value chain study for sericulture in phu tho, hoa binh ... · value chain study for sericulture in...

Crafting out of poverty

VALUE CHAIN STUDY FOR SERICULTURE IN PHU THO, HOA BINH, THANH HOA AND NGHE AN,

VIET NAM

NOVEMBER 2010

Prepared by: Thanh Nguyen National Consultant Alfons Eiligmann International Consultant

While efforts have been made to verify the information contained in this document, the International Trade Centre (ITC) cannot accept responsibility for any errors that it may contain. The views expressed in this report can in no way be taken to reflect the official opinion of the MDG Achievement Fund, the Viet Nam Trade Promotion Agency VIETRADE, the Viet Nam handicraft exporters association VIETCRAFT and ITC. The usual disclaimers regarding responsibilities apply to this report.

Value Chain Study for Sericulture in Phu Tho, Hoa Binh, Thanh Hoa and Nghe An, Viet Nam

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PREFACE

This value chain study is prepared by the International Trade Centre (ITC) within the context of the joint programme entitled ‘Green Production and Trade to Increase Income and Employment Opportunities for the Rural Poor’. Viet Nam has achieved impressive economic progress since the doi moi (renovation) process was launched in 1986. Since 1993, real GDP growth has averaged 7.5% per year and the poverty rate has been reduced from 58% in 1993 to 13% in 2008. Growth has been driven by accelerated international integration, market liberalization and job creation in the private sector. However, persistent inequalities and poverty remain, particularly in rural areas where more than 90% of the poor reside. In many areas, the income generated from farming is not sufficient for smallholder farmers to reach an income level above the national poverty line of VND 200,000 per capita/per month. Against this background, the joint programme works to increase income and employment opportunities for raw craft material growers/collectors and grassroots handicrafts and furniture producers. The collection and processing of natural raw materials from forest areas and handicraft production constitute the most important sources of additional income for rural households. In fact, it is very often the additional income generated from handicraft production or the collection of raw material that determine whether rural households can lead a life above the national poverty line. The programme targets about 4,800 poor farming and craft-producing households in four northern provinces of Viet Nam: Thanh Hoa, Nghe An, Hoa Binh and Phu Tho. These provinces were selected due to: (i) the high incidence of poverty, especially among ethnic minorities; (ii) the concentration of raw materials and local production of crafts; and (iii) the possibility to build synergies with past and ongoing development activities Within the four targeted provinces, the programme will focus on the five following value chains: (i) bamboo/rattan; (ii) sericulture and weaving; (iii) sea grass; (iv) lacquer ware; and (v) handmade paper. The programme’s approach is to develop better integrated, pro-poor, and environmentally sustainable “green” value chains, enabling poor growers, collectors and producers to improve their products and link them to more profitable markets. The complex challenges faced by the five value chains, ranging from sustainable raw material production, entrepreneurial skills development and cleaner production to market linkages and trade information deficits, can best be addressed by a joint programme which combines the core competencies of the relevant UN agencies: UNIDO, FAO, ILO, UNCTAD and ITC. The authors would like to thank Mr. Ngoc Le Ba, Vice Chairman of the national handicraft exporters association VIETCRAFT for his advice and guidance during the preparation of the report. Lastly, the authors would like to thank all sector stakeholders, including farmers, household craft producers, companies, and officials in Hoa Binh, Thanh Hoa, Nghe An and Phu Tho provinces for making their time available to the study team and openly sharing their knowledge and views. The joint programme is is funded under the Thematic Window ‘Development and the Private Sector’ of the MDG Achievement Fund. The ‘Development and the Private Sector’ Window seeks “to facilitate the achievement of the MDGs through interventions that promote the development of private sector, through enabling policy frameworks, the growth of inclusive markets and the establishment of pro-poor public-private partnerships that create and sustain decent and productive employment.” For further details on the present study, please contact Mr. Koen Oosterom, Senior Technical Adviser, at: [email protected] or [email protected].

mailto:[email protected]

mailto:[email protected]


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LIST OF ABBREVIATIONS AND ACRONYMS ASEAN Association of South-East Asian Nations CEO Chief Executive Officer DARD Department of Agriculture and Rural Development DOIT Department of Industry and Trade FAO Food and Agriculture Organization GDP Gross Domestic Product GSO General Statistic Office GTZ German Technical Cooperation HRPC Vietnam Handicraft Research and Promotion Centre ITC International Trade Centre ILO International Labour Organization JP Joint Programme MARD Ministry of Agriculture and Rural Development of Viet Nam JICA Japan International Cooperation Agency PMU Project Management Unit UN United Nations UNIDO United Nations Industrial Development Organization UNCTAD United Nations Conference on Trade and Development VC Value Chain VIETCRAFT Viet Nam Handicraft Exporters Association VISERI Viet Nam Sericulture Corporation VND Vietnamese Dong


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TABLE OF CONTENTS Page

I. INTRODUCTION ....................................................................................................................... 7

I.1 DESCRIPTION OF PROGRAMME INTERVENTION AREAS ......................................................................... 7 I.2 MAJOR SOCIO-ECONOMIC STATISTICS .............................................................................................. 8 I.3 DESCRIPTION OF DIRECT PROGRAMME BENEFICIARIES ........................................................................ 8 I.4 SCOPE AND COVERAGE OF THE STUDY .............................................................................................. 9

II. MACRO-ECONOMIC CONTEXT AND VALUE CHAIN POLICIES .................................................... 11

III. VALUE CHAIN ANALYSIS ........................................................................................................ 12

III.1 OVERVIEW ................................................................................................................................. 12 III.1.1 World Silk Industry ............................................................................................................. 12 III.1.2 Sericulture in Viet Nam ....................................................................................................... 14 III.1.3 Main Products in the Sericulture Value Chain .................................................................... 16

III.2 SERICULTURE VALUE CHAIN MAPPING............................................................................................ 18 III.2.1 VC Map ............................................................................................................................... 18 III.2.2 Description and Quantification of VC Actors ...................................................................... 19

III.3 ECONOMIC ANALYSIS OF THE VALUE CHAIN ..................................................................................... 26 III.4 CONSTRAINTS ANALYSIS ............................................................................................................... 28 III.5 SOCIO-ECONOMIC AND ENVIRONMENTAL PARAMETERS .................................................................... 30 III.6 MESO LEVEL SUPPORT INSTITUTIONS AND OTHER PROJECTS .............................................................. 31

IV. VALUE CHAIN UPGRADING STRATEGY .................................................................................... 32

IV.1 MARKET OPPORTUNITIES AND COMPETITIVE ADVANTAGE ................................................................. 32 IV.2 SWOT ANALYSIS ........................................................................................................................ 35 IV.3 VISION ...................................................................................................................................... 38 IV.4 UPGRADING SOLUTIONS ............................................................................................................... 38 IV.5 SUGGESTED FACILITATION ACTIVITIES .............................................................................................. 39

V. RECOMMENDATIONS ............................................................................................................ 45

VI. APPENDICES .......................................................................................................................... 46

Appendix 1: List of Interviewees in the Provinces .......................................................................... 46 Appendix 2: Economic Analysis: Value Addition per kg Silk Yarn Produced ....................................... 49 Appendix 3: Programme Coverage Area ...................................................................................... 51 Appendix 4: Project Areas Profiles (2009) ..................................................................................... 52 Appendix 5: Bibliography ........................................................................................................... 53 Appendix 6: Some Pictures Taken in Programme Areas .................................................................. 54


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LIST OF TABLES

Table 1: Population Size and Poverty Rate in Project Areas (2008) ........................................................... 8

Table 2: List of Targeted Districts and Communes ..................................................................................... 9

Table 3: The World Mulberry Raw Silk Production (2005-2009) ............................................................. 12

Table 4: The World's and Top Ten Importers of Silk (2005-2009) ........................................................... 13

Table 5: The World's and Top Ten Exporters of Silk Yarn (2005-2009) .................................................... 13

Table 6. Prospects for Market Diversification for Silk Exported by Vietnam (2009) ................................ 14

Table 7: Mulberry Plantation Areas and Cocoon Production in 2007 ...................................................... 14

Table 8: Sericulture VC Functions Map .................................................................................................... 19

Table 9: Sericulture VC Actors Map .......................................................................................................... 20

Table 10: Description of VC Actors in Each Province of the Project Areas .............................................. 21

Table 11: Price overview as of July 2010 .................................................................................................. 26

Table 12: Calculation of Value Addition per Kilogram of Silk Yarn Produced .......................................... 27

Table 13: Constraints Analysis in Project Areas ....................................................................................... 28

Table 14: Critical Points at Meso level Support Institutions .................................................................... 31

Table 15: List of Some Meso level Support Institutions ........................................................................... 31

Table 16: List of Potential Cocoon Buyers for Tinh Cuong Commune ..................................................... 32

Table 17: List of Potential Silk Yarn Buyers for Thieu Do Commune ........................................................ 33

Table 18: List of Potential Brocade Retailers of Brocade Products in Hanoi............................................ 35

Table 19: SWOT Analysis for Each Province ............................................................................................. 36

Table 20: Beneficiaries Targeted for Each Commune .............................................................................. 38

Table 21: Upgrading Solutions and Facilitation Activities ........................................................................ 40

Table 22: Land Required for Mulberry Plantation in each Commune ..................................................... 44


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Programme Areas

I. INTRODUCTION

I.1 Description of Programme Intervention Areas

The programme is implemented in four provinces in the North of Viet Nam: Thanh Hoa, Nghe An, Hoa

Binh and Phu Tho (see Appendix 3 for programme coverage map). These provinces were selected due

to: (i) the high incidence of poverty, especially among ethnic minorities; (ii) the concentration of raw

materials and local production of crafts; and (iii) the possibility to build synergies with past and ongoing

development activities.

Phu Tho is a mountainous midland province situated at

80 km northwestern of Hanoi, and encompassed by Vinh

Phuc and Hanoi to the East, Son La province to the West,

Hoa Binh province to the South and Yen Bai/Tuyen Quang

provinces to the North. The province has fairly

advantageous transport conditions: with the pass-by of

three great rivers (Hong river, Lo river and Da river); the

Hanoi-Lao Cai-Con Minh railway route; inland travel on

National highway No. 2 and the Asian highway which

bridges China to Viet Nam and other ASEAN member

countries.

Nghe An is located at the heart of the Northern Central

region, on the North-South transport route and Asian

East-West corridor. It is 300 km south of Hanoi. Following

the Road No. 8, it is 80 km from the Viet Nam-Laos border

and about 300 km from the Laos-Thai border. Nghe An is

integrated into all types of national transport: inland

road, railway, waterway, airway and seaway. Having 419

km length of land border and 82 km coast, the province

also has the Vinh airport, Cua Lo port and the entire

infrastructure under improvement, extension and new

construction.

Hoa Binh war re-established in October 1991, sharing border with Hanoi and being the cross-section

amongst Northwestern provinces, the Red river delta and the economic hub triangle Hanoi-Hai Phong-

Quang Ninh with a well-developed road network (National road No. 6, Ho Chi Minh trail, National road

12B, National road 15) and river transport (on Da and Boi rivers).

Thanh Hoa is the northernmost province of the Central region, at 150 km south of Hanoi, 1,560 km

north of Ho Chi Minh City. It shares borders with Son La, Hoa Binh, Ninh Binh to the North, Nghe An

province to the South, Hua Phan of Lao PDR to the West and North gulf to the East. The province has

good access to the transport network through the North-South railway, Ho Chi Minh trail, national

roads 1A, 10, 45, 47, and 217 and the Nghi Son deep port and river system, which eases the North-

South waterway transport within the province as well as to the Central region and international


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transport. Currently, Thanh Hoa has built the Sao Vang airport and is planning to build another

international airport nearby the sea to serve the Nghi Son economic zone and tourism demand.

I.2 Major Socio-economic Statistics

According to the most recent figures presented in the Table 1, the average GDP per capita in 2008 in all

four provinces was below the national level of 17,180,000 VND. Of the four provinces, Phu Tho has the

lowest GDP per capita. The statistics also show that the percentage of poor households in the four

provinces is higher than the country’s average level of 13% in 2008 (based on the national standard for

poor households regulated by the Decision 179/2005/QD-TTg dated 08/07/2005, in which households

living in rural areas with equal or less than 200,000 VND/per capita/month are considered to be poor

households).

