From: 0003752801@mcimail.com (Hoanh Dinh Tran)
Newsgroups: soc.culture.vietnamese
Subject: POL/ECON -- France's food aids to VN
Date: 17 Apr 92 17:03:23 GMT
Reply-To: 0003752801@mcimail.com
Organization: N/A
Originator: daemon@media.mit.edu


Hi everyone:

The news said:

 > >     PARIS, April 8, Reuter - France will provide Vietnam with 3,650 tonnes
of
 > > wheat and two million francs ($350,000) worth of other food aid under an
 > > accord signed in Paris last week, the finance ministry said on Wednesday.
 > >     A ministry statement said the food would be sold on local markets to
raise
 > > money for irrigation and other rural development projects in the southeast
 > > Asian country.

Anh Nha^n asked:

 > Why does Vietnam need food aid from France while it boasts itself to be the
 > one of the leading exporter of rice in the world?
 >
 > Could it be that Hanoi need hard currency so desperately that it has to
 > export rice while being oblivious to food problem at home?
 >
 > Nha^n
 >


Here is my attempt at understanding the situation, without actually
knowing the facts of this specific aid arrangement.

First, when a developed country gives food aid to an developing country,
such as Vietnam (today, economists are supposed to used "developing 
country" instead of "underdevelopped country"), it does not mean the 
donee country really wants that specific food aid.  Many times, the content of
deal is determined by the donor.  Let me explain it further.

In any country, agriculture is a business that the government has to stick 
its hands in deeply to help, because it is a very volatile business.
One never can predict how good the crops will be this year or next year.
A little more rain, a little less rain, a little colder or warmer, 
unexpected migration of insects, any of these variations can effect the 
crops tremendously.  

So, what does that mean? 

Well, the bottom line is that the crops may fluctuate wildly year by
year.  In a "very good" year, when the crops are TOO good, agriculture 
production is TOO high, too much food is sold on the market, food price 
plummets tremendously and, thus, farmers lose money.  The main reason
for this is that agriculture products, by and large, are non-durable and
can not be stockpiled for so long.  They must be sold and consumed 
immediately.  (In a nutshell, farmers fail when they are too successful!!
No win situation.  Now, guys, you see why we all should be more generous
and open our heart wide to the daughters of the farm.)

Of course, in a "very bad" year, when the crops are ruined or cannot grow
due to, say, weather, farmers lose too. 

Therefore, besides various systems of agricultural insurance and collective
coordination on agriculture production, which are mostly private, the 
government usually have to jump in to help farmers in hard economic times,
in some form of aids or grants or, the most comprehensive term, subsidies.
One of these governmental aid forms is the government's buying of surplus 
farm products from farmers when agriculture production becomes excessive
(in a "very good" year in our example).  By buying surplus products, the
government keeps the prices of farm products from falling and, thus,
stabilizes agricultural prices and saves farmers' skin.

Say, last year the France government bought $10 millions worth of surplus 
farm products from Frech farmers.  So, what does the French government 
have to do with this $10 million surplus?  It cannot bring it out on the
market (both domestic and export markets), because the purpose of buying
was to take the products from the market to keep prices reasonably
high so farmers can still make a living.  So, it either has to store it,
or dump it away, or give it away.  Storage has its limits.  One can not
store so much farm products, because (1) storage costs money and (2) maybe
next year there will be some surplus again--one cannot keep storing forever.
Dumping away is bad for two reasons: (1) it is morally wrong to dump 
foods while many people are starving in the world and (2) dumping will
show a stupid loss sticking out like a sore thumb on the national financial
statements.   

So, a large portion of this government-purchage surplus must
be given away.  That is good politics and good economics.  Giving foods 
away is, of course, good politics.  Does anyone doubt this wisdom?  It is
also good economics--not only helping  farmers, but also
familiazing the donee country with the taste of new products, for potential
future markets.

If France is not in bad-blood with Vietnam, France would simply call up 
the poor Vietnam guy and say: "Hey, we have free food for you."

So, France can say to itself and the world that it spends so many millions
of food aids to Vietnam.  The price tag of the aid may be calculated at
French market price, which is a very decent price, although in reality
the aid food cannot be sold at any price!  It must be dumped or given away!
How wonderful the international accounting for aid is, you see!

All this doesn't mean that the aid should not be appreciated.  Quite
the contrary, I say, food is food and aid is aid.  All philanthropic 
acts in life make this world a better place.

The only practical point I would like to  point out here is that the little
guy, the donee, has little choice.  Whatever they give us, we either take
it or don't take it.  Not a lot of choice or input.

The result is that the poor country got aids amounting to millions of
dollars in foods that have little value to them.  Dry corn, for example,
is not used in Vietnam for human consumption.  Usually they are used for
animals, like pig.  What a waste!  American podwer milk was used mainly for
pig foods during the '60 (although the American intended the aid milk for
human consumption). 

The bottom line is that the aid gives the donor a big charity claim, but
may mean much, much less to the donee as far as practical value is 
concerned.

The more practical aid, for example, would be that France gives VN 
fertilizers (the ones that work on VN soils) to increase its own food
production.  But, that is another story, which may requires a similar,
but different analysis.

Well, have a good day, everyone.

And have a nice weekend, too.

Me^'n
Hoa`nh
Newsgroups: soc.culture.vietnamese