Chain Analyis Report Final

Benoit Trudel Dang Vu Hoai Nam

June 2009

Safe Vegetables in Viet Tri City, Phu Tho Province and

Lang Son City, Lang Son Province Chain Analysis Report

Chain analyis – Safe Vegetables in Viet Tri and Lang Son. Benoit Trudel, Dang Vu Hoai Nam, June 2009. 2

Table of Content

1. INTRODUCTION 1.1 Background 4 1.2 Objectives of Chain Analysis 4 1.3 Methodology 5 2. SAFE VEGETABLE PRODUCTION IN VIETNAM 2.1 Overview of safe vegetable production 6 2.2 Definition of safe vegetables 8

2.3 State management of SV 8 2.4 Conditions for production of safe vegetables 9 2.5 SV training by DARD 10 2.6 Procedure for certification of SV production area 12 2.7 Procedures for certification of safe vegetables 13 2.8 Self-certification of SV products 14 2.9 Cost analysis for regular vegetable and SV in Viet Tri 16 2.10 Safe vegetable production investments costs 18

3. MARKET RESEARCH 3.1 Safe vegetables – the Hanoi market 19

3.2 Safe vegetables - Viet Tri City Market 23 3.3 Safe vegetables – Lang Son City market 28 4. TAN DUC FARMER GROUPS 4.1 Organization Tan Duc farmers groups 36 4.2 Production plan for 2009 38 4.3 Marketing 39

4.4 Information sources 40 5. NA CHUONG COOPERATIVE FARMERS 5.1 Organization of the cooperative 42 5.2 Production plan for 2009 44 5.3 Marketing 45

5.4 Information sources 46 6. CONSTRAINTS, STRATEGIES FOR CHAIN INTERVENTION 6.1 Main constraints in the safe vegetable chain 47 6.2 Main strategies for chain intervention 49 6.3 Conditions for success 50 6.4 Strategy selection for CD program and potential partners 50 Annex 52


LIST OF ACRONYMS

ASD-VASI Agrarian System Department-Vietnam Agriculture Science Institude CD Chain Development CERDESTA Center for Research and Development of Sustainable Agriculture CIDA Canadian International Development Agency ED Economic Department ICM Integrated Crop Management IPM Integrated Pest Managment DARD Department of Agriculture and Rural Development MARD Ministry of Agriculture and Rural Development MOA Memorandum of Agreement NGO Non-Government Organization PIP Project Implementation Plan PPC Provincial People’s Committee PPS Plant Protection Station SACD Sustainable Agriculture in Chain Development SV Safe vegetables VIETGAP Vietnam Good Agricultural Practices


1. INTRODUCTION

1.1 Background

VECO-Vietnam is the country office of a Belgian NGO named Vredesieilanden and has been initiating projects in Vietnam since 1994. Since 2002, it implemented its Farmers Participation in Sustainable Agricultural Development and Poverty Reduction program in 3 Northern provinces of Vietnam – Phu Tho, Tuyen Quang and Lang Son. The program aimed to improve food security of farmers through sustainable agricultural practices while increasing their participation in the supply chain.

In 2008, VECO-Vietnam launched its new program on Sustainable Agriculture for Chain Development (SACD) with 5 commodities – tea, fish, pig, plum and safe vegetables. The intervention in the safe vegetable chain has already begun and MOAs have been signed with 2 parnters – The Economic Department mainly for production support and VINASTAS, a consumers’ organization for its promotional activities and public awareness campaign. In 2008, VECO also contracted the services of an expert consultant, Fresh Studio, to undertake a market survey and a consumer preference survey.

VECO has as well identified its target groups in 2 safe vegetable production areas of its project sites – Tan Duc commune near Viet Tri City in Phu Tho Province with 2 farmers groups representing a total of 83 farmers. And Lang Son city in Lang Son Province with Na Chuong cooperative and its 40 members.

1.2 Objectives of the Chain Analysis

The need for a chain analysis became apparent in order to better understand the safe vegetable farmers, other actors in the chain such as collectors, wholesalers, restaurants and to identify constraints as well as intervention strategies. To this end, the analysis aims to bring forth:

An in-debt understanding of what safe vegetables are, its standards, production techniques, supporting organizations, costs and certification process;

A detailed overview of the 2 farmers’ groups in Viet Tri City as well as Na Chuong Cooperative in Lang Son City, their management, services offered to members and most of all, a simple production plan for 2009;

Retailing and packaging options in marketing of safe vegetables; A general overview of some key potential buyers, their supply chain,

pricing, payment method and overall demand in vegetable; Main chain constraints, potential strategies and key intervention

activities to be undertaken by the chain development program.


The chain analysis report will not provide a comprehensive portrait of the vegetable chain in Viet Tri and Lang Son cities. But it is hoped that enough information will be provided to help understand how the chain works, its main actors as well as how VECO can support small scale farmers to strengthen their position in the chain.

1.3 Methodology

The main research question of this project is:

What are the constraints in safe vegetable production and potential chain interventions for Tan Duc farmers’ groups and Na Chung Cooperative?

To answer this question, the research focused on several sub-questions: What are safe vegetables and how do they compare to regular vegetables? What role can the 2 Tan Duc farmers groups play in supplying safe

vegetables to Viet Tri markets? Idem for Na Chung Cooperative and Lang Son markets

What are the characteristics of the marketing channels for produce in Viet Tri and Lang Son cities?

The analysis was made with very limited resources – mainly one field staff who conducted most of the interviews and one office staff for writing of the report. Still, it is estimated that key players were contacted and interviewed for their input during field visits in February and March 2009 for Viet Tri, and April and May for Lang Son.

The methodology used was Semi-structured interview with the help of board members with 83 farmers in

Viet Tri and 40 farmers in Lang Son who produce safe vegetables Semi-structured interviews with over 20 regular vegetable farmers Chain mapping analysis and interview with retailers, wholesalers, restaurants

and canteens in markets in Viet Tri and in Lang Son cities Partipatory observation to 4 supermarkets, 11 SV stalls in 2 wet markets and

3 safe vegetables shops in Hanoi Historical analysis through research – Internet as well as printed documents Interview with experts from the:

o Plant Protection Station in Viet Tri and in Lang Son o Economic Department in Viet Tri and in Lang Son o Center for Research and Development of Sustainable Agriculture of

Hanoi (CERDESTA) o Cultivation Department of MARD in Hanoi o ADDA organic project, Hanoi o Thanh Xuan organic project

It is believed that further focussed analysis may be required during implementation of the chain development program for safe vegetables.


2. SAFE VEGETABLE PRODUCTION IN VIETNAM

2.1 Overview of safe vegetable production

The Vietnamese economy has developed and evolved quickly since the later 1980s following government reforms. State run agriculture became managed by farmers directly for the market and saw the use of agrochemicals increase significantly in the 1990s. Generally, farmers have overused chemicals, often not following instructions and even using banned and restricted pesticides. This resulted was many reported cases of food poisoning from chemical residues and other contaminants such as nitrate and heavy metals. In 1998, MARD issue the “Temporary Regulation for the Production of Safe Vegetables” which was then finalized in January 2007 as the “Regulation for the Management and Certification of Safe Vegetable Production” (No.04/2007/QD-BNN). It was then replaced in November 2008 by Decision no 99 titled “Management of safe vegetables, fruit and tea production and trading”. These regulations introduced guidelines for safe vegetable production as well as tables showing the Maximum Residual Levels (MRLs) for permitted pesticides, nitrate, heavy metals, bacterial pathogens and intestinal parasites which are allowed in soil and in harvested vegetables (see Annex 1). Many other decisions were promulgated by the government to somehow guide and support safe vegetable production (see Annex 2 for list) The government followed the policy initiatives by offered training to farmers on safe vegetable production and integrated pest management (IPM) in a effort to improve food safety.1 Still, despite these initiatives, there were nearly 23, 000 reported cases of food poisoning in Vietnam including vegetable produce between 2001-2005 (Ministry of Health, 2006). A study done by the Institute for Ecology and Biology Resources in 1998-9 found nitrate levels from fertilizer use much higher then MRLs (see Annex 3). In peri-urban areas such as Hanoi where the majority of vegetables are produced, over-use of chemical fertilizers and pesticides as well as toxic waste from large industries have resulted in severe soil contamination and environmental pollution. Health concerns are thus the primary divers of safe vegetable production in Vietnam. The production of SV has been increasing over the years in terms of cultivating land, productivity and yield. So far, there are 40 provinces & cities nationwide involved in SV production with a total area of 60,000ha accounting

1 Simmons and Scott. “Organic Agriculture and “safe” vegetables in Vietnam: implications for agro-food system sustainability. p.1-2.


for 8.5% of total vegetable cultivating area (705 300 ha). There are also consolidated SV production areas in five provinces which represent the Red River Link: Hanoi, Vinh Phuc, Hung Yen, Hai Duong and Bac Ninh. The SV qualified area consists of the current SV production area. For Hanoi, it stands at 6,320 ha. The planned area for SV prodution for Hanoi is 6,820, although no time frame is provided. Table 1: Vegetable and SV production area in Vietnam

Source: Green Earth Magazine. Plant Protection Department. Vol. 26, January 2009. p 7-8. The Vietnamese Government with the support of INGOs have launched a variety of programs & projects to develop SV production. So far, MARD and DARDs have been seeking fund from national budget, local budget and NGOs to implement different SV projects. This initiative resulted in the following projects being launched:

Project on food safety in agriculture, an integrated part of the national action plan 2006-2010;

Project on agricultural products safety and sanitary guarantee sponsored by CIDA (Canada) with support for SV production and trading in the period of 2008-2012;

Project on enhancing quality and safety of agricultural products sponsored by ADB in the period of 2009-2013.

According to the MARD annual report for 2008, training activities were consolidated, especially for safe vegetables with training on IPM technique and on SV compliance with the new VietGap system. In localities, some PPCs allocated budget for SV production models and training. Especially in Hanoi, there were 100 short training courses on SV production technique; 65 on IPM for farmers; directions and guidelines to 70 radio stations of 6 districts and to 33 extension clubs to broadcast, promote and disseminate information about SV production and consumption.

No Province, city

Vegetable production area (1,000ha)

Productivity (100kg/ha)

Yield (1,000ton)

Planned area SV production (ha)

SV Qualified area (ha)

Qualified growing locations

1 Whole country 705.3 155.5 10,969.3 2 South 368.8 165.1 6,090.1 3 HCM city 9.2 193.9 178.4 4 North 336.5 145.0 4,879.2 5 Red River delta 160.9 185.4 2,982.3 6 Red River link 100.2 185.0 1,862.3 14,816 6,755 7 Hanoi 25.7 175.0 449.8 6,820 6,320 400 8 Hai Phong 13.1 218.3 286.0 2,500 57 3 9 Vinh Phuc 8.5 169.1 143.7 1,500 - 10 Hai Duong 30.5 195.5 596.3 3,000 378 - 11 Bac Ninh 10.3 177.9 183.2 800 13 12 Hung Yen 12.1 185.5 224.5 196 4


The number of policies put forth by the government to regulate safe agricultural practices, the rapid development of safe production areas as well as extensive programs to support its development all indicate an opportunity for safe vegetable production and marketing in the coming years. VECO’s support should focus on how Tan Duc farmers can take advantage of the trend and compete in this new market which will surely become more and more competitive and regulated by government and market leaders. However, all government policies only focus on SV production and do not regulate the whole process from production to the consumer. Is there an organization that has the mandate to take samples of SV in retailing shops in Vietnam to test whether they meet the MLRs set by the SV regulation? What would happen if samples fail? Will the farmer lose his SV production area certificate? The lack of regulation on marketing of SV makes it very easy for retailers to claim safety of vegetables and sell as SV. So the next step in government regulation must address marketing of SV, certification of SV, sample taking of SV and sanctions in order to build consumer trust. As for SV outlets, it should be compulsory for the shops to clearly display the certificate of full satisfaction of SV production conditions as well as results from sample testing or eventually the certificate of SV products.

2.2 Definition of safe vegetables

According to the safe cultivation regulations (Decision no 4/2007/QD-BNN) “safe vegetables mean products of fresh vegetables which are produced, harvested, preliminarily processed, packaged and preserved in accordance with the technical process to ensure that the microorganism or toxic chemical residues are below the permitted maximum limits.

2.3 State management of SV

When dealing with safe vegetable production and certification, it helps to know the responsibilities of each government body involved. At the national level, the Cultivation Department which is under MARD is responsible for the overall planning of SV production in Vietnam. They coordinate trainings and guide DARD in delivering the certificate of full satisfaction of conditions of SV. They supervise inspection of SV production areas, organized by the Quality Control Department of Agriculture, Forestry and Aquatic Products which would also most likely be responsible for sample taking of SV in retailing outlets for testing for MLRs if/when produce certification comes into effet and is regulated by the government.


The Plant Protection Department is responsible for organizing training on IPM, ICM and SV production process in coordination with DARD. The Department for Science, Technology and Environment assumes the prime responsibility for revising and proposing amendments and formulation of standards and technical norms for SV production. They also manage research subjects and trial SV production projects in coordination with the National Agriculture and Fishery Extension Centre. Finally DARD is directly in contact with the farmers and has the responsibility of planning and implementing SV production areas, organizing training on SV production process, and managing the grant of certificates of SV production conditions. For more detailed responsibilities for each government body, see Annex 4.

