Suggested citation Sharick, A., Tan, C. (2025). Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture. Hanoi, Vietnam: International Rice Research Institute – Vietnam Country Office. About the authors Amber Sharick is the Sustainable Finance Officer for agri-food systems transformation projects at IRRI. Cherie Tan leads partnerships and work at the intersection of forest governance, regenerative agriculture, and land-use transitions to enable public-private collaboration across Southeast Asia. Acknowledgements This work was undertaken as part of the CGIAR Climate Action and Scaling for Impact (S4I) programs. We gratefully acknowledge funding provided by the CGIAR Trust Fund. https://www.cgiar.org/cgiar-research-porfolio-2025-2030/scaling-for-impact/ © 2025 International Rice Research Institute. This publication is under the Creative Commons Attribution – NonCommercial–NoDerivs 4.0 Unported License For more information, please contact: Dr. Katherine Nelson Scientist, IRRI Vietnam k.nelson@cgiar.org Vietnam is at a critical crossroads as it embarks on a transformative journey to create a sustainable, low-emission rice sector. The country’s one-million-hectare low-emission rice initiative is not just a response to global climate challenges, but a necessary evolution to protect its agricultural economy, secure livelihoods, and contribute to global food security. However, this initiative requires more than technological upgrades—it necessitates immediate and coordinated action across all stakeholders, involving smallholder rice farmers, financial institutions, private sector companies, and international development organisations and technical partners in the rice landscape. Rice remains the backbone of Vietnam’s agricultural economy, employing millions and contributing significantly to the national GDP. However, traditional rice farming practices, such as continuous flooding, contribute heavily to methane emissions, exacerbating the global climate crises. This underscores the urgent need for Vietnam’s agricultural practices to evolve, aligning with both environmental sustainability and long-term economic viability, particularly as climate change impacts become more severe in key rice-producing landscapes like the Mekong Delta. This paper presents a selected set of recommendations developed through recent dialogues and workshops in 2024, involving a diverse group of stakeholders within the rice ecosystem. These recommendations are designed to support Vietnam’s ambitious one-million-hectare low-emission rice initiative by addressing key challenges such as financing, technological integration, capacity building, and equitable benefit-sharing. By reflecting the insights of experts across the rice value chain, the paper offers a roadmap for driving the transformation needed to meet Vietnam’s sustainability and climate goals. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture1 Smallholder Farmers and Cooperatives: Core to Transformation At the heart of this transformation are Vietnam’s smallholder farmers, most of whom own less than two hectares of land. Smallholders are essential to the country’s rice production but face immense financial and technical barriers when transitioning to climate-smart practices like Alternate Wetting and Drying (AWD), which reduces both water use and methane emissions. The urgency of this transition cannot be overstated, as climate change is already leading to increased saltwater intrusion and unpredictable weather patterns in rice-producing regions. In order to overcome these challenges and fully unlock the potential of smallholder farmers, the following recommendations are key. Accessing finance remains one of the biggest challenges for smallholder farmers. The existing financial products offered by local financial institutions can get misaligned with farmer needs, as they typically consist of short-term loans at high interest rates and with strict collateral requirements. For Vietnam’s low-emission rice initiative to succeed, financial products such as concessional loans, microfinance, and value chain financing tailored to the rice value chain should prioritise smallholders’ specific needs and constraints. These products need to be flexible enough to support long-term investments, enabling farmers to transition toward climate smart rice farming practices. Cooperatives can play a pivotal role in supporting smallholder farmers in overcoming these barriers. By pooling resources, farmers can access shared equipment, reduce individual financial risks, and improve their market access. Cooperatives also provide a framework for aggregating production and facilitating access to both domestic and international markets that demand high-quality, low-emission rice. Successful examples, such as the Vinh Cuong Cooperative in the Mekong Delta, demonstrate how adopting standards like the Sustainable Rice Platform (SRP) can help cooperatives secure better market access while promoting regenerative farm practices. Additionally, cooperatives make it easier for financial institutions to lend to farmers by reducing transaction costs and centralizing loan management. Beyond traditional cooperatives, companies like Olam have helped smallholders form market linkages by promoting sustainable farming practices and ensuring that farmers meet international quality standards. This model not only benefits individual farmers but also strengthens the entire rice value chain. Recommendations: When public and private sector actors collaborate, they can improve access to tailored financial products—such as concessional loans, microfinance, and value chain financing—designed to meet the specific needs of smallholder farmers. This collaboration can help de-risk investments in sustainable practices and facilitate access to both domestic and international markets, strengthening the rice value chain. Ultimately, such collaboration promotes long-term economic viability and resilience across the sector. