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Linking Farmers to Markets in Vietnam- CIAT Asia


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Linking Farmers to Markets in Vietnam- CIAT Asia

  1. 1. Enabling diversification to high-value crops inthe remote uplands of Vietnam:Lessons from the development of chayote productionand marketing in Tan Lac district<br />
  2. 2. structure of the presentation<br />Section 1: Some background information on the uplands of Tan Lac<br />Section 2: Context behind CIAT’s intervention<br />Section 3: Intervention strategy during the first marketing season<br />Section 4: CIAT interventions during the first season<br />Section 5: Outcomes and impacts during the first season<br />Section 6: Intervention strategy during the second season<br />Section 7: CIAT interventions during the second season<br />Section 8: Outcomes and impacts during the second season<br />Section 9: Cost-effectiveness, sustainability and scalability<br />Section 10: Some final considerations<br />
  3. 3. Section 1Some background information on the uplandsof Tan Lac district<br />
  4. 4. cluster of 5 communes<br />
  5. 5. remote…<br />
  6. 6. ethnic minority (Muong) population, relatively high poverty rates <br />
  7. 7. an agricultural-based, undiversified economy…<br />
  8. 8. Section 2Context behind CIAT’s intervention<br />
  9. 9. diversification to high-value crops is of strategic importance to the uplands of Tan Lac<br /><ul><li>farmers are over-reliant on maize as a source of cash income (maize is the only cash crop in the area)
  10. 10. maize is a low-value crop (its dominance is explained by relatively low-input requirements and low production and marketing risks)</li></ul>maize cultivation in sloped lands is also associatedwith serious soil erosion problems…<br />
  11. 11. chayote is a good bet for diversificationin the uplands of Tan Lac<br /><ul><li>high prices in urban markets(average wholesale purchasing prices in Hanoi during the off-season months ~ US$500-600 per ton)
  12. 12. suitable local agro-climatic conditions for cultivation during the off-season (mid-April to early November)
  13. 13. there is no scope for expansion of areas in Tam Dao, which is currently the only major supplying area to Hanoi during the off-season months</li></li></ul><li><ul><li>relatively easy to grow
  14. 14. high potential yields(25 tons in low-input system; 60 tons in high-input system)
  15. 15. regular cash income during 6-7 months(2-3 harvests a week)
  16. 16. no soil erosion (full soil cover before, during and after the rainy season)</li></li></ul><li>main challenges…<br /><ul><li>high cost of seed
  17. 17. no vegetable input distribution networks in the uplandsof Tan Lac
  18. 18. no vegetable marketing networks in the uplands ofTan Lac
  19. 19. high marketing risk due to the highly perishable nature of chayote leaves</li></li></ul><li>in late 2007 provincial and district agenciesestablished three chayote pilots<br />
  20. 20. but at the start of the harvesting season (April 08)farmers had no buyers for their chayote.<br />was this about to become another failed, subsidy-driven pilot? <br />
  21. 21. it was then that CIAT (through SADU project) decided to work with local stakeholders to addressmarket access problems<br />
  22. 22. Section 3Intervention strategy during the first marketing season (April – October 2008)<br />
  23. 23. TAM ĐẢO<br />TÂN LAC<br />target markets: provincial<br />
  24. 24. key entry point for intervention:development of a local collection network<br />
  25. 25. advantages of provincial markets (vis-à-vis Hanoi)during the initial chain development stages<br /><ul><li>lower marketing costs
  26. 26. feasibility of intermediate means of transport (motorbike)
  27. 27. lower risk of product spoilage
  28. 28. less strict buyer requirements (product quality, regularity of supply)
  29. 29. lower levels of competition (competition from other leafy vegetables, but no supplies of chayote leaves from other areas)</li></li></ul><li>rationale for establishing a local collection network<br />in Vietnam local collectors play a critical role in linking vegetable growers to mainstream (wet) urban markets<br />there was no vegetable collector in the whole cluster of5 upland communes (the key missing link in the chain)<br />
  30. 30. the option of attracting outside traders was deemed inferiorto the development of a local trading network <br /><ul><li>coordination with farmers would be more problematic due to distance
  31. 31. mobilization of district traders would be difficult in view of the small product volumes and the marketing risks involved
