VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES
LAI XUAN MON
OPERATION EFFECTIVENESS OF
VIETNAM SUPPORTING FUND FOR
FARMERS
Sector: Economic Management
Code: 9 34 04 10
ABSTRACT OF ECONOMIC DOCTORIAL
HA NOI - 2019
The works is completed at:
GRADUATE ACADEMY OF SOCIAL SCIENCES
VIETNAM ACADEMY OF SOCIAL SCIENCES
VIỆN NGÔN NGỮ HỘC VIỆN KHOA HỌC XÁC HỘI VIỆT
Supervisors:
1. Assoc. Prof. Dr. Bui Quang Tuan
2. Ph.D. Vu Dinh Anh
Referee 1: Assoc. Prof. Dr. Nguyen Dinh Long
Referee 2: Assoc. Prof. Dr. Ngo Quang Minh
Referee 3: Assoc. Prof. Dr. Tran Dinh Thien
The thessi is protected at Board of Doctoral Thesis Examination,
organized at Graduate Academy of Social Sciences, Vietnam Academy of
Social Sciences, 477 Nguyen Trai, Thanh Xuan, Hanoi.
At minutes .... hour ... date .... month ..... year 201...
The thesis can be found at :
Vietnam National Library
Library of Graduate Academy of Social Sciences
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INTRODUCTION
1. The neccessity and news meaning of the thesis
The Party and Government have many different advocates, policies and
solutions to support for the development of agriculture and rural area. The
foundation of Supporting Fund for Farmers is one of those policies. The success
of Supporting Fund for Farmers has proved the right of this policy. However,
after time of development, Supporting Fund for Farmers still has many limits
as: small scale, not diversified about way of mobilizing capital, number of
farmers as well as cooperative groups of production connection approaching
capital is not much, rate of capital/farmers are still low; some mechanisms,
policies with operation of Supporting Fund for Farmers are insufficient…
Moreover, limit on capacity of human resource and barriers about institution
take large influence to cooperation of the Fund to other financial institutions
for the target of developing agriculture, rural area and farmers.
Operation of the Fund is standing infront of challengies when our
country is on the way of innovation as: participating in free trade agreements of
new age when technological revolution 4.0 take into burst; Climate change
happens very complicatedly with strong impact to agricultural production.
So, It is neccessary to reassess operation of Supporting Fund for Farmers
to have suitable solution infront of new requirement, degree of new
development of Vietnam agriculture, farmer and rural area also take influence
to ability of promoting role of the Fund together with the development of
production, operation of farmers.
The neccessity of evaluating operation effectiveness of the Fund
becomes more neccessary when considering current circumstance that
investment capital into agriculture, rural area mainly taken from State budget,
capital mobilization from society is limited, mostly enterprises of production,
input agricultural material supply and enterprises of agricultural products
consumption which have not participated in investing capital resource
supporting for farmers. Many farmers are difficult to approach with capital
resource loan from bank, so some of farmers must borrow black credit with
high interest rate, and meet many risks.
The title: “Operation effectiveness of Vietnam Supporting Fund for
Farmers” is carried out in that circumstance, with desire of having scientific
foundation and reality supporting for making plan and executing legal policies
for the development of the Fund as well for the target of supporting farmers to
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develop production, do business, enhance production capacity and competition
capacity of subjects in agricultural and rural area and improve benefit of
Vietnam farmers during international integration.
2. Target and duty of research
Target of overall research of the thesis: Via researching and assessing
operation of Supporting Fund for Farmers to discover elements affected to
operation effectiveness of the Fund, making clear success, limit and cause of
those limit in operation of Vietnam Supporting Fund for Farmers.
Simultaneously, via analyzing theory and reality of operation effectiveness of
Supporting Fund for Farmers, the thesis shall supply scientific foundation for
proposing some solutions to enhance operation effectiveness of Vietnam
Supporting Fund for Farmers. In order to reach the target, the thesis has its
specific duties:
- Comprehensing and systematizing selectively theories abuot policies
supporting for farmers (concentrating on supporting via credit with farmers),
about operation effectiveness of policy of supporting credit of the Government
to farmers and agriculture in rural area; analyzing elements effected to
operation and operation effectiveness of Supporting Fund for Farmers. Doing
research experience of countries about supporting credit for farmers and
agriculture, rural area to search lesson for Vietnam.
- Analyzing, assessing the real status of operation effectiveness of
Vietnam Supporting Fund for Farmers on economy, politic and society. Doing
analysis elements impacted to operation effectiveness of the Fund and pointing
out the success, limit, cause in operation of the Fund.
- Analyzing the new circumstance in depveloping agriculture, rural area
to do propose basic solutions, suggest policy to improve operation effectiveness
of Vietnam Supporting Fund for Farmers in the next coming time.
