Incentivize low-emission rice in the Mekong River Delta

This case presents the TRVC program, operated by the Netherlands Development Organisation (SNV) with analytical support from Deloitte Consulting LLP, implemented through rice companies and cooperatives across Vietnam’s Mekong River Delta, and with MRV support provided by Regrow Ag.

The Mekong River Delta, located at Vietnam’s southern tip, is one of the world’s most fertile regions. It covers about 4 million hectares, with freshwater habitats ranging from floodplains, wetlands and mangrove forests, to mudflats, sea grasses, riparian vegetation, paddy land and peatlands. The landscape, often referred to as Vietnam’s “rice basket”, produces over 55% of the country’s annual rice crop and 95% of its rice exports. This production system supports around 1.5 million small-scale rice farmers and is a major factor in local culture, traditions and livelihoods. Its low-lying coastal geography puts the Mekong River Delta and its inhabitants among the world’s most vulnerable to the impacts of climate change.(1) In a region that depends on small-scale agricultural production, this can be devastating to the economy and significantly impact farmers’ livelihoods. The TRVC program addresses these challenges by incentivizing sustainable practices that reduce emissions, improve profitability, and promote social inclusion.

Location: Mekong River Delta, provinces of An Giang, Kien Giang and Dong Thap in Vietnam

The Transforming Rice Value Chains programme, funded by the Australian Government and coordinated by the Netherlands Development Organization (SNV), incentivises rice companies to work with cooperatives and farmers to adopt low-emission practices. Key elements include:

1. Pay-for-results scheme: Companies receive monetary prizes based on verified GHG reductions.

2. Farmer incentives and capacity-building: Higher prices for sustainable rice, capacity-building

3. Flexible practices: Farmers choose from practices like alternate wetting and drying, fertiliser reduction, residue removal, and direct seeding.

4. MRV system: Regrow Ag quantifies emissions using the DNDC model and remote sensing.

As the project lead, SNV directly engages rice producing companies that, in turn, lead the work of enrolling farmers – either directly or, more commonly, through cooperatives – into the program and engaging them in the adoption of improved sustainable farming practices. Based on the results achieved, rice companies receive monetary prizes at the conclusion of each growing season.

The Government of Australia funds TRVC, providing a grant totaling AUD $17 million, covering project operations and the pay-for-results scheme through 2027.

The project awards prizes to participating companies based on verified GHG reductions on-farm. Each company receives prizes proportionally from a shared pool according to the GHG reduction results monitored during each season. In the first season, the shared pool was AUD $200,000 and will increase to AUD $550,000 in the sixth and final season (2027). The increase over time aims to encourage competition and scale across participating companies. To further encourage scaling over time, the project also awards grand prizes of up to AUD $900,000– split among up to five winners and awarded at the end of the sixth season – to the companies that are most successful in reducing emissions across the six seasons (among the eight Vietnamese rice-producing companies currently part of the project). Of the AUD $200,000 awarded to rice producing companies in the first season, the participating companies shared between 15% and 95% of their monetary awards (for a total of approximately AUD $86,000) with their partner farmers and cooperatives. While prize-sharing can prove to be an additional reward and income source for the farmers, the project’s main benefits for growers derive from the reduction of input costs and the receipt of price premiums for the quality of their product.

Female farmers in the field (Credits: SNV)

Sustainability impact

Climate

• Targets Scope 3 emissions, Category 1: Purchased Goods and Services

• Aims to reduce 200,000 mt CO2e by 2027

• MRV aligned with Verra VM0042/VM0051 and SustainCERT standards

Nature

No formal biodiversity objective, but practices reduce water use and chemical inputs

Social

• 40–70% profit increase for farmers in first two seasons

• Premiums of VND 100–1,300/kg for sustainable rice

• Social inclusion criteria: 30% women in training, disability policies, gender analysis

1719 growers over 61000 hectars in the first planting season, total of 95K hectars in the third season with the ambition to reach over 200K by 2027

Business impact

Benefits

• Access to premium export and domestic markets for farmers

• Strengthened farmer relationships and supply chain resilience

• Enhanced brand value through Green and Low-Emission Vietnam Rice trademark launched by the Vietnam Rice Industry Association (VIETRISA).

Costs

• AUD $17M grant from Government of Australia department of foreign affairs and trade (DFAT) covers operations and incentives 2023- 2027

• Prize pool increases from AUD $200K to $550K over six seasons

• Grand prizes of up to AUD $900K awarded to top performers

Co-benefits

• Promotes gender equality and inclusion of marginalised groups

• Builds capacity and trust across the rice value chain

Typical business profile

• Rice-producing companies in Vietnam

• Operating in flood-prone, smallholder-dominated regions

• Early to mid-stage in Net Zero/Nature Positive journey

Approach

• Enroll rice companies and cooperatives

• Implement sustainable practices with farmers

• Monitor emissions and verify reductions

• Distribute prizes and premiums

• Scale adoption and prepare for carbon monetization

Stakeholders involved

• Project Leads: Netherlands Development Organization (SNV), Government of Australia department of foreign affairs and trade (DFAT), eight rice producing companies (Chon Chinh Export – Import Co. Ltd; Vietnam Rice Co. Ltd; Trung An High-tech Farming JSC; Xuan Phuong Kien Giang Co. Ltd; ThaiBinh Seed Joint Stock Corporation; A An Food JSC; Angimex – Kitoku Co. Ltd; King Green Natural Foods Joint Stock Company with over 127 producer cooperatives)

• Company Functions: Procurement, Sustainability, Farmer Engagement

• Main Providers: Regrow Ag, Deloitte consulting LLP, VIETRISA and,

• Others: Government of Vietnam’s Crop Production Department; Provincial Departments of Agriculture and Rural Development

Key parameters to consider

• MRV system designed for carbon markets and insetting

• Practices tailored to farmer needs and local conditions

• Strong enabling policy via Vietnam’s One Million Hectares programme

• Builds on successful AgResults project in Red River Delta

Implementation and operations tips

• Allow flexibility in practice adoption

• Share economic benefits

• Use remote sensing to verify compliance

• Align with national climate and rice strategies