2.4 Conditions for production of safe vegetables

During the course of the chain analysis, it seemed important to clearly understand the difference between safe vegetables and conventional vegetables. How does the production process really differ? The many decisions delivered by the government as mentioned before highlight some of the key points that must be followed when complying with safe agricultural practices:

Farmers must take the SV training delivered by DARD or the Plant Protection Deparment (see section 2.5 for details)

Only chemicals permitted for SV production can be used and instructions must be followed

SV production must implement IPM practices Test of irrigation water, soil and produce cannot exceed maximum level

of residue (MLSs)

Below are more detailed guidelines issued by DARD on safe vegetable production:

Personnel SV-producing organizations must be staffed with technical personnel or

sign contracts to hire personnel specialized in cultivation or plant protection of intermediate or higher level to provide technical guidance on SV production.

SV producers must go through courses of technical training on SV production and get certificate from DARD or from any organization authorized to launch traning courses on VietGAP and regulations on SV production and trade.


Cultivation land Land for safe vegetable production must be approved by the People’s

Committee and not directly affected by industrial waste or other types of harmful wastes.

Soil must be tested and quantities of heavy metals must be below permitted maximum limit.

Irrigation water

Industrial waste water and contaminated water from other discharges cannot be used.

Water must be tested and quantities of chemicals and heavy metals must be below permitted maximum limits.

Fertilizers

Safe vegetable production can only use fertilizers permitted for agricultural use in Vietnam according to prescribed doses, instructions and methods.

Fertilizers such as barnyard manure, urine, daily-life waste, industrial waste cannot be used.

Ntrogen fertilizer can only be used 7-10 days before harvesting.

Disease prevention Safe vegetable production must apply IPM techniques Use biological insecticides and biological measures Minimize use of chemicals and comply with use of only allowed types,

proper doses, proper time and proper method for its application.

Production process Must be in accordance with the new regulation on food safety in

VietGAP. 2.5 SV training by DARD

In order for farmers to be able to obtain the certificate of SV production area, they must first undergo technical training on SV production.

Tan Duc farmers

The training provided to Tan Duc farmers was only 3 afternoons of class lessons. The training manual includes the following sections:


Part 1 – Basic conditions for SV production (referring to government decision no 99/2008/QD-BNN)

Part 2 - VietGap practices with its 11 articles on soil, fertilizer, water, chemical

use, harvesting and handling of produce, waste management and treatment, recording and traceability.

Part 3 - IPM practices with a list of 5 main pests and 5 main diseases with clear

Characteristics regarding appearance How the pest/disease grows and develops How to prevent (natural precautions) and cure (names of pesticides)

Part 4 - Safe and effective application of chemicals allowed in SV

production Categories of poisons, appearance of the chemicals (powder, capsule,

liquid), dangers to health when using chemicals and safety measures (dos and don’ts), how to use chemicals safely (4 rules – right chemical/time/quantity/method). List of chemcals with clear guidelines per vegetable on how many days before harvest it can be used.

Long list of pests/diseases with a list of chemicals which can be used, poison category, quantities, time before harvest.

Long list of chemical herbicides and fertilizers with poison category, quantities, time before harvest.

Part 5 - Compost – concept, material, production techniques, using instructions

Generally, Tan Duc farmers claim that the training gave them a good idea of what safe production is and they understood better about responsible use of chemicals. VietGap practices seemed clear but part 3 and 4 on IPM and use of proper chemicals was too limited. The compost component was the least effective and they could not understand and apply the techniques. Under the VECO agreement with the Economic Department, new training on IPM was provided to Tan Duc farmers since March 2009. Farmers will get in-field practical training every week for 3 months so this should contribute to improve SV production techniques and understanding of IPM process.

Na Chuong farmers

The original safe vegetable production and VietGap training offered to Na Chuong farmers lasted 3 months including in-class and in-field practical components. It followed a whole crop cycle and provided farmers with templates for recording farming data. The training manual itself is quite different than the one for Viet Tri and here are some key differences:


- The Viet Tri document describes in detail the new VietGap norms whereas the one for Lang Son only briefly mentions general Gap standards in the world;

- Viet Tri document has a detailed list of pests and diseases with characteristics, prevention and cure whereas LS does not have this section;

- Both documents have detailed information on chemicals which can be used for SV production including instructions on application;

- LS document does not cover composting. We were surprised to find that the SV training document is not standardized by MARD and can be quite different from one location to another. This will undoubtedly lead to variation in quality and knowledge of safe vegetable production process throughout Vietnam.

2.6 Procedure for certification of SV production area

In order for the farmer’s production area to be ‘certified’ as “safe”, the SV producer must submit to the Plant Protection Department their registration dossier requesting the recognition of full satisfaction of safe vegetable production conditions with:

Farmer group’s registration with authorities and internal regulations; An application form for certification of full satisfaction of safe vegetable

production conditions; A written declaration of safe vegetable production conditions

When the dossier is deemed complete, it is then forwarded to the Agriculture and Rural Development Department. Within 20 days after the receipt of valid registration documents, DARD will send a team of 3-5 officers to check the dossier and cultivating field. They will also take sample of soil and irrigation water if necessary. If the prescribed conditions are fully met, they shall issue the certificate of full satisfaction of safe vegetable production condtions. There are no costs for the farmers in the certification process. The certificate is valid for 3 years after which re-registration must be made along with a report on past production results.(Decision No.99/2008/QD-BNN). Tan Duc farmers have already passed water and soil sample testing but they are still in the process of preparing all the documents for the application of certification. This is a critical first step so that they can claim SV production to their consumers.


2.7 Procedures for certification of safe vegetables

SV production is being regulated and through this process, MARD has recognized 7 organizations in Vietnam with the authority to certify the whole SV process – from production soil and water to the produce themselves with samples sent to a contracted laboratory for testing (see Annex 5 for contact details). The Center for Research and Development of Sustainable Agriculture (CERDESTA) is a non-government organization which falls under the Plant Protection Association of Hanoi. It is one of those 7 agencies which started its operations only one year ago along with 3 others in Hanoi. Each agency seems somewhat independent and can develop their own certification logo, although they all share the high fee which they charge for their services. Table 2: Cost for the certification process Less than 5 ha 6-10 ha land 11-50 ha land Consulting 15 million 15 million 15 million Technology transfer

24 million 36-40 million 48-60 million

Certification 36 million 54-60 million 72-90 million TOTAL 65 million 105-115 million 135-165 million The center has an agreement with a laboratory in Hanoi to test soil, water and products to make sure they do not exceed the maxium levels of residu as set by the government. Hence, the testing is quite complex and covers a wide range of:

micro-organisms nitrate levels chemical residue heavy metals

Only 3 labs in Vietnam are recognized by MARD to do these tests – one in Hanoi, one in Danang and the other in HCMC. A farmers’ group or company which has completed the certification process and has met the requirements is then able to use the certification logo of CERDESTA. At this time, the center has not completed a full certification cycle for safe vegetable. It has begun the process in Yen Lac district in Vinh Phuc province with a safe vegetable production company. Once certification is obtained, the product must be certified again each year at the above mentioned certification cost. The high cost of certification for soil, irrigation water and produce will likely make it impossible for small farmer groups like Tan Duc to apply for, unless


they can get the financial backing. This will likely lead to larger agricultural enterprises working for supermarket chains like HADICO who will be able to cover such high certification cost thus leading to market concentration for safe production. However, it is still unclear whether these organizations will emerge as legitimate certifying organizations warranting the trust of consumers. The fact that there is no unified logo will surely lead to some confusion as to which organization has the authority to grant certification.

2.8 Self-certification of SV products

The high cost of using the services of one of the Hanoi certifying organization leads to the consideration of alternatives for Tan Duc farmers. One of them is to implement self certification which is often done by organic production groups. According to Decision no 99/2008, in the event that farmers want to certify their vegetables as safe by their own means, they must:

Have a certificate of SV production area; Have nominated a certified lab for inspection to examine food safety

criteria of vegetables; Have or hire a qualified sample taker; Have or hire a cultivation or plant protection officer with a university

degree, at least 3 years of working experience and certified for assessment and internal inspection;

Procedure and content for internal assessment and inspection:

A plan for internal assessment and inspection; Disseminate and instruct farmers about plan, scheduled figures,

internal assessing and inspecting method, production recording formats;

Take sample of typical vegetables in cultivation to determine food safety criteria that meet MLRs;

Based on self-assessment, if conditions are met, producers can proclaim SV.

Participatory Guarantee System (PGS)

Participatory Guarantee Systems are locally focused quality assurance systems. They certify producers based on active participation of stakeholders and are built on a foundation of trust, social networks and knowledge exchange. In Vietnam, ADDA has launched an organic project based on PGS. It is an economical way to certify organic production while at the same time involving the farmers and consumer in the process to make them accountable. It is


thus a grassroot and horizontal process based on trust, transparency and participation. The farmer must learn and apply the production process, follow standards, and keep basic farming records. The farmer is individually certified but must be part of a group and submit to regular inspection to ensure compliance. A PGS system is managed by a multi stakeholder group representing farmers, consumer and local organizations. Inspection is done by taking samples of the soil, irrigation water and produce at random and taking them to a certified lab for testing. However there are many chemicals, contaminants and heavy metals to test for and each test cost around 200 000 VND. So if one wants to test for 20 different residues in one sample, the cost is around 4 million VND. When chosing lab testing, the group must carefully choose which residue to test for and keep samples to a minimum. An expert on the PGS certification approach, Mr. Chris May, has currently designed a framework for adapting PGS to a SV production area in Quy Nhon district, Binh Dinh Province. He believes that the conditions for SV as presented in section 2.4 of this document could serve as basis for SV production standards and could be further developed by the multi stakeholder group. He proposes to create a brand and logo for all SV in the province. The steps in forming a PGS for SV could be as follows:

Step 1: Farmers interested in producing safe vegetables with a PGS sign a letter of commitment or pledge to follow SV production process

Step 2: Then, they set up a farmers group with working regulations. Step 3: The group then invites stakeholders including farmers, local people,

local authority, consumer groups, technicians, possibly environmental groups to form a “local steering group” which can then determine and agree on the standards for SV production

Step 4: They then take part in a training course on PGS dynamics (organized by ADDA)

Step 5: They set up an internal assessment and inspection plan, choose testing technique and nominate a certified sample taker and lab for testing

Step 6: When farmers in the group pass the test, they can claim products to be SV and use logo if any.

Quick Test

The alternative is the Quick Test instead of the expensive laboratory analysis and testing. With a simple kit, one can quickly test soil, irrigation water and produce for insecticides, pesticides and fungicides residue. However it gives only an approximate reading on one or two residue types and does not measure the exact amount. It does not seem to test for heavy metals or nitrate content although further study on this needs to be done. For safe vegetable production where residue is allowed under established maximum


levels, the quick test may not be able to give an exact reading on enough residue types. However, it does seem to be the cheapest and quickest method of doing soil, irrigation water and produce testing so it requires further investigation2. In Hanoi, the Saigon Plant Protection Company markets the a Quick Test Kit for 1,1 million VND which can test for only two categories of pesticides. The cost for the equipment accounts for 700 000 VND whereas the solvent represent about 400 000 VND which can be used for 10 tests. So the cost per test is 40 000 VND (excluding cost of initial equipment). The kit comes with an instruction manual and more information can be found on their web site - www.spchcmc.com.vn ADDA is currently researching the whole testing issue and will need to soon decide on which chemicals to test for, budget and number of samples which will form the basis for their inspection. The new organic project in Thanh Xuan has no experience in sample-taking and lab testing. They have asked ADDA to support them in this process.

2.9 Cost analysis for regular vegetable and SV production in Viet Tri

In meeting with SV farmers in Tan Duc communes and in discussions with involved authorities, it seems difficult to assess whether SV production process is actually more costly than regular production. A general consensus seems to lean towards affirmative, and quantifying this at around 20-30%. Farmers and agricultural experts agreed that SV production is more labor intensive – preparing compost, using IPM and manual techniques of dealing with pests – and the yield is less especially at first. Also some farmers use natural or biological fertilizers, pesticides and herbicides which are significantly more expensive. One example is the use of bean oil herbicide at a cost of 160 000 VND/litre which covers one sao. Altho it is very effective, it is also more expensive than chemical herbicides. In order to further our understanding of the cost difference between regular vegetable and safe vegetable production, we interviewed 6 farmers from Tu Xa communes and 2 from Dai Dong commune who all do conventional vegetable production. The aim was to get an idea of the main production cost such as seedlings, fertilizers and pesticides and compare these with SV production process.

2 Food and Fertilizer Technology Center web site - http://www.agnet.org/library/pt/2002018/


Table 3: Regular vegetable production costs

Costs Product Area (m2)

Crop /month

Yield Kg Seed Fertilizer Pesticide Total

Cost/kg VND

Kale 360 2.6 1,714 40,5 164 110 314,5 183,4 Chayote 360 4.7 2,500 183 200 383 153 Squash buds

360 3 1,000 60 267 327 327

For the safe vegetable process, 6 farmers from Tan Duc commune and 1 from Van Noi commune north of Hanoi were interviewed to get the same production costs for the same vegetables. Table 4: SV production costs

Costs Product Area (m2)

Crop /month

Yield Kg Seed Fertilizer Pesticide Total

Cost/kg VND

Kale 360 2,2 1,333 50 183 108 342 292 Chayote 360 5 1,500 134 92 226 159 Squash buds

360 4 1,100 92,5 287,5 380 342,5

Here are a few of the findings that we can draw from these numbers and from the individual reports:

Yield for regular production is generally higher than for SV especially for Chayotte which tops 2000 kg for many farmers while for SV, it turns around 1000 kg. But the higher cost of regular production results in a very similar cost per kg for that vegetable.