3. Object and scope of doing research
3.1. Object of doing research
Object of doing research of the thesis is operation and operation
effectiveness of Vietnam Supporting Fund for Farmers. .
3.2. Scope of doing research
- Scope of researching contents:
+ Policy of supporting credit for farmers in which mainly focus on means
of supporting via Supporting Fund for Farmers.
+ Direct and indirect activities related to mobilize sponsor resources for
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Supporting Fund for Farmers, activities of supporting farmers to borrow capital
serving for production and business as well supporting technique for farmers to
make sure the effectiveness, sustainability of loans. However, due to scope of
doing research of economic sector so the thesis shall analyze mainly matters
related to policy, management mechanism without analyzing deeply into
specific management profession of Supporting Fund for Farmers.
+ Analyzing, assessing some criterias about the real effectiveness of
Supporting Fund for Farmers on economy, politic and society aspects.
In the scope of doing research of the Thesis, contents of cooperative
activity with other financial institutions (as authorised activity) shall not be
researched.
- Scope of doing research about time: The thesis focuses on operation and
operation effectiveness of Supporting Fund for Farmers period 2012 to 2017, being
period that Vietnam agriculture had many fluctuations after Vietnam joined WTO
and world economic crisis. This was the period that Vietnam agriculture stood
infront of many new challengies after deep integration into regional and world
economy. This was the period being suitable with research time of the thesis upon
regulation and being period of having most data for analysis. However, in order to
strengthen the news and science, in analyzing the thesis also did its max to analyze
the newest situation (to 2018 if having data)
- Scope of researching about space: On Vietnam territory without
distinguish administrative region.
4. Method of research
Methodology: The thesis uses Methodology of dialectical materialism,
historical materialism and basic principles of economic management for
approach. On the basis of methodology, the thesis shall use many methods of
specific research including:
- Method of comparative statistic analysis. This method uses to analyze
factual data about operation result of Supporting Fund for Farmers.
- Method of quantitative model: Being used to analyze impact of
operation of Supporting Fund for Farmers to the development of agriculture and
rural area.
- Method of survey, investigation: The thesis uses method of survey,
investigation via survey note with officers of Supporting Fund for Farmers all
the country.
- Method of specialist: Refering to idea of specialists in finance, credit
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and development of agriculture and rural area.
- Method of collecting and solving information
The thesis uses two sources of information and data: (i) the secondary
information from related document and report: (ii) Primary data: being carried
out via notes of survey and investigation with officers in the system of
Supporting Fund for Farmers all over the country.
5. New contribution of the thesis
5.1. The new of the thesis about way of approaching and method
- About way of approach:
The thesis analyzes operation effectiveness of Supporting Fund for
Famers not only under economy but also politic and society. This way of
approach supplies more overview about effectiveness of policy and this is a
newer approach compared to normal way which only assesses the effectiveness
of economy.
- About method:
Many researches have been carried out about policy of supporting credit
for agriculture and farmers but major are quantatitive research and less
qualitative evidence so way of approach combining qualitative analysis with
descriptive statistic, researching typical case and analyzing quantitative via
regression analysis is way of new approach. .
5.2. New contributions about science of the thesis
The thesis also has new contribution as below:
- About theory, the thesis makes clear the nature and key contents of
operation effectiveness with model of Supporting Fund for Farmers, pointing
out elements affected to operation effectiveness of Supporting Fund for
Farmers. Building criteria of assessing effectiveness of the Fund on economy,
society and politic.
- About the reality, the thesis analyzes the status of operation
effectiveness of Supporting Fund for Farmers. Via analyzing secondary data
and survey data, the thesis has assessed and pointed out achievements, limits
and causes of those limits in operation effectiveness of Supporting Fund for
Farmers. The thesis also uses model of quantitative analysis and survey data to
supply evidence for the impact of the Fund to the development of agriculture,
rural area.
- About policy: From analysis with factual and theoretical basis, the thesis
shall mention to solutions of policy to improve operation effectiveness of Supporting
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Fund for Farmers.
- About academic: The thesis shall be good reference document for authorised
management offices, training facilities and to whom it may be concerned to the
operation of Supporting Fund for Farmers.
- In summary, until now, there is not any research carried out about operation
effectiveness of Supporting Fund for Farmers all over the country, projects about
innovating Supporting Fund for Farmers only research major under qualitative but
less analyzing clear about effectiveness of economic impact of Supporting Fund for
Farmers. So, research of the thesis is new contributions about theoretical content and
reality for assessing operation effectiveness of Supporting Fund for Farmers. .
6. Theoretical and practical meaning
+ About theory: The thesis supplies scientific basis for innovating theory
about policy of supporting farmers via Supporting Fund for Farmers to meet the
requirement of renovating and innovating operation of this organization.
