ADB financing to help improve agricultural productivity

New financing to help government install modernized irrigation systems in five drought-affected provinces.

The Asian Development Bank (ADB) has approved over $100 million in financing to help the Vietnamese Government install eight modernized irrigation systems in five drought-affected provinces, which will improve agricultural productivity, especially among farmers growing high-value crops such as coffee, pepper, grapes, dragon fruit, and mangoes.

ADB’s support for the upgraded irrigation systems, which will supply water on-demand through pressurized pipe systems, also covers policy measures to help south-central Binh Thuan, Ninh Thuan and Khanh Hoa and the central highlands’ Dak Lak and Dak Nong provinces improve irrigation management, including the operations and maintenance of irrigation infrastructure.

It will also support the development of improved groundwater and water productivity assessments, as well as micro-irrigation systems based on the type of crops and farmer demand.

“Modernized irrigation systems maximizing the potential of Vietnam’s agricultural sector are crucial to the country’s goal of pursuing inclusive and sustainable growth,” said Mr. Sanath Ranawana, ADB Senior Natural Resources Economist. “The project’s focus on climate resilience, particularly by providing water on-demand to farmers, will help smallholder farmers increase crop yields and boost their incomes.”

Agriculture plays a significant role in Vietnam’s economy, contributing 18.3 per cent of the country’s GDP and 44 per cent of its workforce from 2008-2016. However, despite having among the best irrigation coverage in Southeast Asia, covering about 50 per cent of the country’s arable land area, more than half of Vietnam’s irrigation systems remain under capacity due to outdated infrastructure. This affects the productivity of farmers in drought-affected provinces, especially given the effects of climate change.

ADB’s assistance is composed of a $100 million concessional loan and a $300,000 grant from the Climate Change Fund, established in May 2008 to facilitate greater investments in ADB’s developing member countries to effectively tackle climate change.

ADB will also administer another $750,000 grant from the Netherlands Trust Fund under the Water Financing Partnership Facility, which was established in November 2006 to improve access to water resources among people living in the project area. The grant will support the development of water resource assessments and a water allocation framework, water productivity assessments, and a crop water monitoring platform.