Coffee replanting, the effectiveness of the VnSAT credit fund

A beneficial loan to assist farmers

Mr. Vu Viet Bao's family maintains a three-hectare sustainable coffee plantation in Tan Nghia commune, Di Linh District, Lam Dong province. Over the last three years, as his coffee garden became older and less productive, he received roughly VND 400 million in funding from Lam Dong VnSAT to renovate it.

He emphasized that the program's support assists farmers, even more now that coffee prices are at an all-time low.

Mr. Nguyen Nhat Toan's home in Duc Minh commune, Dak Mil district, Dak Nong province, is a year-round coffee farmer with a total area of around 1.7 hectares in Dak Nong. Around three years ago, when the family was trying to get capital to replant coffee, VnSAT assisted them. At the time, the family was assisted in borrowing roughly VND 100 million at a 7% annual interest rate.

"Following receipt of the funds, my family concentrated on restoring the garden and replanting 1 hectare of coffee with high-quality seeds from the Western Highlands Agriculture and Forestry Science Institute (WASI). Currently, the garden has reached the market stage, producing 4 tons of kernels per hectare. This is a significant output that contributes to our family's income growth "Mr. Toan revealed.

Mr. Toan said that in addition to receiving credit fund assistance for coffee replanting, his family has benefited from the clean coffee production program. As a result, the loan source assists him in purchasing equipment, particularly the wet processing system necessary to assure post-harvest goods.

"Due to the steady decline in the price of coffee in recent years, our income has been severely impacted. Fortunately, the initiative has received timely funding, allowing for uninterrupted re-cultivation and output "Toan stated.

In Dak Lak, the Doan Ket cooperative group (Ea Tieu commune, Cu Kuin district) includes three families that have received an incentive loan from VnSAT totaling around VND 200 million at a 7% annual interest rate since 2016.

Mr. Bui Van Hoan, Head of Doan Ket Cooperation Group, said that the credit money was released at a time when many families in the group were in desperate need of financing. When the VnSAT initiative provided loans, many members of the group were in desperate need. However, since these families have red books with banks as mortgages, they do not fit the criteria.

"By participating in the VnSAT initiative, individuals get training in science and technology, enabling them to swiftly identify illnesses in coffee plants. Additionally, they are taught how to correctly apply pesticides and fertilize their plants, as well as how to care for their gardens in a climate-change-adaptive manner, therefore establishing a sustainable coffee-producing region "Hoan continued.

With the expectation that VnSAT would continue to support loans

Mr. Thai Xuan Quang, Director of Minh Tan Dat Agricultural Cooperative (Ea Kar District, Dak Lak Province), said that the unit now has two members who are eligible for a loan fund under the VnSAT initiative to help with coffee replanting.

According to the VnSAT Kon Tum Project Management Board, the unit has supplied information to banks such as BIDV, Agriculture and Rural Development, and Sacombank on the number of families and area re-cultivated with coffee. To present, loans have been made to 14 families with a total coffee area of 25.6 ha. Households have borrowed a total of VND 2.58 billion.

Meanwhile, from December 1, 2019 to May 31, 2020, 573 coffee replanting families in Gia Lai got credit loans from the VnSAT project, covering a total area of more than 1,100 hectares. As a result, banks have loaned about VND 197 billion, covering 99.7 percent of the plan's designated amount.

According to Quang, such homes cover an area of two hectares. Which allows one family to borrow VND 250 million and the other to borrow VND 90 million to replant coffee.

"After three years of borrowing, the replanted coffee garden in line with the VnSAT technological technique should thrive, with minimal pests and illnesses. Currently, these coffee plantations are reaping a bountiful crop of fortune-telling "Mr. Quang said.

Mr. Quang asserts that without the VnSAT project's credit lending scheme, these two families would face several obstacles in replanting coffee. "With a normal family budget, it is impossible to spend such a huge sum of money on replanting once. Fortunately, there is a VnSAT program that will allow them to get a favorable loan to replant their family's coffee garden "Mr. Quang said.

Mr. Nguyen Tan Duy, director of Phuong Hoang Construction – Trade and Service Cooperative (Duc Co district, Gia Lai province), said that practically all of the cooperative's members are presently requesting access to the VnSAT loan for coffee replanting.

Credit financing provided by the VnSAT initiative has helped assist several families in aggressively implementing coffee reform.

Specifically, this cash may be obtained in the form of unsecured loans; individuals would be able to borrow between VND 50 and 70 million via the guarantee cooperative. Additionally, the loan interest rate on this capital is exceptionally low, which is a favorable occasion for many people.

According to Mr. Duy, 1 hectare of coffee re-cultivation costs around VND 100 million in the first year and approximately VND 50 million the following year. This is not a trivial sum; without the assistance of VnSAT loans, it is quite impossible for individuals to confidently replant.

Mr. Le Quoc Tuan, Deputy Director of the VnSAT Project Management Board in Gia Lai province, said that although there is a high demand for loans for coffee replanting, they are difficult to get due to banks' capital limits being reached. Additionally, many individuals want to borrow but are unable to do so due to their location outside the project area.

Due to a lack of protocols and documentation, it is particularly difficult for individuals to access this cash source. Because the majority of individuals had already borrowed from other banks, they now lack collateral, preventing them from re-cultivating coffee as intended.

To address this issue, Mr. Tuan said that the bank has also loosened lending standards by forgiving people's past loans. Following that, they revalue the coffee garden; if the new value exceeds the previous loan, individuals may borrow the difference "VnSAT's credit capital in Central Highlands was efficiently dispersed. It is supposed to expire in 2019, but in response to widespread demand, the provinces of Central Highlands applied for quotas from the rice component of the Mekong Delta, allowing people to continue borrowing, "Mr. Tuan informed.

"If coffee farmers previously had to borrow money at exorbitant interest rates from commercial banks, they may now borrow money at a significantly reduced interest rate via the VnSAT programme. They are provided a grace period of five years during which they are not required to pay interest or principal until harvest time. According to Mr. Tuan, individuals may borrow up to VND 320 million via this loan package, which includes the whole VND 110 million invested in an efficient irrigation system ", according to Mr. Le Quoc Tuan, Deputy Director of the Gia Lai province's VnSAT Project Management Board.