+ About practice: Research resutl of the thesis also supplies solutions of
policy to apply during process of innovating operation of Vietnam Supporting
Fund for Farmers to improve effectiveness of the Fund and promote better
economic, politic and social duties of Vietnam Supporting Fund for Farmers. .
7. Structure of the thesis
Out of introduction, conclusion, list of reference document and annex,
contents of the thesis include four chapters:
Chapter 1: Overview of researching and analysis frame.
Chapter 2: Theory about credit supporting for agriculture and operation
effectiveness of Supporting Fund for Farmers
Chapter 3: The reality of operation effectiveness of Supporting Fund for
Farmers.
Chapter 4: Orientation and solution of improving operation effectiveness
of Supporting Fund for Farmers. .
Chapter 1
OVERVIEW OF RESEARCHING AND ANALYSIS FRAME
1.1. International research situation
International researches are overviewed according to four main groups: (i)
research about role of credit to the development of agriculture, rural area; (ii)
research about Supporting Fund of Government for the development of agriculture
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and rural area; (iv) research about effectiveness of credit support in agriculture.
Researches said that credit capital plays important role to small
production farmers, ít impacts to income and hunger eradication and poverty
alleviation of farmers. Classic research of Hoff and J.Stiglitz(1990) about rural
area credit market shew that credit in rural area has many limit so it is necessary
to have the intervention of the government into issues as solving difficulty in
executing and repairing unperfect information, protecting money senders,
solving issues about market strength… are necessary to develop rural area
credit market. International researches also point out that effectiveness of
supporting credit depend on many elements and need good supervision of the
government.
1.2. Domestic research situation
With domestic research, the thesis focuses on researches according to
different subjects as: (i) research about credit for rural agriculture; (ii) research about
Financial Funds of the Government (including financial Fund belonging to many fields
in which having Fund of the Government) ; (iii) research about Supporting Fund for
rural agricultuer (iv) research team about operation effectiveness of credit support for
farmers and agriculture.
Policy credit of social policy bank contributes positively to reduce
poverty sustainably, ensure social security and build new rural area. Despite of
having some research about effectiveness of policy supporting credit for
farmers, there is not any research about operation effectiveness of Supporting
Fund for Farmers model.
1.3. Research space
Comprehensing domestic and external research show that there are many
research about policy of supporting credit for agriculture and operation
effectiveness of supporting with agriculture and rural area, research for specific
model of Vietnam is Supporting Fund for Farmers is not fully considered. Some
research about Supporting Fund for Farmers also mention to activities of
Supporting Fund for Farmers, they major appear in some specific locals, and
have not assessed comprehensively activities of the Fund all over the country.
Moreover, those research mainly analyze qualitatively about impact of
Supporting Fund for Farmers with reducing poverty in the local.
So, It is necessary to have a comprehensive work to analyze both theory
and reality of activities of operation effectiveness of Supporting Fund for
Farmers under macro and all over the country but it has not been researched
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yet. Especially, in current circumstance with requirement of developing hightech agriculture to develop agricultural products according to value chain, it
requires large capital resource for production entities as well ways of
supporting technique and technological science for production…
Chapter 2
THEORY ABOUT CREDIT OF SUPPORTING AGRICULTURE
AND OPERATION EFFECTIVENESS OF SUPPORTING FUND FOR
FARMERS
2.1. Overview about agricultural production and farmers
This chapter analyzes common features of agricultural production,
features of Vietnam agricultural production in Innovation age and features of
farmer economy. Thoroughout, to point out specifies of agricultural production
and its impact to process of developing agriculture in Vietnam.
2.2. Overview about policy credit and supporting fund for farmers
2.2.1. Notion about policy credit
The distince of policy credit compared to other credit ways is the participation
of policy making agencies into process of lending. The appearance of government
can be at two forms: 1 – Direct to be lender, supply capital for borrower. 2 – Via
policy, impact indirectly to credit relation between lender and borrower.
2.2.2. Features of agricultural policy credit
Firstly, about purpose, meanwhile other ways of credit often show relation of
market economy toward to benefit, policy credit is born to support to solve some
issues of specific policies. Secondly, participant of agricultural policy credit shall
include three parties: Lender, borrower and government. In which, the government
can play direct role to be lender and borrower. Thirdly, object of lending of
agricultural policy credit mainly focuses on poor households, nearby poverty in rural
area; households, individual in the rural area with demand of opening production,
business and startup…
2.2.3. Role of policy credit to agriculture, rural area
The role of credit into agriculture, policy credti also has an extremely essential
role, especially capital always is the most important input for production, especially
in sectors that are deficiting capital and labor as agriculture.