Kale shows the highest cost/kg difference between the 3 vegetables resulting from higher production cost and lower productivity

Table 5: Cost comparison

Product Regular production (VND/kg)

Safe production (VND/kg)

Difference %

Kale 183,4 292 37

Chayote 153 159 3,7

Squash buds 327 342,5 4,5

We certainly would need a much broader sample data to be able to draw conclusions. But still, we were able to notice 2 trends which distinguishes cost for SV production:

At times production costs are lower because of use of less chemicals which results in lower yield and similar cost per kg compared to regular vegetables


Other times the production cost is higher because of use of natural chemicals while yield remains low, resulting in a higher cost per kg for SV.

For now there are no costs for the farmer in getting the certificate of full satisfaction of SV conditions from DARD. If it became compulsory for farmers to also get a certificate for the produce through an national organization like CERDESTA, then the cost for SV production and marketing would sky rocket.

2.10 Safe vegetable production investments costs

As shown in Table 6 below, the investment costs for equipment for vegetable production are quite high with 2 main expenses:

1- Irrigation system including the frames, pipes, sprinklers and pump with a total of 1 750 000 VND. The life for these is also surprisingly short between 3-5 years. Maintenance cost is low at 200 000 VND per year.

2- Nethouses are used to protect plants from heavy rain and strong sun for a total of 1 500 000 VND. Polyetilen can also be used to cover the soil which helps to prevent insects, worms, weed and frost resulting in less application of chemicals. However, the cost is high and the life of the equipment very short at 2 years.

Out of the 83 farmers in the 2 Tan Duc farmers’ groups, only one farmer, the leader of Groupe 1 – Mr. Thanh, has the irrigation and nethouses equipment. With Na Chuong Cooperative, none of the members use nethouses and the irrigation pump has broken down. The PPC has promised to cover the cost to repair it by September 2009. When traveling to Lam Thao district in Vinh Phuc Province, many farmers there seem to have already installed these types of equipment (nethouses and irrigation system). If Tan Duc and Na Chung farmers are to compete and increase their effectiveness while reducing their risks of adverse effects of climate on production, they will all need to consider this investment in the near future.

Table 6: Investment & maintenance costs

Investment Value of investment up to now

Life (yrs) Annual maintenance cost

Irrigation pump 750 000 5 100 000

Sprinklers & pipes 1 000 000 3 100 000

Nethouses 1 500 000 2

TOTAL 3 250 000


3. MARKET RESEARCH

3.1 Safe vegetables – the Hanoi market

3.1.1 An overview

In1999, Hanoi launched safe vegetable production in peri-urban areas to supply its growing market. Some commune were chosen as pilot production areas such as Van Duc and Dang Xa of Gia Lam district (150 ha), Van Noi of Dong Anh district (60 ha), Linh Nam of Thanh Tri district (20 ha), Thanh Xuan and Dong Xuan of Soc Son district (60 ha)3. Dong Anh district was made into a model safe vegetable area with the help of local farmers and government authorities. Three trade marks were developed – Na Sao for sale to restaurants and Bao Ha and Yen My for sale to markets.4 The main retailing points of the safe vegetables established in Hanoi are:

Safe vegetable stalls at Buoi market (1), Nghia Tan Market (6), 9/12 market (2), Hang Da market (2), Dong Xuan market (5) and Hang Be market (3)

Large supermarkets chains (6) such as Big C, CTM, Hapro, Fivimart and Intimex.

Safe vegetable stores (3) in Hanoi According to the survey data of ASD-VASI of 2005, 85% of safe vegetables are sold through collectors who then resell to supermarkets and retail shops (stall and safe vegetable stores). 10% is sold by farmers to intermediary companies who then resell to supermarkets, trade centers and retailers. A mere 5% is sold directly by farmers to consumers. When large volume of safe vegetable is traded, contracts are signed to guarantee safety and quality of produce. Price of products is usually not included in contracts but negotiated by both parties. Price of safe vegetable is usually 20-30% higher than that of regular vegetables. However, according to the same survey, farmers are only able to sell 10-15 % (40-50% for Dong Anh) of their produce at safe vegetable price. Up to now, many provinces have done the planning of SV production areas. However, the result is limited. Hanoi has issued:

certificates of SV production for 33 organizations,

3 Ho Thanh Son, Dao The Anh. Analysis of safe vegetables value chain in Hanoi province. Agrarian System Department – Vietnam Agriculture Science Institute. March 2006. 4 Fresh Plaza web site - http://www.freshplaza.com/news_detail.asp?id=1803 “Safe Vegetable Model Reaps Success in Ha Noi”. Published 6/01/2007.


certificates of SV post-harvest processing to 9 agencies, certificates of SV trading for 79 organizations.

According to a report delivered by the Cultivating Department of MARD in Oct. 2008, an analysis of cultivating land and irrigating water in SV production areas was done in Hanoi. The results showed that:

400/478 areas qualified for SV production, of which 134 areas use irrigating water from Nhue river, Cau Bay river, Pheo river; in the dry season, these water sources are polluted; 13 areas did not qualify; 43 areas were extremely polluted and 22 areas did not qualify for either soil or water.

Some difficulties in the conversion to safe vegetable production have been the continued misuse and illegal use of pesticides and the difficulty in controlling this. Even tho the farmers get the initial certificate which appraised and tested the soil, there is no continued control to ensure safe vegetable production.

3.1.2 Characteristic for retailing of SV

On March 19 2009, we visited 2 wet markets in Hanoi (Nghia Tan-6 stalls, Dong Xuan-5 stalls), 4 supermarkets (Metro, Big C, CTM, Hapro) and 3 SV shops. The aim of the visit was mainly to assess how safe vegetables are promoted, whether clear signs are posted and to look at the packaging used. We also briefly looked into origin and price of vegetables.

Wet markets

There are 6 stalls at Nghia Tan market that sell only SV and each one has a clear stall sign stating that their produce are SV with origin and contact details. All of them have a great variety of vegetables and claim that all are SV – green leaf, potato, tomato, gourd, lettuce, herbs, carrot, beans, and cucumbers. Some are packaged in plastic bags labeled with Rau An Toan and the origin of products. Often, it is clearly stated that the vegetable production area has been certified by DARD. For the leafy vegetables, they are usually tied with a plastic wrap with label name and product data printed on it. However many vegetables sold at the stall are not packaged or wrapped and one can only trust the seller that they are indeed SV. When asked, shop sellers said that they do have the


production area certification with them. Vegetables seemed very fresh and are delivered to the shops each morning. All SV were from Dong An district north of Hanoi. Prices were a bit higher than regular vegetables at nearby stalls.

Product Price SV Price regular vegetable Potato 15 000 10 000 Carrot 15 000 10 000 Tomato 10 000 8 000

When we visited Dong Xuan market, we found 5 stalls that claimed with their sign to sell safe vegetables. However, none of the produce was packaged or identified in any way as being SV. Whatsmore, none of the signs stated the origin of the vegetables or contact details if one wanted to check. Vegetables were simply displayed just like any regular vegetable, with only the word of the shop keeper as assurance that they were indeed SV. At both markets it is hard to believe that the extensive variety of vegetables all comes from certified safe production. It is clear that when vegetables are packaged and clearly identified as certified SV products, this provides some kind of guarantee to the consumer. It is easy to claim the safety of vegetables, which anyone at the market can do. It is another to guarantee that the vegetables come from a certified SV production area.

Safe Vegetable Shops

We visited 2 shops on Phung Hung street that both claim to sell safe vegetables with a large sign. However, none of their produce is packaged or labeled as coming from a SV production area. The shop keepers buy from a collector from Van Noi commune in Dong Anh district. On Pham Ngoc Thach Street, there is a very professional looking safe vegetable shop operated by the Seeds for Fruit & Vegetable Corporation of Vietnam. Products in the shop sell very well and there were many costomers who could choose vegetables from the racks against the wall and a platform at the center. The shop is equipped with two big refrigerators to store vegetables which are put in plastic bags without label. They get their supply from a collector in Dong An commune and have a certificate from the Food Safety And Sanitary Department of Hanoi. They also sell safe meat and eggs.


Supermarkets

At Metro, we saw some green leaf vegetables labeled as Rau An Toan from Ba Chu cooperative in Dong An. No other vegetable was clearly labeled as being SV. When we asked the vegetable clerk if they carried SV, he said that they all were. He was most likely referring the the fact that vegetables sold at Metro are safe, although they probably do not come from SV certified production areas. At Big C, there were 2 areas where SV are placed. One set of shelves in the refridgerated section with a small selection of not so fresh vegetables – small tomatoes, lettuce, cucumbers, green leaf, beens, etc. And in the middle a large display with many green leaf vegetables, most of them with the SV Ba Chu label on them. Strangely enough, SV tomatoes were cheaper at 5200 VND/kg compared to regular ones at 8,900. Regular potatoes sold at 7,400 and carrots at 8,500 which is less than the price at the wet market. The main brand for Big C safe vegetables is Hadeco. At Hapro supermarket on Nam Bo street, the few vegetables for sale were labeled as SV from Ba Sao Cooperative in Dong Anh district north of Hanoi. All produce was displayed in plastic packaging with basic origin details. They seemed fresh although the variety was limited (rau ngot, cabbage, green beens). Strangely enough, the wall was decorated with certificates for safe chicken and safe pork but there was none for SV. At CTM supermarket in Cau Giay, the small vegetable corner in the refridgerated section had only SV from Dao Duc Cooperative in Dong An district. The few vegetables were not fresh – green beens, cucumbers, green leaf, squash. Most were packaged in plastic bags labeled as SV with name of coop and origin details. Some vegetables like squash had a simple bar code sticker with the name of the coop on it.

3.1.3 Packaging

One of the objectives of the Hanoi survey was to get an idea of the type of packaging that is used when selling safe vegetables. We found four types of packaging:

1. Printed clear plastic bags or with sticker label – for tomatoes, cucumbers, beans, etc.

2. Labelled plastic string with product details – for green leaf vegetables like spinach

3. Hard plastic packaging with color label – for sprouts


4. Price sticker with few details – for pumpkins, squash. However, all kinds packaging cannot assure that the produce is SV indeed. It is possible for the seller or the producer to package regular in a bag labelled SV. For Tan Duc farmers, the printed plastic bag for tomatoes, beans, etc. as well as the plastic string for green leaf vegetables would seem sufficient and ideal when marketing their SV directly to the end users.

3.2 Safe vegetables - Viet Tri city market

3.2.1 An overview

The SV programme was launched in 1996 in Phu Tho province with the following main activities:

• IPM traning, • Research programs on SV production, • SV production projects and trials.

Originally, a training course on IPM was organized in Bach Hac ward, Viet Tri city. From 1997, 20 training courses on IPM were organized in Viet Tri city, Thanh Ba dist., Ha Hoa dist. and Cam Khe dist. Furthermore, in 1998, the provincial farmers union also launched 10 training courses on SV production in Doan Hung dist., Cam Khe dist., Thanh Son dist., and Lam Thao dist. Since 2006, the Plant Protection Department has delivered training on IPM training for SV production in 4 districts: Lam Thao, Phu Ninh and Ha Hoa districts as well as Phu Tho town. Today, in Lam Thao district there are 3 communes which have formed cooperatives producing safe vegetables and certified by DARD as SV production areas – Cao Xa Coop (12 ha), Tu Xa Coop (2 ha) and Ban Nguyen Coop (2 ha). Vinh Lai Coop (2 ha) has applied for SV production but has not yet received it. In Phu Ninh district, there are 2 communes that claim to produce SV – Phu My and An Dao. However, neither has yet been certified. 5 In Bach Hac ward, there is Tan Duc commune with 500 HH producing over 100 000kg/year of vegetables which supposedly conform to SV practices. The People’s Committee hopes to SV certify 40% of production area by the end of

5 Source: Ms. Thom from PP department of Phu Tho province (vice-director)


2010 and 100% by 20156. And there is also nearby Song Lo commune which started a SV pilot in 2006 and claims to sell SV although it has not yet submitted an application for certification. Even though safe vegetable production areas are increasing, it is believed that the key to maintaining a competitive edge for Tan Duc farmers is to first get SV production area certification and then produce certification. It is also critical that public awareness campaigns be implemented through VECO partnership with VINASTAS to increase demand for SV in Viet Tri city.

3.2.2 Chain mapping

One of the objectives of the chain analysis is to better understand the vegetable chain from producer to consumer in Viet Tri city. In the research, we found that local farmers in Viet Tri either sell their vegetables themselves as peddlers, to local collectors or traders, or at the wet markets to the end users. Some sell directly to restaurants or canteens. Produce from other regions is usually gathered by collectors who then sell to wholesalers or restaurants/canteens. The wholesalers sell to retailers, local collectors and end-users at the wet markets. The minimart in Viet Tri which claims to sell SV was not deemed a significant actor in the chain. Below is a chain map for vegetables in Viet Tri, followed by a more detailed description of each actor category.

Figure 1: Map of Viet Tri vegetable chain

6 WERTHEIM-HECK/HO. Fresh Studio Ltd. VECO Viet Tri Market and Consumer Research Report. January 2009.

Local farmers

Farmers other regions

Collectors

Whole salers

Local collector/trader

Restaurants/canteens

Street vendors

Wet market retailers

End user/Consumer


3.2.3 Supply chain of vegetables

A survey of the main central market in Viet Tri as well as 3 smaller markets (Nu, No and Hang markets) near Tan Duc commune was realized from February 18-20th 2009. During the survey, retailers, wholesalers, collectors as well as farmers were interviewed to get information on product origin, quantities, and market. It is estimated that about 200 farmers from Tan Duc commune sell their produce at the Central market, and about 50 farmers sell at each of the smaller markets near the commune. The 3 smaller markets also have traders who bring produce from other areas and about 50 farmers from nearby communes who sell their produce. Even though retailers, wholesalers and collectors tend to rely on regular suppliers, they do not have contracts binding them.

