Viet Nam’s Green Funds: Increasing Farmers’ Income

 Viet Nam’s Green Funds: Increasing Farmers’ Income

In rural Viet Nam, a Southeast Asian country rich in forests and farms, small farmers and forest workers was facing a big challenge. They wanted to grow trees for timber and plant different crops or try new ways of farming that could earn them more money. 

But to do these things, they needed some extra money in the beginning as like a loan. When they went to the bank, the bank asked for two things:

1.     A long, detailed business plan.

2.     Collateral -like land papers or property as security.

These farmers didn’t have time, skills, understanding or resources to prepare big business plans which bank was asking, and they didn’t have property to give as security. 

So the bank avoided to give them money. For a long time they were unable to start new cultivation plans, even if they had good ideas.

In 2021, a group called the Forest and Farm Facility (FFF), working with the Viet Nam Farmers Union (VNFU), came up with a new idea — something they called “Green funds.” 

The Forest and Farm Facility (FFF) in Vietnam is a program focused on supporting smallholder farmers and forest producers in forming cooperatives and improving their livelihoods through sustainable forest and farm management. It has a partnership with the Food and Agriculture Organization (FAO).

The Green funds worked well for the farmers and changed their lives in many ways. Farmers now getting small loans of up to USD 1,000 without giving any collateral. They didn’t have to pay any interest, and they can return the money in next 12 months. 

The rules are flexible, designed to match each farmer’s needs and capacity. This means a farmer can borrow just the right amount for their project, whether he planting timber trees, starting an agroforestry plot, or adding value to their produce, and can repay it without feeling pressured.

Since these loans were given through local farmer groups, the people lending the money already knew the farmers well. They knew who was honest, who could repay, and what kind of projects they wanted to start.

One farmer from rural Viet Nam, wanted to plant timber trees that would take a few years to grow but could bring him good income later. He applied for a green fund loan through his local producer group. 

The group trusted him, gave him the money, and he was able to start his plantation. Soon, more and more farmers in rural Viet Nam started using green funds. Within a short time, the results were clear. 

The number of farmers who could access loans more than doubled. Over half of the farmer groups supported by FFF now had the funds to invest in projects like agroforestry and timber growing. As a result, many farmer’s incomes raised by 10–30%, giving them greater stability and the confidence to plan for the future.

So, through this simple, no-collateral, no-interest loan system introduced in 2021 by FFF, VNFU, and FAO, small forest and farm businesses in rural Viet Nam could finally growing, trying new things, and improving their lives, all while taking care of the environment.

Source: The State of the World’s Forests 2024 report by FAO