Building financial inclusion through Agricultural Value Chain Finance training for bankers

While access to finance remains a major challenge for smallholder farmers, it is essential for purchasing agricultural inputs and investing in improved productivity. In Vietnam, assessing farmers’ creditworthiness is often difficult for bankers, who may lack in-depth knowledge of the agricultural sector. In this context, LuxDev, through the Finance for resilience project, organised a three-day training course on Agricultural Value Chain Finance for bankers, held in Hue City from 16 to 18 July 2025.

In Vietnam, while bankers are well-versed in the mechanics of lending, those specialising in agricultural production and business often lack a deep understanding of the sector. Assessing the creditworthiness of farmers becomes challenging, especially given the unpredictable weather and market conditions many people face. This disconnect creates a cycle of limited access to finance for farmers. Without adequate financial support, farmers are unable to invest in necessary inputs, technologies, or practices that could enhance their productivity and resilience.

Agricultural Value Chain Finance (AVCF) emerges as a promising solution to address these challenges. By linking various actors within agricultural value chains – from producers and input suppliers to processors and traders – AVCF enables financial institutions to mitigate risks through a structured approach. Understanding the interconnections and dynamics within these value chains allows banks to better assess and manage risks associated with lending.

By tailoring financial products to meet the specific needs of different actors within the value chain, financial institutions can facilitate safer and more efficient lending. This not only improves access to finance for smallholder farmers but also contributes to the overall stability and sustainability of the agricultural sector.

Recognising the significance of this entry point, the Finance for resilience project has commenced its mission to facilitate the access to finance for climate and economic resilience of smallholder farmers in Hue City with a three-day training course from 16 to 18 July 2025, focused on AVCF for bankers. This training brought together 17 core staff members from Agribank's head office and Hue branch, aiming to empower them with a deeper understanding of farming systems, agribusiness models, and agricultural financing mechanisms.

"We greatly appreciate the support from the experts of the Finance for resilience project. We now understand the importance of bankers in agricultural finance having knowledge of farming systems, climate, soil, and plant growth. Additionally, we have learned that AVCF is primarily information-based, where collateral is not the main priority. Following this course, we will take home valuable insights and essential tools to navigate the complexities of agricultural value chain finance. Armed with this newfound knowledge, Agribank staff – alongside the ongoing support of the Finance for resilience project – will be better positioned to design tailored financial products that meet the unique needs of smallholder farmers", stated Ms. Giang PHAM, deputy manager of Financial Institution Department and head of Agribank task force for the Finance for resilience project.

Agribank is a 100% state-owned bank in Vietnam. It is the country's largest provider of agricultural credit, serving approximately 3 million smallholder farmers through a network of over 2,300 branches nationwide. As of 2023, Agribank's agricultural loan portfolio exceeds VND 1 trillion (approximately $43 billion), accounting for over 60% of its total outstanding loans. In the context of the Finance for resilience project, Agribank acts as both a beneficiary and service provider. They will receive technical support to design and pilot AVCF products while potentially providing financing for project beneficiaries in Hue, and expand lending to other provinces in Vietnam.

The project Finance for resilience is funded by the Grand Duchy of Luxembourg and implemented by LuxDev, the Luxembourg Development Cooperation Agency.