2.2.4. Ways of supporting to agriculture, rural area.
There are two ways of supporting for agricultural production. Firstly, it is
direct way to lend farmers/agricultural producers for agricultural production.
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Secondly, it is indirect way of supporting via training, technical support, information
about market for farmers; input price support and promote to approach market for
output of products; and improve infrastructure for farmers – rural area.
2.2.5. Concept and features of Financial support fund of government
According to law State budget (2015) at section 19, article 4 “State financial
fund out of budget is fund to be established by authorised office. It operate
independently with state budget, income source, expense duty of fund to carry out its
duties according to regulation of law”. Vietnam Supporting Fund for Farmers is
established according to Decision No. 4035/KTTH dated 26/07/1995 by Primer
Minister. Main capital source is from State budget, so Supporting Fund for Farmers
has full features of financial fund out of state budget. Operation target of Supporting
Fund for Farmers is support for the development of agriculture and rural area and
strengthen the development of role of Vietnam Farmer’s Union.
2.3. Common theory about operation effectiveness of supporting fund for
farmers.
2.3.1. Notion about operation effectiveness
Overally, effectiveness is considered under two angles: Effectiveness of
production, business of each unit and socio – economy effectiveness under macro.
2.3.1.1. Opinion about effectiveness under business of enterprise.
Under business of enterprise, effectiveness of production, business is
target which is determined by rate of comparison between result and expense,
this definition only gives way of setting up effective criteria but not showing
out the nature of the issue. So, business effectivenes reflects the degree of using
resources (including human resource, finance and physics) into activities of
production, business to get the highest result with lowest cost. 2.3.1.2. Point of
view about effectiveness under macro.
Economic effectiveness has larger content, it is not only about economic
result but also social result mean that economic effectiveness of social
production including economic effectiveness and social effectiveness.
Effectiveness of production and business is considered on the basis of
enterprise opinion, economic effectiveness is considered according to overall
social opinion. .
2.3.1.3. Distinguishing kinds of effectiveness
Under opinion of policy analysts, effectiveness of social policies out of
assessing under economy, it can be considered under society, environment
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(David Weimer and A. Vining (2010)1. According to them, effectiveness of policy
is positive impact or achieved results of policy according to desired policy targets.
2.3.1.4. Operation effectiveness of Supporting Fund for Farmers.
In this thesis, operation effectiveness of Supporting Fund for Farmers is
understood not only itself economic effectiveness of the Fund (as one of macro
Financial Fund) but also benefits about economy, politic society with
agriculture, rural area that the Fund bring for farmers, agriculture via its
activities.
2.3.2. Criterias of assessing operation effectiveness of Supporting Fund
for Farmers.
2.3.2.1. Criterias about economic effectiveness
Including criterias about assessing operation effectiveness of the Fund as
macro credit organization: + criteria about scope of operation and loan outstanding
balance ; + Criteria about capital mobilizing for the Fund; + Criteria about amount of
mobilized capital for the Fund; + Criteria about rate of interest and debt collection.
Criteria of assessing macro economic effectiveness: + Criteria about
productivity and Add Value in agriculture; + Assessment criteria about impact of
Supporting Fund for Farmers.
2.3.2.2. Criterias about social effectiveness
Including criterias as: + criteria about creating jobs in rural area; +
Quantity/rate of poor households and quantity of farmers who are borrowed capital; +
quanity/rate of households escaping from poverty; + Criteria about enhancing degree
of farmers (days of training, practising, visiting, quantity of participants…
2.3.2.3. Criteria of qualitative assessment about political effectiveness
2.3.3. Factors influence to operation effectiveness of SupportingFund
for Farmers.
2.3.3.1. Objective factors
(1) Common socio – economic situation of Vietnam and distinctive
features about socio – economy of each region. (2) Policy of Government to
Supporting Fund for Farmers, policy to agriculture… (30 Degree and cultivated
habbit of farmer households, scale of production, production sector of each
household (cultivation, ranching or aquaculture…) (4) Qualifcation and
1
David Weimer và A. Vining (2010) “Policy analysis: Concepts and Practice”– xuất
bản lần thứ 5, NXB Pearson(5th Edition)
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technological science trend in agriculture.
2.3.3.2. Subjective factors
Subjective factors takes influence to operation effectiveness of
Supporting Fund for Farmers including: (1) Capital scale of the Fund; (2)
Administrative system of credit policy of the Fund as: Process of management,
lending of the Fund, approval for loan… (3) Qualification and morality of
officers in the Fund; (4) Technological Qualification and informatic system of
credit organization, specifically Supporting Fund for Farmers (5) Quality of
internal control system of credit organization.
2.4. International experience about supporting farmers via policy credit
In the scope of the thesis, the author introduces some remarkable experiences
about policy credit, in developed and developing countries including America, Japan,
Korea, Bangladesh, Philipine… This is experience about policy credit of supporting
farmers without experience about Supporting Fund for Farmers – being typical model
of Vietnam.
