Annual Agriculture Policy Forum No.5: Livelihoods Conversion And Financial Status Of Some Ethnic Minority In Vietnam

On December 9th, The Agriculture Coalition held a workshop called “Transition livelihoods and financial condition of a number of ethnic minorities in Vietnam”   in which pioneer research on the current situation of indebtedness of Central Highland’s ethnic minority are presented. The research was conducted by the Institute of Social Studies, Economics and Environment (iSEE) and Southern Center of Agriculture Policy and Strategy(SCAP) in Dak Lak and Lam Dong Province.The research show ethnic minorities are suffering a large proportion of debt, ranging from 50 to 240 million Vietnam Dong. Specifically, 70 percent of the loan is used for investment in agriculture, 7 to 8 percent is used to pay back previous debts. 90 per cent of household asked consider indebtedness “serious” to “very serious”. Most of the households in the research resort to private loans to finance their agriculture production, with interest rate of 50 to 60 percent per year instead of taking loans from official banks at a lower rate.

Farmers take private loans for various reasons: They have nothing to put up as collateral, cumbersome bank loan procedure, slow disbursement process or bank loans can not meet farmer’s production needs. Meanwhile, taking private loans is relatively simpler as they do not require collaterals and can meet farmers’ demands of higher amount of money. The research offered both short and long term policy recommendations to solve farmers in Central Highland’s indebtedness. These include using financial tools such as agriculture credits and insurance; evaluating livelihood models and philosophy in ethnic minority development.

“Besides offering short and long term recommendation to solve farmers’ financial problems in Central Highland, the Agriculture Coalition will continue to implement programs to help farmers become more autonomous and be able to raise their voice for their rights”, said Ms. Luong Minh Ngoc, Director of the Institute of Social Studies, Economics and the Environment (iSEE).

The roundtable discussion received comments and suggestions for the research from the Ministry of Agriculture, the Committee for Ethnic Minorities Affairs, farmer representatives, the press and researchers. The suggestions will help the Agriculture Coalition to improve its forthcoming program to tackle the current issue. Based on analysis results on the current situation, the causes of farmer’s indebtedness in provinces in Central Highland and their consequences, research group including Hoang Cam, Ngo Thi Phuong Lan, Hoang Anh Dung, Dao Chi Danh, Nguyen Duc Loc proposed that changes should be made in the provisions of Decree 55/2015/ND/CP on policy regarding “”Credit for agriculture and rural areas development”, specifically: supplements should be added to Article 3 and Article 4 to optimize farmers and ethnic minorities’ welfare. At the same time, lifting lending rate and professionalize micro-finance is expected to create competition among credit models.

Besides, researchers also recommend solution synchronization, including widening agriculture insurance programs for large agriculture commodities region to build trust and disperse risk, building credit programs specific for ethnic minorities in Central Highland; establishing groups at the municipal level and villages as wholesale supply of inputs and output distributors; eliminating production philosophy which considers production for market economy the best and the only development strategy for Central Highland ethnic minorities in the long term; using approaches that are culturally suitable for ethnic minorities; modifying and changing regulations on resource allocation and promoting institutions.

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