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Loans to rescue coffee, cashew processors
The Ministry of Agriculture and Rural Development has asked banks to make low interest loans available for the purchase and processing of coffee and cashews, worth a total of VND45 trillion (US$2.15 billion).
The ministry's Circular 3017/BNN-CB urged banks to provide the six-month loans to the coffee and cashew sector to overcome cashflow difficulties and high input costs.
Coffee and cashew processors needed capital late in the year to buy raw materials to process for export to take advantage of approaching holidays, the ministry said.
But the Viet Nam Coffee and Cocoa Association and the Viet Nam Cashew Association had complained of difficulties in getting loans due to high interest rates of 20-22 per cent, the ministry said.
The coffee association said the banks had imposed conditions, including financial ability, export volume and the number of years exporting, that made many coffee enterprises ineligible for loans.
The cashew association complained that high interest rates and input cost, and pressure to repay principal at the end of the year had forced firms to sell cashews at low prices.
Therefore, based on export ability and demand on capital for the year end production, the ministry asked banks to provide VND16 trillion ($766 million) in "soft-interest" loans at 17-19 per cent with flexible conditions.
It asked that the cashew sector get VND29 trillion ($1.38 billion) in loans with preferential interest rates, including VND13 trillion ($622 million) to buy raw cashew locally, VND13 trillion to import raw cashews and VND3 trillion ($144 million) in long-term loans to upgrade equipment and machinery.
The coffee association said that at the end of this month and early next month, it would sign co-operation agreements with the Agriculture and Rural Development Bank (Agribank) and Technological and Commercial Bank (Techcombank) to provide loans for enterprises purchasing coffee in the 2011-12 crop.
At a meeting last month with export enterprises in Central Highland Dak Lac Province, Agribank undertook to provide loans of VND5 trillion ($239 million) during the 2011-12 harvest starting next month, a bank representative said.
Meanwhile, other banks said at a meeting between banks and coffee and cashew trading enterprises in Ha Noi last week they would provide enough capital for coffee trading enterprises. The banks included the Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Bank for Investment and Development of Viet Nam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank).
The coffee association said if the sector had the capital, it would likely export 1.2 million tonnes of coffee this year, to earn an expected $2.4 billion.
The export value of coffee had increased sharply in recent years but most of the exports were raw coffee, so the industry has planned to increase the export volume of processed products by 20 per cent.
Cashew association chairman Nguyen Thai Hoc said despite the many obstacles in production and business, the industry was predicted to earn $1.3-1.4 billion from exports this year.
So far of this year, Viet Nam has exported 129,000 tonnes of cashew, earning $1.1 billion, a year-on-year reduction of 7.8 per cent in quantity but a year-on-year increase of 38.6 per cent in value due to the sharp increase in export price from $8,809 to $9,500 per tonne in July.
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