SMALLHOLDERS IN THE SMALLHOLDERS IN THE SMALLHOLDERS IN THE SMALLHOLDERS IN THE

UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages

Before, During and After SADUBefore, During and After SADUBefore, During and After SADUBefore, During and After SADU

SADU Final Workshop

Vientian, 4th – 5th July 2012

Cu Thi Le Thuy, CIAT Vietnam

Persimmon

Red persimmon market collapsed

Before SADU

SADU Intervention

Shifting to new varieties with high market value

Visit markets

Topworking

Pests and diseases

ENTO-PRO

• ~ 120 farmers

topworked ~ 1200

trees => good

• ~ 15 farmers planted

seedlings ~ 2000

trees => slow growth

• A small amount was

sold at 35,000d/kg

Results

Lessons

• Good technical assistance generates more

sustainable impacts than subsidies

⇒ Farmers themselves take care of their orchards

without depending on project assistance

⇒ Project staff have to be more active and innovative

• Contribution of beneficiaries is a must

Lessons

• Communication for farmers need to be diverse

and easy to understand

⇒ Study tours to markets and production areas

⇒ Promotion meetings at commune/village levels

⇒ Dissemination of documents in writing, photos, and

movies/slideshows

⇒ Exchange visits among farmers

Cassava Contract Farming

KrongBong, Daklak, Vietnam

Contract farming scheme before SADU

� Contract farming setup in line with Decree 80.

� Factory’s Strategy:

� Buy fresh roots from contract farmers

� Relies on field staff to manage the contract farming system

� In 2006 signed contracts with1,700 farmers in an area of

1,600 hectares

� Purchases some fresh roots from traders

Contract farming scheme before SADU

� Provides

� input credit:

�planting material (KM 94 variety) during first year

�“biological” fertiliser (by-product of dry starch)

� Small loans to some farmers (land preparation, weeding)

� Technical assistance

� Guarantees the purchase of fresh roots and

� Pays farmers according to the starch content of fresh roots

The system was difficult and costly to manage

� Managing ~ 1,700 small contracts for a highly perishable commodity is complex and time-consuming

� The factory is under-staffed => poor implementation of contract

� Input quality was questioned

� Limited technical assistance received

� Delays in transport and long waiting times when delivering fresh roots

Delivering and getting payment were too slow

RegisterCollect

harvesting

ticketsArrange

transport Travel to

the factory Wait for

deliveryPayment

SADU was working with the factory to…

1. Develop improved vertical coordination strategies

2. Improve communication with farmers

3. Improve technical advice to farmers

4. Introduce harvesting tools and slicing tools

⇒ Farmers are now able to

decide the planting and

harvesting dates

⇒ Direct contracts with

selected traders instead of

1,700 farmers

⇒ Reduction of transaction costs (registration, harvest, transport/delivery

of fresh roots, payment)

No longer such a common sight!

Increased Capacity of the factory to Deliver Technical

Services to Farmers

Improved Technical Capacity of Local Extension

Promoted long season cassava and

flexible harvesting calendars

� Long season cassava piloted in Krong Bong (5 hectares)

� Long season piloted in Ea Kar (1.8 hectares)

� Farmers are being encouraged to delay harvest

⇒ Lower production costs, off-season supplies, less soil erosion

Labor-saving harvesting tools have been adopted

� Tools are available in local workshops

� Tools have been sold in others provinces –

Hoa Binh, Hue, Daknong…

� Increased labor productivity: 2-5 times

faster

� Health benefits

“Third-generation” sling equipment developed and produced by local

workshops

Appropriate slicing technology developed

Very happy with the tools

Lessons

• The State plays an essential role in creating favourable external conditions

� Favourable policy/regulatory environment

� Good economic infrastructure

• Contract farming requires significant capacity from sponsoring firms

� Financial, Technical, Marketing, Management, Business strategy, Farmer/community relations

• There is often significant scope for improving contract farming practices

� Dialogue and communication with farmers

� Vertical coordination models: role of groups, agents and traders

� Input provision

� Technical advice

Chayotte

Before SADU

• Production pilot in 2007– 5 communes

– 3.5 ha

– 175 farmers involved

– Funded by P135 and CDF

• Rationality– High market price

– Suitable agro-climate condition

– Easy to grow

– Cash flow over eight months

No market linkages!

SADU Strategy and Interventions

(2008 and 2009)

Intervention Strategies

Communes 2007-08 2008-09

Target markets Hoa Binh Hanoi; Hoa Binh

Linkage actors Motorbike collectors Collectors

Wholesalers

Subsidies No direct subsidies / allowances to famers,

collectors or wholesalers

Role of SADU Market research

Provision of market information

Skill development

Market linkage facilitation

Advisory and mentoring services

Policy advice

geographical targeting and chain approaches

Input supply

Production Collection

Retailing

Wholesaling

SADU

indirect impact trajectories and leverage

input suppliers

smallholder Farmers collectors

wholesalers

SADU

large traders / large farms

collectors

Attempts to instigate collective action

at farmer level: FAILED

Farmers mobilized and mentored to do

chayotte trading business

5 farmers become collectors, sold 12 tons

of chayotte over the first 6 months

facilitation of linkages to wholesalers in Hanoi

loading a truck on its way to Hanoi

facilitation of investment linkages

On-farm advisory services Post-harvest advisory services

July 2012

Production expanded

0

10

20

30

40

50

60

70

2007 2008 2009 2010 2011 2012

Areas (ha)

0

100

200

300

400

500

600

700

2007 2008 2009 2010 2011 2012

Growers

Large traders increased, farmer-

collectors decreased

0

2

4

6

8

10

12

14

16

18

2007 2008 2009 2010 2011 2012

Farmer - Collectors (prs)

Large traders (prs)

Direct interaction between wholesalers and farmers

Buy directly from farms

• Increased competition for farmers’ produce

• Shorter product chains

• Reduced marketing costs (e.g. presence of trucks)

• Introduction of new crops (demonstration effect; transfer of know-how and

skills)

– Two farms of mushrooms setup

– Mustard greens, gingers and chilli

• Employment opportunities

– 100 workers

– 2,000,000VND/month (190USD)

– or 50,000VND/day (2.5USD)

Positive effects from the physical presence

of large farms

Lessons

• “intelligent” projects can play a critical role in the success of market-oriented diversification processes

– market research

– policy advice

– market information

– technical assistance to large farms

– intense piloting of new crops with local farmers

– market linkages

• innovations that generate win-win outcomes

• flexibility and opportunism

• gradualism and pragmatism (sequential approach to innovation)

• strategic use of subsidies (address barriers to innovation)

• perseverance

Some ingredients for successful value chain development

in the uplands of Vietnam

Thank you for your attention!