Circular agriculture has great potential but “resources” are limited
First of all, it can be seen that circular agriculture is an integrated model of the “value chain” including: Production, processing, consumption associated with the reuse of by-products, optimizing resources and minimizing waste. Accordingly, this is a suitable strategy for Vietnam, which has more than 70% of rural land area and agricultural labor, but in reality is currently facing a serious decline in land and water resources and climate change.
According to information from the Ministry of Agriculture and Environment , if circular models are applied in cultivation, livestock and aquaculture, Vietnam can reduce input costs by up to 20%, while cutting greenhouse gas emissions by up to 40% in some industries. However, it is worth mentioning that the initial investment costs for technology, waste treatment, recycling equipment, labor, etc. require large capital.
Although there have been many positive moves by credit institutions, in practice there are still many barriers, mainly due to the lack of a clear legal framework for classifying green credit in agriculture. Currently, Vietnam does not have any specific criteria to define what a “green” circular agricultural model is, leading to confusion in project appraisal.
At the same time, and also the “key” point, agricultural enterprises and cooperatives often lack the capacity to prepare documents, do not meet the requirements of financial transparency, emission reporting or environmental impact assessment processes, which are conditions for accessing preferential capital from banks or international financial institutions.
According to an agricultural credit expert of ADB Bank in Vietnam, “We have approached many models of processing rice by-products and straw very effectively. However, when assessing for granting green credit, there is not enough scientific evidence to evaluate environmental efficiency, due to the lack of a system to measure and verify emissions, this is an inherent weakness.”
Bank - An effective channel for "green capital injection"
Given the current potential, advantages, and challenges of Vietnam’s agricultural sector, there is a need for synchronization in all stages from policy mechanisms to production, distribution, and consumption. In that context, green capital from the credit institution system is expected to be an important “lever” to promote the development of circular agriculture.
Accordingly, some major banks such as Agribank, BIDV, VietinBank, Vietcombank have had preferential interest rate programs for loans for clean production, organic agriculture or resource-saving models. With the largest network in rural areas, Agribank is implementing a green credit package with interest rates from 4.5-6%/year, prioritizing circular livestock farming models, processing by-products into organic fertilizers or biomass electricity production. By the end of 2024, Agribank had disbursed about VND 28,000 billion for agricultural production models applying green technology.
According to BIDV leaders, the bank has developed a list of “green” projects in agriculture, with clear criteria: saving water, not directly emitting emissions into the environment, using renewable energy or recycling by-products. BIDV also cooperates with the World Bank (WB) to deploy preferential loans through the Sustainable Agriculture Development Program in the Mekong Delta (SACRI), with the expectation of providing more than 500 million USD in the period 2024-2030.
Therefore, a green financial ecosystem for agriculture is needed. For green credit to truly become a foundation for circular agriculture, it is necessary to establish a complete green financial ecosystem, from policies, technical criteria to risk support mechanisms. Some notable recommendations include: Issuing a national green classification framework, including specific subgroups for circular agriculture, agreed upon by the State Bank, the Ministry of Finance and the Ministry of Agriculture and Environment.
The issuance of a national green classification framework, including a classification for circular agriculture, is an essential step to: Standardize green criteria in investment and credit; Prioritize and effectively direct resources; Create momentum for the transformation of green and circular agriculture; Enhance transparency, promote integration and sustainable development.
In addition, it is necessary to strengthen the green credit guarantee mechanism through the Vietnam Environmental Protection Fund or the Green Agriculture Development Fund to minimize risks for banks. Support training and technical advice for businesses, especially cooperatives and small businesses in project planning, environmental impact assessment and production process standardization.
It can be seen that green credit is one of the important keys to transforming Vietnamese agriculture from “brown” to “green”, from spontaneous production to sustainable, ecological production. However, to promote this role, it is necessary to have a synchronous ecosystem including appropriate policies, flexible financial mechanisms, technical support organizations and especially changes in awareness and actions of each farmer and business.
Green credit cannot fully develop its value if it stops at preferential interest rates. As an intermediary in mobilizing and allocating capital, banks need to go further – becoming a consulting partner, a guide and a “bridge” between farmers, businesses and domestic and international green financial resources. Only then can circular agriculture become a “green pillar” for a low-emission and sustainable economy.
In particular, as international capital flows are shifting strongly into sustainable development sectors, the role of credit institutions is becoming increasingly pivotal in “bridging” global commitments and local actions. So how have Vietnamese banks prepared to adapt to the global green finance trend? Which green credit models are being effectively implemented in the banking system? And what are the barriers that need to be removed so that green finance can truly spread widely in economic sectors?./.
Source: https://baodaknong.vn/tin-dung-xanh-bai-4-von-xanh-be-do-cho-nong-nghiep-tuan-hoan-254457.html
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