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Advancing Sustainable Rice Through Secured Agri-Financing in Long An, Vietnam

  • Writer: Mick Dang
    Mick Dang
  • May 13
  • 3 min read

Updated: 7 hours ago

Overview


In the Winter–Spring 2024 rice season, Rize partnered with Olam Agri VN and Cay Trom Agricultural Service and Trading Cooperative (HTX Cây Trôm) to pilot a 300-hectare program in Long An Province, Vietnam. The project aimed to produce sustainable MRL-compliant rice (aligned with EU pesticide residue standards), while introducing a secured, buyer-backed input financing model to improve credit access for farmers and build trust in the rice value chain.


The pilot demonstrates how targeted technical support and smart financing design can overcome longstanding challenges in Southeast Asian agriculture: sustainability, quality compliance, and credit risk.

From Left-To-Right: Rize’s team (Mr. Dung - Vietnam Country Manager, Mr. Long - Senior Agronomist, Mr. Siem - Head of Partnership, Mr. Hai - Partnership Associate), Mr. Senaji Chaki from Olam Agri VN, Mr. Tuan from Cay Trom Co-Op, and Ms. Hi from Olam Agri VN
From Left-To-Right: Rize’s team (Mr. Dung - Vietnam Country Manager, Mr. Long - Senior Agronomist, Mr. Siem - Head of Partnership, Mr. Hai - Partnership Associate), Mr. Senaji Chaki from Olam Agri VN, Mr. Tuan from Cay Trom Co-Op, and Ms. Hi from Olam Agri VN

Context: What is MRL rice and why is it important?


MRL-compliant rice refers to rice produced using strictly controlled pesticide inputs, meeting the Maximum Residue Limits (MRL) set by high-standard export markets like the European Union. This rice earns a price premium, presenting a clear income opportunity for farmers. Offtakers like Olam Agri VN are increasingly investing in MRL sourcing to serve international buyers from EU markets who must follow the low residue requirement.


Besides the economic benefits to farmers and offtakers, producing MRL rice improves the sustainability of the rice value chain by minimizing contamination of soil and water sources and reducing farmer’s exposures to harmful chemicals.


Despite strong demand and clear supplier incentive, cultivating rice crop with a high MRL compliance rate is still a great challenge as farmers often struggle with:

  • Selecting and applying the correct agrochemicals.

  • Avoiding cross-contamination from neighboring plots.

  • Responding to unexpected pest outbreaks without violating MRL rules.


These challenges have led to low and inconsistent MRL success rates, limiting the scalability of MRL production across Vietnam.


Rize’s Objectives


Rize, as a promoter of sustainable rice farming and improvement of farmer’s livelihood, entered the partnership with these key goals:

  • Advance MRL rice as a form of sustainable rice, reducing pesticide load on the environment.

  • Improve the success rate of MRL compliance, enabling farmers to earn premiums and offtakers to secure compliant supply.

  • Introduce a secured, buyer-backed agri-financing model to unlock affordable input access for farmers while ensuring collection as a financier.


What Rize Did


Explore Technical Problems in improving MRL Compliance rate


Rize, working alongside Olam Agri VN and Cay Trom pinpointed the main barriers to improve MRL compliance:

  • A MRL-compliant input package (pesticides, fertilizers), with enough flexibility of SKUs for farmers to switch based on their preference and unexpected pest solution.

  • A digital module to guide agronomists on checking in with farmers on events such as spraying, switching pesticides, and harvesting.

  • Fully traceable journey of the paddy, with testing protocol at key steps, to ensure detection of mistakes that may reduce the success rate.


Improving Farmer’s Credit Access through Buy Now, Pay Later Input, while establishing a secured, offtaker-backed repayment mechanism


Access to agricultural financing remains one of the biggest barriers to productivity and sustainability in Southeast Asia as many input providers and financial institutions are hesitant to extend credit to smallholder farmers due to high default risks, unsecured repayment mechanisms, and a lack of enforceable contracts.


Rize supplied the input package to farmers under a Buy Now, Pay Later (BNPL) scheme, with 0% interest—eliminating the need for upfront capital.


To ensure repayment, Rize worked with Olam Agri VN to build a secured, buyer-backed mechanism:

  • At beginning of the season, Rize provided the input package to the Cay Trom Co-Op (who receives on farmer’s behalf) on credit.

  • At harvest, Olam Agri VN paid the Co-Op for their paddy, but withheld an amount equal to the input credit that Rize provided.

  • Once Cay Trom repaid Rize the input payable, Rize will inform Olam Agri VN to release  the remaining payment to the Co-Op.


This arrangement allowed Rize to achieve 100% repayment on time, demonstrating how de-risked agricultural financing can be achieved through a secured payment collection structure with the right incentives to farmers (Cay Trom Co-Op), offtakers (Olam Agri VN) and project financiers (Rize VN). 


Future Outlook


Support further adoption of MRL rice farming: Rize aims to work with co-ops and offtakers with a willingness to grow MRL rice to meet downstream demand from international importers and create income improvement for farmers.


Development of a Digital MRL Compliance Tool: Rize looks forward to embracing the learnings on MRL compliance issues  into the development of a practical digital MRL module used by Rize agronomists to raise the precision of this practice while scaling it more efficiently.


Scaling the secured, offtaker-backed financing model: Rize aims to pursue the secured, offtaker-backed financing model, which builds trust across the value chain—offering farmers affordable input access, while giving financiers the repayment confidence. Rize will apply this financing structure on scale across the Mekong Delta with other offtakers and Co-Ops to enable more credit opportunities to farmers in the region.

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