The total amount of credit available to the agricultural sector has increased by 2.1 times to 622 trillion VND (29.6 billion USD), three years after a Government decree to improve the flow of credit to farmers came into effect.

This figure accounts for 18-19 percent of the total credit available to every sector, said the Director of the State Bank of Vietnam 's Credit Department Nguyen Viet Manh, during an online meeting that focused on the demand for credit from agriculture and rural areas on August 15.

The decree became effective in July 2010, and has had several positive impacts on farmers, particularly in helping them get better access to credit, he said.

The credit programme has helped to increase the amount of loans from 10 million VND (476 USD) to 50 million VND (2,380 USD) for farmers, from 50 million VND (2,380 USD) to 200 million VND (9,500 USD) for farm owners and from 100 million VND (4,760 USD) to 500 million VND (23,800 USD) for cooperatives without any guaranteed assets.

However, many involved say that the credit policy needs to be complemented to meet demands from farmers as well as ensuring its efficiency.

The Vice Chairman of the Vietnam Farmers' Union, Lai Xuan Mon, said credit for farmers through the union reached 13 trillion VND (619 million USD), while there are 14 million farming households nationwide. This means that only 4 percent of households could access credit.

Deputy Director General of the Bank for Agriculture and Rural Development (Agribank) Nguyen Tien Dong said that apart from providing loans for farmers via intermediary groups such as the Farmers' Union, the Vietnam Women's Union or the Vietnam War Veterans Association, the bank's credit department also sent representatives to every commune and village, offering credit to farmers directly.

Credit for farmers via intermediary groups accounted for 17 percent, he said.

When explaining why credit institutions preferred offering loans to businesses rather than farmers when they visited rural areas, Dong stressed that farmers are the most vulnerable borrowers because of the impacts of natural disasters, diseases and their limited management capacity.

Concerning the limited operations of local agricultural businesses due to their shortage of capital, Deputy Minister of Agriculture and Rural Development Vu Van Tam said that not only farmers but businesses as well, need credit support.

However, apart from State assistance, businesses should take advantage of trade opportunities and study the market to introduce appropriate production and trade strategies, he said.

Most businesses operating in agriculture in Vietnam still fail to work closely with the farmers to boost production, he added.

When asked about the debts run up by agricultural businesses, Tam said that the Government has instructed all banks to review the debts of big businesses and restructure them following their own individual plans.

He pointed to the need to introduce measures to tackle difficulties in the consumption of farm products and develop the market for agricultural businesses.

"The next credit policies should have different credit programmes for each key agricultural product such as "tra" fish, rice and coffee," he said.

Tam also proposed a credit policy for fishermen, which he said is an important sector that also contributes to protecting national sovereignty, but is facing very high risk.

Manh stated that the banking system will continue to relax the tax laws and will allow for delays and reduced payments for bad debts from now until the end of the year.

The State Bank of Vietnam is working with several Government agencies to draw up new agricultural credit programmes that fall in line with the production processes used by farmers, he said.-VNA