The rice price on harvest time can be stabilized if the price risk on off-harvest time can be removed. The business pattern between farmers and RPCs should be changed from transactions(buying and selling) into the sales on consignment to get rid of price risk. Then the received price by farmers can be averaged to annual price, and the management of RPC can be rationalized because RPC take a fee. And the conflict between farmers and RPCs can be removed.
It was found that the amount of an advance payment to farmers is not much. This means that the level of an advance payment is not important to activate the sales on consignment. It is very general that rice price is calculated exactly at the price of time when the farmers want. It implies that we can not adopt the pooling system that Japan and Australia apply.
It is surveyed that 20% of farmers and 38% of RPCs have intentions to do the sales on consignment, and 45% of farmers and 38% of RPCs want the sales on consignment if the conditions are satisfied. The 44.8% of rice farmers and 42.3% of RPC operators ask that the clearing price must be guaranteed to activate the sales on consignment. Farmers and RPC operators worry that the price at the off-harvest time falls bellow the price of harvest time.
Government tried the sales on consignment as a pilot project. They aimed 100,800ton, but the results are 20% of targets. There were few reasons that farmers and RPCs did not participate the pilot project. The price level which should be calculated was not suggested. That comes first to the farmers and RPC operators. And much paper works are required to the RPC operators.
A kind of guaranteed price should be suggested, and then the uncertainty farmers and RPC face can be removed. We can refer to the loan rate program U.S. has. If the market price falls bellow the loan, then the government pay the difference between loan rate and market price. Considering the loan rate, we should take into account the market situation and should not consider the non-market factors.