  32. 32. potential for generating local income from marketing activities would be lost
  33. 33. opportunity for developing local entrepreneurial skills would be missed</li></li></ul><li>in theory, farmer groups can replace collectors by taking onproduct assembly and other marketing functions<br />
  34. 34. but attempts to instigate group action failed!<br />
  35. 35. Section 4CIAT interventions during the first season<br />
  36. 36. 1. identification and mobilization of farmers who couldtake on the role of collectors<br />
  37. 37. 2. provision of market information to new farmer-collectors(as well as local government staff and farmers)<br />
  38. 38. 3. provision of advisory and mentoring servicesto the new collectors(bargaining strategies, record keeping etc)<br />
  39. 39. 4. transfer of production and post-harvest know-how to farmers: harvesting skills…<br />
  40. 40. and bundling skills<br />
  41. 41. Section 5Outcomes and impacts during the first season<br />
  42. 42. production<br />
  43. 43. marketing<br />
  44. 44. 26%<br />chayote chain<br />87 farmers<br />40%<br />34%<br />5 collectors<br />Phuong Huyen<br />Restaurants<br />Retailers<br />Consumers in Hoa Binh Province<br />
  45. 45. one farmer-collector (w/ helmet) selling to retailersin Hoa Binh town<br />
  46. 46. another farmer-collector selling to consumersin Hoa Binh town<br />
  47. 47. income impacts: additional local net incomes in 2008(assuming no production pilot subsidy)<br />Note: maize is the counterfactual crop<br />
  48. 48. encouraged by these positive results, local government agencies decided to expand the pilot area <br />
  49. 49. Section 6Intervention strategy during the second season(December – October 2009)<br />
  50. 50. target markets: Long Bien, Hanoi(largest wholesale market for fresh produce in Hanoi)<br />
  51. 51. <ul><li>provincial markets are too small to absorb additional production from Tan Lac
  52. 52. prices in Hanoi are significantly higher than in Hoa Binh</li></li></ul><li>rationale for targeting wet markets instead of supermarkets<br /><ul><li>supermarket demand for fresh produce is still very small (in the case of chayote, about 50 kgs per day per chain)
  53. 53. the transport logistics associated with deliveries to supermarkets are challenging and transportation costs too high
  54. 54. suppliers to supermarkets must be formally registered and have a bank account
  55. 55. supermarkets do not pay upon delivery</li></li></ul><li>promote an upgrading of product quality,in line with the requirements of wholesalers in Hanoi<br />
  56. 56. facilitate an expansion and consolidation ofthe collectors’ network<br />
  57. 57. support the development of commercialinput distribution networks<br />
  58. 58. Section 7CIAT interventions during the second season<br />
  59. 59. 1. market information and product market linkages<br /><ul><li>mobilization and mentoring of new farmer-collectors
  60. 60. exposure visits involving collectors and commune officers
  61. 61. markets within the province and in neighbouring provinces
  62. 62. Long Bien, Hanoi (main target market)
  63. 63. Tam Dao (largest production area in Vietnam, main competitor)
  64. 64. mediation between collectors and wholesalers in Hanoi, especially during the initial stages
  65. 65. facilitation of linkages with transport service providers </li></li></ul><li><ul><li>provision of useful telephone contacts (producers in Tam Dao, collectors in Tam Dao, traders in Hanoi) to collectors for regular access to price information
  66. 66. promotion of collective action amongst collectors to ensure
  67. 67. joint negotiation with wholesalers in Hanoi
  68. 68. minimum daily deliveries to key buyer in Hanoi
  69. 69. standardized product quality, in line with the requirements of wholesalers in Hanoi
  70. 70. integration of a trader servicing a chayote pilot in a neighbouring district in the Tan Lac chain (scaling-out)</li></li></ul><li>collectors discussing the market situation and opportunities with retailers in Hoa Binh province<br />
  71. 71. one collector and one commune officer discussing the market situation and opportunities with retailers in a neighboring province<br />
  72. 72. collectors and one district officer checking the qualityof chayote in Long Bien night market<br />
  73. 73. collectors discussing the market situation and opportunitiesin Long Bien night market<br />
  74. 74. collectors from the uplands of Tan Lac loading chayoteinto a truck on its way to Long Bien market<br />
  75. 75. collector in a neighboring district linked to the Tan Lac chain<br />