Table 1: Population Size and Poverty Rate in Project Areas (2008)1

Provinces Population Number of

households

GDP per capita

(VND)

% of poor

households

Phu Tho Province 1,364,522 274,908 8,842,097 18.41

Hoa Binh Province 788,274 174,198 13,090,660 19.34

Thanh Hoa Province 3,405,000 746,428 10,295,558 21.15

Nghe An Province 2,919,214 758,333 10,490,458 17.54

Source: The 2008 statistical year books of 4 provinces

I.3 Description of Direct Programme Beneficiaries

In collaboration with provincial authorities, 4,822 poor farming and crafts producing households in the

four targeted provinces have been selected as direct programme beneficiaries. Criteria for the

selection of direct beneficiaries include poverty, current activity in value chain, women and ethnic

minority.

The list of the 25 targeted communes is shown in table 2. These communes belong to 14 different

districts in the four provinces. The programme will implement promotion activities in 5 value chains in

these 25 communes, with the following grouping of communes: 12 communes in the bamboo and

rattan value chain, 8 communes in the sericulture value chain, 2 communes in the sea grass value

chain, 2 communes in the lacquer value chain and one commune in the hand-made paper value chain.

Of the 25 targeted communes, there are 15 communes undertaking the Phase II of the national

Programme 135 II.

1 See Appendix 3 for further information on each commune in project areas


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Table 2: List of Targeted Districts and Communes

Province # District Commune Under me 135 Value chain Number of

beneficiaries

NG

HE

AN

PR

OV

INC

E

1 Quy Chau

1 Chau Tien Yes Sericulture 110

2 Chau Hanh Yes Sericulture 60

3 Chau Thang Yes Bamboo/Rattan 150

2 Nghia Dan 4 Nghia Hoi Yes Bamboo/Rattan 100

3 Quynh Luu 5 Quynh Trang No Bamboo/Rattan 80

6 Quynh Thach No Bamboo/Rattan 180

4 Dien Chau 7 Dien Van Yes Bamboo/Rattan 150

8 Dien Kim No Sericulture 174

5 Yen Thanh 9 Kim Thanh Yes Bamboo/Rattan 50

10 Lang Thanh No Bamboo/Rattan 120

THA

NH

HO

A

6 Nhu Thanh 11 Hai Long No Bamboo/Rattan 311

7 Nong Cong 12 Thang Binh No Bamboo/Rattan 200

13 Tan Tho No Bamboo/Rattan 199

8 Nga Son 14 Nga Tan Yes Sea grass 431

15 Nga Thai Yes Sea grass 260

9 Thieu Hoa 16 Thieu Do No Sericulture 193

HO

A B

INH

10 Luong Son 17 Lien Son Yes Bamboo/Rattan 604

18 Hop Hoa Yes Handmade paper 250

11 Tan Lac 19 Tan Lac No Sericulture 50

12 Mai Chau 20 Na Phon No Sericulture 100

21 Pa Co Yes Sericulture 50

PH

U T

HO

13 Tam Nong 22 Tho Van Yes Lacquer ware 180

23 Di Nau Yes Lacquer ware 120

14 Cam Khe 24 Tinh Cuong Yes Sericulture 200

25 Yen Tap Yes Bamboo/Rattan 500

TOTAL 4,822

It is worthwhile noting that 41% of the selected direct beneficiaries are considered as poor, in accordance with the official national poverty line of 200,000 VND/per capita/month. As this percentage is two times higher than the percentage of poor households in the 4 provinces (see table 1), it can be concluded that the programme is indeed pro-poor. In addition, 1,432 beneficiaries from ethnic minorities have been included in the list of beneficiaries, representing Thai, Muong and H’Mong. Handicraft production also strengthens the economic position of women, who are involved in many stages of handicraft production in the five different value chains.

I.4 Scope and Coverage of the Study

Contributing towards the realization of the JP Outcome 1: “Improved understanding of the handicrafts

and small furniture value chains in four provinces” five value chain studies are prepared, one for each

value chain identified for the programme: (i) bamboo/rattan; (ii) sericulture and weaving; (iii) sea grass;

(iv) lacquer ware; and (v) handmade paper.


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The present study covers the sericulture and weaving value chain and includes:

A presentation of key macro-economic framework data;

An analysis of the main value chain actors from raw material supply to the international market

and support organizations at meso level;

An assessment of the strengths and weaknesses of the different actors and income generation

along the chain;

An identification of competitive advantages and market opportunities;

The development of an intervention strategy for value chain upgrading and value-addition,

with the view to enhance income generation along the respective value chains.


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II. MACRO-ECONOMIC CONTEXT AND VALUE CHAIN POLICIES

Vietnamese have always produced substantial hand-made products. It is both cultural and a matter of

necessity in what has been until recently a very poor but also very art and culture-oriented society.

Promoting a rapidly growing handicraft industry in Viet Nam is part of the Vietnamese government’s

plan to foster economic development across all regions of the country, reducing unemployment

especially in the rural areas and raising exports. With more than 1,400 ancient handicraft villages2, Viet

Nam is gradually revealing both its potential and the wide range of products, which can be supplied to

international markets.

While most handicraft villages cluster around the Red River and Mekong Deltas in the North and the

South, Central Viet Nam is also blessed with abundant natural materials and thus has been targeted as

a major supply center. The handicraft industry has created millions of jobs for local workers, elevating

their living standards while helping to preserve ancient traditions. Handicraft villages also bring about

benefits as tourism destinations, attracting an increasing numbers of tourists every year.

Viet Nam has been amazing the international markets with both the variety of its handicraft items and

the skills of its handicraft producers. Valued craft items from Viet Nam include wooden furniture,

porcelain, lacquer ware, silk, embroidery, candles, jewelry, artificial flowers and glass products.

Although the export turnover of the handicraft industry does not compare to other industries such as

oil & gas or textile, handicrafts have an advantage of low overall production costs. While in 2000, the

handicraft export turnover was only about $274 million,3 already reaching $565 million in 2005, it

increased to as much as $820 million in 2007 resp. to some $880 million in 2009. According to the

Ministry of Trade and Industry, the handicraft export turnover is expected to reach $1.5 billion in

2010.4

Despite the favorable conditions to be found both in view of the Vietnamese government and the

export markets, the handicraft industry in Viet Nam is still facing fierce competition from other

countries like China and Thailand. In addition, foreign customers comment regularly on the limited

production capacity and the lack of information on market demand which they found Vietnamese

handicraft producers to have, which leads to Vietnamese craftsmen producing crafts of insufficient and

outdated design, with them being able to produce medium sized quantities only.

2 Runckel & Associates, Inc. Business in Asia.com, retrieved on July 31, 2010

3 According to Vietcraft: http://vietcraft.org.vn/tin-tuc/tinh-hinh-xuat-khau-cua-hang-thu-cong-my-nghe-viet-nam

4 According to various newspapers sources (www.vneconomy.vn, www.kinhtenongthon.com.vn, etc.)

http://vietcraft.org.vn/tin-tuc/tinh-hinh-xuat-khau-cua-hang-thu-cong-my-nghe-viet-nam

http://www.vneconomy.vn/

http://www.kinhtenongthon.com.vn/


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III. VALUE CHAIN ANALYSIS

III.1 Overview III.1.1 World Silk Industry

Silk is produced in more than 20 countries. While the major producers are in Asia, sericulture industries

have been established in Brazil, Bulgaria, Egypt and Madagascar. Sericulture is labor-intensive. This is

reflected in the fact that about 1 million workers are employed in the silk sector in China. Sericulture

provides income for 700,000 households in India and for 20,000 weaving families in Thailand.

The annual production of silk in the world is estimated at average 100,000 tons (see table below), of

which China and India account for more than 96% of the total figure. Brazil, Thailand and Uzbekistan

are the other leading sericulture countries in the world. However, total production of these countries

represents for about 2% of the world figure. Viet Nam, with 0.53% of production share in 2009, saw its

production decrease from 750 tons in 2007 to 550 tons in 2009. Nonetheless, the industry has survived

the stiff competition with the man-made fibers.

Table 3: The World Mulberry Raw Silk Production (2005-2009)

Unit: tons

Country 2005 2006 2007 2008 2009 (P) % Share

China 87,800 93,100 78,000 70,980 84,000 81.07

India 15,445 1,6525 16,245 15,610 16,315 15.75

Japan 150 150 105 95 90 0.09

Brazil 1,285 1,387 1,220 1,177 811 0.78

Korea Republic 150 150 150 135 135 0.13

Uzbekistan 950 950 950 865 750 0.72

Thailand 1,420 1,080 760 1,100 665 0.64

Viet Nam 750 750 750 680 550 0.53

Others 1,500 1000 500 350 304 0.29

TOTAL 109,450 115,092 98,680 90,992 103,620 100.00

Source: http://indiansilk.kar.nic.in/rti/CO/WorldRawSilkProduction.pdf

Whilst being a big silk producer in the world, India is also the biggest importer of raw silk (2009)

followed by Italy, Hong Kong, USA and Japan according to ITC statistics (see Table 4 below). The total

value of silk imported in 2009 decreased about 24% in comparison with the previous year. While

almost all importers reduced the value of their imports, India remained the top buyer with a slight

increase of 5%. Most of the top importers of raw silk have modern processing techniques. Viet Nam

ranks number 7 in the list with a total import value of $101 million in 2009. This shows that, even being

among top producers of silk (table 3), Viet Nam still has to import silk for domestic consumption. In

comparison with ITC's export figures in table 5, Viet Nam ranks number 5 in silk yarn export but the

value was just above $22 million, equivalent to about 20% of the import value. The figures might imply

a great opportunity for an expansion of the sericulture subsector on the domestic market.

http://indiansilk.kar.nic.in/rti/CO/WorldRawSilkProduction.pdf


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Table 4: The World's and Top Ten Importers of Silk (2005-2009)

Unit: US dollars thousand

# Importers 2005 2006 2007 2008 2009

TOTAL (the World) 2,805,552 2,962,949 2,986,931 3,090,289 2,355,090

1 India 413,640 351,484 395,093 373,399 393,438

2 Italy 312,378 389,496 408,494 431,506 255,776

3 Hong Kong (SARC) 227,675 247,488 276,722 261,091 195,108

4 USA 316,232 305,414 294,891 254,920 149,068

5 Japan 200,486 224,289 157,227 165,756 119,568

6 China 136,173 127,025 110,842 116,649 109,025

7 Viet Nam 53,339 76,469 58,136 40,007 101,183

8 Republic of Korea 164,366 183,157 158,737 143,557 100,572

9 Germany 107,110 115,017 110,214 109,774 90,162

10 France 107,911 112,943 119,589 131,873 87,938

Source: Intracen Trade Statistics www.trademap.org/tradestat/Country_SelProduct_TS.aspx

Table 5: The World's and Top Ten Exporters of Silk Yarn (2005-2009)

# Exporters 2005 2006 2007 2008 2009

TOTAL (the World) 259,122 309,593 270,679 286,445 271,161

1 China 98,307 108,899 91,085 105,943 136,201

2 Romania 11,804 31,147 40,223 47,559 31,546

3 Brazil 31,025 40,283 33,604 31,806 25,823

4 Italy 24,422 27,631 30,428 25,359 23,822

5 Viet Nam 34,324 33,884 31,034 31,241 22,293

6 Germany 10,731 17,837 13,797 15,365 10,536

7 USA 800 6,266 6,694 6,099 4,837

8 Hong Kong (SARC) 3,181 3,680 5,507 4,534 3,942

9 Tunisia 2,154 608 2,920 3,318 1,915

10 Japan 2,190 2,421 1,765 1,502 1,892

Unit: US dollars thousand

Source: Intracen Trade Statistics http://www.intracen.org/tradstat/sitc3-3d/indexpi.htm

http://www.trademap.org/tradestat/Country_SelProduct_TS.aspx

http://www.intracen.org/tradstat/sitc3-3d/indexpi.htm


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Table 6: Prospects for Market Diversification for Silk Exported by Vietnam (2009)

III.1.2 Sericulture in Viet Nam

Sericulture and silk production have a long tradition in Viet Nam. Since 1996, the state-owned Viet

Nam Sericulture Corporation (VISERI) has pursued a very ambitious plan to build a strong export-

oriented silk industry in the country. To this end, VISERI has set up 25 affiliated units composed of 11

silk reeling system which include four units equipped with automatic machines, two silk weaving plants

and around 10 sericulture centers for silk and seed production. VISERI also had the plan to increase

mulberry areas up to 40,000 ha by the year 2010 with increased capacity to produce 3,000 tons of raw

silk, equivalent to 5 million meters of fabric in a year.5 However, VISERI faced a big failure with ten of

the affiliated companies having to file for bankruptcy.6 A crisis of the subsector still exists. Most of the

activities within the subsector are controlled by individual traders or small private enterprises.