Analyzing experience of countries in supporting agricultural and rural area
development via supporting credit policy can withdraw some lessons as below:
Firstly, supporting agricultural production must be diversified to be suitable
with features of agricultural production and farmers in each region, local. Secondly,
supporting credit for agricultural production is very necessary, origining from risky
features of agricultural production. Especially, it moves to agricultural production
toward goods production, it cannot be lack of supporting role of credit policy from
the Government. Thirdly, supporting policy for developing agricultural production
via credit must be carried out constantly, and diversified about interest rate and term.
Fourthly, it is necessary to encourage for mobilizing many different capital resources
for developing agricultural production. Fifthly, supporting policy needs to be sure
about policy advocate, fixed legal frame, encourage economic sectors participating
resource contribution or supporting with the government to support credit for
agricultural and rural area field. Sixthly, with farmers of having small scale of
production without mortage properties, unsecured loan is necessary but it needs to
have the guarantee of one certain Union, Group. This also allows to enhance
effectiveness of using supporting capital and reducing unbalance situation about
information. Seventhly, In order to promote the development of agricultural
production, it is very important to strengthen credit support with the development of
cooperative model.
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Chapter 3
OPERATION REALITY AND OPERATION EFFECTIVENESS
OF SUPPORTING FUND FOR FARMERS.
3.1. Process of developing and activities model of supporting fund for farmers.
3.1.1. History of forming and developing of Vietnam Supporting Fund
for Farmers.
Legal pursuant for the establishment of Supporting Fund for Farmers is
document no 4035/KTTH dated July 26th, 1995 by Primer Minister. On that basis,
March 2nd, 1996, Vietnam Farmers’ Union issued Decision of establishing
Supporting Fund for Farmers belonging to Vietnam Farmers’ Union. With the born
of Supporting Fund for Farmers belonging to Central of Vietnam Farmers’s Union,
Supporting Fund for Farmers belonging to Farmers’ Union of provinces, cities.
Union is established. Until now, all system of Farmers’ Union, Supporting Fund for
Farmers have been established at 100% provinces, and Farmers’ Union at districts.
3.1.2. Organization and operation of Supporting Fund for Farmers.
Supporting Fund for Farmers standing by Vietnam Farmers’ Union,
establishing upon Decision No. 80 QĐ/HND, dated March 2nd, 1996 by Vietnam
Centre of Farmers’ Union. Supporting Fund for Farmers is organized at 03 levels in
organization system of Vietnam Farmers’ Union including Supporting Fund for
Farmers at central, provincial and district grades. Quantity of Supporting Fund for
Farmers increase strongly during period from 2005 until now, currently quantity of
provinces and district with Supporting Fund for Farmers are 100% instead of equal
number 81.2% and 57.8% in 2005. This shows that scale covering of Supporting
Fund for Farmers is more and more expanded.
3.1.2.1. Operation principles of Supporting Fund For Farmers.
Supporting Fund for Farmers operates not for the purpose of benefit, aims at
supporting and helping farmers develop production, business in agricultural and rural
area field. Supporting Fund for Farmers with legal status, seal and its own balance
sheet is openned account at State Treasury, internal trading banks according to
regulation of law. Supporting Fund for Farmers is independent on finance, self
responsible for their operation infront of law; Making safe and developing capital;
compensating cost and risk in operation according to regulation of current law and
own rules of Central Supporting Fund for Farmers.
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3.1.2.2. Ways of operation of Supporting Fund for Farmers.
Supporting Fund for Farmer supports agricultural production via 02
main ways including:
+ Supporting credit via loans to households of production, business in
agricultural and rural areas.
+ Supporting via training farmers, propaganda information for farmers
as openinig classess of training, visiting, supporting to make propaganda for
citizens about market, technological science in agriculture….
3.1.3. System of legal regulation about operation of Supporting Fund for
Farmers.
After process of forming and developing over 20 years , operation of
Supporting Fund for Farmers is institutionalized via many legal documents at central
and local grades, including 23 official documents. These documents are used to be
adjusted and supplemented.
3.1.4. Contents of credit operation of Supporting Fund for Farmers.
Contents of credit operation of Supporting Fund for Farmers including: (i)
Using capital; (ii) Mobilizing to create capital resource; (iii) Regulation of loan (iv)
Objects and field of loan; (v) Fees of loan; (vi) Limit of loan, time of loan and
mechanism to guarantee for loan; (vii) Supervision, inspection loan user; (viii) credit
risk and authorization of treating risk.
3.1.5. Comparing operation of Supporting Fund for Farmers, Policy Bank and
Agricultural and rural area development bank .
