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Bank loans let farmers prosper
Ngo Thi Phu, a farmer in Yen Lap District in northern Phu Tho province, owns a 1,000-square metre-farm where she raises eight wild sows and a wild boar, earning VND150 million (US$7,200) a year.
Although the 48-year-old woman and her family worked hard for several years, it was access to a bank loan that led to them prosperity.
"In 2002, my family borrowed VND7.5 million from the Agriculture and Rural Development Bank (Agribank)," she said. "With that amount, I bought a wild sow that gave us six pigs. We sold five and kept one for breeding."
Loans have helped thousands of rural residents like Phu, including Phan Thi Duyen, who set up the Tan Uyen Brocade Co-operative in southern An Giang Province's Tan Uyen District, where brocade is a traditional product.
Recognising the market's increasing demand for brocade products, Duyen borrowed nearly VND100 million from the Viet Nam Bank for Social Policy (VBSP) to set up a brocade production co-operative, which has grown from the initial five to 19 members.
"The income of the members, most of them farmers, is on average VND1 million per month. The co-operative has helped the local farmers to fully use their idle time between crops," Duyen said.
Rural credit involves small funds given by banks or financial institutions to farmers, co-operatives or associations of rural producers.
Its main goal is to stimulate investment and help in funding the production and marketing of agricultural products.
To get credit, the borrowers must present a project, plan and budget.
In Viet Nam, Agribank and the VBSP are two among several credit institutions specialising in rural credit for farmers.
According to the State Bank of Viet Nam's Credit Department, as of December 31, 2011, total outstanding loans given to the agriculture sector and rural areas was around VND477.49 trillion ($22.93 million), a year-on-year increase of 25.26 per cent. The figure is equal to 20 per cent of the country's total loan portfolio.
Last year, while the banking sector's credit growth rate was only 13 per cent, credit injected into agriculture and rural areas grew by 25 per cent.
Investments have also resulted in farmers' incomes increasing by 30 per cent on average, and between 60 and 80 per cent in some localities.
According to economic experts, Viet Nam, like other developing countries, has to cope with capital problems, particularly in agriculture and in rural areas.
More than 70 per cent of the population continues to live in rural areas, and they depend on agricultural production. However, most farmer households are still poor due to their low incomes.
In recent years, the Government has encouraged credit organisations to further invest in agriculture and rural areas. This has improved farmers'standard of living.
Dr Cairo Newman, a senior economic expert from Denmark, told Tai Chinh Viet Nam (Vietnam Financial) newspaper that the percentage of farmers households getting access to rural credit rose from 45 per cent in 2008 to 54 per cent in 2010.
He, however, said 50 per cent of the Vietnamese farmer households had not been able to access credit resources.
Several Vietnamese experts said the market economy was still developing so farmers had few opportunities to get access to credit. They also noted that agencies allocated investment resources unequally among localities and different sectors, making access to loans more difficult. To improve the quality of rural credit, experts recommended that more research be conducted on farmer demand, access to credit resources and evaluation of farmers' use of loans.
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