Short of a miracle
The Minister of Industry and Trade (MoIT) recently held a meeting with the Departments of Industry and Trade from 32 provinces to discuss measures to help farmers buy machinery, equipment and other materials for agricultural production and construction materials for building houses.
The government’s stimulus policy for agricultural products has not been very effective despite being put in place for over a year.
Farmers facing production challenge
In the context of the global economic crisis, farmers are considered some of the most economically vulnerable as they have experienced a great deal of difficulty.
Last year, the Prime Minister decided to provide financial aid for farmers to buy machinery, equipment and materials to boost agricultural production, as well as construction materials to build houses.
According to figures released by the State Bank of Vietnam (SBV), this stimulus package had cost VND776 billion by December 31, 2009, accounting for only 0.22 percent of total government expenditure.
The SBV Monetary Policy Department says that the decision paid off as expected. Most of the beneficiaries are small household businesses who are unable to access small loans.
Nguyen Duy Luong, Vice Chairman of the Vietnam Farmers Association, says there are still a number of snags in preventing farmers from accessing funds they need. Firstly, the beneficiaries are required to buy domestically made machinery while farmers in the border provinces prefer Chinese machinery which is cheaper and more multifunctional. Secondly, in many localities, the chairpersons of the local People’s Committees refuse to sign off on farmers’ proposals to take out more loans from banks. Thirdly, many farmers have already mortgaged their land-use certificates to borrow money from the banks and they have nothing left to mortgage.
Worse still, a loan of VND7 million is far from enough to buy agricultural materials.
Another reason, argues Deputy Minister Nguyen Cam Tu, is it may take some time before local authorities agree to save the situation.
More time needed
To make the programme more effective, the MoIT proposes lengthening the directive to 2-3 years so that farmers will afford to repay their debts.
Luong suggests the government early help a certain number of sectors or branches of activities by raising the ceiling for loans and expand the package to other industries like seafood and animal husbandry.
“The local authorities should control the quality and the price of machinery, equipment, plants and animals,” he adds.
“Organisations like the Vietnam Farmers Association and the Vietnam Cooperative Alliance should also give a helping hand to farmers so that they can access and use loans more effectively”.