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture2 Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture3 Carbon Compliance and Voluntary Markets Vietnam is actively developing compliance frameworks to achieve national and international climate change commitments. WIth sectoral targets in agriculture, greenhouse gas emissions (GHG) reductions in rice production are poised to play a key role in achieving the country’s Nationally Determined Contributions (NDCs). Currently, rice does not fall under the Emission Trading Scheme (ETS) in Vietnam, and carbon credits will not be available internationally during the pilot phase. How these frameworks evolve in the future is yet to be determined, especially whether emissions reductions achieved in agricultural projects in Vietnam will be available for buy-and-trade with entities mandated under the ETS. This is an open question as Vietnam works to align its carbon trading systems under Article 6 of the Paris Agreement. The Role of Article 6 in Vietnam’s Carbon Market Development Article 6 of the Paris Agreement provides Vietnam a mechanism to tap into larger, stable revenue streams by enabling international carbon credit trading. The pilot phase (2025–2028) will focus on domestic trading, with full international integration anticipated by 2029. Vietnam is building formal carbon trading systems to allow the exchange of emissions reductions with other countries, particularly to meet its Nationally Determined Contributions (NDCs). In voluntary markets, farmers can sell carbon credits certified by third-party bodies like Verra and Gold Standard. However, a shortage of accredited verifiers, especially in agriculture, remains a bottleneck. Targeted support from international donors could enhance Vietnam’s verification infrastructure and foster greater market integration. It is in Vietnam’s interest to align the legal, regulatory and market frameworks both with national climate goals and international frameworks like the Paris Agreement. This alignment will ensure that high quality, low-emission rice and the corresponding verified emissions reductions from production are robust, trusted and able to secure premium prices and better market access. The recent government announcements reflect a dual focus: piloting carbon markets domestically while preparing to connect with regional and global carbon markets in 2029. This phased approach ensures that the necessary legal frameworks, infrastructure, and capacity-building efforts are in place to support the market’s long-term success. Recommendations: The future remains uncertain regarding whether rice sector-generated carbon credits can be integrated into voluntary, non-compliance markets. To accelerate the adoption of carbon markets in the rice sector, Vietnam must focus on clarifying interim operating procedures during the pilot phase (2025-2028). This would enable smallholder farmers to generate immediate revenue through emissions-reducing practices such as Alternate Wetting and Drying (AWD), while allowing them to participate in voluntary markets sooner. Clarifying interim operating procedures during the pilot phase will allow smallholder farmers to generate immediate revenue through emissions-reducing practices, while helping Vietnam gain valuable insights into viable business models for reducing GHG emissions. A well-defined framework would also help attract investment from the private sector, especially as the voluntary market continues to grow in importance. Additionally, building the capacity for robust Measurement, Reporting, and Verification (MRV) systems will be critical for ensuring the credibility and traceability of carbon credits. This will not only support the integration of rice sector carbon credits into compliance and voluntary markets but also provide long-term value for all stakeholders across the rice value chain. With these steps, Vietnam can position itself as a key player in global carbon markets while advancing its sustainability goals. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture4 Technological Tools: Unlocking New Revenue Streams The Ministry of Agriculture and Environment (MAE), formerly the Ministry of Agriculture and Rural Development (MARD), and the International Rice Research Institute (IRRI) have worked collaboratively to develop the tools necessary for measuring, reporting, and verifying (MRV) emissions reductions in Vietnam’s rice sector. These tools ensure that emissions reductions from a change in farming practices are accurately captured and calculated in accordance with international standards. Digital MRV tools like FARMORE and RICEMORE, which are transparent and publicly available, provide the basis for the MRV system. These tools are flexible enough to adapt over time as the data sets become more robust. Furthermore, they do not preclude any private sector approaches or technology-driven data innovations, such as remote sensing, from contributing to MRV going forward. Digital tools in this space can be better leveraged and can improve farmer profiling for risk management (e.g. insurance) and accessing financing (e.g. lending), creating opportunity for multiple insights and revenue streams. International corporations are increasingly recognizing the importance of decarbonization in agriculture. Large commodity buyers and agricultural conglomerates are motivated to support high-quality, low- emission rice production, aligning with their own net-zero targets. This is leading to closed-loop value chain in rice production, where the entire value chain - from farmers and cooperatives to processors and millers - can monitor and calculate GHG reductions. Industry-led buyer procurement targets for low-emission rice, such as those being discussed in the World Economic Forum’s First Movers for Food Coalition’s Rice Working Group, signal a demand side push for climate-resilient practices. Platforms like Grow Asia play a critical role in facilitating partnerships and mobilizing resources to support this transformation. Grow Asia has established several multi-donor impact funds, including GrowVentures, which focuses on promoting climate-smart