In 2007, about 11,000 tons of cocoons were produced nation-wide. In comparison with the year 2000,

cocoon production decreased by about 25%. This decline is due to different reasons, but it is mainly an

effect of the drop in cocoon/silk price, which prompted household farmers to turn to other crops like

corn, cassava, etc.

Table 7: Mulberry Plantation Areas and Cocoon Production in 2007

# Local Planted Areas

(1,000 ha)

Areas for

mulberry leaf

(1,000 ha)

Mulberry

productivity

(100kg/ha)

Mulberry leaf

production

(1,000 tons)

Cocoon

Production7

(tons)

Country wide 16.7 15.9 126.2 200.7 11,055

5 Mahesh Nanavaty & Rajat K. Datta, "Global Silk Industry: A Complete Source Book", 2007, pp. 56-57

6 http://vietbao.vn/An-ninh-Phap-luat/Con-duong-sup-do-cua-Tong-Cong-ty-Dau-tam-to/70061446/218/

7 Cocoon production is calculated on basis of mulberry leaves consumed to produce a cocoon unit


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I Red River Delta 4.2 4.2 189.9 79.8 4,034

1 Ha Noi 0.6 0.6 170 10.2 523

2 Vinh Phuc 0.5 0.5 286 14.3 715

3 Bac Ninh 0.1 0.1 160 1.6 80

4 Hai Duong 0.7 0.7 195 13.7 683

5 Hung Yen 0.4 0.4 227.5 9.1 455

6 Ha Nam 0.3 0.3 186.7 5.6 280

7 Nam Dinh 0.7 0.7 178.6 12.5 625

8 Thai Binh 0.9 0.9 142.2 12.8 674

II Northern East 0.8 0.8 180.0 14.4 720

9 Yen Bai 0.1 0.1 110 1.1 55

10 Thai Nguyen 0.3 0.3 196.6 5.9 295

11 Phu Tho 0.1 0.1 60 0.6 30

12 Bac Giang 0.3 0.3 226.7 6.8 340

III Northern West 0.4 0.4 67.5 2.7 135

13 Son La 0.3 0.3 60 1.8 90

14 Hoa Binh 0.1 0.1 90 0.9 45

IV Norther Central 3.1 2.5 84.8 21.2 1,060

15 Thanh Hoa 1.1 1.1 58.2 6.4 320

16 Nghe An 1.8 1.2 114.2 13.7 685

17 Quang Binh 0.2 0.2 55 1.1 55

V Southern Central 1.1 1 148.0 14.8 740

18 Quang Nam 0.6 0.5 120 6.0 300

19 Quang Ngai 0.1 0.1 180 1.8 90

20 Binh Dinh 0.4 0.4 175 7.0 350

VI Highland 6.4 6.4 94.8 60.7 4,008

21 Dak Lak 0.1 0.1 62.5 0.6 35

22 Dak Nong 0.4 0.4 100.7 4.0 237

23 Lam Dong 5.9 5.9 95 56.1 3,737

VII Eastern South 0.7 0.6 119.2 7.15 358

24 Binh Duong 0.3 0.2 127.5 2.6 128

25 Dong Nai 0.4 0.4 115.0 4.6 230

Source: Handicraft Research and Promotion Center (HRPC), Report on Raw Materials for Craft Villages

With regard to the mulberry leaf cultivation productivity, all four provinces in the project area have a

much lower productivity level than the nation-wide average (162.2 tons per ha). Phu Tho and Thanh

Hoa reach half of the country level, at 6 tons and 5.8 tons per ha respectively (see ranks 11 and 15 in

Table 6, crossed with column "leaf productivity", which is measured by 100 kg per ha). Hoa Binh is a

little bit more productive with 9 tons per ha (rank 14) but ranks far below average level (just 71.5%).

Nghe An is the most productive among four provinces with 11.42 tons per ha (rank 16) but still below

expectations. This is a critical issue for the development of sericulture in the targeted areas, which

suggests that a strategy to increase the productivity of mulberry leaf cultivation must be devised.


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White cocoons

Yellow cocoons

In 2010, the total land area for mulberry plantation declined to less than 15,000 ha, compared to still

nearly 25,000 ha in 2005. The objective set by the Ministry of Agriculture and Rural Development of

Viet Nam (MARD) is to stabilize the area used for mulberry cultivation at around 16,000 has by 2020.8

III.1.3 Main Products in the Sericulture Value Chain

Mulberry leaves

Mulberry leaf is the main input for the rearing of silk worms.

Mulberry trees have a lifecycle of 10-15 years. Leaves can be

harvested from six months after plantation, and one ha of land

can produce 20-25 tons of leaves annually. Each year, mulberry

leaves can be harvested in 6-8 cycles. However, there is a

serious lack of proper planning for mulberry cultivation. For the

last ten years, the low quality of mulberry leaves and silkworm

eggs still remain a big issue for the development of sericulture

in Viet Nam. Viet Nam is still passive in developing basic inputs

for the subsector. Currently, around 90% of areas are using old

mulberry saplings with low productivity (10-15 tons/ha).

Silkworm Eggs

The first stage of silk production is the laying of silkworm eggs, in a

controlled environment such as an aluminum box, which are then

examined to ensure they are free from disease. The female deposits

300 to 400 eggs at a time. In an area the size of a PC monitor screen

(14”), 100 moths would deposit some 40,000 eggs, each about the

size of a pinhead. The tiny eggs of the silkworm moth are incubated

(about 10 days) until they hatch into larvae (caterpillars).

Households in the project areas normally buy silkworm eggs from Thai Binh province, mostly through

individual traders who import from China. In general, one ha of mulberry trees requires about 60 boxes

of silkworm eggs.

It is interesting to note that white and yellow species have different

resistance ability. The yellow species can resist hot weather conditions (like

in Thanh Hoa and Nghe An), while the white one can be used in the cooler

areas of the northern provinces.

Cocoon

Once hatched, the larvae are placed under a layer of gauze and fed huge

amounts of chopped mulberry leaves. Larvae fed on mulberry leaves

produce the very finest silk. The larvae will eat 50,000 times its initial weight. The silkworms are raised

8 HRPC (2009), Report on Raw Materials for Craft Villages,

Mulberry tree field in Nghe An

Mulberry leaves and larvae


P a g e | 17

for about 20 days to be ready to spin a cocoon. The silkworm attaches itself to a compartmented

frame, twig, tree or shrub in a rearing house to spin a silk cocoon over a period of 3 to 8 days. The

silkworm rotates its body in a figure-8 movement some 300,000 times, constructing a cocoon and

producing about a kilometer of silk filament. The cocoon is the key input for silk yarn production and

the rearers might continue to reel the cocoon into silk yarn or just simply sell the cocoon to reelers.

However, the cocoon must be reeled within 5-6 days, otherwise the larvae inside would turn into live

moth and the moth can destroy the cocoon. White cocoons are higher valued in comparison with the

yellow cocoons.

Raw silk

To produce raw silk, the cocoon is treated with hot air, steam or boiling

water. The silk is then unbound from the cocoon by softening the sericin

and then delicately and carefully unwinding, or “reeling” the filaments

from 4-8 cocoons at once, sometimes with a slight twist to create a

single strand. To produce one kilogram of raw silk, it requires normally

6.6-7 kg of cocoon. The reeling process can be done manually with very

basic reeling machines or with semi-automatic (industrial) machines

(with much higher productivity). Reelers can also do twisting/throwing,

but it requires a small investment and techniques/skills to do it.

However, there are always buyers ready to collect raw silk, so many

reelers just produce raw silk and sell it as their final product.

Dead larvae

Once the cocoon is boiled in hot water and raw silk is reeled, the dead larvae inside the cocoon can be

served as food and are even considered as very clean food. Each kilogram of dead larvae is priced at

40,000-50,000 VND ($2-2.5).

Manual reeling in Thanh Hoa

White and yellow raw silks Semi-automatic reeling machine

Dead larvae and classification Larvae being served as food


P a g e | 18

Weaving and brocade products

Silk yarn

Raw silk is silk that still contains sericin. Once this is washed out (in soap and boiling water), the silk

yarn is left soft, lustrous and up to 30% lighter. The silk yarn is twisted into a strand sufficiently strong

for weaving or knitting. This process of creating the silk yarn is called “throwing,” and prevents the

thread from splitting into its constituent fibers.

Broken or waste filaments and damaged cocoons are retained, treated

to remove the sericin, and combed. This is then processed into yarn,

marketed as spun silk, which is inferior in character to the reeled product

and much cheaper.

Silk fabric and final brocade products

Silk yarn is consumed by weavers to produce final products such as

scarves, hand bags, silk clothes, ties, tablecloths, silk photo frames, etc.

There are also quite many brocade villages in Viet Nam, especially in the

areas of minority ethnic people. As a cultural practice, ethnic

communities in Viet Nam use colorful clothes, scarves, bags etc. made by themselves from silk and

other yarn. Within the JP project areas, Chau Tien and Chau Hanh (Quy Chau, Nghe An), Na Phon and

Pa Co (Mai Chau, Hoa Binh), Man Duc commune (Tan Lac, Hoa Binh) and Thieu Do (Thieu Hoa, Thanh

Hoa) are places having brocade weaving villages.

III.2 Sericulture Value Chain Mapping

III.2.1 VC Map

As mentioned in the previous parts, there are different products made from silk. Table 8 below

illustrates the functions and links between each process in the value chain. Since the VC analysis is

Twisted silks


P a g e | 19

made for four different locations, a detailed description and quantification of actors involved in the

chain in each JP project location will be explained in section 3.2.2.

Table 8: Sericulture VC Functions Map

III.2.2 Description and Quantification of VC Actors

The VC map shown in Table 8 above explains the functions of each process in the value chain. Table 9

below shows the actors performing the different functions and related to different markets. There are

three main buyers of sericulture products: foreign buyers (mostly from China, Laos, Thailand and

Cambodia) who import silk yarn from local traders (mostly in Nam Cao-Thai Binh, Bac Ninh and Nam

Dinh); foreign tourists in Viet Nam who are buyers of brocade products in tourist areas and finally, local

buyers, mostly minority ethnic people.

PRODUCTION

COCOON PRODUCING

- Feeding silkworm for about 20 days

- Spinning the cocoon in about 5 days

- Difference between white/yellow cocoons

INPUTS SUPPLY

- Mulberry leaves

- Silkworm eggs

- Fertilizers - Cultivation &

harvesting tools (e.g. bamboo net layers)

REELING

- Cocoon is treated with boiling water;

- Raw silk unbound by softening sericin then unwinding (reeling)

- Dead larvae are sold for food

TWISTING/ THROWING

- Raw silk is twisted into a strand (silk yarn) sufficiently strong for weaving or knitting

WEAVING

- Silk fabric is

created by interlacing the warp yarns (lengthwise) and the weft yarns.

- Weaving is carried out on looms

INPUT

PROVISION

DYEING, PRINTING & FINISHING

- Yarn-dyed or piece-dyed;.

- Printing; - Finishing

COCOON SELLING

- Local collectors who buy cocoons then resell to reelers

SELLING RAW SILK

- Selling to buyers from other provinces

SELLING DEAD LARVAE

- Selling on market for

food

SILK YARN SELLING

- Selling to weavers

- Exporting to China, Thailand, Cambodia and Laos via exporters

BROCADE TRADING

- Domestically consumed by ethnic minorities;

- Selling to foreigners at tourist spots

DISTRIBUTION


P a g e | 20

Table 9: Sericulture VC Actors Map

Grey shade: Actors partly or completely in target communes.

The JP programme areas are located in four different provinces, with the VC actors involved all having

their own characteristics. Table 10 below explains the role of VC actors in each region in relation with

the different processes in the value chain.

INPUTS SUPPLY

MULBERRY PLANTING

& SILKWORM RAISING

COCOON COLLECTION

REELING

TWISTING/THOWING

SILK YARN TRADE

WEAVING, DYEING &

FINISHING

RETAIL

EXPORT

Individual traders of silkworm

eggs, fertilizer suppliers

Households/farmers

Local individual traders/

collectors

Households or enterprises

Local traders/collectors

Exporters/Traders

Retailers/Agents

Households or

enterprisesnterprises

Brocade weaving villages

Retailers/Shops in

tourist areas

Foreign buyers Foreign tourists Local buyers


P a g e | 21

Table 10: Description of VC Actors in Each Province of the Project Areas

Loca-tion

Inputs Supply Cocoon production Reeling/Twisting Weaving/Finishing Distributions

Ph

u T

ho

Tin

h C

uo

ng

com

mu

ne

- Purchasing silkworm eggs from other provinces (Thai Binh/Hanoi);

- Used to have 350 households planting; mulberry trees and raising silkworms;

- Using old mulberry varieties (local variety).

