Preferential credit for farmer-business connectivity models

14:07 | 03/06/2014 Economy

(VEN) - The State Bank of Vietnam, the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology are considering cooperation on a pilot program for financing a connectivity model between businesses and farmers in order to multiply the model and promote high technology application in agricultural production and farm produce exports.

State Bank of Vietnam's Credit Department Director Nguyen Viet Manh said that there have been many agricultural production models promoting connectivity between businesses and farmers nationwide. A number of those models have proved successful, including the large-scale rice field model in An Giang Province and other localities, the hi-tech vegetable and flower cultivation model in Lam Dong Province, and the dairy farming and milk product production model in Nghia Dan in Nghe An Province, among others.

With those models, businesses not only created large scale rice fields and mechanized agricultural production but also had stable raw material production areas and constructed trademarks and geographical indications for both their exported and domestically sold products. The models benefited both farmers and businesses.

At a government's regular meeting in February 2014, State Bank of Vietnam Governor Nguyen Van Binh suggested construction of a credit program for connectivity models and high technology application and farm produce export promotion projects. Through its Resolution 14/NQ-CP, the government assigned the State Bank of Vietnam to work with the Ministry of Science and Technology and the Ministry of Agriculture and Rural Development to implement a pilot credit program for connectivity models. These three organizations are working together to survey, research and construct experimental policies for a large scale application.

Manh said that the pilot credit program is expected to decrease the input costs for the connectivity models’ products through offering preferential credit for the models. The program could provide unsecured loans for businesses and farmers as members of a connectivity model. 

With this pilot program, the banking sector can not only increase credit growth related to agricultural production but also promote large-scale, competitive agricultural production, contributing to gradually improving farmers' living standards and constructing and developing new rural areas.

Manh said that the State Bank of Vietnam, the Ministry of Science and Technology, the Ministry of Agriculture and Rural Development and credit institutions surveyed and  were expected to select about 20 connectivity models as the pilot credit program’s beneficiaries, including the large-scale rice field model, the product value chain-based connectivity model and the high technology applying business model, among others, with priority given to rice, seafood, livestock breeding, vegetable and fruit. An estimated two years after the pilot credit program finishes, the State Bank of Vietnam will consider policy improvements and multiplication of the models.

Manh said that agricultural insurance policies, farm produce planning and farm produce planning management, export farm produce promotion and law-based assistance and market information are important for the pilot credit program’s success./.

According to the State Bank of Vietnam, the annual credit growth for agriculture and rural development has been higher than the economy’s average; as of the end of 2013, the outstanding loan balance for agriculture reached VND671.986 trillion, up 19.67 percent from the same time in 2012.

By Ngoc Thao