Working with the Private Sector to Leverage Impacts
Experience with cassava in Krong Bong, Vietnam
Chiang Mai, 26 September 2007
Tiago Wandschneider, SADU Project
Small-scale Agro-enterprise Development in the Uplands - SADU
Cassava is the second most important commercial crop in Krong Bong
No. cassava farming and processing households
> 4,000
Area under cassava 2007 3,500 ha(500 ha in 2002)
Production 2007 65,000 tons
Farm-gate value of cassava roots
US$ 2.1 million
Value added from dry cassava processing
US$ 400,000
� Competitive/efficient marketing system
� Limited dissemination of technical messages
� Soil erosion and declining soil fertility are becoming major issues
The Yang Kang starch factory
Starting year of operation 2004
Processing capacity 75,000 tons fresh roots
Processed volumes20052006
17,840 tons42,243 tons
No. contract growers 1,640
� input credit
� consumption loans
� guaranteed purchase of fresh roots
� competitive prices
Key features of contract farming scheme
Weaknesses in contract design (baseline)
1. registration process
2. consultation with farmers
3. role of group leaders
4. input supply
5. transport services
6. off-season contracts
Weaknesses in contract implementation (baseline)
1. issuing of harvesting tickets
2. loan disbursement
3. technical assistance
4. vertical coordination
5. payment procedures
Payment
Phiếuthuhoạch
Collect harvesting tickets
Arrangetransport
Travel to the factory
Wait fordelivery
very high transaction costs =>
many farmers rely on traders as intermediaries
Travel to the factory
Do farmers and the factory need a contract?
(+)
cassava (off-season)
Farm
er s’need
(+)
(-)
(-)cassava (season)
Company need
Both farmers and the factory can benefit froma more trader-centred system!
Intervention strategy
training
SADU Project
dialogue, advice, training, linkage, technical
assistance
vertical coordinationcultivation practicesoff-season contracts
dialogue
resources
services
Cultivation practices
Outcomes: improvements in contract design
Registration process Measuring of farm size no longer necessary
Consultation w/ farmers
Harvesting calendar now set by farmers
Role of group leaders Financial package being revised
Input supply Plans to supply fertiliser to 10 model groups
Transport services Contract w/ 4 traders and YU
Off-season contracts No change, increased investment in off-season cultivation
Outcomes: improvements in contract implementation
Harvesting tickets One new field officeImpact of contract traders?
Loan disbursement No major changeImpact of contract traders?
Technical assistance Demonstration servicesPlan to work w/ 10 model groups
Vertical coordination Facilitative attitude towards traders Contracts w/ traders
Payment procedures Farmers no longer have to travel to the factory
Intervention costs (year 1)
Activities Cost (US$)
RMA 1,500
RMA workshop 1,100
Case studies 8,000
Technical assistance 2,400
Project staff salaries 6,000
Other 1,500
Total cost 19,500
� variation in farmer net incomes?
� employment effects?
� impact on non-contract growers?
Some target impacts (1)
∆ yield ∆ production ∆ farmer gross income
income multiplier effect
1 ton/ha 1,800 tons/ annum
$US 57,375 1.?
Some target impacts (2)
� release of labour for productive and leisure activities
� potential for increase in farm-gate prices
∆ starch content of roots ∆ farmer/trader net income
+ 1%, 15% supplies US$ 9,375/annum
Interventions: promoting adoption ofsimple slicing tools
� Reduced labour costs
� Shorter drying time (4-5 days)
=> scaling-up of processing activities
=> lower risk of product spoilage due to rain
� Improved product quality
Profitability, small commercial processor (US$)Manual slicing
8 cycles (10 tons dry cassava/cycle)
Mechanical slicing
10 cycles (10 tons dry cassava)
fresh roots 6,050 fresh roots 7,563
labour 250 labour 125
bags 40 bags 50
Diesel 107
depreciation 9
maintenance 5
Cost 6,340 Cost 7,859
Revenue 7,710 Revenue 9,375
Profit 1,370 Profit 1,516
∆ profit = 146
� technology piloted
� Conditions for commercialisation of technology in place
Outcomes
� Tool improved
� disc, belt => motorised
� blades w/ inclination
� different size holes
In the next two seasons, SADU will focus on:
� demand for slicing tool
� linkages between processors and manufacturers
� the concept of group purchases
� direct linkages with exporters
� scaling-out
Intervention costs (until August 2007)
Activities Cost (US$)
RMA 800
RMA workshop 400
Case studies 1,000
Demonstration of tool 1,125
Meetings w/ processors + exporters 565
Staff salaries 2,500
Monitoring visits 200
Total cost 6,590
Target impacts
∆ profit, 100 commercial enterprises US$ 16,400
additional local demand for fresh roots 4,400 tons
labour savings, 150 farmer-processors 1,200 man-days = US$2,250
potential labour displacement… 3,800 man-days = - US$9,500