Ethnic women harvest tea in the northern region. Agricultural credit policy in rural areas of Việt Nam is inadequate so that 86 per cent of ethnic minority farmers in the Tây Nguyên (Central Highlands) region are borrowing “black” credit to develop production. — VNA/VNS Photo
HÀ NỘI — Agricultural credit policy in rural areas of Việt Nam is inadequate so that 86 per cent of ethnic minority farmers in the Tây Nguyên (Central Highlands) region are borrowing “black” credit to develop production.
This is the finding of a research team of the Institute for Studies of Society, Economics and Environment (iSEE) presented at the seventh Việt Nam Agriculture Policy Forum yesterday.
“Black credit” refers to a practice of borrowing from individuals at high interest rates agreed on between borrower and lender, wiithout collateral and with only the borrower’s signature.
Dr Hoàng Cầm from the iSEE research team said most ethnic minority farmers in Tây Nguyên had to borrow large sums in black credit for three reasons: they fear regular banking procedures, can borrow bigger sums of money and think individual lenders easily extend deadlines while banks can confiscate assets if they can’t pay the money back.
Lê Đức Thịnh, deputy director of the Rural Development and Economic Co-orporation Department under the Ministry of Agriculture and Rural Development said bank loans are not really suitable for farmers in rural areas.
Although banks offer incentives, the proportion of credit loan in rural area is still low.
This is due to the low profits of agricultural production, high risk and small scale, according to Thịnh.
A professional small agricultural credit system for rural areas has not been established and only 0.67 per cent of agricultural co-operatives nationwide have access to banking credit loans.
Organised by the Việt Nam Institute for Economic and Policy Research, the forum entitled "Credit Policy for Agriculture and Rural Development – Current Situation and Solutions" drew some 100 participants from NGOs, Japan’s Kyoto University, the agriculture ministry and research organisations. — VNS