organic vegetable business in vietnam: entrepreneurial finance & creative marketing
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Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative MarketingTRANSCRIPT
Organic Vegetable Supply Chain in Vietnam: Marketing & Finance Perspectives
Tran Tri DungDHVP Research & Consultancy
Pham Hoang NganThe Vietnamese Initiative for Food and Agricultural Policy
Organic production of agriculture is a tradition…
Ho Chi Minh (left), 1962
Working on fields, today
•Sustains the health of soils, ecosystems and people.•Minimal use of off-farm inputs •Management practices that restore, maintain, or enhance ecological harmony
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•Trial and error process•Narrow window for private sector
SUSTAINABILITY?
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 landWay below a full-swing development
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
Organic Vegetables Company (OVC)
•Organize production•Educate farmers•Technical and financial supports to growers• Assure farmers’ income
ODA funded companiesThe Great Organizer & Coordinator
•Trading and marketing jobs•Educate consumers•Raise funds
Lack of commercial motivation & viability Entrepreneurship & Creativity
Branding: Greenlink, Ecolink, Ecolife..
Government & Associations
• International donors &
development agencies:
Initiators
• Central and local
government fully support
• VOAA: established in Oct.
2011Vietnam Organic Agriculture Association:First Meeting on May 22, 2012 in Hanoi
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– E-commerce
• Educating the OVCs themselves: how to do a real business
Loyal clients visited organic production sites
Next education: making a fortune from agriculture production
Wakening..
A recruitment of sale collaborators:
•Retired people
• Simple works
• Performance-based income
• Social responsibility
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
Korean market
What is the difference?
‘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?
An organic vegetable store
Also organic cosmetics!Shop rental cost: US$600/month
Finance: Start-up• Most important source of
funds: ODA, int’ aids• Venture investment
Connecting the dots..
Relationships
Empirical examination
Lessons for research & business
Creativity
Cultural Dimensions
Entrepreneurship
Creativity
Japan Korean
Viet Nam?
‘Organic’ Car
Future: The Entrepreneurs
1ha on the side of Red River; 15 minutes to Hanoi’s downtown
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 (EU, America, Japan)
A new comer:
Farmers are entrepreneurs: growers/producers + traders + capitalists
THANK YOU!