Agribank credit provides platform for agriculture to flourish

Agribank, one of the four largest state-owned banks in Vietnam, has made its mission over the past 35 years to support local agriculture, farmers and rural areas.

Agriculture, farmers and rural areas have a special significance to socio-economic stability and development, and are a strategic issue in the process of national industrialization and modernization.

Due to this significant role, important resolutions and documents have been issued over the years, including Resolution No. 26-NQ/TW released on August 5, 2008 by the 10th Party Central Committee on agriculture, farmers and rural areas; and the Prime Minister’s Decision No. 899/QD-TTg dated June 10, 2013 on approving a restructuring project aimed at enhancing added value and sustainable development.

Thanks to these policies and strategic orientation, Vietnam's economy has seen miraculous development, with GDP surpassing $400 billion, 10 times higher than in 2010 and 20 times higher than at the beginning of the Doi moi reform period in 1986.

From a hungry country, Vietnam has become a leading agricultural exporter with turnover of agricultural, forestry and fishery products reaching a record $53.2 billion in 2022, far exceeding the milestone of $48.6 billion set in 2021. Over the years, the country's agricultural sector has grown by 2.8% to 3% per year, a high rate in the world.

According to standing Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu, the central bank has always considered the development of agriculture, farmers and rural areas one of its priority areas and issued policies and solutions to encourage investment in and remove difficulties in accessing loans in this sector.

It advised the government to issue Decree 55/2015/ND-CP on credit policies for agricultural and rural development (now Decree 116), and also set an interest rate ceiling for short-term VND loans in the field.

“There are no other fields that have enjoyed so many support mechanisms and policies like agriculture," said Tu.

The agricultural sector’s achievements have been obtained largely thanks to bank credit, especially capital from Agribank.

Determining that its development would always be associated with the development of Vietnam's agriculture sector, over the past 35 years, Agribank has allocated 65-70% of its total outstanding loans to this field. Its current total outstanding loans stand at VND1.42 quadrillion ($60.4 billion).

The bank has been a pioneer in implementing credit policies for agriculture and rural areas. Following its establishment, Agribank supported the “land allocation for farmers” policy by researching, developing and implementing a pilot loan program for them.

In the 90s, it provided funding for a food and export program in Mekong Delta provinces, a project on developing agricultural products and raising cattle in the central and Central Highlands regions, and national target programs on hunger eradication and poverty reduction, among others.

Recently, the bank was the first to reduce lending interest rates and issue policies to promptly remove difficulties facing customers such as debt restructuring and interest breaks. In 2022, Agribank reserved VND5 trillion ($212.7 million) to cover interest exemptions and cuts for farmers.

"Midwife" for agriculture, farmers and rural areas

Along Vietnam's s-shaped strip of land, millionaire and billionaire farmers are no longer rare thanks to the effective use of loans from Agribank. Nguyen Van Thanh, owner of Thanh Thoa farm in Ngoc Thu village, Dak Xu commune, Ngoc Hoi district, Kon Tum province in the Central Highlands has been a customer of Agribank for 25 years. From nothing, his family now earns a profit of VND1.8-2 billion ($80,050) per year.

Like Thanh, Dao Xuan Hai, owner of Hai Theu farm in the northern province of Vinh Phuc, became a "hill chicken billionaire" in 2015 thanks to Agribank.

With hard work, determination, daring to think and do, and the support of Agribank, many households have risen strongly. The case of farmer Bui Van Quyen in Tum village, Yaly commune, Sa Thay district, Kon Tum province is a typical example. With the support of Agribank, he boldly cut down more than 20 hectares of rubber trees to plant fruit trees such as orange, tangerine, guava, avocado, mango, custard apple, jackfruit and durian, using methodical and scientific methods.

The crop conversion initially achieved certain successes when his household became one of the only two in Kon Tum province granted a growing area code for fruit exports.

Many fruit growing models in the Central Highlands have brought in very high economic efficiency, for example, from VND800 million to VND1 billion ($42,500) per hectare per year from durian.

That is one of the reasons why the demand for capital for crop restructuring in many Central Highlands localities has increased in recent years. Nguyen Thi Phuong, deputy general director of Agribank, affirmed that the bank has always strived to ensure sufficient capital for the region.

Persisting with the goal of promoting agriculture and rural development, Agribank’s capital has helped many farmers reform their family production models, which has created a solid foundation to form thousands of potential economic models, contributing to poverty reduction, raising incomes for rural people, and promoting economic restructuring.

Agribank has always supported agriculture, farmers and rural areas with lending interest rates of 1-2% per year lower than those offered to other groups, Phuong said, noting that investing in agriculture is very difficult because the sector faces potential risks such as natural disasters and epidemics. Therefore, it requires long-term cohesion and commitment.

Over the past 35 years, Agribank's capital has found its way to 3.5 million farming households. In the coming time, with Vietnam's goal of reducing poor households by 1- 1.5% each year and fulfilling its sustainable development goal by 2030, Agribank, playing a leading role in providing credit for agriculture, rural areas and farmers, will continue to make more contributions to Vietnam’s socio-economic development, adding to sustainable poverty reduction in the country.