About principle of operation,Supporting Fund for Farmers operates upon self
control, self responsible for each Fund upon grade and Central Supporting Fund for
Farmers only keeps role of instructing and supporting. Meanwhile, Social policy
Bank and Agribank, Headoffice is responsible for leading, inspecting and executing
operation of overall system. Supporting Funds for Farmers enter the account
independently meanwhile, two banks enter account dependently.
Legal frame of two banks is regulations of Credit Organization Law and
instructions in relation and direct managed by State Bank. Current Supporting Fund
for Farmers operates upon the instruction of Law of the Government and Central
Farmers’ Union and under direct management of Farmers’ Union of all levels.
Supporting Fund for Farmers operates upon the nature of Policy Credit Fund
with main capital source from supporting of State budget at all grades meanwhile,
Social Policy Bank and Agribank operate with the nature of bank credit organization.
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Due to the feature of opeation model, Supporting Fund for Farmers lends upon
features of micro financial organization, unsecured loan via guarantee of Farmers’
Union Organization according to programes of agricultural and rural area
development. Borrower must be member of Farmers’ Union meanwhile borrower
from other credit organizations do not need this condition. Supporting Fund for
Farmers mainly lends according to team to promote cooperative model and
cooperative in agriculture, other organizations do not need to follow this target.
Other important distinctive feature between lending of Supporting Fund for
Farmers with other credit organization as Social Policy Bank or Agribank is
Supporting Fund for Farmers lends enclosed with activities of training, supporting
technique. Supporting activities enclosed with these credits allow farmers to use more
effective loan. Simultaneously, Supporting Fund for Farmers gradually promotes the
development of cooperatively economic model in agriculture and rural area when
lending via model of group or team of production.
3.2. The reality of operation and operation effectiveness of supporting fund for
farmers.
3.2.1. The reality about activities of supporting of Supporting Fund for
Farmers.
3.2.1.1. The reality of lending activities from Supporting Fund for
Farmers.
Odd debt for loan of Supporting Fund for Farmers impressively grows from
761 billion VND in 2012, about 1700 billion in 2017 and approximately reaches
2120 billions in 2018, equal to the growth of 16.3%/year. This data is higher than
credit growth of economy period 2011 – 2016, around 14% (Nguyen Duc Thanh and
his copartner, 2017). .
Scale of each lending according to household also increases remarkably.
According to data of Vietnam Farmers’ Union (2018), Meanwhile in 2012, average
of each household only borrowed 8.5 million/household, in 2016, this data increased
16.8 million and was 18.2 million/household in 2018. In addition, quantity of
household borrowed capital around from 68 – 89 thousand households/year increased
to 100,000 households in 2017 and estimated to be 130,000 households in 2018.
Captial scale in economic regions grow during period 2012 – 2017; however,
speed of growth in each area is different. North central area, including Thanh Hoa,
Nghe An, Ha Tinh, Quang Binh, Quang Trị, Thua Thien Hue provinces, withness
rate of growth exceeding 25.8%/year. Meanwhile, Tay Nguyen area meets many
difficulties during process of borrowing loan from the Fund. Sale growth of average
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lending is only around 0.9%/year.
Focal loan resource is disbursed for breeding. Scale of loan for breeding more
and more increases. Proportion of loan in breeding field increases from 47,9% to
55,5% during 2012-2017. Meanwhile, proportion of loan in cultivation, seafood and
general service reduce slightly. This reflects trend of moving loan of the Fund toward
households of breeding.
Duration of loan of the fund mainly from 12-36 months. Loans from Central
Fund with interest rate 0,8% /month during period 2012-2013. If compared to quite
high rate of inflation period 2012-2012, interest rate of lending of the Fund is quite
low. This positively impacts to process off supporting farmer households during
process of developing economy, determining operation “not for the purpose of
benefit” of the Fund. Period 2014-2016, when inflation had signal of reduction,
Central Fund actively reduced interest rate of lending down 0.7%/month.
Thanks to good management of the Fund, overdue debt rate of the Fund used
to be at low level. During period 2012-2017, Funds manage upon provincial grade
with overdue debt average at 0,7% -1,1 %.
Executive Board of Central Fund builds plan and directly inspects, supervises
about activity of Supporting Fund for Farmers at provinces, cities; cooperating with
Social Policy Bank to inspect interdisciplinary program of lending pupils, students at
provinces, cities.
3.2.1.2. The reality of supporting training farmers.
Period 2012-2017, classes of training technical science for farmers increased
slightly, average of 7%/ year from around 11 to 14,6 thousand classes. However,
number of learners do not much change. This number increased slightly during
period 2012-2017 from 415 to 538 thousand learners, and reduced to 436 thousand
learners after that in 2016 and increased slightly to more than 500.000 learners in
2017. Average, farmers participated in training class reduce from 37 to 30 learners
in the same period.