- As of 2010: no more households in the sericulture sector.

- Only one or two households used to buy cocoons and did silk reeling;

- 2010: no more reelers.

- No weavers. - Cocoons were collected by traders from other places;

- Silk yarn was collected by traders from other places.

Ho

a B

inh

Na

Ph

on

& P

a C

o c

om

mu

ne

s

- Very few silk yarn to serve as raw material for brocade production;

- Instead, mostly nylon, wool and cotton yarn are used and bought from Son La province or in bazaars in Mai Chau District;

- Mulbery: Local variety;

- Only hemp material to be used in Paco. Hemp is presently planted by Hmong people.

- Very few households used to plant mulberry trees and raise silkworms;

- Now only Ms. Lo Thi Uon does the rearing with just around 0.2 ha of mulberry plantation.

- Used to have 700 weaving looms;

- Now: about 30 households in Na Phon are weavers using mostly non-silk raw material;

- Final products: scarves, bags, tablecloths etc.;

Pa Co: Very nice embroidery pieces and some handbags, table runners etc.

- Households in the areas are just subcontractors to other traders or souvenir shops in adjacent communes, i.e. Chieng Chau;

- Pa Co: Working for

traders in Hanoi for the export market.


P a g e | 22

Than

h H

oa

Thie

u D

o c

om

mu

ne

- Duc Thanh Pte. Enterprise and Mr. Le Viet Hanh's household provide silkworm eggs for other households in the area;

- Mulberry: H11 and H13 – these varieties become old.

- 300 households planting mulberry trees (with total 40 ha of land), silkworm raising and spinning cocoons;

- They sell cocoons to 40 reelers in the same commune Thieu Do.

- 40 households reeling and twisting, using both manual and semi-mechanic methods, then selling to Duc Thanh Enterprise or Mr. Hanh.

- There are almost 300 manual weaving looms available, but all out of operation;

- Few households use semi-automatic looms to produce silk fabric. Mr. Hanh is the biggest one in the commune.

- Duc Thanh Pte. Enterprise and Mr. Hanh's household collect all cocoons, reel, twist and sell silk yarn to Nam Cao (Thai Binh) and Nam Dinh traders;

- Mr. Le Viet Hanh sells directly silk fabric to traders in Nghe An province.

Ngh

e A

n

Die

n K

im c

om

mu

ne

- Two traders (household) are Mr. Truong & Mr. Hai provide silkworm eggs for other households in the area. They order mainly from two suppliers in Thai Binh: Mrs. Lien & Mr. Son;

- Mulberry variety: Local and H11.

- 200 households planting mulberry (with a total of 45 ha of land) and silkworm raising;

- They sell cocoons to 30 reelers in the same commune Dien Kim.

- 30 households reeling then selling to 2 traders: Mr. Truong or Mr. Hai;

- Final product: Raw silk;

- Reeling is done manually;

- Investment in a semi-automatic reeling machine has been made, but the machine is out of operation due to lack of cocoons.

- No weavers. - Mr. Truong and Mr. Hai sell raw silk to traders in Bac Ninh and Thai Binh provinces. A large quantity of silk yarn is being exported to Laos through local traders.


P a g e | 23

Ch

au T

ien

co

mm

un

e

- About 30% of raw material (silk yarn) sold to weavers are made by 30 households in Chau Tien;

- 70% of raw material (mostly nylon and cotton yarns) are purchased from Trieu Khuc commune, Thanh Tri, Ha Noi or directly in local bazaars;

- Silkworm eggs are mainly provided by Mai Linh Silk company (Ha Dong, Ha Noi) through individual traders;

- Mulberry variety: Local and Sa Nhi Luan (China);

- 50 households are planting mulberry trees, 2.5 ha in total.

- Currently 30 households are planting mulberry trees, raise silkworms , do reeling and producing silk yarn to provide to Hoa Tien Brocade Village.

- The same 30 households mentioned do the reeling & twisting;

- They sell silk yarn to Hoa Tien Brocade Village;

- Reeling and twisting is done manually;

- Investment in a semi-automatic reeling machine has been made by the Belgium Technical Cooperation, but the machine is out of operation due to lack of cocoons and because the machine is too complicated for the local people.

- Hoa Tien Brocade Village: about 245 households participating in the village;

- Ms. Bich, Ms. Nga and Mrs. Quyen are the two leaders of the village who take care of raw materials and distribution of final products;

- Final products: traditional Pieu scarves, long scarves, silk photo frames etc.;

- Retail sale in cultural festivals;

- Through agents in Hanoi but they dealt with individual traders;

- Supply to Craftlink for export.


P a g e | 24

Ch

au H

anh

co

mm

un

e

- Very few silkworm eggs are bought by 4 households only;

- The 4 mentioned households sell silk yarn to local weavers;

- Most materials for brocade production are nylon or cotton yarns which are provided by individual traders or directly bought in bazaars;

- 0.2 ha of mulberry, local variety.

- Only 4 households are currently planting mulberry trees (with 0.2 ha of land), do silkworm raising and spinning cocoons.

- The same 4 households mentioned do the reeling & twisting;

- They sell silk yarn to Ms. Lang Thi Hoa and other weavers in Chau Hanh;

- Reeling and twisting are done manually.

- There are about 30 households currently doing brocade weaving in Chau Hanh;

- Final products: traditional Pieu scarves, long scarves.

- Ms. Hoa goes directly to Hanoi and sells products in tourist areas like Hoan Kiem Lake, Hang Bac str., Hang Ngang/Hang Dao, etc.

Tinh Cuong commune, Phu Tho Province

Since 1994, local authorities in Phu Tho province have placed a strong policy emphasis on developing

sericulture in Tinh Cuong commune. At peak, there were 350 households participating in sericulture

with 80 ha of land for mulberry plantation. However, households just produced cocoons and sold the

cocoons to traders or collectors from other provinces (like Bac Ninh, Nam Dinh, Thai Binh). Part of the

cocoons were sold to few households doing the reeling (e.g. Ms. Nguyen Thi Thuy, Mr. Tran Van Long,

Mr. Nguyen Van Hai). While the upswing in the subsector in Tinh Cuong had lasted some 10 years,

from 2004 onwards, the number of households in the subsector has decreased radically. Variation in

the cocoon price (price drop), silkworm disease, low productivity in mulberry cultivation, difficulties in

market access etc. were the major reasons for the downturn. Now in 2010, there is no more household

left to maintain the cocoon production. However, as cocoon prices have again been rising in 2010 (VND

60,000/kg versus half of it few years ago), households and local authoritties of the region show strong

commitment to revive the subsector.

Na Phon and Pa Co communes, Hoa Binh Province

These are two mountainous areas of Mai Chau district with 808 households (368 in Na Phon and 438 in

Pa Co). The geographic location of these two communes is not favourable for mulberry plantation, and

currently there is only one household in Na Phon (Ms. Lo Thi Uon) planting mulberry, raising silkworm

and producing silk yarns. The main economic activity undertaken in these two communes is brocade

weaving. Peak season was the period 2004-2008 where there were 700 looms working in Na Phon

alone (2 looms per household on average). They produced brocade products such as clothes, bags,

scarves, tablecloths etc. on behalf of traders from other places. From 2008, orders decreased and the


P a g e | 25

number of weaving households declined strongly. As of 2010, there are about 30 households with 40

looms working in Na Phon. Final products made by these two communes are purchased by traders or

consumed locally. For Pa Co, people are mostly producing hemp handicrafts without using silk as

inputs.

Thieu Do commune, Thanh Hoa Province

Sericulture plays an important role for Thieu Do as it contributes 15% of the GDP of the commune.9

Currently there are about 300 households in the commune participating in cocoon production on 40 ha

of mulberry plantation. There are 40 households (including one private enterprise, i.e. Duc Thanh) who

produce silk yarn and some of them also do weaving to produce silk fabric (led by Mr. Le Viet Hanh

household). In theory, 40 ha of mulberry can produce 360 tons of cocoon annually (1 ha x 60 egg boxes

x 15 kg cocoon x 10 cycles per year) and can make 55.4 tons of silk for the whole commune. However,

as productivity remains low, total cocoon production of the commune is about 228 tons (creating 30

tons of silk yarn). A big part of this production (both cocoon and silk yarn) are collected by Duc Thanh

Private Enterprise (owner: Mr. Hoang Viet Duc) and sold (silk yarn) to traders in Nam Cao village (Thai

Binh province) and Nam Dinh province. Part of the silk yarn is sold to local weavers, about 20

households led by Mr. Le Viet Hanh. Weavers in the commune have 1-2 looms per household and each

loom can produce 150 pieces of silk cloth (size 8 m x 0.4 m) monthly. Total production of silk cloth of

the commune is about 4,500 pieces per month, consuming about 225 kg of silk yarn (100 pieces

require 5 kg silk yarn). Thus, this group use about 2.7 tons of silk yarn per year. Silk cloths are made not

only from silk but also cotton and nylon yarns and they are sold to traders in Nghe An province.

Dien Kim commune, Nghe An Province

Quite similar to the case of Thieu Do commune, there are currently more than 200 households in Dien

Kim commune planting around 45 has of mulberry trees. There are 30 households doing the reeling

and producing raw silk yarn. However, these reelers do not twist/throw raw silk into twisted silk yarn.

They collect cocoon from other households or even from other places (like from Do Luong district,

Nghe An) and do the reeling. Raw silk is then sold to 2 local collectors, Mr. Truong and Mr. Hai. These

collectors sell raw silk to traders in Bac Ninh province. Some traders export raw silk to Laos. With 45 ha

of mulberry trees, the commune can produce around 264 tons of cocoons, equivalent to about 40 tons

raw silk per year.

Chau Tien and Chau Hanh communes, Nghe An Province

These are two communes famous in brocade weaving, and Hoa Tien village (Chau Tien) has been

recognized as brocade handicraft village according to MARD's criteria. There are currently 245

households in Chau Tien participating in brocade weaving, out of which only about 25 households are

involved in cocoon production and silk yarn reeling. These rearers/reelers supply the silk yarn

demanded by weavers in the commune(30% of their total raw material demand). About 70% of the

raw material needed is cotton or nylon yarn, which is being purchased from Trieu Khuc (Thanh Tri, Ha

Noi). In Chau Hanh, there are only four households maintaining silk yarn production with just 0.2 has of

9 Interview with Mr. Le The Ky, Deputy Chairman of the Commune People Committee


P a g e | 26

mulberry plantation. The number of weavers in Chau Hanh currently is 82 households and they

consume silk yarn from local rearers/reelers. Both communes' final products are brocade items such as

clothes, hand bags, photo frames, tablecloths or small silk gift items. All these products are collected by

few individuals in the communes, such as Ms. Sam Thi Bich and Ms. Lo Thi Nga in Chau Tien or Ms.

Lang Thi Hoa in Chau Hanh. These collectors sell the products to agents, shops in Hanoi and other

tourist areas. Sometimes, Ms. Lang Thi Hoa goes to Hanoi to sell directly to foreign tourists in Hanoi

streets such Hang Bac orHang Gai.

III.3 Economic Analysis of the Value Chain

Calculation and presentation of value addition for sericulture are based on following facts:

Prices are market-based and averaged as due to (slight) variations in prices in different

locations;

Labor costs are sometimes not included in the calculation as most households use their time

not only for sericulture but also for other farm or off-farm activities;

Productivity is different in each province, the inputs for calculation will be averaged;

Initial investment of 1 ha of mulberry is VND 20 million. Each year, there are 10 cycles of

cocoon production and these mulberry trees need to be renewed every 10 years. Thus, a

depreciation of each cycle is VND 200,000;

Each ha of mulberry plantation requires 4 tons of fertilizer and 1 ton of urea;

One silkworm eggs box can generally produce 15 kilogram of cocoons;

About 6.5-7 kg of cocoon can produce 1 kg of raw silk and 1 kg of raw silk produce 0.85 kg of

twisted silk yarn. Thus, average 7.6 kg of cocoon can make 1 kg of twisted silk;

100 kg of cocoons make 55 kg of dead larvae.