  76. 76. 2. input chain development<br /><ul><li>dau trau pilot with Phuong Huyen, with an emphasis on upstream links with an Hanoi agent and downstream links with the collectors in the uplands of Tan Lac(note: dau trau is a nutrient-rich chemical fertilizer = NPK++; Phuong Huyen is a small agribusiness firm based in Hoa Binh town)
  77. 77. facilitation of linkages between the collectors in the uplands and a growth regulator agent in Hanoi</li></li></ul><li>dau trau agent loading a truck for delivery to Phuong Huyen<br />
  78. 78. one of the collectors that supplied dau trau to farmers<br />
  79. 79. 3. product quality<br /><ul><li>training and mentoring of farmers and commune officers
  80. 80. production practices
  81. 81. bundling
  82. 82. discussions with collectors on the need for communicating buyers’ quality requirements to farmers and only purchasing from them chayote that meets those requirements</li></li></ul><li>transfer of production knowledge and skills<br />
  83. 83. improving bundling skills<br />
  84. 84. practicing bundling<br />
  85. 85. 4. investment linkages<br /><ul><li>facilitation of visits by outside traders with a potential interest in buying chayote and investing in vegetable cultivation in the uplands of Tan Lac
  86. 86. facilitation of meetings between these traders, local authorities, and local collectors</li></li></ul><li>Mr. Thao (a wholesaler from Long Bien) leased 5 ha withinan idle, 40 ha commercial farm in the uplands of Tan Lacfor cultivation of chayote fruit and other vegetables<br />
  87. 87. Mrs. Tam (a farmer and trader from Tam Dao) and her husband leased 3 ha within the same commercial farm for cultivation of chayote leaves and other vegetables<br />
  88. 88. 5. policy and strategy dialogue with local authorities and collectors: scaling-up and diversification strategies<br />
  89. 89. Section 8Outcomes and impacts during the second season<br />
  90. 90. production<br />
  91. 91. marketing<br />
  92. 92. chayote chain<br />197 farmers<br />11%<br />25%<br />64%<br />49%<br />15%<br />Phuong Huyen<br />9 collectors<br />Long Bien night market,<br />Hanoi<br />Restaurants<br />Retailers<br />Restaurants<br />Retailers<br />Consumers Hoa Binh Province<br />Consumers Red River Delta<br />
  93. 93. income impacts: additional local net incomes in 2009(assuming no production pilot subsidy)<br />Note: the data excludes the profits earned by Phuong Huyen, wages at the two commercial vegetable farms, and the additional income flowing to the Mai Chau trader and30 pilot growers in that district<br />
  94. 94. Section 9Cost-effectiveness, sustainability and scalability<br />
  95. 95. cost of SADU Intervention (two seasons)<br />
  96. 96. how sustainable and scalable are these processes? <br />skills and knowledge<br />commercialinput distribution chains<br />PROFIT<br />marketing networks<br />
  97. 97. but there is a danger that Moc Chau will become anew, major supplier… <br />the market is growingbutremains thin<br />risk of oversupply<br />need for diversification beyondchayote leaves<br />
  98. 98. expectations for the 2009/10 season<br /><ul><li>doubling of areas in the uplands Tan Lac
  99. 99. consolidation of input distribution chains
  100. 100. increase in yields
  101. 101. diversification of buyers
  102. 102. significant reduction in marketing costs  ↑ farm-gate price
  103. 103. diversification to chayote fruits
  104. 104. scaling-out of processes to Mai Chau</li></li></ul><li>Section 10Some final considerations<br />
  105. 105. some key features of the CIAT approach(considered good practice and critical for achieving success)<br /><ul><li>multi-stakeholder (and multi-client)
  106. 106. facilitative
  107. 107. pragmatic
  108. 108. flexible and opportunistic</li></li></ul><li><ul><li>production and marketing are regarded as intimately linked and equally important
  109. 109. agribusiness-inclusive (working w/ the private sector for pro-poor innovation and leverage)
  110. 110. chain competitiveness and value as guiding concepts
  111. 111. win-win as a guiding principle</li></li></ul><li>other critical success factors: issues for donor agencies<br /><ul><li>time, not lots of money
  112. 112. flexibility in the design and implementation of interventions (log-frame; planning procedures)
  113. 113. flexibility in the targeting of geographical areas (opportunities for scaling-out)</li></li></ul><li>two key issues for implementing agencies<br /><ul><li>indirect impact trajectories
  114. 114. stance towards the private sector</li></li></ul><li>Thank you for your attention! <br />