3.2.1.3. The reality of mobilizing capital for Supporting Fund for
Farmers.
Data according to report of Vietnam Supporting Fund for Farmers (2017), up
to December 31st, 2018, total capital resource of Supporting Fund for Farmers at
grades reached 3015,812 billion, inceased 429,97 billion, compared to December
31st, 2017; exceeding plan. Speed of increasing capital resource of mobilization
period 2015-2018 reaching average 15 %/year.
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3.2.2. The reality of elements impacted to operation effectiveness of the
Fund.
3.2.2.1. Method of researching
In order to assess elements impacted to operation effectiveness of the Fund as
well as role of the Fund to production activity of farmers, researching survey via
investigating random questionaire with officers participating activities at the Fund
belonging to different grades about operation of Supporting Fund for Farmers.
Officers directly participating in lending activity of farmers shall have practical and
objective points of view. This is the practical basis to issue suitable policies to
improve operation effectiveness of Supporting Fund for Farmers model with
agricultural and rural area development. With 300 notes issue and collect 229 notes.
Officers in research sample of investigation distribute in different economic areas.
3.2.2.2. Elements impacted to operation effectiveness of the Fund.
The thesis makes survey of assessment of officers in the Fund with 06
elements (both objective and subjective) can impact to operation effectiveness of the
Fund including: Policy of the Government with Fund; Policy with agriculture, rural
area, Operation area of the Fund; Qualification of officers of the Fund; Capital scale
of the Fund; Process of managing the Fund
In which, the most important element and decides to operation of the Fund is
capital Scale of the Fund (average point 4.541), following is Process of managing the
Fund (4.528 scores), Policy of the Government to the Fund (4.48 score), Officer
qualification of the Fund (4.45 scores), Policy to agriculture and rural area (4,393
scores), Operation area of the Fund (4,288 scores). This is important basis to
implement prior policies to improve operation quality of the Fund. About officer
qualification of the Fund and policy of the Government to the Fund, two these
elements having level of impact is equal average point. However, if considering the
dispersion in answer, policy of the Government receive many answer “more
important” more (128) compared to officer qualification (110). Finally, impacted to
effectiveness of the Fund. These are two elements with most officers who are
surveyed to answer “important” and “very important”
About other elements, one officer said that element “”the concern of executive
committee, local authorities” play important role in operation of the Fund when he
was surveyed.
3.3. Assessing operation effectiveness of supporting fund for farmers
Due to the nature of operation of Supporting Fund for Farmers only carries out
its duty to support policy. So, in order to assess operation effectiveness of the Fund,
the thesis only uses criteria of indirect assessment as impact of the Fund to ability of
approaching capital of farmer households and result of agricultural production. In
order to carry out this, the thesis shall use many approaches to assess via surveying
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and typical cases, and in order to assess impact of Supporting Fund for Farmers to
agricultural production, the thesis uses way of approaching via quantitative model.
This allows objective appraisals and in larger scope is singlely typical cases.
3.3.1. Positive impact of Supporting Fund for Farmers to agriculture
and rural area.
3.3.1.1. Operation of Supporting Fund for Farmers about economy via
approaching capital of farmer households.
Firstly, loan has positive impact to production, business of farmer households.
26,7% officers in survey sample said that loans positively impact to activities of
production and business of farmer households. Nearly a half of survey sample
(46,9%) said that those impacts are positive. Only 4,4% officers said that loans have
average impact, 0,6% officers said that impact of those loans is low or very low.
Secondly, process of lending is simple, interest rate of lending is at suitable level,
duration of lending is fairly suitable. Most of officers in the Fund said that procedure
of lending of the Fund is more simple compared to banks lending in agricultural field.
If following the time of current lending of loans from the Fund, it can be seen
that loan package of the Fund for farmer households follow closely with factual view
from direct officers working at the Fund.
3.3.1.2. Operation effectiveness of the Fund via supporting credit with
some agricultural production models at the local.
There are many models thanks to borrow loan from Supporting Fund for
Farmers get high income for farmer households. The thesis has proved via three cases
of operation of Supporting Fund for Farmers in Tuyen Quang, Ninh Binh and Binh
Phuoc.
3.3.1.3. Operation effectiveness of Supporting Fund for Farmers about
economy via impact to production, business of farmer households.
In order to assess th impact of the Fund to operation of supporting production,
business of farmers, the thesis uses model of regression to analyze quantitative. The
result shows that operation of the Fund positively impacts to open quantity of
breeding farm in provinces. In brief, operation of the Fund has positive impact to
expand agricultural production, help farmers open more farms, creating premise to
improve life and income with growth and making safe for the Fund, bad and overdue
debt is very low.
