Organic vegetable production in Vietnam is still small, making up only 0.2% of the country's agricultural area. Production is also fragmented across small plots of land. While some farmers have been able to increase their incomes significantly through organic methods, expansion is challenging due to high land prices, urbanization, and the difficulty of merging small plots.
Most organic vegetable companies in Vietnam were initially established and funded through international development aid, with a focus on organizing farmers and educating consumers. However, many struggle financially with limited supply and sales volumes. Successful long-term organic businesses will require a commercial focus on entrepreneurship, developing international brand recognition, and expanding to meet growing domestic and export demand. With the right support,
Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing
1. Organic Vegetable Supply Chain in Vietnam:
Marketing & Finance Perspectives
Tran Tri Dung
DHVP Research & Consultancy
tran@vietnamica.net
Pham Hoang Ngan
The Vietnamese Initiative for Food and Agricultural Policy
pham@vifap.org
2. Organic production of agriculture
is a tradition…
Ho Chi Minh (left),
1962
•Sustains the health of soils,
ecosystems and people.
•Minimal use of off-farm inputs
Working on fields,
•Management practices that today
restore, maintain, or enhance
ecological harmony
3. and ADDA introduced…
organic agriculture in 2004
2004-2010: Agricultural Development Denmark Asia, in collaboration with
Vietnam’s National Farmers Union, developed a framework for organic
production and marketing (http://vietnamorganic.vn/)
•A non-profit initiative
•Lack of consideration for resources’ limitation SUSTAINABILITY?
•Trial and error process
•Narrow window for private sector
4. Production
• Organic agriculture production area
– Small (2010):
• 21,000 ha = 0.2% Viet Nam’s agricultural area (2010)
– Fragmented: two largest suppliers for Hanoi (2012)
• Soc Son district: 30ha ~ 0.15%
• Luong Son district (Hoa Binh province): 15ha ~ 0.075%
• It’s hard to expand production area:
–Relaxation of field is the expense of cost-sensitive farmers
–Surge of land prices in peripheral areas of big cities
–Urbanization and industrialization
–Tough negotiation with neighbor for merging fragmented
pieces of land
Way below a full-swing development
5. Growers
• Motivations:
– Able to learn quickly organic cultivation techniques
– Income is improved by three, even four, times
• Challenges:
– Complicated procedures and standards
– Expensive PGS certification: US$2,000 (excluding experts
expenses that are covered by int’ aids)
– Lack of industrial disciplines
• Some large investments:
– Organik Dalat: 15ha, first EurepGap farm
– ASIMCO (Hoa Binh): 2.2 ha
6. Organic Vegetables Company (OVC)
Branding: Greenlink, Ecolink, Ecolife..
ODA funded companies
The Great Organizer & Coordinator
•Organize production •Trading and marketing
•Educate farmers jobs
•Technical and financial •Educate consumers
supports to growers •Raise funds
• Assure farmers’ income
Lack of commercial motivation & viability
Entrepreneurship & Creativity
7. Government & Associations
• International donors &
development agencies:
Initiators
• Central and local
government fully support
• VOAA: established in Oct.
Vietnam Organic Agriculture Association:
First Meeting on May 22, 2012 in Hanoi 2011
8. Marketing = Educating
• Educating farmers
– Responsible growers/producers
• Educating local government
– Organic agriculture for sustained
development
• Educating consumers
– Above-average income, urban
households; much concern about
food safety and health
– Definition of organic produce
• Trust building process
– The most convenience services
– Virus marketing
– Loyal clients group Loyal clients visited organic production sites
– E-commerce
• Educating the OVCs themselves: Wakening..
how to do a real business
Next education: making a fortune
from agriculture production
9. A recruitment of sale collaborators:
•Retired people
• Simple works
• Performance-based income
• Social responsibility
10. Limited Supply
• Vietnamese people want
vegetables every day.. but not the
same vegetables
• Supply of organic produces is
limited:
– Quantity
– Type of vegetables
• Caveat: Organic & safe vegetable
• Long-life wet market
13. ‘Quasi’ Business of OVCs
• Gross margin: 45 to 47% of
revenue
• Sale volume: $80 to $150 per
day
• Greenlink:
– Top quarterly sale: $2,000
– Manager salary: $1,000/month
• Ecolink:
– Monthly revenue: $10,000
– Still struggling with financial
distress
• Well-invested business
facilities.. but for what?
14. An organic vegetable store
Also organic cosmetics!
Shop rental cost: US$600/month
19. Future: The Entrepreneurs
Farmers are entrepreneurs: growers/producers + traders + capitalists
A new comer: Ecolink (a veteran):
• 2014: Sufficient supply sources
for organic certified foods
• 2014: Certifier for local market
• 2015: Export of 200 MT of
organic teas and 400 MT of
organic spices (30% for Fair-
trade market).
• 2015: 10,000 customers
• Develop international brands of
organic tea/spices in key markets
1ha on the side of Red River; (EU, America, Japan)
15 minutes to Hanoi’s downtown