Table 11: Price overview as of July 2010

# Items Unit Unit Price

1 Silkworm egg box 50,000

2 Fertilizer kg 2,200

3 Urea kg 7,500

4 Bamboo basket cycle 500,000

5 Cocoon kg 60,000

6 Raw silk kg 340,000

7 Dead larvae kg 45,000

8 Silk yarn kg 425,000

Source: Market, updated by the authors

A detailed economic analysis is presented in Appendix 2. Table 12 illustrates the value addition for

each process in the value chain. The calculation is made on the basis of one kilogram of silk produced,

i.e. inputs to produce one kg of silk and this amount is used to make final brocade products.

To produce one kilogram of silk, it requires total cost of VND 169,935 for buying silkworm eggs,

fertilizer and raising tools. From these inputs, 7.6 kg of cocoons are produced and can be sold


P a g e | 27

at VND 458,824 (VND 60,000 per kg). Farmers can make VND 288,889 as value addition in the

reering process.

As for reelers, from the above amount of cocoons (7.6 kg, purchased at VND 458,824), they can

make 1.18 kg of raw silk that can be sold at a value of VND 400,000. In addition to that, about

4.2 kg of dead larvae can be sold for VND 189,265 as a further output of the reeling process.

Thus, reelers make a profit of VND 73,471, but the value addition (profit + labor) with regard to

silk production is VND 104,059.

As for twisters, from 1.18 kg raw silk as input (at VND 400,000), they make one kg of twisted

silk (at almost no additional cost except for labor cost). Twisted silk can be sold at VND 425,000

per kg, which leads to a VND 25,000 as value addition.

Twisted silk is used by weavers to produce final products such as scarves. From 1 kg of silk (at

VND 425,000/kg), weavers can make 20 scarves and sell at VND 85,000 each. Thus, revenue

will be VND 1,700,000 and their profit will be VND 380,238. Total value addition in this process

(profit + labor), equals to VND 608,810.

Retailers buy and resell the same 20 scarves above at VND 150,000 each at retail shops in

tourist spots and create VND 850,000 of value addition.

Table 12: Calculation of Value Addition per Kilogram of Silk Yarn Produced


P a g e | 28

III.4 Constraints analysis

The constraints faced by the subsector are assessed according to 7 categories: input supply, market

access, technology and product development, organization and management, services, financial and

infrastructure and market regulation. Table 13 below summarizes the key constraints identified in each

category in each area of the project.

Table 13: Constraints Analysis in Project Areas

Phu Tho Hoa Binh Thanh Hoa Nghe An

Tinh Cuong, Cam Khe

Na Phon & Pa Co, Mai Chau

Thieu Do, Thieu Hoa

Dien Kim, Dien Chau

Chau Tien & Chau Hanh, Quy Chau

Inp

ut

sup

ply

- Low productivity of mulberry varieties, no introduction of high productivity varieties;

- Silkworm eggs are purchased through some individuals who go to Thai Binh province.

- Cotton/nylon yarns are purchased in Yen Chau (Son La province), quite far from Mai Chau and on ad hoc basis;

- The land in these two communes is not favourable for mulberry plantation;

- Narrow area of land for mulberry planting;

- Old mulberry varieties.

- Lack of land for mulberry planting;

- Old mulberry varieties that lead to low productivity;

- Silkworm eggs imported from China: high price and low quality;

- Unstable electricity create difficulties for reeling and weaving process.


- Silkworm eggs are provided by few individual reelers without test of quality and market price;

- Silkworm diseases happen quite often.

- Difficult to buy inputs such as silkworm eggs, cotton/nylon yarns, as the location is far away from centers, with locally unfavorable traffic system.

Mar

ket

acce

ss

- No updated information on market price, both inputs (silkworm eggs) and outputs (cocoon or silk) prices are set by traders/collectors from other places;

- Outputs depend on external traders.

- Local weavers cannot find markets for their brocade products by themselves. Instead, they are dependent on other traders.

- No market information for households.

- Collection of cocoons and silk is scattered: lack of well structured organization of collecting cocoons and raw silk.

- Dependence on orders from retailers/ shops/agents in Hanoi and other tourist spots;

- Only marketing channel: trade fair or cultural festival organized by local authority.


P a g e | 29

Tech

no

logy

& p

rod

uct

dev

elo

pm

ent

- Lack of knowledge on prevention of silkworm diseases;

- No special rearing place (raising silkworm together with human living place);

- Lack of reeling techniques & machines.

- Using traditional and manual looms to do weaving;

- Lack of environmentally-friendly durable dyeing techniques;

- Limited design capability, now just use traditional texture or patterns.

- Lack of eco-friendly, durable dyeing techniques;

- Lack of appropriate reeling equipment (now only manual) to increase the recovery rate, productivity and quality of silk yarn;

- Lack of a waste management system, especially for reelers, who create odor to households nearby.

- Final products here are raw silk and silk fabric serving as intermediate products for yarn silk or brocade production: households have difficulties in twisting:; techniques/skills

- Limited reeling techniques and machines.

- Lack of product development and design capacity for brocade products.

Org

aniz

atio

n &

man

agem

ent

- No mechanism to form an enterprise or cooperative.

- Tribal grouping on basis of neighborhood relationships.

- Loose commitment between farmers/rearers and traders/ collectors. Commitments to supply cocoons are not respected when prices are going up.

- Loose commitment between farmers/ rearers and traders/ collectors. Commitments to supply cocoons are not respected when prices are going up.

- Not being organized as cooperative nor enterprise, households of handicraft villages in these communes are grouped on volunteer basis.

Serv

ice

s

- Lack of training on mulberry cultivation, silkworm raising and disease treatment;

- Lack of reeling techniques.

- Lack of training services on technical issues and business skills;

- Limited marketing services.

- Limited basic business skills and inefficient business service providers (e.g. writing business plan for Duc Thanh enterprise);

- Lack of training for farmers on mulberry cultivation and rearing skills.

- Lack of training services on technical issues (such as selection of eggs, silkworm raising, technical care in spinning cocoon, cocoon classification and grading).

- Almost no training for weavers, instead they are working by experience, thus skillfulness of weavers leads to inconsistent product quality.


P a g e | 30

Fin

anci

al

- Lack of funds to replace old mulberry varieties with new, more productive varieties;

- Difficult to get access to loans as banks require mortgage for any loan.

- N/A (currently raw materials are given by brocade traders, households just do weaving and get paid for labor work).

- Difficult to get access to loans as banks require mortgage for any loan released;

- Lack of funds to change old mulberry varieties with new, higher productivity ones.

- N/A - Lack of financial access for weaving village team leaders (e.g. Ms. Bich and Ms. Nga) as they need capital to buy raw materials for provision to weavers and for products storage.

Infr

astr

uct

ure

& m

arke

t re

gula

tio

n - Pollution from

brick production creates environmental problems (smoke), which are harmful for mulberry trees;

- Lack of precise and detailed support policies from local authorities.

- Lack of specific support policies for local farmers;

- Traffic system to Pa Co is still underdeveloped.

- Master plan for sericulture development in Thieu Hoa district is agreed upon but not implemented;

- Difficulties in getting land for local enterprise in the subsector to build a factory.

- Lack of specific support policies for local farmers.

- Long distance from the area to central areas, with less favorable transportation system.

III.5 Socio-economic and Environmental Parameters

The majority of the workforces in the sericulture sector are women, who particularly do all the labour

involved in brocade weaving. The work is done in a very traditional way. Programme beneficiaries are

not only engaged in sericulture/brocade production, but are also involved in other farm or off-farm

activities. In peak seasons for cocoon/silk/brocade, they spend more time on this activity, involving

more household members, but at the same time they are still involved in other activities such as

cultivation of rice, vegetables or livestock (pig, poultry…). In peak times for weaving, households can

also involve girl teenagers in the household production.

Regarding environmental concerns, silk waste management and drainage for reeling/twisting process

are big issues in larger silk production areas such as Thieu Do (Thanh Hoa) and Dien Kim (Nghe An). As

reelers/twisters use their house for reeling and twisting, which is generally located in the living areas of

the local population, sewage creates bad odor and influences the living environment of local

inhabitants. Currently, actors in these areas have no idea on how to handle this issue and they lack

appropriate measures to improve waste treatment.

Another issue related to the environment is the silk dyeing process. Traditionally, silk is naturally dyed

with different kinds of substances e.g. “cham leaf”, “hom leaf”, “coong kam leaf”, “hoanh dang”; bean

roots, berries, lychee cover, “canh kien”… with carbonate calcium water. Nowadays, very few people

(normally elderly persons) still know how to use these natural materials for dyeing. Instead, younger

people are now using chemical dyeing methods to make colorful silks. This way is much faster and


P a g e | 31

easier than using natural methods. Moreover, young people do not know how to mix natural

substances and to turn them into dyeing liquid.

III.6 Meso Level Support Institutions and other Projects

In general, sericulture gets very little support from meso level institutions such as local authorities,

business associations, agro-forestry institutes or trade promotion agencies as there is no specific policy

from those institutions. Developing the subsector is generally mentioned as an objective in local socio-

economical development plans, but due to lack of funding sources, very little improvement is made. In

some places within the project areas such as Mai Chau (Hoa Binh) or Quy Chau (Nghe An), inhabitants

used to obtain financial or technical support from international agencies, which helped people in the

areas to improve some aspects of their production, but some constraints still remained. The main

constraints to be found at meso level are illustrated in Table 14 below. Table 14: Critical Points at Meso level Support Institutions

Table 15: List of Some Meso Level Support Institutions

# Institutional Name Address Contacts Tel

1 Viet Hung Sericulture

Research Center

Viet Hung, Vu Thu Dist.,

Thai Binh Province

Mr. Vu Duc Ban, CEO

(0904301474)

Mr. Ngo Xuan Bai, Dty CEO

(0915038387)

036.3.722003

2 Central Sericulture

Research Center

Ngoc Thuy, Gia Lam

Dist. Hanoi City Mr. Dang Dinh Dan, CEO 04.3.8271805

3 Lam Dong Research

Center on Agro-Forestry

03 Quang Trung, Bao

Loc, Lam Dong Province

Mr. Le Quang Tu, CEO

(0918.438.566) 063.3.865117

4

Vietnam Handicraft

Research and Promotion

Center

No. 19, Lane 19, Lac

Trung Street, Hanoi,

Viet Nam

Ms. Nguyen Bao Thoa, CEO 04.3.6368 006

Inputs provider

Rearers

(cocoon)

Reelers

(raw silk)

Twisters (silk

yarn)

Weavers

(brocade) Traders Final

Consumerer

DARD, DOT, Local Authority and Technical Agencies

Lack of interventions on the input supply market (mulberry varieties, silk worm eggs…)

Land use planning for mulberry areas; Introduction of new varieties

Limited capacity in providing training and consulting in technical issues: rearing/reeling/ twisting/dyeing/weaving

Limited capacity in providing technical support for disease treatment; new mulberry varieties; silkworm eggs

Limited capacity to get access to market information, marketing skills

Lack of funding for improvement initiatives

Limited linking/ networking activities to connect actors in different areas

Viet Hung/Lam Dong/Central Sericulture Research Centers

Business Associations

Lack of support to improve quality & productivity of silk production


P a g e | 32

IV. VALUE CHAIN UPGRADING STRATEGY

IV.1 Market Opportunities and Competitive Advantage

The market opportunities that present themselves for the different products in the sericulture value

chain vary among the project areas as each province (commune) has its own competitive advantage.

Tinh Cuong (Phu Tho), Thieu Do (Thanh Hoa) and Dien Kim (Nghe An) are favourable locations for

cocoon and silk yarn production. Soil and climate conditions in these areas are suitable for mulberry

plantation and silkworm raising. Meanwhile, Na Phon & Pa Co (Hoa Binh) and Chau Tien & Chau Hanh

(Nghe An) provide advantages for the weaving of brocade products. In these areas, soil conditions are

not favorable for mulberry plantation. In addition, almost all people in these areas are ethnic

minorities (Muong ethnics in Hoa Binh and Thai ethnics in Nghe An), who are quite skillful in weaving

and brocade production (ethnic women in these areas are considered "not good" if they are not skilled

in weaving).

Tinh Cuong commune used to have 80 ha of land for mulberry cultivation with about 350 households

participating in rearing. According to the local authorities, the commune can allocate now about 30-40

ha of land to revive the subsector. Theoretically, with 30 ha of mulberry trees, Tinh Cuong could

produce 216 tons of cocoon annually (1ha x 60 egg boxes x 15kg cocoon x 8 cycles per year). As a

shortcoming, there is almost no reeling activity in the commune (before, there were only two

households who did reeling). As a consequence, the cocoons must be sold and transported to other

provinces. Potential buyers include traders and enterprises from Vinh Phuc (within 60 km far from Tinh

Cuong), Nam Dinh (220 km far away) or Thai Binh (260 km far away).

