Farmers struggle to access loans to develop production

A man feeds his chickens in central Quảng Bình Province’s Vạn Ninh Commune.-VNA/VNS Photo Vũ Sinh

Trần Đình Thành, head of the Farmers Association of Ba Vì District’s Cẩm Lĩnh Commune said the association includes 61 households raising a total of 270,000 chickens, reported by Tiền Phong (Vanguard) newspaper.

It needs VNĐ17 billion (US$748,000) to maintain their breeding activities, he said.

This meant each household was required to contribute about VNĐ300 million ($13,200).

However, most of them could only borrow VNĐ100 million ($4,400) from banks because to borrow more, banks required farmers to use their land-use right certificate as collateral, he said.

Most co-operatives households rent land for breeding farms, so they have no land-use right certificates.

Ngô Thanh Tùng, head of a group of animal breeders in Đông Anh District’s Việt Hùng Commune in Hà Nội said the group was raising more than 50 sows and hundreds of pigs.

The group provided jobs for more than 20 local labourers with regular income of VNĐ3-5 million ($132-220) each month, he said.

Yet he and other breeders could only access 12 month loans from the State Bank of Việt Nam (SBV). The short-term loans affected the breeders’ mindsets as they had to pay their loans back quickly, he said.

Thành said he hoped the Government would help farmers could borrow middle and long-term loans in the future.

In June 2015, the Government issued Decree 55/NĐ-CP, aiming to create favourable conditions for farmers to borrow money with preferential treatment. Under the decree, farmers can get a loan from VNĐ50 million – 3 billion ($2,200 - $1.3 million) but were required to give banks their land-use right certificates before receiving money.

A representative from the SBV admitted to shortcomings in providing loans for farmers.

Nguyễn Tiến Đông, head of the SVB’s Credit Department said he knew many famers failed to borrow money due to the need to provide land-use right certificates as collateral.

Đông said the SVB would ask the Government to amend regulations on mortgages to fix the shortcomings.

Economist Cấn Văn Lực said lending money without collateral should be carefully considered because banks would risks borrowers failing to pay back their loans.

It was easy to see why banks had to carefully calculate the feasibility of a project before lending money, he said.

Lực said authorised agencies were advised to provide training for farmers so that they used the money they borrowed from banks effectively. When they presented a feasible plan, they could borrow money from banks easier.