3.3.1.4. Operation effectiveness of the Fund under polictic and society
- Political meaning:
Supporting Fund for Farmers with role of bridge between the Party, the
Government and farmers have issued prior credit policy to near with million of
farmer households all over the country. The Fund contributes to enhance role,
postion, prestige of Union organization in social politic system, creating belief
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of farmers to the Party and the Government.
-Social meaning:
Loan resource of Supporting Fund for Farmers and activity of supporting
loan via entrusted service with banks help millions of labor in rural area have
jobs, increase income and improve their live. Together with other policies,
Supporting Fund for Farmers contributes to improve index of socio – economy
development of Vietnam and especially contributing to hunger eradication and
poverty reduction.
3.3.2. Issues limited in operation of Supporting Fund for Farmers
3.3.2.1. Scale of small loan, not meeting the requirement
Firstly, scale of loan to each household of the Fund increases, but it does not
meet the factual demand of people. Scale of these loans are lower than average scale
that banks operating in agricultural field launching out.
Secondly, level of approaching of the Fund to farmer households is limited.
Total of households borrowing capital period 2012-2017, not only increase but also
have trend of slight decrease, from 89 thousand households to 80 thousand
households.
3.3.2.2. Structure of lending of the Fund is not balanced
About sectors of lending, capital resource of the Fund is having trend of
focusing on breeding field, meanwhile, proportion of lending in lending fields shall
help Supporting Fund get many different sectors, guarantee for the sustainable
development and harmonization of sectors in agriculture, good support for farmers in
different fields.
Structure of lending of Supporting Fund for Farmers so much focusing on
breeding shall create certain risk for collecting loan. Especially when breeding
industry is facing with big disease as African swine fever or foot and mouth disease.
Meanwhile, Supporting Fund for Farmers has not expanded lending with
aquaculture in locals limiting ability of exploring this advantage.
3.3.2.3. Other limits in operation of the Fund
The Fund positively opens courses of training profession for officers in the
Fund, however, officers participating more and more increase. This shows that limit
on quality of professional classes. Classes of training need to be more practical to
attract officers of the Fund.
About human of the Fund, despite of officer quality and ability of
administration of the Fund improving upcoming time, There are 3/299 officers
surveyed to assess capacity of administration of the Fund is weak. This shows that
capacity of officers of the Fund at local is not equal. The Fund needs to discover
deeper about quality of human resource, giving out supporting of training profession
in time at areas of weakness about capacity.
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Most of Supporting Funds for Farmers at district grade have not enter the
account according to regulation of Financial Ministry. Some areas (including district
and commune grades) books tracing operation of the Fund have not openned fully,
document of collecting and expensing without or with but not right as regulation of
Financial Ministry and instruction of Executive Board of Central Supporting Fund for
Farmers, have not built regulations of using fees and Plan of collecting – expensing
finance; Updating report data gets many mistake and not in time.
3.3.3. Cause of limits in operation of Supporting Fund for Farmers
3.3.3.1. Scale of organization, scale of capital are not effective
Scale of loan of the Fund is small and most coming from ability of attracting
capital supporting for lend of the Fund. In activities about mobilizing capital of the
Fund, the most difficult is ability of mobilizing capital from external resources.
3.3.3.2. Management, human resources of the Fund is limited
Organization Board of the Fund has been strengthened, consolidated but
arrange officers in some places is not right with capacity, profession. Some leaders,
especially some heads have not really concerned to guide closely operation of
Supporting Fund for Farmers, and it remains the avoid, being afraid of difficulty,
making relation.
3.3.3.3. Ability of mobilizing supporting capital is still low
Fund mainly depends on State Budget supplementing but economic situation
of our country is still difficult, State budget supplementing in previous years were
lower than plan, causing difficulties in process of executing the Fund.
The Fund has not function of mobilizing capital from other credit, financial
organizations so capital resource of the Fund is less than demand of borrowing of
farmers. Because Farmers’ Union in many Districts has not had Board of agitation of
Supporting Fund for Farmers, so mobilization for supporting the Fund is high as
desire. Additionally, with Funds haves their own boards of agitation but due to
plurality of many jobs so result is limited.
Currently, there is not policy mechanism allowing the Fund to mobilize
resources from preference credits of International Organizations as World Bank or
ADB, Because Supporting Fund for Farmers has not had full functions as other credit
organizations so mobilizing capital on capital market is unfeasible and this can
prevent from expanding capital of the Fund.
3.3.3.4. Professional management about credit is limited
Because many officers with plurality of some jobs so profession of managing
credit finance of Supporting Fund for Farmers is limited. This is the cause of making
operation effectiveness of some Fund is low. Causes including
Capactity and technique about managing loan is not good: During process of
building project, at some communes in the district, coordinating with
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