Table 16: List of Potential Cocoon Buyers for Tinh Cuong Commune

# Buyers Name Address Contacts Tel

1 Thai Ha Silk Company Nam Dinh Mr. Thuc, CEO 0913290126

2 Son Nam Co Vinh Phuc Ms.Thuan, 0962004939

3 Noi Due Silk Export and

Production Cooperative

Noi Due, Tien Du dist,

Bac Ninh province

Ms. Vu Thi Ngung

Cooperative Chairwoman 0241. 837302

4 Phu Khanh Silk Co Lot 1, Tran Dai Nghia

Str., Phuc Khanh IZ, Thai

Mr. Tran Van Tuan, CEO

0913532327 0363 210 499

Ethnic people in colorful brocade clothes & weaving at home


P a g e | 33

Binh

5 Mai Linh Sericulture First

Grade Enterprise

Phung Châu Hamlet,

Chuong My, Ha Noi Mr. Duong Dinh Chuc, CEO 04.3.3866031

6 Mr.Hai or other cocoon

processors

Chuyen Ngoai, Duy Tien

district

Hanam

province

With 216 tons of cocoon produced each year, 2-3 reelers (and they are also twisters at the same time)

can be developed in the region. These actors could produce around 28.5 tons of silk yarn from above

cocoon. According to the calculation of value addition made in section 3.3, reelers could earn VND

98,471 from each kg of silk yarn. Thus, they would share VND 2.81 billion per year. Of course, this

requires initial investment in reeling/twisting machines and technical training on these activities.

In Thieu Do commune, the total production of cocoons is 228 tons per annum. This volume is

equivalent to 30 tons of silk yarn produced. Currently, Duc Thanh Enterprise sells about one ton of silk

yarn per month to Thai Binh and Nam Dinh provinces. Therefore, this company could buy 7.6 tons of

cocoon per month (or 91.2 tons per year). This number is equivalent to 40% of total cocoon production

in the commune. The rest would be sold to about 40 other households, who also do reeling and

twisting in the area. Duc Thanh Enterprise can develop into a good collector of cocoon for the whole

commune, but it needs to invest in improving their reeling/twisting capacities. Almost all the silk yarn

produced in the commune is sold to traders/enterprises in Nam Dinh or Thai Binh for further

processing before being used or/and exported. In order to link the commune's products to export

markets, the potential for export to Thailand, Cambodia, China and Laos should be explored.

Table 17: List of Potential Silk Yarn Buyers for Thieu Do Commune

# Buyers Name Address Contacts Tel

1

Local weavers in the

commune, e.g. Mr. Le

Viet Hai household

Thieu Do Commune Mr. Le Viet Hai, 098073745 037.3829425

2 Lam Giang Silk JSC

5 Nguyen Huy Oanh Str.,

Ben Thuy Dist., Vinh

City, Nghe An

Mr. Nguyen Kim Lung,

0988215906 0383 833 378

3 Nghe An Sericulture JSC 39 Le Hong Phong, Vinh,

Nghe An Mr. Pham Duc Hoan, CEO 038.3844647

Potential buyers of silk yarn in Thieu Do can also be the silk weavers in Moc Nam commune, Duy Tien

district, Ha Nam province; Van Phuc village, Ha Dong town, Hanoi; Trieu Khuc commune, Thanh Tri

village, Hanoi. A long-term contract can be signed between Duc Thanh Enterprise and Van Phuc Silk

Association (led by Mr. Nguyen Huu Chinh).

Also, there is a group of weavers in Thieu Do commune who produce "nhieu" - a silk fabric containing

50% of silk and 50% of nylon yarn. "Nhieu" is used to make scarves by adding some more pattern or

texture or to make clothes for ethnic minority people. As mentioned in section 3.2.2, this group

purchases locally around 2.7 tons of silk and produces around 4,500 pieces monthly (50,000 pieces per

year). Final products are sold to traders in Nghe An province before being exported to Laos. It is


P a g e | 34

worthwhile noting that raw silk fabric (the product before bleaching and dyeing to have “Nhieu”) is

presently a hot product for home decoration (door/window shade). 2 companies in Hanoi, Dome and

Vinaem, are looking for possibilities to buy such product from Thieu Do.

The production of cocoons in Dien Kim commune is estimated to be somewhat higher than in Thieu

Do, at about 264 tons per annum. These cocoons are consumed by about 30 reelers in the commune

(on average each reeler takes 8.8 tons yearly). Some households even collect more cocoons from other

communes. It means that the reeling capacity in Dien Kim currently exceeds the volume of cocoons

produced. These reelers produce about 40 tons of raw silk, selling to traders in Bac Ninh, Nam Dinh and

Thai Binh. Some potential buyers of raw silk are also listed in table 16 above. The Laos market should

also be explored as the traders who buy raw silk in Dien Kim already export to Laos, from where the

products are reported to be re-exported to Thailand.

The core activity in the communes of Na Phon & Pa Co (Hoa Binh) and Chau Tien & Chau Hanh (Nghe

An) is brocade production, on which they have a competitive advantage. Products made by these

communities include clothes, bags, tablecloths, "Pieu" scarves or purses that are locally consumed by

different ethnic minorities such as Muong, Thai, Tay, H'Mong, etc. Traditionally, ethnic communities in

Viet Nam use a lot of brocade products. Even everyday clothes are made from brocade. Thus, there is a

high potential fort he products to be sold on the domestic market.

The brocade producers in Na Phon mainly sell through the Vong Ngan Brocade Cooperative (Tan Lac

Dist, Hoa Binh), becausethis organization sells to a number of domestic markets, not only in the North

but also in central and southern Viet Nam. Also, retailers in bazaars (open markets) serving ethnic

minority people are also good channels to sell brocade products for these communes.

Foreign tourists coming to Viet Nam are important potential buyers for brocade products. According to

the General Statistics Office (GSO), during the first 7 months of 2010, altogether 2.9 million foreign

visitors came to Viet Nam (increase of 35% in comparison with same period 2009), out of which 1.85

million visited the country as tourists. This group has a substantial purchasing power and can thus be

easily interested to buy brocate products, but only provided that the brocade products presented are

unique, well designed and of good quality. This target group may by from local selling channels such as

retailers/shops in Chieng Chau (an adjacent commune to Na Phon and Pa Co, attracting quite a lot of

foreigners) and retailers in Hanoi, Ha Long bay (Quang Ninh), Sapa (Lao Cai), Hue, Da Nang, Hoi An

(Quang Nam), Vung Tau, Nha Trang, Da Lat and Ho Chi Minh City. The possibility of supporting

entrepreneurs to open up shops in Hanoi for promoting articles from the different groups in the JP

should be explored.

Home accessories and gift articles made from brocade (such as purses and bags) and garments made

from brocade (vests) are successfully sold on export markets. Particularly the Vietnamese fair trade

exporter Craftlink is well-known for their fashionable brocade articles. Some European fairtrade-

oriented importers have expressed their interest to get access to new sources of supply. These

importers also have expressed their need to diversify their supplier base, because working with a

number of different suppliers in Viet Nam enables them to differentiate from other importers.


P a g e | 35

There is an opportunity to build up new fairtrade-related exporters and to link them to international

fair-trade-related wholesalers. Currently almost all fair-trade-oriented European wholesalers buy from

the same two suppliers in Viet Nam. As the prices of Vietnamese handicrafts by nature are relatively

low, and as the Asian style of the products is appreciated by international customers, European fair-

trade wholesalers are highly interested in further developing business with Viet Nam. However, the

dominating market position of only two fair-trade-related wholesalers that are currently available is

one of the most limiting factors for European wholesalers to enhancing business relations with Viet

Nam.

Table 18: List of Potential Brocade Retailers of Brocade Products in Hanoi

# Buyers Name Address Tel

1 Craft Link www.craftlink.com.vn 41 - 43 Van Mieu, Hanoi 04.38.437.710

2 Khai Silk 121 Nguyen Thai Hoc & 96 Hang Gai 04.3.747 0583

3 Duc Loi (Queen) Silk 76 & 93 Hang Gai, Hanoi 04.3.826 8758

4 Ha Dong Silk 102 Hang Gai, Hanoi 04.3.928 5056

5 Nam Son Silk & Art Hanoi Tower, 49 Hai Ba Trung, Hanoi 04.3.934 5665

6 Huong Quyen Silk 104 Hang Gai, Hanoi 04.3.826 7286

7 Pinocchio 129 Hang Bong, Hanoi 04.3.928 6282

8 Kenly Silk www.kenlysilk.com 108 Hang Gai, Hanoi 04.3.8267236

9 Tran Le Silk Showroom www.tranle-handicraft.com

106 Ma May, Hanoi 04.3.9261198

10 Xuan Fashion www.xuanfashion.com

7 Hang cot & Trang Tien Plaza 04.3.826 8987/934 9449

11 Ipa Nima Shop www.ipa-nima.com

10B Nguyen Huu Huan, Hanoi 04.3.9340876

12 Jade Collection 17A Au Trieu, Hanoi 04.3.928 6567

13 Oriental House 28 Nha Chung, Hanoi 04.3.828 5542

14 Trang an Silk 58 Hang gai, Hanoi 04.3.8268 982

15 Hoa Sua Embroidery 63A Trang Thi, Hanoi 04.3.934 2792

IV.2 SWOT analysis

The main strengths, weaknesses, opportunities and threats are summarized in table 19 below, broken

down by province and project area.

http://www.craftlink.com.vn/

http://www.kenlysilk.com/

http://www.tranle-handicraft.com/

http://www.ipa-nima.com/


P a g e | 36

Table 19: SWOT Analysis for Each Province

Locations Strengths (S) Weaknesses (W) Opportunities (O) Threats (T)

Ph

u T

ho

Tinh

Cuong

- Good climate and soil conditions, suitable for mulberry plantation;

- Strong support from local authorities to promote a sericulture village.

- Lack of know-how on reeling techniques;

- Lack of information on suitable mulberry varieties;

- Lack of techniques to control the quality of cocoons.

- In the short-term, cocoons can be sold to Phu Khanh Silk JSC in Thai Binh Province (this company commits to buy cocoons at 30 tons per month);

- In the long-term, some reelers/ reeling centers can be developed in the commune to develop local cocoon processing.

- There are environmental issues as the industrialization process takes place in a residential area;

- Brick production creates pollution that is harmful to mulberry fields and creating silkworm diseases.

Ho

a B

inh

Na

Phon

& Pa

Co

- Long weaving tradition in the commune;

- Women are skillful in producing brocade products.

- Lack of research, design and development of new products;

- Unable to make finished products;

- Lack of equipment for finishing;

- Lack of marketing skills to find buyers by their own, thus dependence on unstable orders of traders from other places.

- Doing weaving for and selling final products to Vong Ngan Brocade Cooperative in Tan Lac district;

- Potential to sell to shop/retailers in Hanoi and other tourist spots (see facilitation activities in section 4.4.);

- Potential to penetrate further the fair-trade market in Japan, Australias, Europe and America.

- Substitution by gift products from China with good design and lower price;

- Strong competition with brocade products sold in Chieng Chau (next commune that attracts almost all foreign tourists to Mai Chau);

- Overuse of chemical dyes instead of natural substances and use of nylon and synthetic yarn might destroy customers' trust in producers using natural products like silk.


P a g e | 37

Than

h H

oa

Thieu

Do

- Good soil condition for mulberry tree plantation;

- Long tradition of weaving;

- Having Duc Thanh Enterprise as a leading reeler/ twister who can consume large volume cocoon produced by households in the commune.

- Lack of techniques to control the quality of cocoons;


- Quality of raw silk is unstable due to variation of skillfulness of different households;

- Lack of education on contractual practice that enhances farmers' commitments with reelers, especially when price goes up;

- Lack of clean bleaching and dyeing techniques to add value to the present raw silk yarn;

- Low commitment of farmers to technical requirements in spinning cocoon in order to get high cocoon grades.

- Duc Thanh Company is planning to invest more in reeling capacity with more machines in the commune;

- Cocoon can be sold to Lam Giang Silk company (in Nghe An) and Phu Khanh Silk JSC in Thai Binh (with capacity to reel 2 tons cocoon per day);

- Silk can be sold to Dai Hoa weaving company and other weavers in Nam Cao, Kien Xuong, Thai Binh province; Moc Nam commune in Ha Nam, Van Phuc and Trieu Khuc villages in Hanoi;

- High potential to develop direct markets in Laos, Cambodia and Thailand;

- High demand for raw silk fabric.

