Improving Agricultural Value Chain Financing: A Case Study of Seng Cu Rice Chain in Lao Cai Province, Vietnam

Date Received: Jun 12, 2020

Date Published: Mar 05, 2021

DOI: https://doi.org/10.31817/vjas.2020.3.3.05

Views

2010

Download

613

Issue: Vol. 3 No. 3 (2020): Vietnam Journal of Agricultural Sciences

Section:

ECONOMICS, SOCIETY AND RURAL DEVELOPMENT

How to Cite:

Lam, B., Cuong, T., Hao, L., & Philippe, L. (2021). Improving Agricultural Value Chain Financing: A Case Study of Seng Cu Rice Chain in Lao Cai Province, Vietnam. Vietnam Journal of Agricultural Sciences, 3(3), 712–725. https://doi.org/10.31817/vjas.2020.3.3.05

Improving Agricultural Value Chain Financing: A Case Study of Seng Cu Rice Chain in Lao Cai Province, Vietnam

Bui Thi Lam (*) 1, 2 , Tran Huu Cuong 2 , Le Thi Thanh Hao 2   , Philippe Lebailly 1

  • Corresponding author: btlam@vnua.edu.vn
  • 1 Gembloux Agro-Bio Tech, University of Liège, Belgium
  • 2 Faculty of Accounting and Business Management, Vietnam National University of Agriculture, Trau Quy, Gia Lam, Hanoi 131000, Vietnam

    • Keywords

    Agricultural value chain finance, Seng Cu rice, rural finance, Lao Cai province

    Abstract


    Nowadays, the value chain financing (AVCF) is considered as an effective agricultural financing approach in the world, however, its prevalence is still limited in developing countries, like Viet Nam. This paper analyses the financial gap between the demands and the actual credit obtained of the Seng Cu (SC) rice chain participants in Lao Cai. Cross-sectional data were collected from 160 face-to-face interviews with SC rice producers and from in-depth interviews with 31 other stakeholders involved in the chain (demand-side) and the representatives of district-branch banks (supply-side) in 2016 - 2017. Overall, almost chain actors had high financial demands, especially upland rice producers and the leading chain actor (TPC). However, they faced many credit constraints related to the strict risk-avoidance strategy and the collateral requirement of banks. Even the SC rice chain confirmed its high potential and many supportive linkages among them developed, the decision-making of banks on credit disbursements still depends on the individual capability of each chain actors, not the entire chain.  Thus, the recommendations for policymakers, producers, and agribusiness are suggested to enhance the financial sources going in the chain and the effectiveness of chain actors in the locality.

    References

    AfDB (2013). Agricultural Value Chain Financing (AVCF) and Development for Enhanced Export Competitiveness. Retrieved from https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Agricultural_Value_Chain_Financing__AVCF__and_Development_for_Enhanced_Export_Competitiveness.pdf on May 10, 2017.

    Claudio G.-V. (2017). The barriers to agricultural financing and the emergence of new models of financial intermediation for the sector. In: Emilio Hernández (Ed.) Innovative risk management strategies in rural and agriculture finance – The Asian experience. 15-28. Retrieved from http://www.fao.org/3/a-i6940e.pdf on August 6, 2018.

    Coates M., Kitchen R., Kebbell G., Vignon C., Guillemain C. & Hofmeister R. (2011). Financing agricultural value chains in Africa: A synthesis of four country case studies. Making finance work for Africa. Eschborn-Germany: Deutsche Gesellschaft für Internationale Zusammenarbeit [GIZ]. Retrieved from http://www.fao.org/sustainable-food-value-chains/library/details/en/c/267127/ on August 9, 2017.

    Cochran W. G. (1977). Sampling techniques (3rd Edition). John Wiley & Sons. New York, United State. 448 pages.

    De La O Campos A. P., Villani C., Davis B. & Takagi M. (2018). Ending extreme poverty in rural areas – Sustaining livelihoods to leave no one behind. Rome, FAO. 84 pages. Retrieved from http://www.fao.org/3/CA1908EN/ca1908en.pdf on March, 2019.

    Dufhues T. (2007). Accessing rural finance: The rural financial market in Northern Vietnam. Studies on the Agricultural and Food Sector in Central and Eastern Europe. etrieved from https://www.researchgate.net/publication/46472781_Accessing_rural_finance_The_rural_financial_market_in_Northern_Vietnam on May 5, 2017.

    Emerson R. M., Fretz R. I. & Shaw L. L. (1995). Writing ethnographic fieldnotes (2nd ed.). University of Chicago Press, United State.

    FAO (1995). History of the credit revolving fund. Retrieved from http://www.fao.org/3/AC576E/AC576E02.htm on May 14, 2019.

