What are the interests of financial institutions on Better Management Practices (BMP) & certification of shrimp farming? How to support the BMP/certified shrimp farmers to achieve better financial services? In September 2011, the International Collaborating Centre for Aquaculture and Fisheries Sustainability (ICAFIS) conducted several interviews with key financial institutions in Soc Trang province to find answers for these questions. The answer? It is possible!
Introduction
As part of the WWF DK project "Promoting certification and Better Management Practices among small-scale shrimp farmers in Vietnam", funded by the Danish government, ICAFIS, in collaboration with VINAFIS conducted several meetings with financial institutions including the Vietnam Bank for Agriculture and Rural Development (Agribank), Baoviet Company, Vietnam Bank for Social Policies (VBSP) in addition to the Soc Trang branch of VINAFIS and shrimp farmers in Soc Trang province. The objective of these meetings was to explore whether additional financial services could be provided to small-scale farmers to assist them in their efforts to comply with BMP or certification.
Opportunities to achieve better financial services for BMP/certified shrimp farmers
Concerning access to credit, financial institutions mention some existing financial services that can be applied to BMP/certified shrimp farmers e.g. customer loans, loans for farmers at Agribank; household loans of Bao Viet.
There also appears to be several opportunities for BMP/certified shrimp farmers to access financial benefits such as higher customer grade, higher credibility, easier applications to get loans, better conditions of services. In addition to joining the "Piloting Agriculture Insurance" in accordance with Decision 315QD-TTg which means that if they meet the requirements of the Ministry of Agriculture and Rural Development (MARD) on production and disease prevention (e.g. managing the use of chemicals, having health check plan to control disease, etc.), they will be more likely to be eligible to get support (e.g. 60% of the cost of the premium).
To get loans, BMP/certified shrimp farmers have to provide information on their production to the financial auditor in their application. Conventional shrimp farmers may not have enough information, such as record of selling products, records of total profits, description of the production, description of management model, description of relation with stakeholders, description of the technic applied in production etc.. On the contrary, BMP/certified shrimp farmers would have most (if not all) the information reported above and can access financial services more easily.
Having better credibility along with the higher grade in customer list, it means that the BMP/certified shrimp farmers can get better conditions of financial services than those who do not adopt BMP. Beside the advantages of obtaining bigger loan amounts, enjoying lower interest rate or longer time in term of repayment, BMP/certified shrimp farmers may also receive many privileges from financial institutions like advice on financial management, promotion services, a chance to become members of customer's club, etc.
Constraints of small-scale farmers
Mr Mai Van Chanh, leader of Tom Lua Hoa Loi cooperative, My Xuyen, Soc Trang expressed his concerns with the current status of financial services by saying: "We want to get loans for our production, but the loan amount is quite small and doesn't meet our expectations. To get bigger loans, the requirements of the bank is very strict and difficult to comply, especially for us, small-scale shrimp farmers." This is just one of several constraints faced by small-scale BMP/certified shrimp farmers to access financial services. Other constraints include the lack of financial services specifically designed for BMP/certified shrimp farmers, limited knowledge of financial institutions on responsible shrimp farming, the risk of disease outbreak in shrimp farming and high inflation and tightening of credit in Viet Nam.
Financial institutions are ready
According to Mr. Duong Dinh Lang, vice director of VBSP Soc Trang: "VBSP is looking forward for the direction and guidance of central government to provide new financial services for farmers who follow the better production".
Conclusion
Through this activity, several opportunities were identified for BMP/certified shrimp farmers to access financial benefits. The financial institutions also declared that they are more and more interested in responsible shrimp farming which will lead the sector towards sustainability. Moreover, the government is working to provide solutions to mitigate the challenges of the agriculture sector, especially aquaculture, through better practices. ICAFIS is committed to continue engaging with financial institutions to ensure that farmers' efforts to comply with responsible practices are properly rewarded.
