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Case study tea_hungcuong inclusiveasia_2015


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

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Case study tea_hungcuong inclusiveasia_2015

  1. 1. Hung Cuong Company Le Thi Ha Lien, IPSARD
  2. 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. 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. 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. 5. Natural Heritage: 220 Shan green tea trees of > 100 years old
  6. 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. 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)