- Cocoon and silk quality does not meet grading requirements for automatic reeling/twisting machines;

- The industrialization and urbanization process will minimize the cultivation area and increase the risk of pollution.

Ngh

e A

n

Dien

Kim

- Good soil condition for mulberry plantation and having long traditional for sericulture.

- Reelers cannot twist raw silk into high quality silk yarn;


- Lack of techniques to control the quality of cocoons

- Lack of clean bleaching and dyeing techniques to add value to present raw silk yarn;

- Low commitment of farmers to technical requirements in spinning cocoon in order to get high cocoon grade.

- Raw silk can be sold to Dai Hoa weaving company and other weavers in Nam Cao, Kien Xuong, Thai Binh province;Moc Nam commune in Ha Nam, Van Phuc and Trieu Khuc villages in Hanoi;

- Laos, Thailand and Cambodia can be potential export markets.

- Cocoon and silk quality does not meet grading requirements for automatic reeling/twisting machines.


P a g e | 38

Chau

Tien

&

Chau

Hanh

- Having a long weaving tradition in the commune;

- Women are skillful in producing brocade products;

- Local people can also plant mulberry and raise silkworm to produce silk yarn;

- Silk yarn can be consumed by local weavers, thus no need to find markets.


- Lack of capacity to design and develop new products;

- Lack of equipment to make finished products;

- Small scale sericulture: difficult to have bargaining power over inputs provider (i.e. silkworm eggs).

- Potential to sell to shops/retailers in Hanoi and other tourist spots (see facilitation activities in section 4.4.);

- Potential to penetrate further the fairtrade market in Japan, Australia, Europe and America.

- Substitution by gift products coming from China with attractive design and lower price;

- Decreasing quality of final brocade products as the portion of cotton/nylon yarn is quite high. This leads to losing clients’ trust in the products being "silk brocade".

IV.3 Vision

The vision proposed for sericulture and brocade/textile production in the project areas is based upon:

The competitive advantages of each province as analyzed in previous sections;

The SWOT analysis undertaken for cocoon and silk yarn (sericulture) and final brocade

products in the project areas;

The opportunity to link actors in project areas with potential buyers in new markets.

The proposed VISION is: "To build a sustainable sericulture subsector in Tinh Cuong, Thieu Do and Dien

Kim with higher quality of silk yarn that can be exported and to diversify brocade products in Na Phon,

Pa Co, Chau Tien and Chau Hanh with new designs, which are attractive to local consumers, foreign

tourists to Viet Nam and fair-trade related customers in Europe and America".

With above vision, the project aims to support beneficiaries in each commune as stated in Table 20.

Table 20: Beneficiaries Targeted for Each Commune

Unit: Number of Households

Commune Dien Kim Chau

Tien

Chau

Hanh Thieu Do Na Phon Pa Co

Tinh

Cuong

Sericulture 174 50 20 166 0 0 200

Textile/ Brocade 0 60 40 27 100 50 0

IV.4 Upgrading solutions

The following upgrading solutions are proposed fort he sericulture value chain:

Increasing overall sericulture production and improving productivity of sericulture farmers;

Enhancing processing technology and upgrading quality of silk produced that can be exported

and used in large automatic reeling/twisting factories (e.g. from manual to semi-automatic


P a g e | 39

reeling/twisting machines); and improving waste treatment system to reduce environment

threats to living condition of local people;

Diversification of brocade products by creating new designs with better quality;

Linking actors in the chain and restructuring distribution channels for both domestic (local

consumers, foreign tourists) and handicraft importers (including buyers at international trade fairs).

IV.5 Suggested facilitation activities

Table 21 below proposes the facilitation activities to be initiated for each upgrading solution in the

sericulture value chain.


P a g e | 40

Table 21: Upgrading Solutions and Facilitation Activities

Issues Related facilitation activities

Land allocation for

mulberry plantation in all

project areas with

beneficiaries indicated in

Table 20, especially in

Tinh Cuong (Phu Tho)

Assist local authorities in determining land allocation for mulberry plantation. The size of land can be estimated on the basis of the

number of beneficiaries that the project targets. The total land required in each commune is identified in table 21 below. The allocation

of land requires commitment from local governmental agencies from provincial to communal level. Especially in Tinh Cuong commune,

where people had stopped cultivating mulberry earlier, farmers already expressed their interest to get back to sericulture, but strong

commitment of both authorities and households is nevertheless required. A stakeholder meeting has to be organized in Phu Tho to

confirm these commitments. Also, the commitment from authorities has to include to ensure that the pollution (like smoke, dirt…)

created by the brick making plant will be reduced.

Sericulture and cocoon

production in targeted

project areas

Raise awareness on the income generation potential of sericulture in Phu Tho, improve raw material supply for reelers, linking Phu Tho

farmers and collectors to Thai Binh and Ha Nam. In Tinh Cuong commune, the beneficiaries should focus on cocoon production in the

short term. Cocoon produced by households in Tinh Cuong can be estimated at 330 tons per year (46 ha x 60 egg boxes x 15 kg cocoon x

8 cycles). This production can be sold to Phu Khanh Silk Company in Thai Binh, as this company has a processing capacity of 700 tons of

cocoons per year. A meeting between this company and the stakeholders in Tinh Cuong should be organized to agree on contractual

terms for both sides;

Choose new varieties such as VH15 or VH17 - those are the newest varieties made by Viet Hung Sericulture Research Center (see Table

14, page 24, for contact details). For Thieu Do and Dien Kim, it takes more time to change the varieties as people are cultivating in

current mulberry fields. An experimental field needs to be developed in these areas to raise awareness for local growers. For any new

land area that the project intervenes, new varieties must be chosen. This can be done easily in Chau Tien, Chau Hanh and Tinh Cuong as

land areas for mulberry plantation will be mostly newly allocated;

Produce a practical handbook for rearers which specifies clear instruction/guidance on selecting mulberry varieties, silkworm eggs; pest

control, treatment of silkworm disease, rearing techniques (e.g. heating when spinning cocoon), etc.;

Deliver training programmes for local trainers and farmers on technical issues and consider to apply new ways of rearing such as raising

silkworm on soil ground instead of rearing them on different layers of bamboo baskets as traditional way (this technique was developed

in China and ever applied in Yen Bai province). . Contents covered in the trainings should include: silkworm raising techniques;

prevention and treatment of silkworm diseases; cocoon classification and grading;

Develop demonstration fields in Nghe An, Thanh Hoa and Phu Tho;

Organization of study tours to sericulture areas in Vietnam, especially Thai Binh, Ha Nam and Nam Dinh provinces.


P a g e | 41


Enhancing processing

technology to increase

productivity and quality

of silk yarn

Link reelers with engineering companies to innovate reeling machines such as attaching electric motors to manual reeling machines; to

do the same with weaving machines (looms) that have been used in a few households in Thieu Do (Thanh Hoa);

Study reeling/ twisting techniques at household/cooperative level in India and China;

Develop a processing handbook and quality management manual, incorporate guidelines on exporting standards;

Deliver training programmes on reeling, bleaching, degumming and twisting techniques; quality management in silk production;

weaving techniques and related issues etc.;

Introduce best practice models for reeling, bleaching, degumming and twisting in Thanh Hoa and Nghe An;

Organize study tours, experience sharing workshop between farmers/reelers to exchange best practices in rearing and reeling;

Introduce reeling/twisting techniques and silk grading methods to increase value addition.

Environment protection

and waste management

Develop manuals and deliver training on waste management and environment protection for households, local authorities and other

stakeholders in project areas;

Develop a handbook for dyeing techniques using both locally available natural materials such as roots, tree leaves etc. and colour-fast

dyeing using eco-friendly chemicals;

Delivering training on practical dyeing skills to producers, both on natural and colour-fast dyeing. Support to develop models on natural

and colour-fast dyeing in the provinces or on the premises of committed buyers on PPP basis;

Explore the possibility of processing the heads and tails of the cocoons;

Build a pilot model on waste management in sericulture production: Drainage system, waste treatment, etc. and assist and promote

investment in existing reeling entity such as Duc Thanh Enterprise in Thieu Do (Thanh Hoa) or reeling households in Dien Kim (Nghe An).

Familiarize local producers with fairtrade principles ;

Support for setting up 2 fairtrade producer groups in Hoa Binh and Nghe An;

Establish and promote new provincial reeling centers to become more independent from national traders.

Getting customers

feedbacks for

diversification

Organize meeting between handicrafts shops/retailers in Hanoi to get/analyze feedbacks on customers need and trends for design,

quality and materials. The feedback would help making better products that fit customer needs. Also, this group of buyers could form a

kind of alliance to commit buying from project areas' producers. Similar activities can be made in big tourist spots that attract many

foreign tourists, e.g. Ha Long bay, Hoi An, Hue, Da Nang…;

Organize study tours for weavers in Na Phon, Pa Co, Chau Tien and Chau Hanh to visit some best practices in weaving with creative

designs for brocade products, domestically and internationally (such as to China or participating in international trade fairs).

New designs and product Engage creative designer who can make new and sustainable designs with "out-of-the-box" thinking to break conventional wisdom of


P a g e | 42


development traditional brocade products to support groups;

Engage foreign buyers, particularly fairtrade wholesalers, to develop new products with the groups;

Work with the University of Industrial Arts and Design (http://design.edu.vn/) to organize competitions on "excellent/best handicraft

design award" for products in project areas. This is a chance for the university students to take part in practical exercises that help

improve design handicraft products of Viet Nam;

Train local trainers and producers on new designs and product development;

Support tools and equipment for production groups to enhance the capacity of making final products;

Assist Vong Ngan Cooperative in Tan Lac (Hoa Binh) and villagers at Hoa Tien Craft Village (Quy Chau - Nghe An) on researching and

producing different product items for different ethnic minorities: this helps expand domestic markets to sell brocade products to

different ethnics in different places at nation-wide level.

Enhancing linkages/

relationships between

actors in the chain

Raise awareness for farmers on commitment to supply cocoon to contractual buyers/ collectors to reduce risk of lacking raw materials

supplied to producers of silk, especially when price fluctuates uptrend;

With the support of provincial authorities, organize meetings between farmers and reelers/ twisters/weavers (with participation of

other stakeholders) in the same project area to build strong network, commitment and ownership from each actor in demand-supply

relationship.

Promoting the domestic

market: targeting ethnic

minority communities

country-wide and foreign

visitors at tourist spots

Identify active (business-minded) people and train them to be marketers for each location: they will find and penetrate local markets;

organizing some intermediaries at local level to be collectors (cocoon, raw or twisted silk yarn) with appropriate training on cocoon/silk

grading and know how to classify before delivering to buyers;

Connect Vong Ngan Cooperatives in Tan Lac District of Hoa Binh with brocade producers in Na Phon and Pa Co; connecting villagers in

Quy Chau to retailers in Hanoi and other tourist spots

Assist and connect retailers in tourist spots with direct link to brocade producers in project areas.

Promoting and exploring

potential export markets

Engage 3-4 buyers from Europe in the value chain;

Improve linkages to fair-trade wholesalers for exporting more brocade products from ethnic minorities;

Conduct market survey to explore new export market for silk yarn in Laos, Thailand, China, Cambodia;

Assist companies in Hanoi and other provinces (such as the Brocade cooperatives) to improve design capacity, doing market research,

participating in national, regional and international fairs, developing promotional materials, website, etc.;

List products on online trade portal such as www.alibaba.com and other sites.

Addressing labour, Build capacity to improve occupational safety, health and labour conditions among sericulture farmers, collectors, reelers, twisters,

http://design.edu.vn/

http://www.alibaba.com/


P a g e | 43


occupational safety and

health issues in order to

meet market

requirements

weavers and exporting companies, taking international buyer requirements fully into account.


P a g e | 44

Table 22: Land Required for Mulberry Plantation in each Commune

# Communes

Number of

Beneficiaries

(households)

Land required(*)

for each

household (ha)

Total land area

needed (ha)

1 Tinh Cuong, Phu Tho 200 0.23 46

2 Thieu Do, Thanh Hoa 166 0.23 38.2

3 Dien Kim, Nghe An 174 0.23 40

4 Chau Tien, Nghe An 50 0.18 9

5 Chau Hanh, Nghe An 20 0.18 3.6

(*) Estimations are made on basis of statistics at peak time for sericulture production in each commune


P a g e | 45

V. RECOMMENDATIONS

In addition to the upgrading facilitation activities that have already been proposed in section IV.5, the

following recommendations are made in regard to providing more opportunities for the value chain to

move toward to a next level of development.