Retailers

Retailers were interviewed and they said that they rely on wholesalers to get a great variety of produce from: Viet Tri (Bai Hoc, Ban Nguyen), Vinh Phuc Province (Tam Dao, Vinh Tuong district), Phu Tho Province (Lam Thao district), Hai Duong Province, Da Lat and Ha Noi (Dong An district). Few retailers seem to buy directly from local farmers and none of the Tan Duc farmers sell directly to fixed stalls at market. Most retailers sell about 20-30 kg per day and complain of the low price of produce. After the flood in 2008, price of produce sky-rocketed which led many farmers to plant vegetables. Now there seems to be a surplus of offer which has led to lower prices. Also many farmers are selling all their produce in February to clear their field for rice paddy. All retailers have heard about safe vegetables. 2 said that they could sell them at a price of 10-15% more. One retailer mentioned that Tan Duc produce has such as good reputation for being safe that she can sell them at 50-100% more than other vegetables. Some popular vegetables are: green bean, kale,


bamboo shoots, pumpkin buds, celery, cabbage, kohlrabi, lettuce, onions, potatoes, herbs, green and red capsicum, broccoli and garlic.

Wholesalers

Three out of four wholesalers interviewed deal mainly with out of province collectors. Only one deals directly with local farmers from Vinh Phuc and Phu Tho province. Two can sell about 100 kg per day, one sells 200 kg and another sells up to 500 kg per day. All of them have heard about safe vegetables – one said he would pay between 10-20% more than regular vegetables, another said between 30-50% more and another said that she would not pay more for safe vegetables. Some popular vegetables are: green and red capsicums, broccoli, garlic, onions, lettuce, mustard, kale, baby corn, carrot, kohlrabi, chilli, cauliflower, green bean, cabbage. Some wholesalers sell to collectors who then go around to canteens and restaurants. They also sell directly to consumers, restaurants and retail vegetable stalls.

Collectors

One school collectors gets her supply from one main farmer in Bach Hac ward, although at times she also buys from other farmers in the areas if she needs to. She has a one-year contract with the school canteens and supplies about 20 kg per day. Price is negotiated between both parties when there is new produce or market fluctuations. One collector supplies to 3 canteens of large factories in Viet Tri. He gets his supply of vegetables 50-70 farmers from Van Hoi commune in Tam Duong district, Vinh Phuc Province. He purchases about 400 kg per week and has no contract with the farmers. Price fluctuates according to the market. Another collector from Lung Hoa commune, Vinh Tuong district, Vinh Phuc province sells vegetables to three main customers: Hoa Phong Nursery school, a Japanese garment company and another company. He signed contracts with these customers in which the price is a little bit lower than market price and he must supply the best vegetables. If market price fluctuates for a minimum of three consecutive days, he can adjust the selling price to his clients accordingly who can then check with the local market. He needs 300 kg per day and he buys from 3 other collectors (not farmers) in Vinh Tuong district.


3.2.4 Market survey

During the survey, it seemed critical to also meet with potential market buyers such as canteens and restaurants to better understand their needs in vegetable supply (see Annex 6 for contact details). Other information such as use of contract, payment method and type of supplier were collected. It was found generally that canteens have contracts with their suppliers, be it a collector or farmers, but restaurants do not. Here is a summary of the main findings.

Canteens

All 6 canteens interviewed use a steady supplier and order 15-30 kg of produce per day which is usually delivered to them every morning. Most have a one-year contract with the supplier which often clearly outlines their obligation to deliver safe vegetables. All canteens are aware of the need for safe vegetables and many say that they pay a higher price to have a guarantee on safety of produce. A factory canteen even pays 50% more than regular market price to ensure safety of produce. A school canteen pointed out that they have no way of “proving” that vegetables are safe. Most said that they feel open to consider new suppliers on a regular basis. Payment is done either at the end of the week or at the end of the month tho a school canteen said that they could pay daily if required. Price of produce is not fixed in contract but agreed upon by canteen and collector on a weekly basis. Canteens tend to order less varieties of vegetables, typically 2-4 varieties per day such as: cabbage, kohlrabi, carrot, potatoes, carrots, kale, squash, gourd, celery. Many factory canteens in the industrical district of Thuy Van order meals through a catering service which deliver ready-to-eat meals at lunch times.

Restaurants

Six restaurnats were interviewed, including two hotels who said that they do not order vegetables regularly since they only prepare meals when booked in advance for special occasions. Most restaurants deal directly with farmers groups and have daily delivery of produce and payment is made daily. One restaurant which requires special vegetables like mushrooms and zuccinis deals with a collector for these, and farmers for the rest. One restaurant deals with a trader from the Central market who supplies him with 10-20 kg of vegetables per day. Payment for him is with one-two month delay. None of the restaurants that we interviewed have contracts with their supplier. Some


typical vegetables ordered by restaurants were: lettuce, onions, green onions, potatoes, garlic, carrot, mushrooms, cucumbers, turnip, chilli and lemon.

Supermarket

There is a small supermarket in Viet Tri named Phu Cuong which has sold safe vegetable in its produce section in the past. But when we visited the shop twice, there were only tomatoes and green sprouts in clear plastic packaging without a any label. The manager still claimed that in the off season from January to October, they sell about 80 kg per week tho this seems hard to believe (up to 200kg/week in the high season). They have two suppliers – one from Dong Anh district near Hanoi and the other from the Phu Tho Center for Seed and Plant. The manager says that she can sell safe vegetables at a price 30-50% higher than regular vegetables and that certain criteria had to be met in order for her to carry safe vegetables in her shop:

o Produce must be packaged in a plastic bag; o Clear origins of produce must be on label; o Product specifications such as weight, expiry date must be clearly presented.

3.3 Safe vegetables – Lang Son city market

3.3.1 An overview

There are many vegetable production area near and around Lang Son City which itself has the largest production area with 284 ha in 2004. Mai Pha commune where Na Chuong cooperative is comes in 3rd with only 49.4 ha although it has increased since 2001. Most farmers sell either to market retailers, to collectors or as peddlers to end-users. Lang Son City statistics show the main vegetable production areas and their development over 4 years in the following tables7: 7 Pilot Model of High Quanlity Safe Vegetables Production in Lang Son City. Thai Nguyen Agriculture and forestry University. 2006.


Table7: Vegetable production area in Lang Son city

No Location 2001 2002 2003 2004 1 Lang Son city 323.8 304.3 269.2 284.6

2 Hoang Dong commune 90.8 62.5 49.1 49.9

3 Mai Pha commune 37.8 34.0 39.5 49.4

4 Quang Lac commune 45.1 41.6 27.4 44.9

5 Hoang Van Thu ward 16.8 18.0 10.2 7.3

6 Tam Thanh ward 32.1 34.0 21.5 15.3

7 Vinh Trai ward 20.2 22.3 28.5 14.3

8 Dong Kinh ward 76.0 87.0 89.0 97.0 A significant difference between Viet Tri and Lang Son is that the first has many SV production areas, some certified, others not. With Lang Son, there is only one other vegetable production area that claims to abide by safe process like Na Chuong cooperative, with 4 ha in Xuan Mai commune, Van Quan district. However, they are not certified and have not yet applied for certification. Consumer awareness for safe vegetable in Lang Son City seem low which results in little differentiation between safe vegetables of Na Chung cooperatives and regular vegetables from other production areas. Productivity of vegetables increased in the period of 2001-2004, from 13,870kg/ha in 2001 to 14,700kg/ha in 2004 for Lang Son City. It increased considerably in some areas like Hoang Dong commune, Chi Lang ward. This is due to the application of intensive cultivation and support from local technicians. With regards to productivity per ha and total production in tons, Mai Pha still comes in 3rd place as seen in the following 2 tables: Table 8 : Productivity of vegetables in Lang Son city (100kg/ha)

No Location 2001 2002 2003 2004 1 Lang Son city 138.7 130.9 143.5 147.0

2 Hoang Dong commune 127.8 120.9 125.2 156.3

3 Mai Pha commune 135.8 155.1 128.6 139.6



6 Tam Thanh ward 142.1 125.5 117.7 135.2

7 Vinh Trai ward 123.0 124.0 122.1 113.6

8 Dong Kinh ward 170.3 141.3 185.4 162.7


Table 9: Yield of vegetables production in Lang Son city (ton)

No Location 2001 2002 2003 2004 1 Lang Son city 4,490.9 3,982.4 3,860.0 4,549.1

2 Hoang Dong commune 1,160.3 755.5 615.0 966.0

3 Mai Pha commune 513.5 527.6 508.0 718.0



6 Tam Thanh ward 456.2 426.7 253.0 224.7

7 Vinh Trai ward 248.3 276.6 348.0 195.0

8 Dong Kinh ward 1,294.4 1,229.7 1,650.0 1,560.0

In order to get a better idea on the availability of different varieties of vegetables in Lang Son City, we interviewed fixed stalls, pedlars, farmers and 1 wholesaler from Bac Giang as well as 1 collector supplying to Thao Vien restaurant. The table below shows what varieties of vegetable are sold in the market throughout the year as well as approximate price. The safe vegetable program was kicked off in Lang Son city in 2006. The Economic Department was allocated a budget by the People’s Committee to launch training sessions on safe vegetable production for farmers in the surrounding areas. However, farmers did not seem interested so the Economic Department changed their focus to Na Chuong hamlet. In 2007, ED opened a safe vegetable shop at Gieng Vuong market area but it only lasted 5 months from November 2007 to March 2008 before it was closed. Limited quantities and varieties as well as changing staff at SV shop were blamed for the failure. In the past, irrigation water for Na Chuong cooperative from Ky Cung river was deemed polluted from boxit ore from a coal mining industry nearby. But according to the Economic Department, recent processing system of waste water from the industries solved the water pollution problem.

3.3.2 Chain mapping

It is estimated that there are 10-15 wholesalers and 30 retailers/fixed stalls at Gieng Vuong market, 10 retailers at Dong Kinh market and 5 retailers at Chi Lang market, together with hundreds of farmers and pedlars along the streets. Dong Kinh and Chi Lang markets as well as peddlers, restaurants and canteens mainly get their supply of vegetables from


Gieng Vuong market and partially from local farmers. A great deal of local farmers also bring their self-grown vegetables to Dong Kinh market while only a few to Chi Lang market. Both fixed stalls and peddlers sell their products to end-users, a few to small restaurants. Farmers of Na Chung Cooperative sell to collectors who come 1 km away from their hamlet in the winter season from November to January. These collectors then resell to restaurants or operate their own fixed stall at one of the markets. Produce from other provinces go through collectors and wholesalers who come to Gieng Vuong market to sell to fixed stalls. Figure 2 below shows the main actors in the vegetable chain in Lang Son City: Figure 2: Map of Lang Son vegetable chain

The chain map is quite different in Lang Son from Viet Tri: One market with its fixed stalls acts as a wholesalers; Wholesalers do not sell directly to end-users; Many farmers sell directly to fixed stalls at markets; Most restaurants and canteens get their vegetable supply from markets; There are mobile stalls going around the city with a good selection of

vegetables

Local farmers Farmers from Bac Ninh, Bac Giang

Collectors

Wholesalers

Retailers/Fixed stalls at Dong Kinh market

Restaurants/canteens

Retailers/Fixed stalls at Chi Lang market

Retailers/Fixed stalls at Gieng Vuong market

Consumers

Peddlers/ Mobile stalls

Chinese traders

Local collectors


3.3.3 Supply chain of vegetables

During the field trip of April 22-27, 3 main markets were visited in Lang Son – Gieng Vuong Central market, Dong Kinh market and Chi Lang market. We also visited 1 sales point of Na Chuong farmers, 1 unofficial wet market, 7 restaurants, 6 canteens and 3 collectors.

Retailers

There are 2 types of fixed stalls at the markets: 1. At Gieng Vuong market, the stalls act

more like wholesalers as they supply mostly to retailers of other markets such as Dong Kinh and Chi Lang and also sell to restaurants, canteens but generally not to end-users.

2. At Dong Kinh & Chi Lang markets, the stalls sell most of their produce to consumers, and a little to small restaurants. They also get some supply from local farmers for vegetables such as kale, bo khai, squash buds, amaranth, day and ngot.

In general, the stalls are open at the markets every day from 5 am to 7 pm.

Peddlers

There are hundreds of peddlers in the city who go along the streets and supply directly to end-users. There are two types of peddlers: 1. Local farmers: They harvest their self-grown

vegetables and bring to the city from 6-7 am. They usually sell only 1-2 varieties of vegetables carried on shoulder poles along the streets and at the three big markets.

2. “Trolley” peddlers: They go around the city with

a trolley with a good variety of vegetables. They get their supply from Gieng Vuong market and sell directly to end-users with their mobile stall.


