Driving finance and collaboration for low-emission rice in Vietnam

On August 27-28, 2024, the Vietnam Rice Sector Association (VIETRISA) and the International Rice Research Institute (IRRI), in collaboration with the Ministry of Agriculture and Rural Development (MARD), hosted the Consultation Workshop on Access to Finance in the Low Emission Rice Value Chain in Vietnam.

With the growing need to understand how transitioning to low-emission rice production impacts SMEs, market actors, and financial institutions, the workshop explored not only opportunities and challenges but also policy instruments and financial products to address both actual and perceived risks. These insights aim to streamline the movement of finance through the value chain, benefiting farmers and their organizations. Key stakeholders, including representatives from ministries, the State Bank of Vietnam, Agribank, private companies, international organizations, and farmers’ cooperatives, gathered to exchange insights and recommendations for expanding Vietnam’s low-emission rice sector.

In his opening remarks, Dr. Nguyen Do Anh Tuan, Director General of ICD-MARD, emphasized Vietnam’s competitive edge in rice exports despite global market fluctuations and climate change. However, as global trends move toward greener consumption with stricter environmental and carbon standards, Dr. Tuan highlighted the need for innovation to avoid jeopardizing millions of livelihoods in the Mekong Delta. He underscored the significance of the One Million Hectare Program for high-quality, low-emission rice Program, stressing that assessing its impact on businesses, financial institutions, and farmers is essential for Vietnam’s climate goals.

Dr. Cao Duc Phat, Chair of IRRI’s Board of Trustees, highlighted the timeliness of the workshop as Vietnam’s carbon market framework is under development. He noted that agriculture, particularly rice production, holds vast potential for piloting carbon credit activities to reduce greenhouse gas emissions. Dr. Bui Ba Bong, Chairman of VIETRISA, added that while Vietnam is well-positioned to meet demand for high-quality rice, substantial financial investment is crucial, and the workshop aimed to explore funding options for both the One Million Hectare Program and technological advancements.

The State Bank of Vietnam, tasked with developing a financial program for the One Million Hectare initiative, addressed key challenges, such as high risks in agricultural production, weak sector linkages, and limited financial capacity of enterprises. Mr. Nguyen Quang Ngoc, Deputy Head of Credit Policy Department of Agribank echoed these concerns, pointing to the fragmented nature of small-scale rice production and farmers’ preference for cash over bank services. He noted that it can better engage farmers through social organizations like the Farmers’ Union or Women’s Union. Additionally, representatives from international organizations emphasized that agricultural financing still falls far short of actual needs.

The 1.5-day event featured panel discussions covering a range of topics, including financing for farmers, aligning national goals with international markets, branding low-emission rice, financial readiness in the rice value chain, insurance products, and investment strategies for climate-resilient agriculture. Panelists from public agencies, financial institutions, private enterprises, and farmers’ cooperatives outlined policy frameworks, business models, and the need for stronger public-private sector coordination. International organizations highlighted the importance of regional collaboration.

Farmers’ cooperatives brought valuable insights, often overlooked in financial discussions, shedding light on when and how farmers need funding. They also emphasized the complexity of insurance products, with one cooperative representative proposing broader coverage beyond weather-related losses and compensation adjusted by the scale of damage to make insurance more appealing to farmers.

Active participation from attendees made the panel discussions dynamic and engaging, fostering meaningful exchanges on practical challenges and solutions. This engagement helped bridge gaps between stakeholders, contributing to a deeper understanding of the financial and operational needs for transforming Vietnam’s rice sector toward low-emission production.

In closing, Mr. Vu Thanh Liem, Deputy Director of ICD-MARD, remarked that the workshop’s recommendations would be reported to the government and shared with regional administrations to help farmers access and effectively use funding, particularly within the One Million Hectare Program. He also expressed MARD’s appreciation for the support from international organizations and private partners and welcomed their continued involvement in the program.

This activity is part of the CGIAR Initiatives on Asian Mega-Deltas and Low-Emission Food Systems and the ASEAN-CGIAR Innovate for Food and Nutrition Security Regional Program.