As has been mentioned in the upgrading facilitation activities related to the training to

farmers/reelers/weavers, a Training Need Analysis (TNA) is necessary to identify specific

training programmes for each actor in the chain. ILO should work with the PMU on conducting

TNA and provide training on TNA results;

Build a better information system to provide farmers with updates on market price, reducing

"information asymmetry";

Create new mulberry varieties with higher productivity: this can be done through supporting

research centers at meso level;

Facilitate more e-commerce activities such as HRPC's portal to promote brocade products;

On the basis of the above VC information/analysis, the PMU and relevant UN agencies would work out

a detailed action plan to intervene in each commune. The action plan can be developed upon a

stakeholders’ meeting in order to validate the VC analyses undertaken and in order to obtain

agreement/commitment on implementable solutions. Also, due to the seasonal character of some

plants such as mulberry, the cultivation of which is normally started in the last quarter of the year, the

action plan must be time-bound to the respective interventions.


P a g e | 46

VI. APPENDICES

Appendix 1: List of Interviewees in the Provinces

# Name Title Organization Contact

Phu Tho Province

1. Mr. Nguyen Hai

Minh

Director

Rural Development Division,

DARD

0978304666

2. Mr. Lanh Head of Handicraft Section 0978785070

3. Mr. Ngo Anh Truong Expert, Handicraft Section

4. Mr. Hung Head of Industrial

Management

Department of Trade &

Industry

0912116869

5. Mr. Trang Head of Training Section DOLISA 0912065022

6. Mr. Cong Chairman Phu Tho Cooperatives Alliance 0913283070

7. Mr. Luu Chairman Trung Vuong Sericulture

Cooperative

8. Mr. Nha Household

9. Mr. Vu Van Nhat Deputy Chairman Cam Khe Dist., People

Committee

10. Mr. Nghiep Expert, Agriculture Unit Agriculture Division Cam Khe

Dist.

0979412393

11. Mr. Tau Chairman of People

Committee

Tinh Cuong Commune, Cam

Khe Dist

0974153569

12. Mr. Tran Van Long Household Tinh Cuong Commune, Cam

Khe Dist

Hoa Binh Province

13. Mr. Ha Ngoc Son Deputy Director Rural Development Division,

DARD

0977868999

14. Mr. Nguyen Ho Thuy Head of Rural Handicraft 0903482558

15. Mr. Dinh Van Vien Expert

16. Mr. Van Trong Khoi Head of Industrial

Management Department of Trade &

Industry

0912877992

17. Mr. Pham Xuan Dan Deputy Head of Industrial Mgt

18. Mr. Pham Trung Han Head Industry Promotion

Center


Industry

0913296271

19. Ms. Do Thi Kim

Tuyen

Expert of Trade Promotion

Unit


Industry

0987056148

20. Mr. Dinh Cong San Chairman Vong Ngan Textile

Cooperative

21. Ms. Phuong Vice Chairman 0982063888

22. Mr. Cuong Expert, Agriculture Unit Na Phon Commune, Mai Chau

Dist.

23. Mr. Ha Duc Chung Chairman of People

Committee

Na Phon Commune, Mai Chau

Dist.

0945629271

24. Ms. Xuyen Deputy Chairwoman Women Union, Na Phon

Commune

25. Ms. Chau Household, Textile Na Phon Commune, Mai Chau

Dist.


P a g e | 47

26. Ms. Lo Thi Uon Household, Textile Na Phon Commune, Mai Chau

Dist.

27. Mr. Duc Deputy Head of Agriculture

Unit

Agriculture Dept., Luong Son

Dist.

0913251687

28. Mr. Nguyen Van

Chuc

Team Leader, Handmade

Paper

Hop Hoa Commune, Luong

Son

01649405385

Thanh Hoa Province

29. Mr. Tai Deputy Director


Industry

30. Mr. Nguyen Vu

Thang

Deputy Head of Industry &

Agri

0983857336

31. Mr. Vinh Expert, Industry & Agri Section 0983639336

32. Mr. Le The Ky Chairman of People

Committee

Thieu Do Commune, Thieu

Hoa Dist.

0904649887

33. Mr. Hoang Dinh

Thuy

Expert on Cooperatives Thieu Do Commune, Thieu

Hoa Dist.

0949347702

34. Mr. Hoang Viet Duc Director Duc Thanh Private Enterprise 0982829426

35. Mr. Le Viet Hanh Household of Textile Thieu Do Commune, Thieu

Hoa Dist.

098073745

Nghe An Province

36. Mr. Phan Nguyen

Hung

Head of Finance & Planning

Unit Department of Agriculture

and Rural Development

(DARD)

0904225279

37. Mr. Pham Ngoc

Chau

Deputy Head, Finance &

Planning

0912625252

38. Mr. Phan Duy Thieu Expert 0903413959

39. Mr. Vo Trong Ngo Deputy Head Rural Development Division,

DARD

0943681789

40. Mr. Nguyen Van

Hung

Chairman Nghe An Cooperatives Alliance 0913274107

41. Mr. Sam Van Thai Deputy Head Rural Development Dept, Quy

Chau

0986445466

42. Ms. Vi Thi Sam Head of Agriculture Unit Chau Hanh Commune, Quy

Chau

0984548748

43. Mr. Lo Van Giap Head of Agriculture Unit Chau Tien Commune, Quy

Chau

0919618675

44. Mr. Vo Khanh Khoa Expert, Agriculture Unit Rural Development Dept, Dien

Chau

0913484495

45. Mr. Nguyen Van

Truong

Silk Household Dien Kim, Dien Chau

46. Ms. Pham Thi Lan Silk Household Dien Kim, Dien Chau

47. Ms. Sam Thi Bich Head of Textile village Chau Tien Commune, Quy

Chau

48. Ms. Lo Thi Nga Deputy Head of Textile village Chau Tien Commune, Quy

Chau

01658190466

49. Ms. Lang Thi Hoa Textile weaving and trading Chau Hanh Commune, Quy

Chau

038.389.2459


P a g e | 48

50. Ms. Lang Thi Loan Textile Household Chau Hanh Commune, Quy

Chau

038.389.2452

Thai Binh & Nam Dinh Provinces

51. Mr. Le Van Thuc CEO of Thai Ha Silk Co., Ltd. My Tan, My Loc, Nam Dinh 0913290126

52. Mr. Nguyen Dinh Dai CEO, Dai Hoa Weaving

Enterprise

Nam Cao, Kien Xuong Thai

Binh

0912868986

53. Mr. Tran Van Tuan CEO, Phu Khanh Silk Company Phu Khanh Industrial Zone,

Thai Binh

0913532327

54. Prof., PhD. Ha Van

Phuc

Ex-Director, Central

Sericulture Research Center

0912027931


P a g e | 49

Appendix 2: Economic Analysis: Value Addition per kg Silk Yarn Produced

Per ha mulberry Unit Price Total

Per

kg silk Notes

Mu

lber

ry p

lan

tati

on

, silk

wo

rm r

aisi

ng

and

co

coo

n

pro

du

ctio

n

Silkworm eggs 60 box 50,000 3,000,000 25,490

One ha mulberry

plant needs 60 egg

boxes

Mulberry leaves 1 cycle 200,000 200,000 1,699 VND 20 mio/10

yrs/10 cycles per yr

Fertilizer 4,000 kg 2,200 8,800,000 74,771 4 tons per ha

Urea 1,000 kg 7,500 7,500,000 63,725 1 ton per ha

Bamboo basket 1 cycle 500,000 500,000 4,248 VND 5 mio/10

cycles for 1 year

Total input cost

20,000,000 169,935

Cocoon produced 900 kg 60,000 54,000,000 458,824

One egg box can

produce 15 kg of

cocoons

Cocoon VA 34,000,000 288,889

Ree

ling

Cocoon inputs 900 kg 60,000 54,000,000 458,824

Electricity & water 900 kg 1,200 1,080,000 9,176

Coal 900 kg 2,250 2,025,000 17,206

VND 80,000/man-

day. 100 kg raw silk

need 5 man-days

Labor cost 900 kg 4,000 3,600,000 30,588

Total reeling cost 60,705,000 515,794

6.5 kg cocoons

produce 1 kg raw

silk

Raw silk produced 138 kg 340,000 47,076,923 400,000

100 kg cocoons

produce 55 kg dead

larvae

Larvae produced 495 kg 45,000 22,275,000 189,265

Total revenues 69,351,923 589,265

Raw silk VA 8,646,923 73,471

Twis

tin

g

Silk yarn produced 117.7 kg 425,000 50,019,231 425,000

1 kg raw silk

produces 0.85 kg

silk yarn

Silk yarn/raw silk

VA 2,942,308 25,000


P a g e | 50

Wea

vin

g, d

yein

g Silk yarn 0.05 kg 425,000 21,250 425,000

Other yarn 0.05 kg 515,000 25,750 515,000

Electricity 0.36 kw 2,500 893 17,857

Dyeing 1 5,000 5,000 100,000

Looms

depreciation 2 666.7 1,333 26,667

VND 12 mio per

loom/5 yrs

depreciation/3,600

scarves/yr

Labor cost 1 11,428.6 11,429 228,571

VND 80,000 per

man-day. 1 man-

day produces 7

scarves

Transportation 1 333.3 333 6,667

Total cost for 1

scarf 65,988 1,319,762

Scarfs produced 20 85,000 1,700,000 Scarf size 8m x 0.4m

each

Weaving VA 19,012 380,238

Trad

ing

Selling 20 150,000 3,000,000

Cogs 1,700,000

Indirect cost 15% 450,000

Trading VA 850,000


P a g e | 51

Appendix 3: Programme Coverage Area


P a g e | 52

Appendix 4: Project Areas Profiles (2009)

# Project Area by

Administration Units

Population

(people)

Area size

(km²)

GDP/

capita

(USD)

No of

house

holds

Ethnic

minority

(%)

% of

the

poor

1 Phu Tho Province 1,364,522 3,532.9 1,320 274,908 14.11 13.2

Cam Khe District 131,929 29,919 0 15

Tinh Cuong Commune 2,963

2 Hoa Binh Province 788,274 4,596.4 894.7 174,198 72.27 16.56

Mai Chau District

Na Phon Commune 1,696 368 10,1

Pa Co Commune 2,282 438 35,6

3 Thanh Hoa Province 3,405,000 11,120.3 780.0 746,428 17.57

Thieu Hoa District 195,000 175.47 592.1

Thieu Do Commune 8,000 1,700

4 Nghe An Province 3,113,055 16,487.0 758,333 13.41 14.45

Quy Chau District 52,627 12,435

Chau Tien Commune

Chau Hanh Commune

Dien Chau District 267,216 68,662

Dien Kim Commune

Source: Provincial General Department of Statistics Yearbook 2009 and author's compilation


P a g e | 53

Appendix 5: Bibliography

- L. Buisman & G.J. Wielenga (2008), Textile & Garment Industry in Viet Nam, University of Groningen,

Faculty of Economics and Business;

- Matthias L. Herr & Tapera J. Muzira (2009), Value Chain Development for Decent Work, International

Labour Office;

- B.R. Patil, K.K. Singh, S.E. Pawar, L. Maarse and J. Otte (2009), Sericulture: An Alternative Source of

Income to Enhance the Livelihoods of Small-scale Farmers and Tribal Communities, Pro-Poor Livestock

Policy Initiative;

- MARD (2009), Report on Raw Materials for Handicraft Villages, Hanoi;

- Andreas Springer-Heinze (2008), Value Link Manual, GTZ;

- Le Ba Ngoc (2008), Preliminary Survey on the Project on Capacity Development on Artisan Craft

Promotion for Socio-economic Development in Rural Areas in Viet Nam, JICA & HRPC;

- Mahesh Nanavaty & Rajat K. Datta (2005), Global Silk Industry: A Complete Source Book, Universal

Publisher

- Thanh Nguyen (2006), Value Chain Analysis for Sericulture Sub-sector in Quang Binh province, GTZ/GFA;

- Le Ba Ngoc (2005), Report on Off-farm activities development potential in Quy Chau District, Belgian

Technical Cooperation

- Dr.K.J.S.Satyasai & Dr.G.H.V.Ratna Babu (2004), Integrated Sericulture Development Project for Andhra

Pradesh, India;

- Michael Dower (2001), Bộ Cẩm nang Đào tạo và Thông tin về PHÁT TRIỂN NÔNG THÔN TOÀN DIỆN,

Agriculture Publishing House;


P a g e | 54

Appendix 6: Some Pictures Taken in Programme Areas

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