Wholesalers

Gieng Vuong market is the only one with wholesalers from Bac Ninh & Bac Giang provinces with supply of vegetables from farmers and collectors from those two provinces which they sell to retailers. They transport by lorries as early as 1-2 am every morning and finish their job at around 3 am, and then return for the next day collection. Only a few stay until 7-8 am to sell remaining vegetables to end-users. On average, they supply 200-500 kg of different varieties of vegetables daily. Safe vegetables don’t make sense to them since they are not aware of any cases of food poisoning related to vegetable consumption. They generally sell their produce at a lower price than that of local farmers. There are many farmers from other provinces who come to Lang Son to rent land and grow vegetables year-round and then sell as wholesalers. They manage their farm on a large scale efficiently with good cultivating techniques and sell at markets. An example of this is Mrs Tham from Thai Nguyen province who has resided and rented land in Lang Son for many years. She cooperates with two other farmers, Mrs Ha and Mr Nguyen, to produce vegetables on a farm of 16 saos with an approximate yield of 200-500 kg per day. They supply to collectors from other regions and local fixed stalls at Gieng Vuong market. When demand is high, collectors come to the farm to buy vegetables directly and sell at wet markets in different districts of Lang Son province. In the past, Na Chuong Cooperative farmers were introduced to them to sell vegetables but those farmers insisted on high price and provided low quality products so the partnership failed. However it could be interesting for Na Chung Cooperative to link again with this farming enterprise to benefit from their knowledge of market demand for vegetable, their cultivating techniques and their marketing channels.

Collectors

One collector we interviewed claims to have a daily turnover of 5-10million VND and supplies to 5 restaurants (Thao Vien the biggest) and also to consumers via her vegetable shop at 67 Bac Son street. She gets her supply of vegetables from collectors from Bac Ninh and Bac Giang, traders from China for root vegetable and local farmers for local variteties.


We were not able to meet with local collectors who come near Na Chung hamlet during the winter season to buy vegetables from farmers. But the cooperative said that some of these collectors sell the vegetables to restaurants in the city while others sell at their fixed stall at one of the markets. These collectors get their supplies from other local farmers as well.

3.3.4 Market survey

In comparison with Viet Tri City where restaurants and canteens are located along one main road, in Lang Son City they are scattered in a cirle around Dong Kinh market. Nearby is Gieng Vuong market which acts more as a wholesaler. Different vegetables are brought to Gieng Vuong market from China such as roots via wholesalers at Tan Thanh border, regular vegetables come from Bac Ninh and Bac Giang, and local produce comes from farmers in the suburbs. Most restaurants and canteens get their supply of vegetables from Gieng Vuong or Dong Kinh markets (see Annex 6 for more details). Restaurants and canteens of Lang Son City seem to have little concern regarding safety of vegetable and claim that they would not pay a higher price for them.

Canteens

There does not exist any factory canteens since there is no industrial zone in Lang Son City. However 5 school canteens were interviewed. All of them supply vegetables from Gieng Vuong wet market daily. There seems to be some concern for safety of vegetables but since the cost for each meal is fixed, this does not allow them to pay a higher price for SV. However they suggest that having a fixed stall at Gieng Vuong or Dong Kinh market for sale of safe vegetables would be popular. They usually only buy one or 2 varieties per day (one leaf, one root) in quantities of 10-60 kg per day, depending on number of pupils and if one or two meals per day. Payment is made immediately and they pay the market price.

Restaurants

We interviewed 7 restaurants of which only one uses collectors to deliver produce directly to the restaurants, Thao Vien Restaurant. Other restaurants get their supply daily directly at Gieng Vuong or Dong Kinh markets. None of the restaurants have contracts and payment is made immediately at the


market or at the end of the month when dealing with a collector who usually offers produce at lower than market price. In fact, restaurants are busier on weekends and during holidays when people tend to go out more so restaurants buy between 30-60 kg of vegetable per day. Especially during the period from October to Tet holiday, Lang Son city gets a lot of tourists who come to cross over to China for shopping. In Lang Son city, it is very convenient for restaurants to get their vegetable supply directly at wet markets. They all suggested that we open a fixed stall at Gieng Vuong market but they insisted that if we do so, we must offer safe vegetables at a competitive price, fresh and with a wide variety available year round. Off-season and new vegetables are also particularly appreciated. The feedback confirmed that they are not willing to pay more for safe vegetables in Lang Son City. Typical vegetables ordered by restaurants include kale, caisin, mustard, bo khai, chayote buds, squash buds, kangkong, mung toi, eggplant and tomato.


4. TAN DUC FARMER GROUPS

4.1 Organization Tan Duc farmers groups

Tan Duc commune was recognized in 2008 by the People’s Committee as a safe vegetable production area because of its reputation for growing high quality vegetables and using few chemicals in its production process. There are two farmer groups established in Tan Duc commune by the Economic Department and VECO to set up pilot models for SV production. If it proves to be a success, the models will be replicated in other areas to ensure a stable SV supply for the city. Within support from VECO, the Economic Department has cooperated with the Plant Protection Station to launch training courses on SV production and IPM techniques for all members. The first group with 43 farmer households was established in August 2008 and the second with 40 farmer households in December 2008. Both groups have applied for SV production area certification and have passed the sample tests of soil and water. The application was forwarded to the Plant Protection Department and then to DARD and certification should be delivered by the end of May 2009. There are no costs related to SV certification. Each of the farmer groups has a management board of three members and the following details:

Table 7: Farmer groups details

Group 1 Group 2 Leader Nguyen Van Thanh Luu Thi Kim Lien Vice Leader Cao Viet Thanh Nguyen Thi Kieu Accountant Nguyen Thi Thom Do Thi Duong Number of members 43 40 Time of establishment August, 2008 December, 2008 Meeting 2nd (of each month) 15th (of each month)

The two groups operate based on agreements reached during meetings and following written regulations (see Annex 7). Each group has a fixed day each month for meeting with all group members. However, up to now, farmers have


not received any services from the group such as supply of seeds, fertilizers in large volume and at lower price, or collective marketing.

Group fund

Regarding finance, each member of the first group contributed 20,000VND upon registration although the regulation states that the required contribution should be 50 000 VND. There is also a provision for the group to provide low-interest loans to its members but up to now, this has not been done. For the second group, they were not required to contribute any money when they formed the group so they have no fund to speak of. It seems critical to review the groups’ regulation and make sure that it reflects how the group plans to operate. If the registration fee is set at 50 000 VND, then that is the amount that each farmer must contribute to the group’s fund. As for group 2, they must agree on an amount for the members to pay so as to have a fund to be used for group activities.

Group functions

Clear responsibilities for each management board member is critical, especially if the group is to undertake business planning and collective marketing activities. A salary for each will also need to be determined. If the groups plan on providing credit as stipulated in the regulations, then they must also clearly communicate to the members their credit policy, how they can apply for the fund, and conditions for repayment. And finally, the group must decide on which services they wish to offer to the members: - input supply for seeds, fertilizers and/or pesticides - technical support on SV production techniques - promotion of safe vegetables - training/coachin in book-keeper and farm record keeping The group regulation is an important tool which outlines the basic functioning mechanisms. It should be amended to reflect the real situation of the group, and be followed diligently. The group currently offers no services to its members and this must be addressed if the group is to have a purpose and develop into a well-functioning grassroot organization.


4.2 Production plan for 2009

Production of SV is not coordinated by the group and each farmer is completely autonomous in planning his production and marketing of his produce. There is no business plan for the group. Getting a production plan from each farmer proved to be more challenging that expected but with the help of the board members, we were able to gather the following data: Table 8: Production plan 2009 – Tan Duc farmer groups

Month 2 3 4 5 6 7 8 9 10 11 12 Price/kg

Vegetable Kg Kg Kg Kg Kg Kg Kg Kg Kg Kg Kg Low High

Pole bean 310 2475 2815 2025 775 400 3,370 7,000

Eggplant 380 2130 5300 5940 3475 1000 3,000 6,500

Squash buds 240 3640 2920 12090 9170 2760 200 130 140 120 3,500 6,250

Kale 50 50 15 20 2265 13190 15110 8920 3050 300 2,500 6,560

Mung toi 135 710 1295 1455 685 525 3,280 7,000

Ngot 35 390 670 765 705 275 190 100 20 50 5,000 12,500

White bean 830 430 100 100 970 3230 4860 4,600 12,320

Chayote 2025 2055 1750 1020 2,500 6,000

Amaranth 90 200 105 20 2,630 6,500

Coriander 130 100 50 460 940 5,460 12,650

Cucumber 100 200 60 3,000 6,000

Celery 10 50

Cassaba melon 145 300 370 40 5,000 8,000

String bean 300 290 315 300 315 165 3,670 6,000

Chayote buds 520 740 620 470 100 8,000 12,670

Green bean 1170 1140 420 100 820 2330 2705 4,000 7,350

Pea 120 200 250 170 30 30 30 30 150 320 480 5,000 7,000

Sweet potato buds

5 5 5 5,000 10,000

Taro 200 200 4,000 15,000

Melon 50 70 360 200

Kohlrabi 70 100 2,000 5,000

Pumpkin 100 150 100 70 70 70 4,000 6,000

TOTAL 5,455 9,695 12,580 24,925 20,715 11,200 15,970 15,530 11,210 9,630 9,695


The production plan and the actual harvested production will probably vary but it is still useful to know:

the general harvesting cycle of each vegetable with approximate yield the low price and high price which is expected for each produce the total yield per month from the 2 producers groups.

When looking at the data, we find that the lowest yield would be in February with 200 kg per day, if delivering 6 days per week with a variety of 10 different vegetables. During the high season in summer, yield triples and there are 9 varieties available. It is easy to assume that the numbers provided by the farmers are overly optimistic. But even if we cut by half, the Tan Duc farmers should be able to supply 100 kg per day, which would be sufficient to supply restaurants, canteens and a safe vegetable stall at the market. Setting a production plan is only a first step for Tan Duc farmers. The next step would be for them to compare the plan with the recently set up record keeping of all produce sold on a daily basis (as well as selling price if possible). Only then can we see whether the plan is accurate or not, and make necessary adjustments for the future. The more practice they get at record keeping and planning, the more accurate they will become. However, this requires that all 83 farmers do this in order for it to be effective. The simple record keeping system recently introduced to Tan Duc farmers should be closely monitored and kept up to date. The need for accurate planning will be apparent when/if they start to sell to collectors, restaurants or canteens. It is hoped that accurate production plan will help to find a suitable market match. For sure, production at some point should be aligned on consumer and market demand if the groups are to be competitive and able to seize opportunities.

4.3 Marketing

All farmers of the two groups currently go to sell their vegetable at wet markets. Usually, they come to the Central Market which is open daily. If they cannot sell out their products, they then go to smaller markets in Viet Tri such as: Nong Trang, Nam Tang, Gat or go around the city as pedlars in the streets. When the three markets near Tan Duc commune operate, many of them go there. In general, most of their customers are end-users. Thanks to alluvial soil and a tradition of not using pesticides or growth-boosting chemicals, they have a good reputation for SV and can sell at a higher price of 20%-30%. However, they encounter a limit in productivity and varieties. Among their products, chayote bud is the main recognizable vegetable being paid at a higher price by consumers. Currently, they have to sell vegetables individually without a


collective marketing channel which takes them a lot of time. The farmers are unclear about market demand so they grow and sell vegetables individually based on past experience. This results in unstable prices and surpluses of crops they cannot sell. Having each farmer sell his produce individually is very time consuming and does not take avantage of more effecient opportunities. It would be ideal for the group to collectively coordinate sale of produce to a few main buyers, which could be either local collectors, restaurants or directly to some school or factory canteens. They could then deliver on a regular basis produce at agreed upon price, varieties and quantities. In order for this to work, this would require the group to:

- coordinate production and basic business planning - adjust production according to market demand - agree on responsible persons as well as tasks for collection of produce

and delivery - prepare basic group details for promotion to potential clients - solicit potential customers and reach agreement for supply of SV

Tan Duc farmers should probably start with a 2-3 small contracts for supply of around 20 kg per day to restaurants, canteens or collectors. The advantage of selling to restaurants seems to be that payment is made immediately whereas sale to collectors or canteens result in delayed payment. Then as they get the system operational, they can later see how much they can upscale with new customers. The idea of opening a stall at the Central market is also valid, in that it would provide a direct window for SV for Viet Tri consumers. The emphasis should be on having a stall with a clear sign stating certification obtained, origin of produce and contact details. The certificate should be framed and visible at the shop for consumers to see. SV should be packaged in clear, labeled plastic bags or string. And finally, any kind of brochure avaialbe from VINASTAS promoting SV should be used to inform the public, thereby increasing consumer awareness.

4.4 Information sources

It is of great importance for the farmers to have access to information on SV production. However, they have an array of unreliable information sources to turn to and there are too many “official” documents for the farmers to keep up with. In Tan Duc commune, the two farmer groups have been attending training courses on SV production and IPM. Yet, the farmers emphasize that most information is shared within the group and among neighbours. They have


regular meetings in which they consult each other about problems they are facing and possible solutions. Sometimes, if a disease threatens the crops and no solution can be found, they turn to authorities like the Economic Department or the Plant Protection Department. An IPM expert is available to offer technical support to Tan Duc farmers. The quality of this expert must be assessed in order to ensure that Tan Duc farmers have access to qualified technical support (see figure 2). Figure 2: Information sources available to the farmers

A study tour other SV production areas would also be helpful for Tan Duc farmers. SV has been produced successfully in other areas which could benefit Tan Duc farmers. An initial assessment of which area would be most suitable for a visit should be made by VECO. Some of the options seem to be: - the 3 SV cooperatives which were launched in Lam Thao district - SV production areas in nearby Vinh Phuc Province - the now famous Dong Anh district north of Hanoi. The objective of the study tour would be for Tan Duc farmers to better understand SV production techniques but also see how other farmers market their produce.

Farmer

SV production training

Plant Protection Station

IPM course

Economic Department

Group members & Neighbours


5. NA CHUONG COOPERATIVE FARMERS

5.1 Organization of the cooperative

The cooperative was established by the Lang Son People’s Committee on January 29th, 2007 with its headquarter at the Culture House of Na Chuong hamlet, Mai Pha commune, Lang Son City. It is registered to deal in: SV production Cattle, livestock raising according to safe production process Agriculture, forestry, aquaculture materials and products.

