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Enabling diversification to high-value crops inthe remote uplands of Vietnam:
Lessons from the development of chayote productionand marketing in Tan Lac district
structure of the presentation
Section 1: Some background information on the uplands of Tan Lac
Section 2: Context behind CIAT’s intervention
Section 3: Intervention strategy during the first marketing season
Section 4: CIAT interventions during the first season
Section 5: Outcomes and impacts during the first season
Section 6: Intervention strategy during the second season
Section 7: CIAT interventions during the second season
Section 8: Outcomes and impacts during the second season
Section 9: Cost-effectiveness, sustainability and scalability
Section 10: Some final considerations
Section 1
Some background information on the uplandsof Tan Lac district
cluster of 5 communes
distance to Hoa Binh: 50-65 km
distance to Hanoi: 120-135 km
local physical access conditions:poor to reasonable
remote…
number of households
population % ethnic minority
householdpoverty rate
1,534 7,766 100 45
ethnic minority (Muong) population, relatively high poverty rates
agricultural land (ha) rice area (ha) maize area (ha)
2,050 488 1,298
an agricultural-based, undiversified economy…
Section 2
Context behind CIAT’s intervention
diversification to high-value crops is of strategic importance to the uplands of Tan Lac
farmers are over-reliant on maize as a source of cash income (maize is the only cash crop in the area)
maize is a low-value crop (its dominance is explained by relatively low-input requirements and low production and marketing risks)
maize cultivation in sloped lands is also associatedwith serious soil erosion problems…
chayote is a good bet for diversificationin the uplands of Tan Lac
high prices in urban markets(average wholesale purchasing prices in Hanoi during the off-season months ~ US$500-600 per ton)
suitable local agro-climatic conditions for cultivation during the off-season (mid-April to early November)
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
relatively easy to grow
high potential yields(25 tons in low-input system; 60 tons in high-input system)
regular cash income during 6-7 months(2-3 harvests a week)
no soil erosion (full soil cover before, during and after the rainy season)
main challenges…
high cost of seed
no vegetable input distribution networks in the uplandsof Tan Lac
no vegetable marketing networks in the uplands ofTan Lac
high marketing risk due to the highly perishable nature of chayote leaves
in late 2007 provincial and district agenciesestablished three chayote pilots
location area (ha) number of growers
4 villages, 3 communes 1.8 87
but at the start of the harvesting season (April 08)farmers had no buyers for their chayote.
was this about to become another failed, subsidy-driven pilot?
it was then that CIAT (through SADU project) decided to work with local stakeholders to address
market access problems
Section 3
Intervention strategy during the first marketing season (April – October 2008)
target markets: provincial
TAM ĐẢO
TÂN LAC
key entry point for intervention:development of a local collection network
lower marketing costs
feasibility of intermediate means of transport (motorbike)
lower risk of product spoilage
less strict buyer requirements (product quality, regularity of supply)
lower levels of competition (competition from other leafy vegetables, but no supplies of chayote leaves from other areas)
advantages of provincial markets (vis-à-vis Hanoi)during the initial chain development stages
in Vietnam local collectors play a critical role in linking vegetable growers to mainstream (wet) urban markets
there was no vegetable collector in the whole cluster of5 upland communes (the key missing link in the chain)
rationale for establishing a local collection network
the option of attracting outside traders was deemed inferiorto the development of a local trading network
coordination with farmers would be more problematic due to distance
mobilization of district traders would be difficult in view of the small product volumes and the marketing risks involved
potential for generating local income from marketing activities would be lost
opportunity for developing local entrepreneurial skills would be missed
in theory, farmer groups can replace collectors by taking onproduct assembly and other marketing functions
but attempts to instigate group action failed!
