New hope for coffee replanting in Dak Lak

08:19, November 6, 2023

Replanting coffee trees to "rejuvenate" the garden is an extremely necessary and urgent solution for the sustainable development of the coffee industry.

Limited results

Ten years ago, the People's Committee of Dak Lak province and the Vietnam Bank for Agriculture and Rural Development ( Agribank ) jointly organized a conference on coffee replanting solutions in Dak Lak province with the participation of representatives of central and local ministries and branches. At this conference, 10 memorandums of understanding were signed, with more than 163 billion VND in investment capital for replanting 955.7 hectares. These are 10 replanting projects that kick off a major investment program of Agribank for coffee trees.

After this conference, with the spirit of "Capital for replanting is ready", the leaders of Agribank Dak Lak province directed its affiliated units to approach farmers and businesses in need of replanting to guide procedures and loan processes and assign replanting loan targets to each unit. Agribank identified this as an opportunity to continue expanding credit investment in agricultural and rural development, enhancing its brand and financial capacity, contributing to the implementation of the Party and State's policies on new rural construction.

On the local side, the People's Committee of Dak Lak province has also approved the coffee replanting plan in the province for the period 2013 - 2020; issued the coffee replanting plan for the period 2021 - 2025. In the districts, they promoted the establishment of a steering committee on lending for coffee replanting, organized direct dialogues with coffee growers in communes with large replanting areas, so that people could see the long-term benefits of coffee replanting, and set up projects to borrow capital from banks.

However, the actual implementation of the coffee replanting program has not achieved the expected results, the coffee replanting area does not meet the province's plan. According to the most recent statistics, the whole province has only replanted more than 6,893 hectares of coffee out of a total of 24,441.78 hectares according to the Coffee Replanting Plan for the period 2021 - 2025 (according to Decision No. 3262/QD-UBND dated December 30, 2020 of the Provincial People's Committee), only 28.2% of the plan.

Agribank staff directly inspected the successfully replanted coffee garden that was harvested in the business phase.

Regarding coffee replanting loans, at the time of highest outstanding loans at the two main banks, Agribank Dak Lak and Agribank Bac Dak Lak, only reached over 117.6 billion VND, with 221 customers (196 individual customers, 25 businesses). Among them, some successful models have high and stable productivity, typically: 720 Coffee One Member Co., Ltd., 721 Coffee One Member Co., Ltd., Viet Duc Coffee Company and many households in the districts of Krong Pac, Cu M'gar, Cu Kuin...

Finding ways to overcome difficulties in credit for coffee replanting

There are many reasons why coffee replanting has not been as planned. For example, farmers have destroyed old coffee trees to switch to growing more economically efficient crops such as avocado, durian, etc. instead of replanting coffee; in some localities, farmers have replanted by patching, patching, or replanting in the form of "leopard skin", which means destroying a part of the area in the garden to replant, so it does not meet the requirements of the process and technique. Meanwhile, to borrow capital, farmers must have a certificate of eligibility for replanting, strictly follow the technical process of replanting issued by the Ministry of Agriculture and Rural Development; meet the conditions for loan guarantee, not to mention that although the interest rate for coffee replanting is preferential with a level lower than the market interest rate of 1.5 - 2%/year, it is still high.

In addition, businesses have the need to replant but have difficulty accessing bank credit capital due to low equity capital, not being eligible to participate in project implementation. For state-owned enterprises, because the land is rented and paid annually, to secure the loan, businesses can only mortgage assets attached to the land, usually coffee gardens, and must also present invoices and documents proving the proper use of capital. On the bank side, although there have been many positive moves in clearing the capital flow for coffee replanting loans, the disbursement progress is still slow, still difficult to reach customers.

Difficulties and obstacles in accessing credit capital in general and preferential loans in particular, including loans for coffee replanting, were mentioned by credit institutions, businesses and associations at the Central Highlands Bank-Business Connection Conference organized by the State Bank (SBV) on October 20, 2023 in Buon Ma Thuot City. On that basis, propose and recommend solutions to remove difficulties and obstacles in credit relations, creating favorable conditions for businesses to access preferential capital from banks with reasonable interest rates.

At this conference, Mr. Dao Minh Tu, Permanent Deputy Governor of the State Bank of Vietnam, said that in the coming time, the State Bank of Vietnam will work with commercial banks to research to have the most appropriate and positive mechanisms and policies to support the 5 provinces in the Central Highlands. Regarding capital solutions for coffee replanting, Mr. Dao Minh Tu affirmed: "We will direct the Vietnam Bank for Agriculture and Rural Development to be the focal point, together with other commercial banks, to research thoroughly, in the most urgent spirit, to come up with solutions to expand and directly support coffee replanting; in addition, to help with the most effective purchasing, processing and exporting."

It can be said that the results achieved at the conference are a new driving force for coffee replanting in the Central Highlands in general and Dak Lak province in particular. Hopefully, with the efforts of the banking sector and the active participation of coffee growing households, businesses and local authorities, the coffee replanting program in Dak Lak province will flourish again and achieve its set goals.

Phan Quoc Luong

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