Up to now, the cooperative has only carried out the first activity of safe vegetable production. There is no plan at this time for coop members to take on the 2 activities of safe husbandry and aqualculture as mentioned in the regulation. Whatsmore, the group regulation does not state as a condition to join the cooperative that the person must carry out agricultural activities as per the 3 defined categories (see Annex 8). Farmers have joined the cooperative mostly to receive allowance and support from VECO project. Na Chuong cooperative passed the water and soil tests and has already obtained its certificate of full satisfaction of SV production issued by DARD since July 18th, 2007 (see Annex 9).

Group fund

Each member contributed 200 000 VND to join the cooperative and the group fund totals 8 million VND at this time. It has not been used for any purpose up to now. The contribution is considered social capital of the members and is refunded in whole if/when the member leaves the cooperative. The cooperative regulation clearly states how MB and control board members can be remunerated. Remuneration for 6 persons = 50% monthly profit and can be distributed as follows:

Chairman = 30% of 50% 2 Vice Chairman = 40% of 50% 1 control person = 8% of 50% Accountant = 15% of 50% Cashier = 7% of 50%

However, since the cooperative does not operate any business actitivities, it cannot generate any revenues or profits to pay the board members. If the cooperative truly expects its board members to manage and control


operations, then it also needs to pay a salary. There are many ways that the cooperative could generate revenues to pay for its board members:

- Charge members a yearly fee/contribution which can be used to cover operational costs;

- Charge small fees to members when they attend trainings such as IPM or others;

- When the SV stall opens, make a small margin between price paid to farmers and retail price of produce.

- Make a small margin when supplying input to farmers Group functions

A cooperative is much more than a simple informal community based organization. It is a legal entity where the “shareholders” are the members. Its prime objective is to operate business activities for the sake of its members. Up to now, the cooperative has been fairly passive and has not undertaken and business operations. The role of the management board has been mainly to inform members of training and actities and provide to them inputs which they supply from Mrs. Hong of the PPS. However, their role could be broadened to take on new responsibilities:

- Production and business planning of the cooperative with in mind collective marketing;

- Cooperative education of members; - Networking with other agricultural cooperatives to learn about

management of organization and business activities - Production support to farmers

The members of the MB were appointed by the PC and not elected voluntarily by the cooperative members. So far, they have not received any salary for performing their functions. The MB meets monthly and hold quaterly meetings with all members. Its management is formed of: Mr. Hoang Van Thinh Chairman Mr. Hoang Van Hao Vice-chairman Mrs. Ngo Thi Lanh Vice-chairperson Mrs. Hoang Thi Cuong Head of the Control Board of the Coop

Careful examination of the by-law of the cooperative shows that they have decided to put the duration of mandate for management board administrators at the limit of 5 years, whereas 2-3 years might be more suitable and allow for necessary changes in management. Also the decision to have 1 control board member is the minimum allowed by law but could be raised to 2 to provide a counterpart and support and to avoid having no control board member if the one should quit. A cooperative can only become a strong entity if it is able to provide economic and social advantages to its members. If it fails to do so, members will not contribute to its development.


5.2 Production plan for 2009

Na Chuong cooperative safe vegetable production up to now has only been producing winter crops on 3 ha of land although they have registered 8 ha as safe vegetable production area. The following table shows the production plan for all 40 farmers of Na Chuong Cooperative. Quantities are fairly low with a total yield of 250 kg in June and the highest in September with over 9 000 kg of produce. The “x” represent the harvesting period for each vegetable during which Na Chuong farmers could extend production in the Lang Son area. Table 9: Production Plan for Na Chuong Cooperative and harvest period of vegetables

Month 1 2 3 4 5 6 7 8 9 10 11 12 Price/kg

Vegetable Kg Kg Kg Kg Kg Kg Kg Kg Kg Kg Kg Low High

Kale x x x 1270 2650 4620 950 3,500 8,500

Kohlrabi x x x 1030 930 1070 850 3,500 6,000

Caisin x x x 1250 5000 1000 300 1,000 3,000

Cabbage x x x x x x 200 430 1640 2900 2,000 4,000

Cove bean 150 550 410 370 x x x 3,500 7,500

Red gourd 80 330 300 300 x 200 2,000 3,500

Green gourd 150 100 120 200 150 250 x x x x x x 2,000 4,500

Bitter gourd 80 100 450 220 2820 x x x 2,500 7,000

Tomato x 100 650 1000 x x x x 350 180 x x 2,000 6,000

Capsicum x 200 2880 100 x x x x x x x x 2,500 6,500

Cucumber 200 1200 200 x x x x 1,000 3,000

Amaranth 130 1300 350 x x x x x 2,000 4,500

Sweetpo.buds x x x 120 x x x x x 3,000 6,000

Loofah 600 300 2,000 6,000

Kangkong x x 300 x x x x x x x x x 2,000 6,000

Squash buds x 370 x x x x x 2,500 5,000

Mung toi 70 x x x x x x x 1,500 4,000

TOTAL 380 1330 6640 4230 4070 250 200 300 4100 9190 8330 5000

During various meetings, the chairman has expressed the need of farmers for support in extending their production period to summer vegetables and


develop production of off-season and new vegetables. However, they face many constraints to extend vegetables production to summer crops:

- Not enough irrigating water due to hot weather and the pumping machine has broken down

- Sandy soil which absorbs water from vegetables. - Farmers’ habit to grow rice and corn in summer so that they have food

for pig & livestock raising. SV production leads to more labour working in the field and selling at markets.

Despite the constraints in producing summer safe vegetables, this year Na Chuong Cooperative farmers will try a summer crop from April to July with tomato, beans, capsicum, cucumber, various types of gourd, and amaranth, with the assistance of the Plant Protection Station,. If we look at the production plan for Na Chuong Cooperative, we can clearly see the varieties and total quantities planned for the main vegetables in summer and winter crops. The following table shows the summary: Table 10: Summary of production plan for summer and winter crops

Summer vegetables

Total quantities kg

Winter vegetables

Total Quantities kg

Cove bean 1,480 Kale 9,490Red gourd 1,210 Kohlrabi 3,880Green gourd 970 Caisin 7,550Bitter gourd 3,670 Cabbage 5,170Tomato 1,750 Tomato 530Capsicum 3,180 Cucumber 1,600 Amaranth 1,780 TOTAL 15,640 26, 620

5.3 Marketing

There are 3 distribution channels for Na Chuong Cooperative safe vegetables, depending on season and demand:

1. When there is a shortage of vegetables in Lang Son market like during the fall of 2008 when there were severe floods, then local collectors come directly to the field of the farmers and offer a high price;

2. When demand for vegetable is normal and during winter months only, farmers bring their produce to collectors at a slope 1 km from Na Chuong hamlet between 5 am and 7 am;


3. During peak harvest times in winter and during the summer months, farmers must bring their produce to the city to sell at wet markets or as pedlars along the streets.

In general, Na Chuong farmers either sell to collectors in winter, at wet markets or as peddlers directly to consumer, not to restaurants or canteens. Vegetables of Na Chuong are considered fresher than those from Bac Giang or Bac Ninh and this helps them to sell at a slightly higher price. Still, individual marketing of produce is time consuming and subject to great fluctuation in price. Farmers of Na Chuong would like to have stable outlets and a fair price for their safe vegetables. They are willing to produce off-season and new varieties of vegetables to differentiate themselves in the market as safe vegetables producers.

5.4 Information sources

Farmers of Na Chuong Cooperative participated in an IPM and VietGap training course which lasted 3 months from March to May 2008. The course were delivered by Mrs. Hong of PPS with in-class lectures and in-field practicum. Farmers claimed that the trainings were very good and helped to build their capacity as SV production farmers. As for the production process, farmers have applied compost and natural herbicides but still use some chemical pesticides. Mrs Hong from PPS supplies these inputs to Mrs Chuong and Mrs Lanh so that they can sell to farmers. In return, farmers can consult by Mrs Hong regarding seeds, cultivating technique, pesticides and herbicides application. We contacted the Cooperative Deparment under MARD to find out if there is at the provincial or even at the national level a staff assigned to support Na Chuong cooperative. The support expected could have been to build capacity of the management board of the cooperative or on how to organize and hold a successful general assembly. We we informed that they do not provide such kind of support and that they have very limited human resources.


6. CONSTRAINTS, STRATEGIES FOR CHAIN INTERVENTION

6.1 Main constraints in the safe vegetable chain

6.1.1 Tan Duc in Viet Tri

The main constraints identified in safe vegetable production are:

Tan Duc farmer groups

1. The 2 farmer groups are very new and have little experience in group

management, service delivery and coordination of activities. Their regulations may not reflect the true nature of the group and should be revised.

2. The group has no business plan for collective marketing of their produce. This makes it very difficult to know what varieties and quantities of produce they have to offer, and to which markets.

SV certification

1. Tan Duc farmers do not yet have the certification of full satisfaction of SV production issued by DARD whereas other communes nearby already have the certification.

2. There is no system in place or planned to certify the produce sold by Tan Duc farmers. In order to increase consumer awareness and demand for SV, produce certification is essential to creating a competitive advantage for SV produce.

SV marketing

1. Tan Duc farmers production is determined ad hoc by farmers and does not necessarily respond to market/consumer demand

2. Tan Duc SV are not packaged and therefore do not distinguish themselves clearly from regular vegetables.

3. Tan Duc farmers spend a lot of time selling their SV individually at local markets

4. Tan Duc farmers do not have steady and profitable buyers for their produce


5. Tan Duc farmers have no marketing plan to promote SV to potential buyers and consumers

6.1.2 Na Chuong Cooperative in Lang Son

Na Chuong Cooperative

1. Na Chuong cooperative has a weak capacity in management, coordination of production and collective marketing;

2. Na Chuong cooperative group fund is not being used to support development;

3. Na Chuong cooperative does not function as a democratic independent organization.

SV certification

1. There are no plans to certify the safe vegetables which results in lack of trust from consumers and little differentiation from regular vegetables.

SV marketing

1. Na Chuong cooperative farmers have limited varieties and quantities to offer to consumers;

2. Farmers sell individually to collectors, at wet markets or as peddlers which is very time consuming;

3. Vegetables are not packaged or labeled as being produced in a certified vegetable production area;

4. Na Chuong cooperative has no fixed stall to sell its produce and differentiate itself as suppliers of safe vegetables.


6.2 Main strategies for chain intervention

The main strategies for chain intervention for safe vegetables are:


Certification

1. Take steps to get certification of full satisfaction of SV from DARD (already in progress with current partner Economic Department of Viet Tri)

2. Set up a participatory guarantee system (PGS) for Tan Duc farmers adapted from organic production (with support of ADDA)

SV marketing

1. Develop a simple yet comprehensive business plan including a production plan which reflects market demand.

2. Develop different types of packaging for each type of vegetable sold with labels details. (to be implemented by Economic Department)

3. Set up SV stalls at the Central market with clear sign stating SV produce, certification and origin (to be implemented by Economic Department)

4. Create linkages with potential buyers (restaurants, collectors, canteens) and sign contracts for supply of SV

5. Use SV promotional material created by VINASTAS to increase consumer awareness


Na Chuong Cooperative

1. Provide management training and coaching to MB members (to be delivered by Minh);

2. Provide training on characteristics of cooperatives under the Vietnam Cooperative Act, coaching on holding a general assembly and on MB roles and responsibilities (Economic Department);

3. Training on basic record keeping and business planning


Certification

1. Set up a participatory guarantee system (PGS) for Na Chuong farmers

adapted from organic production (with support of ADDA).

SV marketing

1. Open a safe vegetable stall in Lang Son City and coordinate regular

supply by Na Chuong farmers (Economic Department) 2. Develop packaging and labeling for safe vegetables of Na Chuong

cooperative to differentiate their produce (Economic Department);

6.3 Conditions for success

The conditions for success in implementation of SV strategies are:

1. Consumer awareness for safe vegetables increases significantly and lead to a willingness to pay a higher price for them

2. Famers plan and coordinate production to supply a wide variety of fresh SV throughout the year

3. Frmers get SV certification for their production area and product which is credible to the consumer

6.4 Strategy selection for CD program and potential partners

1. Adapt PGS to SV production of Tan Duc farmer groups and Na

Chuong Cooperative This strategy would be innovative in that we would adapt a system used for organic production to SV process. It is a bottom-up approach which would give the farmer groups a distinct role to play in the marketing of their product. Whatsmore, it would link them with local stakeholders who can then take part in SV development alongside the farmers. The expected outcome would be a well functioning group able to guarantee “safety” of vegetable produced to its markets. 2. Develop a record keeping system integrated to business planning. As safe vegetable production farmers, by law they must keep track of use of inputs such as fertilizers, persticides and herbicides. They must also start to measure output in varieties and quantities of vegetables produced and sold. This data is important to plan collective marketing to supply a fixed stall as planned in both Viet Tri and Lang Son but also for sale to regular buyers. A


simple record system needs to be set up as well as training and coaching on business planning.


3. Support Tan Duc farmer groups with collective marketing of SV to

restaurants and canteens The chain development program would also like to focus its intervention on marketing, that is to link the farmers with steady buyers – either restaurants which tend to buy smaller quantities and pay cash on delivery, or canteens which require less product varieties. This would ensure regular sale of large quantities of vegetables and develop the capacity of the farmer groups to coordinate production and delivery of safe vegetables. The expected outcome would be 2 contracts with restaurants and/or canteens.


