Vietnam to form $300 mln fund to protect coffee, rice production

Rice farmers during a summer-autumn crop in Vietnam. Photo by VnExpress Photo Contest/Vu Duc Phuong

Concessional loans from the World Bank will help support these key export products. 

Vietnam is planning to make around $300 million available to help restructure and maintain sustainable production of rice and coffee, its major export products, over the next four years, Vietnam Plus reported.

Drought and salination coupled with weak financing have been disrupting production of the commodities, affecting the lives of millions of farmers in the Central Highlands coffee belt and the Mekong Delta rice basket over the past year. Vietnam is the world's largest producer of robusta coffee and the third biggest exporter of rice after India and Thailand.

Around $237.3 million will be sourced from loans provided by the World Bank's International Development Association, while the Vietnamese government will add a further $28.8 million and find another $35 million from the private sector, said Vietnam Plus.

The funds, available in medium and long-term loans, will improve rice quality using new processing technology in eight Mekong Delta provinces and support coffee replanting in all five Central Highlands provinces.

The Bank for Investment and Development of Vietnam, the country's biggest partly-private lender by assets, will distribute the funds via several domestic banks, the report said.

Vietnam's coffee output in the current 2016/2017 crop is projected to fall 11 percent from the previous season to 1.53 million tons, based on a report compiled by the International Coffee Organization. The country accounts for around 20 percent of the world's coffee output.

The Vietnam Coffee and Cocoa Association said that water shortages last year affected around a fifth of Vietnam's coffee acreage, and output could fall 10-20 percent from the 2015/2016 season. The country's crop year runs from October to September.

Water levels in the Mekong Delta fell to their lowest level last year due to the El Nino weather phenomenon, triggering sea water to penetrate as far as 90 kilometers (56 miles) inland. The Delta provides half of Vietnam's rice output and 90 percent of its grain for export.

Salination cut paddy output in the Southeast Asian country to 43.6 million tons in 2016, a three-year low, the agriculture ministry said.