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SMALLHOLDERS IN THE SMALLHOLDERS IN THE SMALLHOLDERS IN THE SMALLHOLDERS IN THE
UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages UPLANDS OF VIETNAM: Market Linkages
Before, During and After SADUBefore, During and After SADUBefore, During and After SADUBefore, During and After SADU
SADU Final Workshop
Vientian, 4th – 5th July 2012
Cu Thi Le Thuy, CIAT Vietnam
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Persimmon
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Red persimmon market collapsed
Before SADU
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SADU Intervention
Shifting to new varieties with high market value
Visit markets
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Topworking
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Pests and diseases
ENTO-PRO
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• ~ 120 farmers
topworked ~ 1200
trees => good
• ~ 15 farmers planted
seedlings ~ 2000
trees => slow growth
• A small amount was
sold at 35,000d/kg
Results
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Lessons
• Good technical assistance generates more
sustainable impacts than subsidies
⇒ Farmers themselves take care of their orchards
without depending on project assistance
⇒ Project staff have to be more active and innovative
• Contribution of beneficiaries is a must
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Lessons
• Communication for farmers need to be diverse
and easy to understand
⇒ Study tours to markets and production areas
⇒ Promotion meetings at commune/village levels
⇒ Dissemination of documents in writing, photos, and
movies/slideshows
⇒ Exchange visits among farmers
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Cassava Contract Farming
KrongBong, Daklak, Vietnam
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Contract farming scheme before SADU
� Contract farming setup in line with Decree 80.
� Factory’s Strategy:
� Buy fresh roots from contract farmers
� Relies on field staff to manage the contract farming system
� In 2006 signed contracts with1,700 farmers in an area of
1,600 hectares
� Purchases some fresh roots from traders
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Contract farming scheme before SADU
� Provides
� input credit:
�planting material (KM 94 variety) during first year
�“biological” fertiliser (by-product of dry starch)
� Small loans to some farmers (land preparation, weeding)
� Technical assistance
� Guarantees the purchase of fresh roots and
� Pays farmers according to the starch content of fresh roots
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The system was difficult and costly to manage
� Managing ~ 1,700 small contracts for a highly perishable commodity is complex and time-consuming
� The factory is under-staffed => poor implementation of contract
� Input quality was questioned
� Limited technical assistance received
� Delays in transport and long waiting times when delivering fresh roots
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Delivering and getting payment were too slow
RegisterCollect
harvesting
ticketsArrange
transport Travel to
the factory Wait for
deliveryPayment
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SADU was working with the factory to…
1. Develop improved vertical coordination strategies
2. Improve communication with farmers
3. Improve technical advice to farmers
4. Introduce harvesting tools and slicing tools
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⇒ Farmers are now able to
decide the planting and
harvesting dates
⇒ Direct contracts with
selected traders instead of
1,700 farmers
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⇒ Reduction of transaction costs (registration, harvest, transport/delivery
of fresh roots, payment)
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No longer such a common sight!
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Increased Capacity of the factory to Deliver Technical
Services to Farmers
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Improved Technical Capacity of Local Extension
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Promoted long season cassava and
flexible harvesting calendars
� Long season cassava piloted in Krong Bong (5 hectares)
� Long season piloted in Ea Kar (1.8 hectares)
� Farmers are being encouraged to delay harvest
⇒ Lower production costs, off-season supplies, less soil erosion
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Labor-saving harvesting tools have been adopted
� Tools are available in local workshops
� Tools have been sold in others provinces –
Hoa Binh, Hue, Daknong…
� Increased labor productivity: 2-5 times
faster
� Health benefits
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“Third-generation” sling equipment developed and produced by local
workshops
Appropriate slicing technology developed
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Very happy with the tools
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Lessons
• The State plays an essential role in creating favourable external conditions
� Favourable policy/regulatory environment
� Good economic infrastructure
• Contract farming requires significant capacity from sponsoring firms
� Financial, Technical, Marketing, Management, Business strategy, Farmer/community relations
• There is often significant scope for improving contract farming practices
� Dialogue and communication with farmers
� Vertical coordination models: role of groups, agents and traders
� Input provision
� Technical advice
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Chayotte
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Before SADU
• Production pilot in 2007– 5 communes
– 3.5 ha
– 175 farmers involved
– Funded by P135 and CDF
• Rationality– High market price
– Suitable agro-climate condition
– Easy to grow
– Cash flow over eight months
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No market linkages!
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SADU Strategy and Interventions
(2008 and 2009)
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Intervention Strategies
Communes 2007-08 2008-09
Target markets Hoa Binh Hanoi; Hoa Binh
Linkage actors Motorbike collectors Collectors
Wholesalers
Subsidies No direct subsidies / allowances to famers,
collectors or wholesalers
Role of SADU Market research
Provision of market information
Skill development
Market linkage facilitation
Advisory and mentoring services
Policy advice
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geographical targeting and chain approaches
Input supply
Production Collection
Retailing
Wholesaling
SADU
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indirect impact trajectories and leverage
input suppliers
smallholder Farmers collectors
wholesalers
SADU
large traders / large farms
collectors
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Attempts to instigate collective action
at farmer level: FAILED
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Farmers mobilized and mentored to do
chayotte trading business
5 farmers become collectors, sold 12 tons
of chayotte over the first 6 months
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facilitation of linkages to wholesalers in Hanoi
loading a truck on its way to Hanoi
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facilitation of investment linkages
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On-farm advisory services Post-harvest advisory services
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July 2012
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Production expanded
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012
Areas (ha)
0
100
200
300
400
500
600
700
2007 2008 2009 2010 2011 2012
Growers
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Large traders increased, farmer-
collectors decreased
0
2
4
6
8
10
12
14
16
18
2007 2008 2009 2010 2011 2012
Farmer - Collectors (prs)
Large traders (prs)
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Direct interaction between wholesalers and farmers
Buy directly from farms
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• Increased competition for farmers’ produce
• Shorter product chains
• Reduced marketing costs (e.g. presence of trucks)
• Introduction of new crops (demonstration effect; transfer of know-how and
skills)
– Two farms of mushrooms setup
– Mustard greens, gingers and chilli
• Employment opportunities
– 100 workers
– 2,000,000VND/month (190USD)
– or 50,000VND/day (2.5USD)
Positive effects from the physical presence
of large farms
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Lessons
• “intelligent” projects can play a critical role in the success of market-oriented diversification processes
– market research
– policy advice
– market information
– technical assistance to large farms
– intense piloting of new crops with local farmers
– market linkages
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• innovations that generate win-win outcomes
• flexibility and opportunism
• gradualism and pragmatism (sequential approach to innovation)
• strategic use of subsidies (address barriers to innovation)
• perseverance
Some ingredients for successful value chain development
in the uplands of Vietnam
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Thank you for your attention!