4. Improve functioning and management of Na Chuong as a cooperative A cooperative is a special type of legal entity which must abide by cooperative principles, democratic decision-making process and clear advantages to its members. To this end, training and coaching of MB on operations of a cooperative and member education could improve considerably the performance and strengthen the role of the cooperative.


ANNEX 1

Maximal tolerance of some heavy metal in land

Ser.No. Elements Tolerance (mg/kg dried land)

Testing method *

1 Arsenic (As) 12 TCVN 6649:2000 (ISO11466:1995)

2 Cadimium (Cd) 2 TCVN 6496:1999 (ISO11047:1995)

3 Lead (Pb) 70

4 Copper (Cu) 50

5 Zinc (Zn) 200

* Equivalent testing methods are accepted.

Maximal tolerance of some micro-organisms and toxins in safe vegetable

Ser.No. Factor Tolerance Testing method*

I Nitrat content NO3 (for vegetable) mg/kg TCVN 5247:1990

1 Salad 1.500

2 Spicy vegetables 600

3 Cabbage, kohlrabi, cauliflower, roots, garlic 500

4 Onion, gourd, squash, chili, violet eggplant 400

5 Corn 300

6 Potato, carrot 250

7 Bean, asparagus, sweet chilli 200

8 Tomato, cucumber 150

9 Musk-melon 90


10 Onion 80

11 Watermelon 60

II Harmful micro organisms CFU/g **

1 Salmonella 0 TCVN 4829:2005

2 Coliforms 200 TCVN 4883:1993; TCVN 6848:2007

3 Escherichia coli 10 TCVN 6846:2007

III Content of heavy metals mg/kg

1 Arsenic (As) 1,0 TCVN 7601:2007; TCVN 5367:1991

2 Lead (Pb) TCVN 7602:2007 - Cabbage, leaf vegetable 0,3 - Others 0,1 3 Mercury (Hg) 0,05 TCVN 7604:2007 4 Cadimium (Cd) TCVN 7603:2007

- Leaf vegetable, spicy vegetables, mushroom 0,1

- Stem-eating vegetables, roots, potato 0,2 - Others 0,05

IV Residual level of some plant protection chemicals

1 Chemicals mentioned in Decision 46/2007/QD – BYT of the Ministry of Health

Lined with Decision 46/2007/QD-BYT dated 19/12/2007

TCVN or ISO, CODEX or equivalent

2 Chemicals not mentioned in Decision 46/2007/QD – BYT dated 19/12/2007 of the Ministry of Health

CODEX or ASEAN

Based on current use of plant protection chemicals of each locality, high-risk chemicals are determined to analyse.


ANNEX 2

The Government of Vietnam has adopted various decisions & enactments promulgating the regulation on management of SV production & trading:

• Decision No.19/2005/QD-BNN, dated 24/3/2005 promulgating a list of plant protection chemicals acceptables for growing vegetables.

• Decision No.52/2007/QD-BNN, dated 05/6/2007 by Minister of MARD on planning SV production areas up to 2010 with a vision for 2020.

• Decision No.827/QD-BNN, dated 28/3/2007 promulgating the establishment of a Management Board for SV production in the Red River Delta.

• Decision No.106/2007/QD-BNN, dated 28/12/2007 promulgating the regulation on management of SV production and trading (in replacement of Decision No.04/2007/QD-BNN dated 19/01/2007)

• Decision No.84/2008/QD-BNN dated 28/7/2008 about VietGAP • Decision No.107/2008/QD-TTg dated 30/7/2008 promulgating “Some

policies to support the development of SV production and trading up to 2015”

• Decision No.99/2008/QD-BNN dated 15/10/2008 promulgating the regulation on management of safe vegetables, fruit & tea production and trading

• Decision No.100/2008/QD-BNN dated 15/10/2008 promulgating the regulation on management of fertilizers production, trading and usage.


ANNEX 3

Nitrate content (mg/kg) in commercial vegetable products in suburb of Hanoi

NO3 (mg/kg) No. Vegetable Threshold level Gia lam Tuliem Thanh tri

1 Cabbage 500 4038 (+3585) 3645 (+3145) 2303 (+1803) 2 Chinese cabbage 500 4612 (+4112) 3211 (+2711) - 3 Indian mustard 500 4198 (+3698) 2984 (+2484) 2758 (+2258) 4 Lettuce 1500 1477 (-23) 1534 (+34) 1835 (+335) 5 Saurofus - 1035 1102 1468 6 Malabar spinach - 1537 1624 2223 7 Tomato 150 169 (+19) 176 (+20) 163 (+13) 8 Eggplant 400 558 (+18) - 650 (+250) 9 Cucumber 150 356 (+206) 347 (+197) 338 (+188)

10 Pea 200 448 (+228) 236 (+36) - 11 Yardlong bean 400 362 (-38) 538 (+138) 534 (+134) 12 Loofah 400 385 (-15) 409 (+9) - 13 Wax gourd 400 714 (+314) 720 (+320) - 14 Carrot 250 462 (+212) 472 (+220) - 15 Trunip 600 1987 (+1350) 1470 (+870) 987 (+380) 16 Kohlrabi 500 2105 (1605) 952 (+452) 1239 (+739) 17 Potato 250 631 (+431) 483 (+233) - 18 Yam bean - 482 - - 19 Parsley 600 645 (+45) 1228 (+628) - 20 Hoary basil 600 710 (+110) 1146 (+546) 1545 (945) 21 Perilla 600 792 (+19) 710 (+110) 1897 (1297) 22 Shallot 400 717 (+31) 758 (+358) 2017 (1617) 23 Fennel 600 1138 (+538) 940 (+340) 1038 (+538) 24 Rau ngo 600 664 (+64) 1063 - 25 Hot pepper 400 342 (-58) 349 (-151) - 26 Kang kong 600 - 670 (+70) 709 (+109) 27 Kang kong river 600 - - 1679 (+1079)


ANNEX 4 State management of SV

The Cultivation Department • To direct the formulation of overall planning on concentrated SV-producing areas, programs and

projects nationwide; • To train, nominate and manage sample-takers, inspecting offices based on regulations. • To nominate and supervise the certification of safe vegetables • To organize training courses on VietGAP, certification of VietGAP, and to internal inspectors of

organizations nationwide. • To guide and direct DARDs in organizing the certification of full satisfaction of conditions on SV

production, the SV production, the inspection and supervision of SV production in their respective localities; nominate and supervise certifying organizations.

• To coordinate with the Ministry’s Inspectorate in directing the examination, inspection and settlement of complaints and denunciations about SV production, certification of SV production conditions, SV product certification in accordance with VietGAP.

• To inform the public of sample-takers, inspecting offices, certifying organizations, producers who fully meet conditions for SV production and producers with VietGAP certification.

The Quality Control Department of Agricultural, Forestry and Aquatic products • To coordinate with the cultivation department in directing the examination, inspection and

settlement of complaints and denunciations about SV production in accordance with VietGAP. • To take part in training VietGAP, standards and technical instructions for SV producers nationwide. • To organize inspection and examination and suggest repairing solutions in case of unsafe

vegetables to be detected. • To launch scheduled inspections in annual plan or unscheduled assigned by the Minister on SV

producing conditions.

The Processing, Trading Department of Agricultural, Forestry and Aquatic products • To take part in training standards, technical process for SV production nationwide.

The Plant Protection Department • To organize training on, and direct the widespread application of integrated pest management or

insect control management (IPM, ICM) process and process on SV production according to VietGAP.

• To provide professional and operational direction and guidance to plant protection systems in localities on the performance of SV production.

• To coordinate with the Ministry’s Inspectorate in directing the examination, inspection and settlement of complaints and denunciations about SV production nationwide.

The Department for Science, Technology and Environment • To assume the prime responsibility for, and coordinate with relevant agencies in revising, proposing

the amendment and formulation of standards and technical norms for SV production. • To manage research subjects and trial SV production projects

The National Agriculture and Fishery Extension Centre • To take part in training and promulgating VietGAP • To inform and disseminate SV production programme • To set up pilot models of SV production in accordance with VietGAP in specialized areas and

encourage upscaling.


The provincial/municipal DARD • To draw up and submit to the provincial/municipal People’s Committees planning on SV-producing

areas and investment projects for development of SV-producing zones in their respective localities; • To propose mechanisms and policies to encourage and support SV production and trading; • To manage the grant of certificates of SV production conditions; nominate and manage the

operational, registration and certification in localities; inform receipt of SV proclaimation in accordance with VietGAP.

• Based on the real context of localities and VietGAP, to formulate and direct the implementation of SV production processes suitable to local conditions;

• To organize training in and grant certificates of SV production to producers; • To inspect, examine SV production and coordinate with local governmental departments to control

trading activities of SV products. • To announce to the public a list of producers who proclaim SV products; a list of producers fully

satisfied SV production; a list of producers cerified VietGAP; a list of sample-takers, inspecting labs, certifying organizations in localities.

ANNEX 5 National SV Certifying Organizations

No Name Address Contact details 1 Center for Research and

Development of Sustainable Agriculture (CERDESTA) – Vietnam Plant Protection Association

No. 149 Ho Dac Di st., Hanoi city

Tel: 04 3976140 – 04 35334287 Email: [email protected]

2 Fruit & Vegetable Research Institute

Trau Qui town, Gia Lam dist., Hanoi city

Tel: 04 38766062 Email: [email protected]

3 Plant Protection Consultation, Investment & Development Company

Dong Ngac commune, Tu Liem dist., Hanoi city

Tel: 04 38363119

4 ENASA Vietnam Jointstock Company

No. 6, lane 1, Tang Thiet Giap, Co Nhue commune, Tu Liem dist., Hanoi city


5 National Center for Inspecting Seedplants & Fertilizers

No. 6, Nguyen Cong Tru st., Hai Ba Trung dist., Hanoi city


6 Center for Sustainable Agriculture Consultation & Development – Vietnam Plant Protection Association

No. 172, lane 3, Nguyen Tat Thanh st., ward 13, district 4, Ho Chi Minh city


7 Center for Quality Testing Technique 3 – QUATEST3

No. 49 Pasteur st., Nguyen Thai Binh ward, District 1, Ho Chi Minh city



ANNEX 6 Market Research Contacts

Canteens interviewed in Viet Tri Name Address Phone Number Contact 1. Hoa Mai Nursery School 273 Mai Son 2 str.,

Tien Cat ward 02103849875 Mrs Mai

2. Hermain Gmeiner School SOS village 02103840550 Ms Huong 3. Hoa Phong Nursery School Nhi Dong str., Gia

Cam ward 02103847208 Mrs. Kim Tuyen

4. SOS Nursery School SOS village 02103855613 Mr. Minh 7. Hung Vuong Beverage Thuy Van IZ 02103954732 Mr. Thinh 8. Kaptex Thuy Van IZ 02103863679 Mr. Phuc Canteens interviewed in Lang Son

No Name Address Contact Suppliers Payment Price 1 1/6 Nursery School Bac Son st. 0253 877066 Gieng Vuong

Immediately Market

price 2 19/5 Nursery School Chi Lang ward 0253 812022 Gieng Vuong

Immediately Market

price 3 Thuy Nga Nursery

School 83 Le Loi st., Vinh Trai ward

0253 870590 Gieng Vuong Immediately Market price

4 Dong Kinh Primary School

Chu Van An st., Dong Kinh ward


5 Vinh Trai Primary School

55, lane 2; Le Loi st., Vinh Trai ward


Restaurants interviewed in VT Name Address Phone Number Contact 1 Hong Ngoc 2 Hotel 938 Hung Vuong

avenue 0210-386-2026 Mr. Dung

2 Khom Truc Vang restaurant Opposite to Viet Tri PC

0210-327-2348 Mrs. Mai

3 Phong Lan restaurant 516 Chau Phong str., Gia Cam ward

0210-385-4252 Mrs. Ha

4 Quan Ca Bo Song Unit 10A, Song Thao, Tien Cat

0210-384-6013 Mrs. Hanh

5 Coi Nguon restaurant Unit 14B, Anh Dung Str., Tien Cat ward

0210-381-3878 Mrs. Ha

6 Phu Dong restaurant 2256 Hung Vuong 0210-395-3027 Mr. Kim Do Kyeong


Restaurants interviewed in Lang Son No Name Address Contact Suppliers Payment Price 1. Dong Kinh restaurant 2 Phai Ve st.,

Dong Kinh ward 0253-873-390 0913-590-423

Gieng Vuong, Dong Kinh

Immediately Market price

2. Nhat Chieu restaurant 388 Ba Trieu st., Lang Son city

0252-241-943 0986-277-594



3. Hoa Sim restaurant 2, Hoang Van Thu Chi Lang War, LS

091-204-6840

4. Thao Vien restaurant 57 Phai Ve st., Dong Kinh ward

0253-872-278 0977-626-988

4 collectors; farmers

End of month

< Market price

5. Vi Son 2 restaurant 134 Phai Ve st., Dong Kinh ward

0253-717-888 0904-013-558

Gieng Vuong Immediately Market price

6. Kim Khanh restaurant 96 Tran Hung Dao st., Chi Lang ward

0253-812-125 0988-450-689



7. My Son restaurant 69 Ngo Quyen st., Vinh Trai ward

0253-873-103 0984-036-014



Shops in Hanoi Name Address Phone Number 1 Pham Ngoc Thach SV shop Pham Ngoc Thach St. 043-852-3375 2 Hapro Supermarket 5 Nam Bo St. 043-733-3941 3 Thuy An SV shop A12-13, 50 Phung

Hung St. 091-2612227

4 SV shop Nghia Tan St. 5 SV shop Dong Xuan market 094-9152938


ANNEX 7

REGULATIONS SAFE VEGETABLE PRODUCTION GROUP

ZONE 2 – TAN DUC COMMUNE

Pursuant to Directive 151 by the Government on organization and development of economic sectors Pursuant to Planning for Safe Vegetables Development by Viet tri city and Decision No 22/QD-UBND on the establishment of Safe Vegetable Production Group in zone 2, Tan Duc commune by People’s Committee of Tan Duc commune Based on the meeting on 26th August, 2008 with the voluntary participation of group members, operational regulations of the group are approved and developed as follows:

CHAPTER 1 GENERAL REGULATIONS

Article 1: All households of the safe vegetable (SV) production group (included in the list) having their own area for safe vegetable production join the group on a voluntary base Article 2: All members of SV production group enjoy the same rights/benefits and take the same responsibilities for implementing regulations on SV production and market, using no banned chemicals, plant protection drugs

CHAPTER 2 RESPONSIBILITIES AND RIGHTS OF THE GROUP MANAGEMENT BOARD

Article 3: The group management board is responsible for well maintaining such activities as group meetings, training courses organized by the project, organizing quarterly meetings, bi-annual preliminary and year-end meetings. Article 4: Members of the group management board enjoys equal rights as the other group members, and part of profits from the group’s receipts such as group fund or others (if any).

