Farmers harvest rice in southern Tay Ninh Province. Agriculture gained a growth rate in gross domestic production of 3.13 per cent each year from 2011-15. - VNA/VNS Photo Duc Hoanh

This was revealed in a Government report on public investment in agriculture and rural areas.

The report, presented to policymakers during the second session of the 14th National Assembly (NA), said the NA and the Government had many preferential policies for investment activities using funds from the State budget. They also called on investment from society for agriculture and rural development.

From 2012 until today, the Government issued policies to enhance efficiency of public investment activities for agriculture and rural areas, including policies on encouraging development of enterprises' investment activities in the sectors and supporting them.

Of the total VND611 trillion invested in agriculture and rural areas during 2011-15, VND221.5 trillion came into the agro, forestry and fisheries sector, while VND389.5 trillion was used for development of socio-economic restructuring and poverty reduction.

The capital for the National Target Programme on Building New Rural Areas during 2011-15 reached VND851.4 trillion, including VND266.8 trillion from the State budget, VND435 trillion from credit, VND42.2 trillion from enterprises and VND107.4 trillion from people and the community.

Credit for agriculture and rural areas gained an average growth rate of 20 per cent per year in the period, higher than the credit growth rate of the economy at 18.5 per cent, the report said.

The total outstanding loan of the agriculture and rural sector by August 2016 reached VND900 trillion. There were special credit programmes for re-cultivation of coffee trees, support for aquaculture, reduction of losses after exploitation of fisheries and the application of high technology for producing export products.

Agriculture gained a growth rate in gross domestic production of 3.13 per cent each year during 2011-15. The average income of rural residents reached VND2.2 million per capita per month in 2015 and the percentage of poor rural households was reduced to 8.2 per cent last year from 17.4 per cent in 2011.

However, the report highlighted the problem of high debt in capital construction, noting 53 out of 63 provinces and cities were bearing debt. Total debt of these localities reached VND15.3 trillion (US$685 million) with some of them becoming insolvent.

The report said rural infrastructure funding mainly came from the State budget, official development assistance and government bonds. Agriculture and rural areas have not mobilised much funds from people and the private economic sector because policies have been not attractive enough, while administrative procedures have been too complicated.

Appraisement and supervision for efficiency after investment have not been paid enough attention, and there was not enough capital for maintaining construction after investment.

The report recommended that the State enhance supervision for implementation of public investment policies for agriculture and rural areas to ensure the efficiency of the policies.

The NA should complete institutional changes and policies on agriculture, farming and rural areas, and public investment for them to be turned into reality, it said.

Government looks to beef up agriculture loans

The State Bank of Viet Nam (SBV) will direct credit for the agriculture sector into high value production and participation in the global value chain.

The State Bank of Viet Nam (SBV) will direct credit for the agriculture sector into high value production and participation in the global value chain.- Photo daidoanket.vn
Dao Minh Tu, SBV's deputy governor, said at a conference on Sunday that credit policies will focus on encouraging high tech farming in order to improve product quality and value.

Experts at the conference said a huge amount of capital is needed to restructure the agriculture sector, of which credit must play a key role.

However, farmers continue to find it difficult to access banking credit.

Lai Xuan Mon, President of the Viet Nam Farmers' Union, called it difficult for farmers to borrow money from banks without mortgages, even though the Government's Decree 55 on credit policies for agriculture and rural development allows lending without mortgaged assets.

Pham Duc Thang, a farmer from northern mountains' Ham Yen District, said his family business is struggling to find long-term capital for expanding production. Farmers still needed mortgaged assets to borrow money from banks but, land, a popular asset for mortgage, is often evaluated at low values in rural areas.

Trinh Thi My, a farmer from northern Que Vo District, said that her family invested more than VND20 billion (US$895,000) in September to expand husbandry production but only managed to borrow VND2.5 billion from banks and was forced to mortgage six lots of land with a total area of 4,200sq.m. to get the loan.

Le Quang Thanh, general director of Thai Duong Company—which operates in animal feed and rearing in northern Hung Yen Province—said there are credit policies for agricultural production, but the policies are not realistic.

He said in many countries loans are provided for up to 30 years for the animal raising sector, while in Viet Nam loans are only offered from three to seven years, making it difficult for farmers to repay their debts.

"Credit policies for the farming sector still do not pay adequate attention to the real demand," Nguyen Do Anh Tuan, director of the Institute of Policy and Strategy for Agriculture and Rural Development, said.

In addition, small-scale and scattered production as well as risks from climate change, diseases and natural disasters made banks hesitant in providing credit to the agricultural sector.

According to Tu, policies and incentives in the agriculture and rural sector should be adjusted, and the central bank should continue simplifying lending procedures to farmers while tightening supervision to ensure loans are used for the right purposes.

Economic expert Can Van Luc said support will be provided to farmers in improving financial and banking service awareness.

Statistics of the central bank showed that as of the end of September, outstanding loans in the agriculture sector totalled VND925 trillion, up 9.6 per cent over the end of 2015 and 13.4 per cent over the same period last year. The agriculture sector accounted for 18 per cent of the economy's total outstanding loans.

A land bank?

"It is critical to bring the industrial production mindset into agricultural production," Nguyen Duc Kien, deputy chairman of the National Assembly's Economic Committee, said.

Kien said during enterprises' privatisation, assets would be allocated to those who used them in the most efficient manner. "Why doesn't the agriculture sector apply the same mechanism?" Kien questioned.

He said the foundation of a land bank should be considered, in which land would be leased for large-scale production. "This would be more efficient and essential for agricultural restructuring success."

VNS