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MANILA, PHILIPPINES (14 November 2000) - Small-scale farmers in Viet Nam will be better able to diversify into more profitable fruit and tea production due to a US$40.2 million loan approved today by the Asian Development Bank.
Viet Nam's main crop is rice. The country is not only self-sufficient in rice but is also the world's second largest exporter. The Government is encouraging crop diversification as a means towards balanced development, and fruit and tea are considered to have the same potential as cash crops such as rubber, coffee and sugar cane.
The Tea and Fruit Development Project will provide credit lines and know-how to subsistence farmers in 13 provinces. The credit will be used for field development, nursery operations, and small- and medium-scale crop processing. The know-how will include technical manuals and a market information system using the radio for monitoring prices of various crops. The technical manuals will instruct farmers on how to improve their field conditions to cultivate tea and various fruits such as lychees and longan. Guidance will also be provided on processing tea to improve its quality and in cold storage, processing and packing to extend the life of fruit.
Access to marketing will also be improved. "Right now, a farmer sells produce to the traders and has no idea if he is getting a fair price. We hope to put in place a system whereby prices in the cities can be relayed to the farmers by radio," says Loh Ai-Tee, the ADB economist on the project.
The project is expected to directly benefit over 67,000 fruit and tea farmers whose fields will be replanted or rehabilitated using credit. Yields of tea and fruit could increase fourfold and threefold, respectively. Three hundred private commercial nurseries and 730 tea and fruit processing units are also expected to gain. Environmentally, the tea replanting will re-establish perennial cover and reduce erosion on sloping land. The planting of fruit trees on deforested land will protect the soil and stabilize land use. The project will also help various research agencies play a more effective role. Credit facilities will be channeled through the Vietnam Bank for Agriculture and Rural Development to smalholders, nursery operators and entrepreneurs involved in processing, trading and postharvest handling.
The total project cost is estimated at US$57.6 million. The ADB loan will come from its concessional Asian Development Fund. It will be repayable over 32 years, including a grace period of eight years. Interest will be 1 percent per annum during the grace period and 1.5 percent per annum thereafter. Participating financial institutions, beneficiaries, and the Government will finance the balance of the costs. The Ministry of Agriculture and Rural Development is the executing agency for the noncredit component and the Ministry of Finance for the credit component.