Section 4
CIAT interventions during the first season
1. identification and mobilization of farmers who couldtake on the role of collectors
2. provision of market information to new farmer-collectors(as well as local government staff and farmers)
3. provision of advisory and mentoring servicesto the new collectors
(bargaining strategies, record keeping etc)
4. transfer of production and post-harvest know-how to farmers:
harvesting skills…
and bundling skills
Section 5
Outcomes and impacts during the first season
estimated harvest (tons) 33
average yield (tons/ha) 18
production
marketed volume (tons) 29
average farm-gate price (US$/ton) 240
marketing
chayote chain 87 farmers
5 collectors
Consumers in Hoa Binh Province
Phuong Huyen
RetailersRestaurants
40%26%34%
one farmer-collector (w/ helmet) selling to retailersin Hoa Binh town
another farmer-collector selling to consumersin Hoa Binh town
income impacts: additional local net incomes in 2008
(assuming no production pilot subsidy)
chayote (1)
USD
maize (2)
USD
(1) – (2)
USD
farm 5,100 3,000 2,100
marketing 1,700 100 1,600
total 6,800 3,100 3,700
Note: maize is the counterfactual crop
encouraged by these positive results, local government agencies decided to expand the pilot area
location area (ha) number of growers
8 villages, 3 communes 3.5 197
Section 6
Intervention strategy during the second season
(December – October 2009)
target markets: Long Bien, Hanoi
(largest wholesale market for fresh produce in Hanoi)
provincial markets are too small to absorb additional production from Tan Lac
prices in Hanoi are significantly higher than in Hoa Binh
supermarket demand for fresh produce is still very small (in the case of chayote, about 50 kgs per day per chain)
the transport logistics associated with deliveries to supermarkets are challenging and transportation costs too high
suppliers to supermarkets must be formally registered and have a bank account
supermarkets do not pay upon delivery
rationale for targeting wet markets instead of supermarkets
promote an upgrading of product quality,in line with the requirements of wholesalers in Hanoi
facilitate an expansion and consolidation ofthe collectors’ network
support the development of commercialinput distribution networks
Section 7
CIAT interventions during the second season
mobilization and mentoring of new farmer-collectors
exposure visits involving collectors and commune officers
markets within the province and in neighbouring provinces
Long Bien, Hanoi (main target market)
Tam Dao (largest production area in Vietnam, main competitor)
mediation between collectors and wholesalers in Hanoi, especially during the initial stages
facilitation of linkages with transport service providers
1. market information and product market linkages
provision of useful telephone contacts (producers in Tam Dao, collectors in Tam Dao, traders in Hanoi) to collectors for regular access to price information
promotion of collective action amongst collectors to ensure
joint negotiation with wholesalers in Hanoi
minimum daily deliveries to key buyer in Hanoi
standardized product quality, in line with the requirements of wholesalers in Hanoi
integration of a trader servicing a chayote pilot in a neighbouring district in the Tan Lac chain (scaling-out)
collectors discussing the market situation and opportunities with retailers in Hoa Binh province
one collector and one commune officer discussing the market situation and opportunities with retailers in a
neighboring province
collectors and one district officer checking the qualityof chayote in Long Bien night market
collectors discussing the market situation and opportunitiesin Long Bien night market
collectors from the uplands of Tan Lac loading chayoteinto a truck on its way to Long Bien market
collector in a neighboring district linked to the Tan Lac chain
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)
facilitation of linkages between the collectors in the uplands and a growth regulator agent in Hanoi
2. input chain development
dau trau agent loading a truck for delivery to Phuong Huyen
one of the collectors that supplied dau trau to farmers
training and mentoring of farmers and commune officers
production practices
bundling
discussions with collectors on the need for communicating buyers’ quality requirements to farmers and only purchasing from them chayote that meets those requirements
3. product quality
transfer of production knowledge and skills
improving bundling skills
practicing bundling
facilitation of visits by outside traders with a potential interest in buying chayote and investing in vegetable cultivation in the uplands of Tan Lac
facilitation of meetings between these traders, local authorities, and local collectors
4. investment linkages
Mr. Thao (a wholesaler from Long Bien) leased 5 ha withinan idle, 40 ha commercial farm in the uplands of Tan Lac
for cultivation of chayote fruit and other vegetables
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
5. policy and strategy dialogue with local authorities and collectors: scaling-up and diversification strategies
Section 8
Outcomes and impacts during the second season
2008 2009 % change
estimated harvest (tons) 33 67 103
average yield (tons/ha) 18 19 6
production
marketing
2008 2009 % change
marketed volume (tons) 29 61 110
average farm-gate price (US$/ton) 240 355 50
197 farmers
9 collectors
Consumers Hoa Binh Province
RetailersRestaurants
Long Bien night market,Hanoi
Consumers Red River Delta
RestaurantsRetailers
Phuong Huyen 11%
25%64%
49%
15%
chayote chain
income impacts: additional local net incomes in 2009
(assuming no production pilot subsidy)
chayote (1)
USD
maize (2)
USD
(1) – (2)
USD
farm 18,500 5,000 13,500
marketing 5,000 200 4,800
total 23,500 5,200 18,300
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 and
30 pilot growers in that district
Section 9
Cost-effectiveness, sustainability and scalability
cost of SADU Intervention (two seasons)
Cost Item USD
Project staff salaries 10,000
Travel cost 2,500
Per diem for staff 300
Allowances for local staff 400
Accommodation 900
Other 500
Total 14,600
how sustainable and scalable are these processes?
skills and knowledgecommercial
input distribution chains
marketing networks
PROFIT
but there is a danger that Moc Chau will become anew, major supplier…
the market is growingbut
remains thin
risk of oversupply
need for diversification beyondchayote leaves
expectations for the 2009/10 season
doubling of areas in the uplands Tan Lac
consolidation of input distribution chains
increase in yields
diversification of buyers
significant reduction in marketing costs ↑ farm-gate price
diversification to chayote fruits
scaling-out of processes to Mai Chau
Section 10
Some final considerations
multi-stakeholder (and multi-client)
facilitative
pragmatic
flexible and opportunistic
some key features of the CIAT approach(considered good practice and critical for achieving success)
production and marketing are regarded as intimately linked and equally important
agribusiness-inclusive (working w/ the private sector for pro-poor innovation and leverage)
chain competitiveness and value as guiding concepts
win-win as a guiding principle
time, not lots of money
flexibility in the design and implementation of interventions (log-frame; planning procedures)
flexibility in the targeting of geographical areas (opportunities for scaling-out)
other critical success factors: issues for donor agencies
indirect impact trajectories
stance towards the private sector
two key issues for implementing agencies
Thank you for your attention!
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