensate the aggrieved party.

Both parties to the contract shall agree to handle risks due to natural disasters, sudden changes in market prices, and other force majeure factors according to the principle of sharing risks, and the State will consider providing partial compensation for losses in accordance with the law.

Enterprises may not compete to purchase agricultural products from farmers who have been developed by another enterprise. They may not sign agricultural product consumption contracts with producers who have already signed such contracts with other enterprises. Producers may only sell agricultural products produced under a contract to another enterprise when the enterprise that has invested or signed a consumption contract refuses to buy or does not purchase all of the producer's products.

When disputes arise over contracts, the People's Committee of the commune shall be responsible for coordinating with the Vietnam Farmers' Association at the same level and the industry association to organize and create conditions for both parties to resolve disputes through negotiation and mediation. If negotiations and mediation fail to reach a resolution, the parties shall bring the dispute to court for resolution in accordance with the law.

Article 5. During the execution of the contract, if an enterprise violates any of the following contents: failing to purchase all agricultural products; purchasing not at the agreed time or place; engaging in fraudulent trade practices in determining quality standards and quantities of agricultural products; taking advantage of the monopoly of the consumption contract to purchase below the agreed price or engaging in other acts causing damage to producers, then depending on the nature and degree of the violation, they must bear the following measures:

1. Compensate for all material damages caused by the violation in accordance with the law on contracts.

2. The competent state agency shall suspend or temporarily suspend the business rights of the agricultural products involved in the violation and announce on mass media about the enterprise's breach of contract.

Article 6. During the execution of the contract, if a producer receives advance capital and materials from an enterprise that has signed a contract and intentionally fails to sell agricultural products or sells them to another enterprise that did not invest in production; sells less quantity, not at the agreed time, or does not meet the quality standards specified in the contract; fails to pay on time or engages in other violations, then depending on the nature and degree of the violation, they must bear the following penalties:

1. Repay the enterprise for all debts: materials, capital (including interest on bank loans during the advance period) received in advance.

2. Compensate for damages caused to the enterprise in accordance with the law on contracts.

Article 7. The People's Committees of provinces and centrally-administered cities are primarily responsible for directing the implementation of measures to promote the organization of production and consumption of agricultural products through contracts in their respective localities, including the following tasks:

- Directing relevant departments in the locality to widely publicize among the people the method of production under contracts, strengthening legal education, and enhancing awareness of compliance with the law for enterprises and farmers so that the people can support and respond positively to the new business methods under the market economy;

- Selecting and specifically deciding (in some cases, coordination with relevant ministries, state-owned corporations may be necessary) enterprises to implement agricultural product consumption contracts; simultaneously planning to gradually expand the method of signing agricultural product consumption contracts, so that by 2005, at least 30%, and by 2010, more than 50% of the output of major commodity production industries will be consumed through contracts.

- Guiding enterprises and producers to sign production and consumption contracts for agricultural products within their jurisdiction; directing provincial departments to urge and inspect the signing and implementation of contracts;

- Coordinating with the Ministry of Agriculture and Rural Development, the Ministry of Fisheries, the Vietnam Union of Cooperatives, and the Vietnam Farmers' Association to implement the Resolution of the Fifth Plenary Session of the Central Committee of the Communist Party of Vietnam, Ninth Term, on continuing to reform, develop, and improve the efficiency of collective economies, thereby expanding the method of consuming agricultural products through contracts with agricultural cooperatives.

- Implement necessary measures and create conditions for producers and enterprises to carry out the method of selling agricultural products through contracts; promptly identify any difficulties faced by enterprises and producers during the implementation of this method; promptly address difficulties within the responsibility and authority of localities, and proactively work with relevant ministries and sectors to resolve issues beyond the authority of localities;

- Direct the establishment of some model patterns regarding production methods under contracts to draw lessons for general guidance and improve policies, thereby promoting increasingly close and effective linkages between producers, processors, and consumers of agricultural products in agriculture;

Article 8. Responsibilities of ministries, sectors, and related organizations:

1. The Ministry of Agriculture and Rural Development and the Ministry of Fisheries shall issue model contracts for the sale of agricultural products for industries, which enterprises and producers can apply during implementation; monitor and compile reports on the implementation of the method of selling agricultural products through contracts;

2. The Ministry of Trade shall be responsible for guiding and supporting enterprises in promoting trade and seeking markets for agricultural products;

3. The Ministry of Finance shall review tax policies to ensure they are appropriate for parties signing contracts; establish mechanisms and policies to set up industry-specific insurance funds to be submitted to the Government for decision; guide financial policies related to this matter;

4. The State Bank of Vietnam and the Development Support Fund shall provide guidance and organize the implementation of loans to enterprises and producers as stipulated in this Decision;

5. The Government's price management agency shall guide principles for determining the minimum purchase price of agricultural products by enterprises from producers to ensure that producers benefit and businesses operate effectively;

6. The Vietnam Farmers' Association and Industry Associations shall leverage their roles and positions to support enterprises and producers in concluding contracts for the sale of agricultural products;

Article 9. This Decision shall take effect from the date of signing.

Article 10. Ministers, heads of ministerial-level agencies, and provincial People's Committees directly under the central government are responsible for implementing this Decision.