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Similar a Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing(20)


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Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing

  1. Organic Vegetable Supply Chain in Vietnam: Marketing & Finance Perspectives Tran Tri Dung DHVP Research & Consultancy Pham Hoang Ngan The Vietnamese Initiative for Food and Agricultural Policy
  2. 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
  3. 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 ( •A non-profit initiative •Lack of consideration for resources’ limitation SUSTAINABILITY? •Trial and error process •Narrow window for private sector
  4. 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
  5. 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
  6. 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
  7. 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
  8. 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
  9. A recruitment of sale collaborators: •Retired people • Simple works • Performance-based income • Social responsibility
  10. 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
  11. Korean market
  12. What is the difference?
  13. ‘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?
  14. An organic vegetable store Also organic cosmetics! Shop rental cost: US$600/month
  15. Finance: Start-up • Most important source of funds: ODA, int’ aids • Venture investment
  16. Connecting the dots.. Empirical examination Cultural Dimensions Creativity Relationships Lessons for research & business Entrepreneurship
  17. Creativity Japan Korean Viet Nam?
  18. ‘Organic’ Car
  19. 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
  20. THANK YOU!