Aquaculture for all

Vietnamese Struggle for Fish Farm Subsidies

Economics Politics +2 more

VIET NAM Tran Van Tao, a shrimp farmer in My Tu District in Soc Trang Province, was a lucky borrower of the local Bank for Agriculture and Rural Development (Agribank) right at the moment the Governments subsidized lending policy took effect under the second stimulus package.

Tao easily completed procedures for the credit at Agribank Soc Trang as he has paid old debts and is a prestigious customer of the bank, reports VietNamNet Bridge.

A farmer harvests shrimp in his farm in Nam Can District in the Mekong Delta province of Ca Mau. Farmers have difficult access to government-subsidized loans designed to stimulate the slowing economy.

However, other farmers are not as fortune as Tao. Besides small and medium enterprises, farmers are facing obstacles to the subsidized lending program due to many requirements of credit institutions.

Commercial banks in Soc Trang Province through last month loaned over VND2.8 trillion to over 1,000 enterprises, farmers, farm owners and individuals, according to a report of the provincial authorities. The largest disbursement was recorded at Agribank Soc Trang at some VND1 trillion while the local Bank for Investment and Development offered the second largest disbursement of over VND200 billion.

Though only just over 700 local farmers have accessed subsidized loans to date, Soc Trang Province is still seen to have the fastest disbursement rate among localities in the Mekong Delta and nationwide. However, the sum is too modest to serve a province rich in agricultural potential with 40,000 hectares of shrimp farming area and thousands of salt farming families. Farmer Tao is actually a rare circumstance in the province to enjoy the subsidized interest rate.

Like any enterprise, farmers at first are asked to pay old debts before asking for new credits at any commercial bank. Therefore, statistics of the Department of Agriculture and Rural Development in Dong Thap Province show that only 40% of households have settled all old debts and can meet the first requirement of banks. Meanwhile, borrowers who really need money due to last years losses or failed crops are rejected by creditors.

If the debts are rescheduled following the Governments loan extension program, farmers then are asked to submit a qualified production or business plan, says Duong Quoc Nghia, chairman of the provincial Aquaculture Association. Such a requirement is certainly not simple as farmers have to indicate buyers of their products, selling places and underwrite contracts with enterprises.

Many fish farmers in the Mekong Delta say that they have paid old debts at banks but failed to make a business plan because fish farms are required to have certificates from local authorities and trading contracts with enterprises. In fact, only some provinces have expanded the regulation on certificates to local farmers as the Ministry of Agriculture and Rural Development issued the regulation last year.

Just one or two out of every ten farmers in An Giang Province can sign a contract with enterprises, says an official of the provincial agricultural department. However, enterprises on the contracts only promise to buy fish at market prices after harvest due to disputes with farmers and among farmers themselves while commercial banks always ask farmers to list buying prices of enterprises.

The requirement on underwriting contracts is really a big challenge for farmers. An example is a fish breeder in the province who failed to get a subsidized loan because he could not say who would buy his young fish after harvest.

In addition, creditors ask farmers to submit input material purchasing receipts while the farmers are quite used to a no-receipt trading habit. Others cannot even get a receipt as they do not buy materials from companies but from individuals.

The Governments subsidized interest rate policy took effect on February 1 but by that time many farmers had already secured loans without the benefit of the subsidized interest in order to prepare for the winter-spring crop in early 2009. As a result, they may have to sell their products early to re-pay the loans and follow other procedures for subsidized credits. And of course, both farmers and banks will have to spend more time and effort for the job.

Concerning complicated procedures that prevent farmers from reaching subsidized interest, the State Bank of Vietnam early this month sent a document to credit institutions outlining a simplification of the process that will help farmers who lack receipts for their input material purchases.