agriculture, driving innovation, and enhancing economic empowerment. Grow Asia’s Public-Private Partnership (PPP) Taskforce on Rice, collaborating closely with MAE, ensure that national policies align with international climate goals, while equipping smallholders with the necessary tools and knowledge to adopt low-emission practices and participate in global markets for sustainable rice. Recommendations: Adopting standardized definitions and methodologies for high-quality, low-emission rice is essential for ensuring market access under the 1mHa program. These standards should be recognized domestically and internationally, enabling Vietnam to secure premium markets and meet the expectations of international buyers. A crucial next step would be establishing a Technical Assistance Coordination Group, co-chaired by MAE, IRRI, and relevant private sector companies through Grow Asia. This group would align resources, promote inclusivity, and prevent duplication of efforts across the 1mHa program. Coordinating technical assistance among stakeholders will ensure efficient use of resources and greater impact for smallholder farmers. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture5 Private Sector and Development Organization Involvement The private sector’s involvement is crucial to scaling Vietnam’s low-emission rice initiative. Input providers, particularly in crop protection and precision agriculture, play a critical role by supplying farmers with tools that enhance productivity while reducing environmental impacts. These technologies enable farmers to apply fertilizers and pesticides more efficiently, directly contributing to the goals of the one-million-hectare initiative by reducing chemical use and boosting yields through regenerative practices. The Role of Input Supply Intermediaries and the Need for Affordable Financing Less understood is the role of input supply intermediaries in providing advances to smallholder farmers. By offering inputs on credit with deferred payment until after harvest, they provide a critical but costly form of financing, with effective interest rates reaching 20% to 30%. To improve transparency and reduce reliance on high-interest credit, more affordable and structured financing options should be developed. Providing upfront financing for inputs would lower costs, promote financial sustainability, and mitigate the risk of debt traps for farmers. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture6 Critical Rice Landscapes and Their Role in Scaling Transformation Vietnam’s critical rice landscapes, particularly in An Giang, Can Tho, Dong Thap, and Bac Lieu, are key to the success of the country’s low-emission rice initiative. Situated in the Mekong Delta, these regions are among the top landscapes of Vietnam’s rice. Dong Thap, for instance, produces approximately 3.3 million tons of rice annually, contributing significantly to both national food security and exports. These landscapes, however, are highly vulnerable to climate change, making their transformation to low-emission, climate-resilient practices a national priority. The transformation of these landscapes is dependent on effective support for smallholders, particularly in providing access to modern irrigation systems and innovative financing. Strengthening cooperatives is central to enabling smallholders in these landscapes to adopt new practices. By organizing into cooperatives, farmers can pool resources, share equipment, and reduce individual financial risk. In doing so, they gain better access to modern irrigation systems and technologies needed to transition to low-emission farming. In Dong Thap, cooperatives like Thang Loi have successfully adopted SRP standards, demonstrating how collective efforts can reduce input costs, increase yields, and lowering environmental impacts. Provincial governments are also instrumental in mobilizing resources from both national bodies and international partners. In Kien Giang, the World Bank is providing financial and technical support to transform 200,000 hectares of rice production into low-emission systems, a key milestone in Vietnam’s broader goal of achieving one million hectares of sustainable rice. These efforts aim to upgrade irrigation systems, improve water management, and integrate digital tools to enhance farm productivity while minimizing environmental impacts. Recommendations: The transformation of these critical rice landscapes cannot be achieved by provincial governments alone. Success depends on collaboration between local governments, national authorities, private sector actors and financial institutions. These regions are inviting stakeholders to contribute to the transformation by offering technical expertise, financial support, and market access for sustainable rice. By leveraging these partnerships, Vietnam can expand low-emission practices across its rice-producing regions, ensuring both environmental sustainability and economic resilience in the face of climate change. Vietnam’s rice sector is at a critical turning point, as it faces growing challenges from climate change, including erratic weather patterns, rising temperatures, and increasing pressure on natural resources. The need for a sustainable transformation of rice production has never been more urgent. The country’s commitment to the one-million-hectare low-emission rice initiative offers a clear path to addressing these challenges and ensuring the long-term resilience of its rice sector. IRRI has played a significant role in supporting MAE by providing essential research, tools, and capacity- building initiatives. Their work has helped align international best practices with Vietnam’s national goals, making it easier for farmers to adopt climate-smart techniques and reduce emissions. IRRI’s contributions, in partnership with MAE, have created a solid foundation for scaling sustainable rice production across the country. However, IRRI’s efforts are only one part of the solution. Success depends on the combined actions of national stakeholders, the private