Animal Feeding / Asia / Feeds / Fodder / Innovation Systems / Markets / Southeast Asia / Vietnam

Credit through traders – enabling the poorest to engage in cattle fattening in Vietnam

Lack of cash to purchase inputs is a major barrier to poor livestock keepers escaping poverty. Short-term credit is a potential solution but often local micro-finance institutions are unwilling to offer credit to the poorest due to lack of collateral. This was the situation faced by the poorest livestock keepers in Ea Kar District in Vietnam, one of the sites of the IFAD-funded Fodder Adoption Project.

In this Technical Advisory Note, Werner Stur (formerly of the International Center for Tropical Agriculture, CIAT) describes the emergence of a novel arrangement for credit supply to allow the poorest to engage in cattle fattening. This involved a loan being offered to a local trader who then entered into a contractual arrangement with poor farmers to allow them to enter the cattle fattening business.

In consultation with community groups, local government, traders, banks and other key stakeholders the project discussed the reasons for low adoption by very poor households and agreed on finding ways to enable them to engage in and benefit from cattle fattening. In a test case, the local government arranged a low-interest loan for one local trader to buy 10 thin cattle for fattening. The trader entered into a contract with five poor households from the indigenous E De group. Each household agreed to fatten two animals for three months (and repeated for a second cycle with new animals). Technical training and support was provided by the extension office. The farmers successfully fattened cattle, achieving high growth rates, and received a payment of USD 107 for each animal fattened. The return to labour was USD 1.08 per hour, which was more than double the prevailing labour rate in the district.

Read the full account here.

See also a previous post on more general aspects of cattle fattening in the Ea Kar site.

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