Effectiveness of agricultural and rural credit policies

(Baonghean) - After 4 years of implementing Decree No. 41/2010/ND-CP of the Government on credit policy for agriculture and rural areas, the flow of credit to the agricultural and rural areas in the province has been cleared, creating conditions for hundreds of thousands of farming households to access loans to invest in economic development in the agricultural and rural areas of the province.

Like many farmers developing livestock farms in Dien Chau district, Mr. Pham Van Can, hamlet 10, Dien Trung commune has become a loyal customer of the Dien Chau District Agricultural Bank branch for more than 10 years.

Officers of Dien Chau Transaction Office - Nghe An Social Policy Bank guide loan procedures. Photo: Huu Nghia.

In 2002, Mr. Can started building a poultry farm. At that time, he only had a small amount of capital. He approached the Agricultural Bank of Dien Chau district to ask for a loan to invest in a poultry farm. After appraising the project, the bank approved the loan. Mr. Can boldly invested in a closed poultry farm system worth 1.5 billion VND, and bought about 1 billion VND worth of breeding stock. Up to now, his family's poultry farm has a scale of 13,000 chickens, at times up to 19,000 chickens, mainly raising commercial broiler chickens and Egyptian guinea fowls, selling eggs and meat to supply markets in Ha Tinh, Quang Binh, Thanh Hoa, Ninh Binh provinces... Each year, he sells 120 - 150 tons of commercial broiler chickens to the market. In favorable years, the farm achieves a total revenue of 3 - 4 billion VND, after deducting all input costs, the net profit is about 1 billion VND/year. Mr. Pham Van Can said: “In the early years when I first established the farm, I was lent 1 billion VND by the District Agricultural Bank. The business process was effective, my family paid off the bank loan, now only has a debt of 300 million VND. Thanks to the sharing and support of the Agricultural Bank, my family has increased investment resources and confidence in doing business, fulfilling all obligations to the bank on time.”

Decree 41 was issued to create favorable conditions for many economic sectors in rural areas to access capital, promote production and business, creating many material values ​​for society. Mr. Bui Thanh in Tan Thang hamlet, An Hoa commune (Quynh Luu) borrowed capital from the District Agricultural Bank to invest in shrimp farming. Choosing shrimp to develop the economy was also a bold decision of Mr. Thanh, because shrimp farming is no different from gambling, if favorable, the profit is big, if risky, the loss is big. With a loan of 600 million VND from the Quynh Luu District Agricultural Bank, Mr. Thanh boldly invested in 2 shrimp ponds with an area of ​​1 hectare. Recently, he released 650,000 white-leg shrimp seedlings, so far the shrimp have developed for 2 months, and will be raised for about 1 more month before selling to the market. If all goes well, he will harvest 7-8 tons of shrimp, worth 700-800 million VND, minus input costs, the net profit is about 300 million VND. Mr. Thanh shared with us that he wants to borrow an additional 500 million VND from the bank to expand production scale in the next crop.

For localities developing the marine fishing industry, this year fishermen are focusing on borrowing capital to build new large-capacity ships to go offshore to exploit in long-distance fishing grounds, increasing fishing efficiency. Mr. To Hung in Hamlet 3, Quynh Nghia Commune is building a new 800 CV ship, worth 6.5 billion VND. This ship was built by 8 brothers. Mr. Hung shared: Thanks to the approval of the Agricultural Bank of Quynh Luu District to lend 1.7 billion VND to be disbursed according to the progress of the ship construction, it has provided a large and timely source of capital for us to build our dream ship. Previously, we went fishing with 420 CV ships, mainly exploiting in the fishing grounds of the Gulf of Tonkin. Now we have sold old ships to build large capacity ships with the aim of going offshore to exploit 300 - 400 nautical miles, maintaining exploitation at sea for months while ensuring, both increasing the output and value of seafood, and at the same time contributing to protecting the sovereignty of the sea and islands of the Fatherland.

Agribank Son Hai transaction office provides loans to 7 communes including: Son Hai, Quynh Long, Quynh Ngoc, An Hoa, Quynh Thuan, Quynh Tho, Quynh Yen. Up to now, the outstanding loan is over 203 billion VND, of which loans for the marine industry account for 2/3 of the total outstanding loan. In the first 6 months of 2014, outstanding loans increased by 23%. In the first 6 months of the year, Tan An parish alone provided loans to build 6 new fishing boats, with a capacity of 500 CV - 800 CV, with an average loan of about 2 billion VND per boat.

Mr. Ho Cong Dam - Director of the Agricultural Bank of Quynh Luu district said: Determining investment in agriculture and rural areas is the main task of the branch, so each officer and employee of the bank creates the most favorable conditions for people to access capital, increase production investment, and quickly turn over capital. By June 30, 2014, the total mobilized capital of the Agricultural Bank of Quynh Luu reached 796,408 million VND, an increase of 75,153 million VND compared to the beginning of the year; Outstanding loans reached 970,602 million VND, an increase of 118,694 million VND compared to the beginning of the year, a growth rate of nearly 14%. With 12,304 customers with outstanding loans, of which over 90% of outstanding loans are agricultural and rural customers. In particular, 4 coastal communes including Quynh Long, Son Hai, Tien Thuy, Quynh Nghia have outstanding loans of 238 billion VND, accounting for 24.5% of the total outstanding loans of the whole district. In the first 6 months of the year, loans were provided to build 88 new fishing boats, with a capacity of about 800 CV/boat. The average participating bank capital was from 1.2 - 2 billion VND/boat.

According to Mr. Phan Duc Tien - Director of Agribank Nghe An province, since the implementation of Decree 41, the outstanding debt of the provincial Agribank system has increased significantly. As of June 30, 2014, the total outstanding debt for the economy reached 11,728 billion VND, an increase of 753 billion VND compared to the beginning of the year. Of which, outstanding debt under Decree 41 reached 7,058 billion VND, accounting for 60.1%. With 105,990 customers still having outstanding debt. Customers absorb capital well, produce and do business effectively, pay principal and interest to the bank, the bad debt ratio is only under 0.5%. The credit investment structure has been approached relatively comprehensively, including all stages in the process of agricultural production, building new rural areas and improving people's lives.

However, besides the positive aspects, the implementation of Decree 41 also encountered difficulties such as the slow issuance of Land Use Right Certificates in localities in the province; for farm models, farms that are eligible for farm certificates are still slow. This reality affects farmers and farm owners in the process of accessing loans. At the same time, according to Decree 41, the credit loan level is large, production households can borrow up to 50 million VND. If local authorities and authorities do not coordinate well with banks and borrowers, it will be very difficult to recover debts when risks occur. In addition, production models and effective projects in agriculture and rural areas are still limited, there is no common model for the whole community. The consumption of agricultural products is still difficult, dependent on the market, good harvests and falling prices... making it difficult for customers to repay loans... It is thought that the agricultural sector and related sectors need to coordinate closely, have solutions to consume agricultural products conveniently for farmers so that when there is a good harvest, prices do not fall. This will create motivation for farmers to confidently invest in the production of goods on an increasingly large scale.

Quynh Lan