Vietnam Boosts Rice Sector Lending Amidst Price Concerns and Focus on Sustainable Production

Hanoi – Vietnam’s central bank is directing commercial banks to increase lending to the rice sector, responding to declining export prices and supporting the ambitious “Sustainable Development of 1 Million Hectares of High-Quality, Low-Emission Specialized Rice Cultivation Associated with Green Growth in the Mekong Delta by 2030” project. This initiative aims to modernize rice production, reduce environmental impact, and ensure financial stability for farmers and businesses involved in the rice value chain.

Addressing Declining Rice Prices

Vietnam’s rice exports experienced a downturn in February 2026, reaching 560,000 tons valued at $288.2 million – a 13.6% decrease in value compared to the previous year [Rice News Today]. The average export price for January-February 2025 was $553.60 per ton, down 18.3% year-on-year. This decline is attributed to factors such as India lifting export restrictions and increased production in Vietnam, Thailand, and Pakistan, leading to a global supply surge [Rice News Today].

Government and Central Bank Intervention

In response to these market conditions, Prime Minister Pham Minh Chinh directed action on March 4th, prompting the State Bank of Vietnam (SBV) to instruct commercial banks on March 5th to prioritize lending to businesses and individuals involved in the rice sector [Rice News Today]. The focus is particularly on supporting the Mekong Delta region, a key rice-producing area.

The 1 Million Hectare Project and Loan Disbursements

The “1 Million Hectares” project is a cornerstone of Vietnam’s strategy for sustainable rice production. As of late 2025, banks had disbursed over VND142 billion (approximately $5.68 million USD based on current exchange rates) in loans through the program, offering preferential interest rates ranging from 4% to 5.5% per annum [Vietnam.vn]. Agribank Long An Branch has signed agreements with four cooperatives participating in the project, committing to support investments in machinery and equipment. A specific loan agreement of VND1 billion (approximately $40,000 USD) was signed with Travel Gon Cooperative for harvesting equipment [Vietnam.vn]. Other cooperatives, including Hung Thanh, Cai Trom, and Hoang Phuong, have also secured loan commitments for mechanization efforts.

Challenges and Solutions in Loan Access

Despite the availability of funds, challenges remain in ensuring access to loans for all participants. Cooperatives and households have reported difficulties with documentation, procedures, and loan limits [Vietnam.vn]. A key issue is the lack of digitized records among cooperatives regarding land use, linkage agreements, and production history, hindering creditworthiness assessments [Vietnam.vn].

To address these issues, the SBV is collaborating with the Credit Guarantee Fund and the Cooperative Development Support Fund to improve access to loans. Authorities are also working to update project participant lists and formally designate specialized rice growing areas with geographical indications to streamline the assessment process [Vietnam.vn].

Focus on Value Chain Lending and Technology Adoption

Banks are increasingly adopting a value chain-based lending model, recognizing its effectiveness in expanding credit and supporting the entire rice production process. The focus extends beyond traditional inputs like seeds and fertilizers to include investments in irrigation, in-field transportation, and, crucially, straw processing equipment to reduce emissions. As of December 26, 2025, a survey conducted by the State Bank of Vietnam Region 13 and the Tay Ninh Department of Agriculture and Environment highlighted the require for capital to invest in these areas [Vietnam.vn].

Project Progress and Participation

Preliminary reports from the Ministry of Agriculture, Food and Rural Affairs indicate that the project has identified over 942,000 hectares of specialized cultivation area, with the participation of 1,230 cooperatives and 210 companies [Bao Tay Ninh]. Notably, 100% of farmers participating in the project are doing so through cooperatives or cooperative organizations, fostering transparency and facilitating data collection for financial institutions.