AgriCRF pilots climate risk finance solutions for ASEAN agriculture

Foster farmers in understanding and using financial tools

One of Viet Nam’s ongoing efforts to improve farmers’ access to financial tools for climate adaptation is the “Agricultural Climate Risk Financing Initiative in Viet Nam” (AgriCRF), implemented by the German Agency for International Cooperation (GIZ) in partnership with the Department of Cooperatives and Rural Development.

Sharing international experience on climate risk financing in agriculture on April 8, Julian Tost, Project Director of AgriCRF at GIZ, said the initiative goes beyond developing financial products, instead operating on three pillars: expanding the supply of climate risk finance tools, strengthening capacity for farmers and intermediary organizations, and linking these tools with sustainable agricultural standards, including gender equality.

“The difference is that we are not offering a single product, but a package of solutions combining finance, technology and training,” he said.

Over three years, the project has developed four products across three countries. In Indonesia, a weather index insurance product for cocoa is based on rainfall data, enabling automatic payouts when thresholds are met rather than relying on manual damage assessments. In Thailand, an ESG risk assessment tool has been integrated into the banking system to support climate-adaptive agricultural lending.

The AgriCRF initiative is being implemented across 10 ASEAN countries, with pilot models in Indonesia, Thailand and Viet Nam. In Viet Nam, the German Federal Ministry for Economic Cooperation and Development is providing approximately €4 million in funding for the 2023 - 2025 period.

In Viet Nam, two products are being piloted: green credit for smallholder farmers and a digital credit assessment application, both aimed at simplifying loan procedures and reducing barriers to financial access, particularly for women and small-scale farmers.

At the same time, more than 17,000 farmers have received training in finance and insurance, about half of them women. According to project surveys, over 75 percent of participants reported improved resilience to climate risks.

However, Tost noted that these figures reflect only part of the challenge. “Developing financial products is not the hardest part. The bigger challenge is ensuring that farmers understand and actually use them,” he said.

Experience from implementation shows that classroom training can raise awareness but is not sufficient to change behavior. For farmers to adopt these tools in practice, ongoing advisory support, household-level follow-up and continuous engagement after training are required.

In Indonesia, for example, the project is implemented through the partner Edufarmers, focusing on climate-adaptive financial management training for cocoa farmers. The program is designed not just to deliver knowledge but to drive behavioral change at the household level.

Cooperatives serve as the bridge

Farmers are trained in financial management, climate change impacts, and the use of tools such as weather index insurance. Climate-smart farming practices, including good agricultural practices and water-saving techniques, are also integrated into the curriculum.

A key lesson learned is that improving financial literacy does not automatically lead to immediate use of formal financial services. Access still depends on factors such as market conditions, the financial system and the readiness of service providers.

In this context, cooperatives are seen as a crucial link. According to Tost, in ASEAN countries, particularly Viet Nam, cooperatives serve as intermediaries that connect projects with farmers.

“Cooperatives function like an accelerator. We can work with a single focal point, which then disseminates knowledge to members and participates directly in training,” he said.

Nguyen Thi Minh Thuy, Director of Luc Ngan Xanh Cooperative in Bac Ninh Province, said the cooperative has more than 20 members cultivating fruit crops such as lychee, oranges, mandarins and pomelos across over 15 hectares.

In recent years, she noted, production has become increasingly dependent on weather conditions, heightening risks. In addition to market volatility, natural disasters disrupt production, directly affecting income and planning. When risks occur, farmers largely bear the burden themselves, as support tools remain limited or difficult to access.

In 2025, the cooperative received support to connect with businesses to expand market access, but Thuy emphasized that this addresses only the market side. “The biggest challenge is still how to reduce production risks,” she said.

Experts say that for climate risk finance models to be truly effective, more products tailored to real production conditions are needed, alongside training, technical support, and local implementation systems.

Scaling up current pilot models will depend on coordination among governments, the private sector and financial institutions, as well as stronger regional connectivity within ASEAN.

In discussions on the sidelines of the workshop, Tost stressed that the effectiveness of climate risk finance ultimately depends on user awareness.

“Many farmers keep records of income and expenses and invest in production, but they do not fully understand how loans benefit them or how insurance works—that they pay premiums and receive payouts when risks occur,” he said.

According to the GIZ expert, financial tools should be viewed as investments in resilience and long-term livelihoods rather than short-term costs. Achieving this requires sustained training and direct engagement with farmers.