Case study tea_hungcuong Slides from a presentation @Inclusive Agribusiness Southeast Asia Roundtable September 23-24 2015, Ho Chi Minh City, Vietnam

1. Hung Cuong Company
Le Thi Ha Lien, IPSARD

2. Company background
• Private company
• 1998: Founded and initial focus on purchasing tea for domestic
supply.
• 2010: linked with farmers to produce organic tea
• 2011: Cao Bo organic tea certified by IFOAM
• Since 2012: focus on producing, processing and exporting high
quality organic tea
• HCC’s five factories can process more than 80 tons of raw tea/day
• HCC sources its tea from land tended by ethic minority
communities (Dao) who would otherwise be engaged in wood
cutting or low income rice farming
• Currently working with around 645 households.

3. Inclusive mechanism
Pro-poor sustainable production model
zero use of chemicals from seed to harvest
Group of
farmers
Group of
farmers
Group of
farmers
Group
leader
Group
leader
Group
leader
Hung Cuong
Company
Seedling, organic fertilizers
Technical assistance
Certification fee
Internal control
Procurement contract (mutual trust)
11 groups
645 ethnic households
Pre-competitive financing
Profit guarantee for farmers
Factory upgrade
Certification fee
Technical knowledge
NGOs/
VBCF
2010-2012

4. Dynamics of inclusiveness
• Revenue has more than doubled since the inclusive
organic model was implemented
• Internationally recognised organic certification has
boosted value and market opportunities
• Shift from conventional intensive farming to low
impact ‘scientific farming’ increases household
income
• Profitability and partnerships are stable, but true
sustainability will be apparent after donor financing

5. Natural Heritage: 220 Shan green tea trees of > 100 years old

6. Scaling issues
• Support and collaboration with NGOs and donors can
help build a business model that is financially,
socially and environmentally viable
• High market potential, especially with coming free
trade agreements. Production of organic tea in
mountainous regions is high.
• Difficulty in business expansion due to limited access
to finance
• Increased competitiveness in tea procurement

7. Suggestions
• Farmer organization into cooperatives
• Contract farming
• Tea procurement area allocation and planning for
effective management
• Research-based policies
• Collaboration with NGOs and donors for support (at
the beginning)