sector, and provincial governments. Private sector actors must continue to invest in technologies and market solutions that promote low-emission rice production, while provincial governments play a critical role in enabling smallholder farmers to access these resources. By strengthening cooperatives and improving local infrastructure, provincial leaders can help ensure that smallholders are able to scale sustainable practices and participate in more resilient value chains. The opportunity for impactful action is clear. By fostering strong partnerships, making strategic investments, and enacting supportive policies, Vietnam has the potential to become a global leader in sustainable rice production. As the saying goes, “If you want to go fast, go alone. If you want to go far, go together.” Only through collective action can Vietnam achieve its vision of a sustainable, climate- resilient rice sector, setting an example for the world. By acting now, Vietnam can lead the way in sustainable rice production, setting an example for other rice-producing nations. Conclusion: Urgency and Collective Action Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture7 Financial Institutions and Lenders Agribank: One of Vietnam’s largest agricultural lenders, Agribank provides financing to smallholders, though there is a need for more concessional and long-term loan products to support low-emission farming. World Bank: Provides large-scale financial and technical support to Vietnam, particularly in areas of climate resilience and infrastructure development for agriculture. Asian Development Bank (ADB): Offers concessional loans, grants, and technical guidance to help Vietnam build climate-smart agricultural systems, focusing on irrigation and sustainable water management. MSIG (Mitsui Sumitomo Insurance Group): A leading insurance provider, MSIG supports Vietnam’s rice sector through tailored crop insurance products, helping farmers manage risks and enabling greater adoption of sustainable practices. Hillridge Technology: Provides innovative insurance solutions to help farmers manage climate risks, supporting resilience in Vietnam’s agricultural sector. State Bank of Vietnam: The central bank of Vietnam, which regulates and supports financial institutions to create favorable conditions for agricultural lending, including specific policies for rice and agricultural financing. Private Sector and Innovators Bayer: A global leader in agricultural inputs, Bayer provides precision farming tools that help farmers optimize yields while reducing environmental impacts, playing a key role in scaling sustainable practices. RIZE: A startup working to support the digitalization of agriculture, providing smallholders with access to innovative tools that enhance productivity and enable sustainable practices in rice farming. Key Organizations Involved in Vietnam’s Rice Transformation Navigating the complex ecosystem of actors involved in Vietnam’s rice transformation requires building on the efforts already in motion. The following organizations represent just a few examples of the critical work being done to support the one-million-hectare low-emission rice initiative. While not an exhaustive list, these organizations showcase the diverse and coordinated efforts needed to achieve the ambitious goals of sustainable rice production in Vietnam: Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture8 AgriG8: A fintech company offering digital solutions to help smallholder farmers access affordable financing, enabling them to invest in low-emission technologies and climate-smart agriculture practices. Olam: A major agribusiness player, Olam is focused on promoting sustainability within rice value chains, with initiatives aimed at improving environmental outcomes for smallholders. Carbon Credit Trading Platform ASEAN Joint Stock Company (CCTP): Develops carbon credit trading mechanisms across ASEAN, positioning Vietnam as a key player in regional carbon markets. Green Carbon: Focuses on supporting sustainable development through carbon finance, integrating carbon credits into sustainable agricultural practices across Vietnam. Development Organizations and Platforms Grow Asia: Facilitates partnerships between governments, private companies, and development organizations to scale sustainable agriculture practices, working closely with MAE to ensure alignment with national goals. International Rice Research Institute (IRRI): Provides the tools and research necessary for farmers to adopt climate-smart practices, including MRV systems that enable participation in carbon markets. Sustainable Rice Platform (SRP): Sets global standards for sustainable rice production, ensuring that farmers can reduce their environmental impact while improving productivity. SNV: Supports sustainable food systems, climate-smart agriculture, and resource management across Vietnam and Southeast Asia, helping farmers adopt more resilient farming practices. Government and National Agencies Vietnam Ministry of Agriculture and Environment (MAE): Leads the national effort to implement the one-million-hectare low-emission rice program, coordinating resources and stakeholders. Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD): Focuses on research and policy development to guide sustainable agricultural growth and rural development in Vietnam. Vietnam Rice Industry Association (VIETRISA): Organizes the rice value chain, aligning stakeholders toward the national goals for low-emission rice production. Paris Agreement Article 6 Implementation Partnership Center, Institute for Global Environmental Strategies (IGES): Supports Vietnam in its implementation of Article 6, enabling the country to participate in carbon trading mechanisms under the Paris Agreement. Vinh Loi Rice Cooperative, An Giang Province: A leading cooperative in the Mekong Delta region, Vinh Loi works on implementing sustainable rice farming practices and connecting smallholders to domestic and international markets. Transforming Vietnam’s Rice Sector: A Pathway to Low-Emission Agriculture9