CHAPTER 3 RESPONSIBILITIES AND RIGHTS OF GROUP MEMBERS

Article 5: Group members have to contribute to group fund 50,000 vnd/members as approved at the meeting on 28th August 2008 They have to participate in all group meetings for mutual assistance, economic development, have a sense of constructive contributions to common activities of the group and trainings organized by the project Article 6: Under the discussion and management of the group, the group fund contributed by all group members is used as follows:

- Time of fund contribution is at the end of 30th December 2008 - Loan volume providing to a household does not exceed …….vnd/hh/time - Loan rate: 0.1%/month

- Term of a loan: 6 months/a lending time


- Members of SV group have to follow/observe general regulations made by the group

and technical staff

- If a member is given a principal amount (loan) from the group, he/she will be

responsible for refunding in full including both principal and interest on time;

otherwise group management board in combination with local authorities will involve

in reclaiming/taking back the principal amount.

- If a member borrows production tools/instruments of the group, he/she has to give the

right borrowed tools back and observe general regulations of the group. If he/she

loses or break tools borrowed, he/she has to compensate for the loss or breakdown

according to their value

Article 7: Members have rights to participate in meetings, trainings by the group or the

project, visits, and demonstration models (if being chosen); to be given with principal amount

from the group in line with the general regulations made at the meeting on………..2008

Article 8: Households who have demands for joining the group have to get approval by both

group management board and project staff.

In case a member would like to leave the group, he/she has to send a written request to the

group management board; his/her contributions to group fund will be given back in 6 months,

apart from which he/she will not enjoy any other amounts

CHAPTER 4

EXECUTION

Article 9: This regulation is developed at the meeting on the establishment of SV production

group in zone 2 Tan Duc commune on 28th August 2008 and revised properly on a regular

base through group meetings

* The regulation of the SV production group in zone 2, Tan Duc commune includes 4

chapters, 9 articles. It is agreed and approved by all group members and project staff

responsible for safe vegetable production and comes into effect as of 30th September 2008

Tan Duc, 28th August 2008

GROUP LEADER

(Signed)

NGUYEN VAN THANH


ANNEX 8 Regulation of Na Chung Cooperative

Socialist republic of Vietnam

Independence – Freedom – Happiness

****************

12th December, 2006

REGULATION NA CHUONG AGRICULTURAL PRODUCTION & SERVICE COOPERATIVE –

MAI PHA COMMUNE – LANG SON CITY

Chapter I

NAME, HEADQUARTER ADDRESS, FIELDS OF OPERATION

Article 1: Name, symbol of the Cooperative 1. Name: Na Chuong Agricultural Production & Service Cooperative – Mai Pha

commune – Lang Son city 2. Symbol: (no)

Article 2: Headquarter address 1. Address: House for Culture, Na Chuong hamlet, Mai Pha commune, Lang Son city 2. Telephone number: (no)

Article 3: Fields of operation - SV production - Livestocks & cattle raising in accordance with food safety and sanitary criteria - Supply of equipments for agriculture, forestry and aquaculture

Article 4: Representative in law - Chairman of the Cooperative

Chapter II

MEMBERS OF THE COOPERATIVE

Article 5: Selection of members These subjects are entitled to join the Cooperative

1. Individuals, households, officers 2. Vietnamese nationality aged from 18 with full civil rights

Article 6: Conditions for a member 1. Vietnamese residents aged from 18 with full civil rights and capital to contribute;

approve this regulation and voluntarily join the Cooperative; including: individuals, households, officers

2. As for households: Hand in a registration letter, approve this Regulation and Rules of the Cooperative; authorize a person based on an authorization letter

3. As for officers: Hand in a registration letter, approve this Regulation and Rules of the Cooperative; approval letter from Head of the Department where he/she is working.

Article 7: Rights of members 1. Priority to work for the Cooperative and get remuneration in compliance with

Cooperative Regulation 2. Share profit based on contribution


3. Get updated on information regarding economic and technical aspects; take part in training sessions.

4. Welfare from the Cooperative; get economic engagements from the Coop 5. Merits in case of good contribution to the development of the Coop 6. Right to take part in Boards of Members conference or vote for a representative to

join that conference 7. Vote and stand as a candidate for members of Management Board; controlling board

and other ranks. 8. Appraisals to Management Board, Controlling Board and require to be replied;

inquire Management Board and Controlling Board to summon up unusual meeting 9. Transfer contributed capital and other rights and responsibilities to others based on

this Regulation 10. Depart from the Coop 11. Retain capital and other rights in these case: - Departure from the Coop - Death, disappearance, loss of civil rights or limited civil rights - Households without a qualified representative - Inherited case Article 8: Responsibilities of members 1. Obey to this Regulation; Rules and other enactments of the Coop 2. Contribute capital according to the Regulation; each contribution must not exceed

30% of legal capital of the Coop 3. Unite with other members; learn to enhance knowledge so as to develop the Coop 4. Realize economic engagements with the Coop 5. Be responsible for debt, risks and loss within each contribution 6. Compensate for damage incurred by oneself based on Coop Regulation Article 9: Transferring of Rights and Responsibilities 1. After being transferred from other members, one can not exceed 30% of total legal

capital of the Coop 2. In case of transferring from a non-member, that person must be considered by the

Coop after handing in a registration letter Article 10: Procedures for Rights and Responsibilities transferring 1. Application letter to the Management Board 2. Within 30days after receipt, the MB must reply. The time for transferring is based on

the date of approval decided by the MB. The MB is required to report on this in the nearest meeting of Member Board

Article 11: Departure from the Coop 1. Condition

- Change residential place or take part in other economic organizations - Other cases

2. Time for consideration of a departure letter is 30days after receipt 3. Procedures to stop member status

- A letter with clear reason - Finish all tasks before leaving from the Coop Article 12: Conditions to stop member status

1. A member status is stopped in these cases: - Death, disappearance, loss of civil rights or limited ones. Households without a

qualified representative - Get approval to depart from the Coop - Do all the transferring regarding rights and responsibilities - Get expelled by the Board of Members


2. Procedures - The MB considers and documents to actively deal with a case of stopping member

status; adopt in a meeting of the Members Board - In case of excluding a member, the MB finishes a dossier and gets adopted in the

soonest meeting of Members Board

Chapter III

COOPERATIVE MANAGEMENT

Article 13: Members’ meeting Article 14: MB of the Coop 1. Number of members: 03 2. Period of operation: 5 years 3. Operational rules: - A MB is appointed in the meeting to establish the Coop after adopted by Members

Board - The MB meets at least once a month, chaired by the Chairman; unusual meetings in

cases of requirements from at least 1/3 members of MB or Controlling Board. A meeting of the MB is valid when there are at least 2/3 members of the MB. The MB operates collectively and makes a decision based on majority

4. Criteria to become a member of the MB - First, be a member of the Coop with good morality; education and capacity - Whenever become a member of the Coop, she/he must not be a member of the

Controlling Board, Chief accountant, cashier; and not their parents, brothers or sisters.

5. Rights and Responsibilities of the MB: - Select, expel Vice Chairman of the Coop based on proposals from Chairman; stop the

contract to hire a Chief Accountant - Decide on structure of the Coop - Implement enactments of the Members Board; prepare reports on business,

production plans; capital mobilization and profit sharing; reports on activities of the MB to present to Members Board

- Prepare meetings content and summon up members - Evaluate results of production and trading; verify financial reports before representing

to Members Board meetings - Implement rights and res. Of the Coop based on Coop Law in 2003 - Admit or expel members - Supervise, evaluate activities of Chairman and Vice Chairmen. Article 15: Rights & Res. Of Chairman - Be representative of the Coop in law - Implement busines & production plan; coordinate daily activities of the Coop - Nominate & dismiss positions in the MB - Sign contracts on behalf of the Coop - Present annual financial report - Propose on organizational structure to the MB; recruitment and other rights - Be responsible for all assignments; authorize one Vice Chairman to take over daily

tasks in case of absence. Article 16: Controlling Board

1. Number of members: 01 2. Period of operation: 5 year 3. Criteria: the same as criteria to become a member of the MB. 4. Rights & Res.:


- Supervise the following of the Regulation and Rules. - Supervice financial, accounting matters; revenue distribution; loss & profit; Coop

budget and other assets; debts and supports from the State. - Receive complaints regarding activities of the Coop; take part in MB meetings - Inform MB of the results; present at meetings of Members Board; proposals on

overcoming difficulties. - Inquire related ones to provide books, documents and other information for

supervising activities. - Prepare meetings content and summon up an unusual meeting in case of violation

against the law; Coop Regulation & Rules; Enactments of the Members Board.

Chapter IV

COOPERATIVE ASSETS & FINANCE

Article 17: Legal capital Legal capital of the Coop is a total of all contributions from members Legal capital on establishment date of the Coop (06/12/2006) is 8,000,000VND

1. This capital increases in case: - Decision to raise at annual meetings of the Members Board - A members contributes more but not exceeding 30% of the total 2. This capital reduces in case: - Return capital to members 3. In case of any change in legal capital, the Coop must inform Registration Department

of the State Article 18: Contribution of each member

1. Minimum contribution capital: 200,000VND; maximum not exceeding 30% of the total

2. Members can contribute in cash or assets, land but must be converted to money at time of contribution

3. Deadline for contribution: one time as registered at the first meeting to set up the Coop.

4. Return capital to members: - Only after finishing all tasks. - Amount decided by the soonest meeting of the Members Board - Return in one time within 30days (after drawing the annual balance sheet) Article 19: Authorities and methods of capital mobilization

1. Authorities decided by the MB and Chairman. 2. Methods of capital mobilization:

- Borrow from financial institutions - Borrow from Coop members - Support from the State and other individuals, organizations in Vietnam or from the

outside according to the law Article 20: Rules on remuneration - Remuneration packages of MB, Controlling Board, Chief Accountant decided in

annual meetings of the Members Board - Details as follow:

Remuneration for 06 persons = 50% monthly profit + Chairman = 30% of 50% + 02 Vice Chairman = 40% of 50% + 02 control person = 8% of 50% + Accountant = 15% of 50% + Cashier = 7% of 50%


Article 21: Management and usage of Cooperative budgets 1. Distribution and formation of budgets:

After using 50% for operational cost, the left is used to cover loss of year before and to set up budgets as approved by Members Board:

- Division of profit from service renting: 40% - Division based on contribution: 10% - Production Development Budget: 25% - Precaution Budget: 10% - Other Budgets: 15%

Management and objectives of budgets: - Production Development Budget: Reinvest, enlarge production - Precaution Budget: Deal with unexpected difficulties - Other Budgets: Implement social policies within the Coop and community

These budgets are entrusted to the MB to use and manage. The MB has to draw a balance sheet at annual meetings of the Member Board.

Article 22: Loss processing 1. Loss in a year is deducted from compensation of individuals and organizations 2. If these are not enough, the left is deducted from pre-tax profit of the Coop and

Precaution Budget according to decision of the Members Board; Regulation or Rules regarding financial management of the Coop

Article 23: Management, usage, reservation and tackling common assets; cumulative capital of the Coop

Chapter V EXECUTION

Article 24: Regulation infringement and internal disputes handling Based on nature and level of infringement, the member involved is to be blamed, warned or excluded from the Cooperative; and compensation is required in case of damage.

Internal disputes are settled down by reconcilement between members and with the Cooperative based on equality and cooperation. In case of unmanageability, the case is submitted to the Members Board.

Article 25: Regulation modification and adjustment 1. Any modification or adjustment to the Regulation is based on Article 22 of

Cooperative Law. 2. The Management Board prepares modification methods and submits to the

Members Board. 3. After voting for modification, the Coop has to send the modified Regulation

together with an enactment of the Members Board to the registration department. Article 26: Validity

1. The Regulation is adopted at …, and valid from the date of attaining a business license.

2. The MB works out Rules on assets management, labor, merits, infringement settlement; working schedule of the MB, Head of the MB and other position.

3. Any modification or adjustment must be adopted by the Members Board 4. All members are bound to follow the Regulation 5. This Regulation is a legal document to be sent to the Registration Department and

all members of the Cooperative. On behalf of the Cooperative

Chairman Hoang Van Thinh


ANNEX 9

Documents

Chain Analyis Report Final