    FAO & ADA (2016). Innovations for inclusive agricultural finance and risk mitigation mechanisms –The case of Tamwil El Fellah in Morocco, by Ramirez, J. & Hernandez, E. Rome, Italy. Retrieved from http://www.fao.org/3/a-i6166e.pdf on September 20, 2017.

    Fetterman D. M. (2009). Ethnography: Step-by-step (Applied Social Research Methods) (3rd Edition). 200 pages. Sage Publications, United State.

    GRiSP (2013). Rice almanac, Source book for one of the most important economic activities on earth (Fourth edition). Los Baños (Philippines): International Rice Research Institute. 283 pages. (Global Rice Science Partnership). Retrieved from http://books.irri.org/9789712203008_content.pdf on August 19, 2018.

    GSO (2017). Statistical Yearbook of Vietnam: Social-Economical Data from 1990 to 2017. General Statistis Office. Retrieved from https://www.gso.gov.vn/default_en.aspx?tabid=515&idmid=5&ItemID=18533 on May 6, 2018 (in Vietnamese).

    GSO (2018). Results of the Vietnam Household Living Standard Survey (VHLSS) 2018. General Statistis Office. Vietnam. Retrieved from https://www.gso.gov.vn/wp-content/uploads/2020/05/VHLSS2018.pdf on May 10, 2018 (in Vietnamese).

    HLPE (2013). Investing in smallholder agriculture for food security. Retrieved from http://www.fao.org/3/a-i2953e.pdf on May 10, 2017.

    Vi Huyen (2018). Special rice map in Vietnam. Retrieved from https://vnexpress.net/thoi-su/ban-do-cac-loai-gao-dac-san-o-viet-nam-3768497.html on March 23, 2019 (in Vietnamese).

    Kelly D. (2005). Power and participation: participatory resource management in south-west Queensland. Retrieved from https://openresearch-repository.anu.edu.au/bitstream/1885/47415/13/01front.pdf on September 12, 2019.

    Lam B. T., Cuong T. H., Azadi H. & Lebailly P. (2018). Improving the Technical Efficiency of Sengcu Rice Producers through Better Financial Management and Sustainable Farming Practices in Mountainous Areas of Vietnam. Sustainability. 10(7): 1-19. Retrieved from https://doi.org/10.3390/su10072279 on August 22, 2018.

    Lam B. T., Cuong T. H., Ho T. M. H., Eiichi K. & Philippe L. (2019a). Realisation of Higher Value Added of Seng Cu Rice Value Chain in Vietnam. 52-86. Retrieved from https://www.eria.org/uploads/media/8.RPR_FY2018_05_Chapter_3.pdf on March 5, 2019.

    Lam B. T., Hop H. T. M., Philippe B., Dogot T., Tran H. C. & Lebailly P. (2019b). Impacts of Credit Access on Agricultural Production and Rural Household’s Welfares in Northern Mountains of Vietnam. Asian Social Science. 15(7): 119-133. Retrieved from http://www.ccsenet.org/journal/index.php/ass/article/view/0/39949 on September 7, 2019.

    Miller C. (2012). Agricultural value chain finance strategy and design: Technical Note. Retrieved from https://www.ifad.org/en/web/knowledge/publication/asset/39181165 on December 9, 2017.

    Miller C. & Jones L. (2010). Agricultural value chain finance: Tools and lessons. Food and Agriculture Organization. Retrieved from http://www.fao.org/docrep/017/i0846e/i0846e.pdf on December 10, 2017.

    Miyata S., Minot N. & Hu D. (2009). Impact of contract farming on income: linking small farmers, packers, and supermarkets in China. World Development. 37(11): 1781-1790. Retrieved from https://doi.org/10.1016/j.worlddev.2008.08.025 on September 12, 2018.

    Olomola A. S. (2010). Models of contract farming for pro-poor growth in Nigeria. IPPG Briefing Note. Retrieved from https://assets.publishing.service.gov.uk/media/57a08b18ed915d3cfd000b1e/bp34.pdf on September 12, 2018.

    Rapsomanikis G. (2015). The economic lives of smallholder farmers: An analysis based on household data from nine countries. Food and Agriculture Organization of the United Nations, Rome. Retrieved from http://www.fao.org/3/a-i5251e.pdf on March 22, 2019.

    Saigenji Y. & Zeller M. (2009). Effect of contract farming on productivity and income of small holders: The case of tea production in North-Western Vietnam. Retrieved from https://www.researchgate.net/publication/228542523_Effect_of_contract_farming_on_productivity_and_income_of_small_holders_The_case_of_tea_production_in_north-western_Vietnam on March 10, 2019.

    Springer-Heinze A. (2018). ValueLinks 2.0. Manual on Sustainable Value Chain Development, GIZ Eschborn, 2 volumes. Volume 1. Retrieved from https://www.valuelinks.org/material/manual/ValueLinks-Manual-2.0-Vol-1-January-2018.pdf on December 12, 2018.