Farms in trouble due to lack of capital

(Baonghean) - Nghe An has more than 5,170 farms, of which more than 723 farms meet the criteria according to Circular 27 of the Ministry of Agriculture and Rural Development. However, the farms are currently facing many difficulties.

The farms have created jobs for nearly 20,000 workers, contributing to hunger eradication, poverty reduction and socio-economic development in general. The farms that meet the new criteria in Nghe An have an average capital of more than 8 billion VND, many farms have effectively promoted investment resources, creating competitive products in the market... A typical example is the livestock farm of Mr. Dam Duy Tu's family in Hamlet 10, Quynh Tam Commune (Quynh Luu) raising thousands of chickens, geese, ducks, wild boars, sows, 6 incubators for fertilized eggs and hatching chickens.

Mr. Dam Duy Tu said: Since 1999, my family has been lent 2 million VND by the bank to grow sugarcane and raise livestock. The farm has developed smoothly, used the loan capital effectively, and paid interest and principal to the bank on time, so the loan amount has gradually increased, to date it has borrowed 1 billion VND. Currently, the family is continuing to expand and build more barns to raise laying ducks and egg-laying hens to supply the market in and outside the province, and build more barns to raise sows. In addition, the family is also aiming for closed-loop farming from farm to table and striving to be certified by competent authorities for food safety and hygiene.

Chicken farm of Mr. Nguyen Van Du's family in Dong Vinh ward (Vinh city). Photo by Thu Huyen

"In 2012, the People's Committee of Quynh Luu district granted a certificate for a comprehensive farm. Currently, the farm is 1,500 m2 wide with a total investment of 2 billion VND, of which 1 billion VND is self-owned capital and the rest is borrowed from the bank. Recently, the bank has been interested in lending capital for production development, but to achieve the set goal, we hope that the bank will support the loan to increase the outstanding debt to about 1.5 billion VND," - Mr. Tu suggested.

In fact, the number of farms that can borrow capital with large outstanding debt like the case of the farm owner mentioned above is not much. While land is mainly rented for short terms and is not of high value, many farms have difficulty accessing bank loans; if they can borrow, the amount is low and the loan term is short. Currently, many farms invest in facilities, infrastructure, and use machinery, requiring a large amount of capital, not all farmers have the conditions to invest. Meanwhile, bank lending procedures are strict, and the short loan term is not enough for the growth cycle of crops and livestock, making it difficult for farm owners to manage.

Mr. Nguyen Duc Thanh's family farm in Yen Due block, Dong Vinh ward (Vinh city) has been raising laying hens for nearly ten years. Initially, he raised them on a small scale, from 3,000 - 4,000 chickens. In 2016, he invested 3 billion VND to build an additional farm, increasing the flock size to 6,000 - 7,000 chickens. Mr. Thanh said that up to now, the total investment capital for the farm has reached several billion VND, but borrowing from the bank is very difficult; because he does not have a red book, he can only borrow a few tens of millions of VND on credit.

Egg products from farms are stagnant due to difficult output. Photo: Thu Huyen

Similarly, Mr. Vo Van Du also lives in Dong Vinh ward, Vinh city - owner of a farm with an area of ​​2,500m², built chicken coops, 2 hectares of fish ponds for revenue of 4 - 5 billion VND/year. Mr. Du shared: I was luckier when in 2013 I was able to borrow ODA capital with an outstanding debt of 900 million VND, interest rate of 0.6%/month. Also in that year, I established Du Ngoc Cooperative and my chicken farm was granted a quarantine certificate by the City Veterinary Department, ensuring food safety. In addition to importing to Metro and BigC supermarkets, the farm's chicken eggs are also sold at some factories in Nam Cam Industrial Park, some restaurants and even imported to Laos. Based on the reality of farm development, we propose that relevant agencies and banks create conditions for medium and long-term loans.

According to Mr. Nguyen Van Binh - Chairman of the Provincial Farm Economics Association, there are currently many barriers to borrowing capital for farms. Banks require collateral and a highly feasible production plan; however, most farms rent land from the locality with a short lease term of 5-10 years, without a land use right certificate, so they cannot mortgage. With a small loan capital of only a few tens of millions of VND and a short repayment period, it is not suitable for the growth and development cycle of crops and livestock. Normally, a small farm that does not meet the criteria can only borrow 50 million VND through the credit of local mass organizations.

“In the process of understanding the problems and difficulties in the loan relationship, we see that there are still many shortcomings. Banks have legitimate reasons but need better solutions to promptly meet the loan demand and serve customers. Agricultural production requires a long-term investment cycle to build barns, electricity and water systems, etc. and crops and livestock also need time to grow and develop, so the demand of most farms is medium and long-term loans. Therefore, banks need to have more open policies for people to access medium and long-term loans to invest in livestock development. Sectors and localities need to coordinate and remove difficulties and obstacles in land procedures and credit policies to open up preferential loans for farmers,” Mr. Binh suggested.

The farm's demand for loans to invest in animal feed is very large. Photo: Thu Huyen

Discussing the issue of farm loans, according to Mr. Tran Van Duc - Deputy Director of the Bank for Agriculture and Rural Development, Nghe An branch, currently many farms operate spontaneously, lack long-term strategies, the input and output sources are mainly free markets, there is no joint venture in production and consumption of products, so it is not possible to control business efficiency, leading to some farm owners not being able to take advantage of the loan guarantee mechanism according to the credit policy for agricultural and rural development in Decree 55/2015/ND-CP of the Government, which is to be considered for loans without collateral due to lack of trust for banks when considering loans, so banks do not lend.

The current situation of falling product prices for many farms shows that farm owners also need to innovate their production and business models in the form of clean, sustainable agricultural production, applying high technology. Farm owners build joint ventures and associations in crop production, livestock breeding, etc. between farms as well as with processing and export enterprises in the market, supermarkets, restaurants, creating an important basis to ensure conditions for banks to appraise and lend./

Thu Huyen