Nghe An: Establishment of a fund to support the development of the cooperative sector

(Baonghean)-Nghe An currently has 618 cooperatives, including 434 agricultural service cooperatives, 127 non-agricultural cooperatives and 57 cooperative credit funds. Although the province has a large number of cooperatives, this area is still underdeveloped, many cooperatives lack capital for production and business. Therefore, the establishment of the Cooperative Development Support Fund to support loan capital is very necessary.

Giang Son Dong Agricultural Cooperative (Do Luong) supplies fertilizers to members.

Effective model in Vinh city

In 2014, Mr. Vo Van Du - Director of Du Ngoc Investment and Development Cooperative (Dong Vinh Ward, Vinh City) received a loan of 900 million VND from Vinh City Cooperative Development Support Fund to invest in a livestock project. Previously, his family specialized in handmade brick production. After eliminating handmade brick kilns according to the State's policy, in 2013, Mr. Du decided to establish a cooperative to invest in developing super-laying chicken farms.

Mr. Du's farm is more than 3 hectares wide, his family dug a pond to raise fish on nearly 2 hectares, and on the shore built 2 closed chicken coops with a total flock of 11,000 chickens. The investment cost for building the coop and breeding chickens is 1.3 billion VND/coop.

This closed industrial chicken farming model is applied with advanced foreign technology, ensuring environmental hygiene, heating in winter, cooling in summer, ensuring the chicken flock develops stably, safely, and without disease. 6,000 reserve chickens and 5,000 laying hens are always carefully cared for, isolated from the outside environment.

Thus, after exploiting the laying hens for 14-16 months, the broiler chickens are sold, and there are still replacement hens. Thanks to this, the farm never has any interruption in the supply of eggs to customers. The eggs are purchased by Big C and Metro supermarkets. Every day, the hens lay 4,500 eggs which are sold wholesale within the day. Currently, chicken eggs are sold wholesale for 2,000 VND/egg, and the net income from raising chickens alone is from 250 - 300 million VND/year.

In addition, the farm also has an average fish output of 7-8 tons/year, after deducting expenses, the net profit is about 100 million VND. Mr. Vo Van Du shared: "In the early days of capital difficulties, thanks to the Vinh City Cooperative Development Support Fund creating favorable conditions for a large loan of 900 million VND with low interest rates, we have the funds to invest in developing the farm. 3 years ago, without the above capital, the family could not have built this farm.

In Vinh city, there are 54 cooperatives with more than 21,540 members, including 25 agricultural cooperatives, 27 non-agricultural cooperatives and 2 cooperative credit funds. In recent years, the city has paid attention to and created favorable conditions to support in all aspects to promote the development of the cooperative economic sector.

Specifically, the Cooperative Development Support Fund and policies for industrial and agricultural promotion have been established; skills training in production and business planning, accounting, and the 2012 Cooperative Law have been organized, etc. In the period 2011 - 2015, 13 projects of cooperatives were considered for loans with a turnover of 7,350 million VND. The capital borrowed from the Cooperative Development Support Fund of Vinh city has actively supported cooperatives to invest in effective production and business development.

Du Ngoc Cooperative's chicken farm has been effective thanks to the loan capital from Vinh City Cooperative Development Support Fund.

Formation of the Fund to support the development of cooperatives in Nghe An province

The province currently has 618 cooperatives, including 434 agricultural service cooperatives; 127 non-agricultural cooperatives and 57 cooperative credit funds with more than 265,362 members and 52,162 regular employees. In addition, the province also has 2,906 cooperative groups with 34,236 members, the number of employees increases by an average of 250 people per year.

The total revenue of the cooperative sector averages over 1,300 billion VND/year. However, the cooperative sector is still a slow-growing economic sector, with difficulty competing in the market... The main reason is that cooperatives lack capital to invest in production and business, and are slow to innovate technology and apply technical advances. Through investigation at cooperatives, it was shown that only 21 cooperatives (3.26%) received preferential loans; 22 cooperatives (3.41%) borrowed capital from commercial banks, with outstanding loans at banks only about 0.3-0.5% of total annual outstanding loans.

Cooperatives are mainly allowed to borrow capital to cover short-term capital needs and have not yet accessed medium and long-term capital sources to invest in production and business, especially cooperatives in the agricultural sector. In addition, commercial banks only base on the profits earned to evaluate financial efficiency when considering loans. Meanwhile, the nature and value of cooperatives include economic, political and social. Therefore, it is very necessary to have a provincial Cooperative Development Support Fund to solve capital difficulties for cooperatives.

According to statistics, in addition to the Central Cooperative Development Support Fund, by the end of 2015, 43 provinces and cities nationwide had established Cooperative Development Support Funds. In Nghe An, only Vinh City has established a Cooperative Development Support Fund. In reality, most cooperatives and members want the establishment of a provincial Cooperative Development Support Fund.

Mr. Nguyen Quoc Hue - Chairman of the Board of Directors - Director of the Agricultural and Environmental Services Cooperative of Hung Nguyen town shared: "We hope that the Nghe An Province Cooperative Development Support Fund will soon be established to promptly support loan capital for the cooperative sector in the area. Currently, most agricultural cooperatives in the province have just completed the transformation, many cooperatives have boldly proposed new production and business plans that are in great need of capital for investment, hoping that the fund will create conditions for cooperatives to borrow unsecured loans, with a loan term of about 5 years or more so that cooperatives can have conditions to rotate capital and repay debts".

Mr. Tran Van Chuong - Vice Chairman of the Provincial Cooperative Union discussed: The Provincial Party Committee has approved the establishment of the Nghe An Provincial Cooperative Development Support Fund, currently waiting for the Provincial People's Committee to make an official decision. Under current conditions, cooperatives and cooperative members do not have collateral to borrow capital from banks, so cooperatives and members, cooperative groups are facing difficulties in capital sources to invest in technology innovation, expand production, etc.

Members of Giang Son Dong Agricultural Cooperative (Do Luong) invest in developing off-season sugarcane for high income.jpg

The establishment of the Fund will create conditions for cooperatives to access preferential capital from the State to expand production and business. The Fund is expected to have an initial charter capital of 30 billion VND, with the budget providing about 15 billion VND in 2017, and the remaining amount will be fully provided in 2018.

Currently, the cooperative sector in the province is expecting the provincial Cooperative Development Support Fund to be established and put into operation soon to create conditions and opportunities for cooperative members to borrow investment capital, increase production capacity, have better market competitiveness, and develop sustainably; at the same time, create stable jobs, increase income for workers in the cooperative sector, contributing to local socio-economic development.

Quynh Lan