Organic Vegetable Supply Chain in Vietnam:
Marketing & Finance Perspectives
Tran Tri Dung
DHVP Research & Consultancy
tran@vietnamica.net
Pham Hoang Ngan
The Vietnamese Initiative for Food and Agricultural Policy
pham@vifap.org

Organic production of agriculture
is a tradition…
Ho Chi Minh (left),
1962
•Sustains the health of soils,
ecosystems and people.
•Minimal use of off-farm inputs
Working on fields,
•Management practices that today
restore, maintain, or enhance
ecological harmony

and ADDA introduced…
organic agriculture in 2004
2004-2010: Agricultural Development Denmark Asia, in collaboration with
Vietnam’s National Farmers Union, developed a framework for organic
production and marketing (http://vietnamorganic.vn/)
•A non-profit initiative
•Lack of consideration for resources’ limitation SUSTAINABILITY?
•Trial and error process
•Narrow window for private sector

Production
• Organic agriculture production area
– Small (2010):
• 21,000 ha = 0.2% Viet Nam’s agricultural area (2010)
– Fragmented: two largest suppliers for Hanoi (2012)
• Soc Son district: 30ha ~ 0.15%
• Luong Son district (Hoa Binh province): 15ha ~ 0.075%
• It’s hard to expand production area:
–Relaxation of field is the expense of cost-sensitive farmers
–Surge of land prices in peripheral areas of big cities
–Urbanization and industrialization
–Tough negotiation with neighbor for merging fragmented
pieces of land
 Way below a full-swing development

Growers
• Motivations:
– Able to learn quickly organic cultivation techniques
– Income is improved by three, even four, times
• Challenges:
– Complicated procedures and standards
– Expensive PGS certification: US$2,000 (excluding experts
expenses that are covered by int’ aids)
– Lack of industrial disciplines
• Some large investments:
– Organik Dalat: 15ha, first EurepGap farm
– ASIMCO (Hoa Binh): 2.2 ha

Organic Vegetables Company (OVC)
Branding: Greenlink, Ecolink, Ecolife..
ODA funded companies
The Great Organizer & Coordinator
•Organize production •Trading and marketing
•Educate farmers jobs
•Technical and financial •Educate consumers
supports to growers •Raise funds
• Assure farmers’ income
Lack of commercial motivation & viability
 Entrepreneurship & Creativity

Government & Associations
• International donors &
development agencies:
Initiators
• Central and local
government fully support
• VOAA: established in Oct.
Vietnam Organic Agriculture Association:
First Meeting on May 22, 2012 in Hanoi 2011

Marketing = Educating
• Educating farmers
– Responsible growers/producers
• Educating local government
– Organic agriculture for sustained
development
• Educating consumers
– Above-average income, urban
households; much concern about
food safety and health
– Definition of organic produce
• Trust building process
– The most convenience services
– Virus marketing
– Loyal clients group Loyal clients visited organic production sites
– E-commerce
• Educating the OVCs themselves: Wakening..
how to do a real business
Next education: making a fortune
from agriculture production

A recruitment of sale collaborators:
•Retired people
• Simple works
• Performance-based income
• Social responsibility

Limited Supply
• Vietnamese people want
vegetables every day.. but not the
same vegetables
• Supply of organic produces is
limited:
– Quantity
– Type of vegetables
• Caveat: Organic & safe vegetable
• Long-life wet market

Korean market

What is the difference?

‘Quasi’ Business of OVCs
• Gross margin: 45 to 47% of
revenue
• Sale volume: $80 to $150 per
day
• Greenlink:
– Top quarterly sale: $2,000
– Manager salary: $1,000/month
• Ecolink:
– Monthly revenue: $10,000
– Still struggling with financial
distress
• Well-invested business
facilities.. but for what?

An organic vegetable store
Also organic cosmetics!
Shop rental cost: US$600/month

Finance: Start-up
• Most important source of
funds: ODA, int’ aids
• Venture investment

Connecting the dots..
Empirical
examination
Cultural
Dimensions
Creativity
Relationships
Lessons for
research & business
Entrepreneurship

Creativity
Japan Korean
Viet Nam?

‘Organic’ Car

Future: The Entrepreneurs
Farmers are entrepreneurs: growers/producers + traders + capitalists
A new comer: Ecolink (a veteran):
• 2014: Sufficient supply sources
for organic certified foods
• 2014: Certifier for local market
• 2015: Export of 200 MT of
organic teas and 400 MT of
organic spices (30% for Fair-
trade market).
• 2015: 10,000 customers
• Develop international brands of
organic tea/spices in key markets
1ha on the side of Red River; (EU, America, Japan)
15 minutes to Hanoi’s downtown

THANK YOU!