Enabling diversification to high-value crops inthe remote uplands of Vietnam:

Lessons from the development of chayote productionand marketing in Tan Lac district

structure of the presentation

Section 1: Some background information on the uplands of Tan Lac

Section 2: Context behind CIAT’s intervention

Section 3: Intervention strategy during the first marketing season

Section 4: CIAT interventions during the first season

Section 5: Outcomes and impacts during the first season

Section 6: Intervention strategy during the second season

Section 7: CIAT interventions during the second season

Section 8: Outcomes and impacts during the second season

Section 9: Cost-effectiveness, sustainability and scalability

Section 10: Some final considerations

Section 1

Some background information on the uplandsof Tan Lac district

cluster of 5 communes

distance to Hoa Binh: 50-65 km

distance to Hanoi: 120-135 km

local physical access conditions:poor to reasonable

remote…

number of households

population % ethnic minority

householdpoverty rate

1,534 7,766 100 45

ethnic minority (Muong) population, relatively high poverty rates

agricultural land (ha) rice area (ha) maize area (ha)

2,050 488 1,298

an agricultural-based, undiversified economy…

Section 2

Context behind CIAT’s intervention

diversification to high-value crops is of strategic importance to the uplands of Tan Lac

farmers are over-reliant on maize as a source of cash income (maize is the only cash crop in the area)

maize is a low-value crop (its dominance is explained by relatively low-input requirements and low production and marketing risks)

maize cultivation in sloped lands is also associatedwith serious soil erosion problems…

chayote is a good bet for diversificationin the uplands of Tan Lac

high prices in urban markets(average wholesale purchasing prices in Hanoi during the off-season months ~ US$500-600 per ton)

suitable local agro-climatic conditions for cultivation during the off-season (mid-April to early November)

there is no scope for expansion of areas in Tam Dao, which is currently the only major supplying area to Hanoi during the off-season months

relatively easy to grow

high potential yields(25 tons in low-input system; 60 tons in high-input system)

regular cash income during 6-7 months(2-3 harvests a week)

no soil erosion (full soil cover before, during and after the rainy season)

main challenges…

high cost of seed

no vegetable input distribution networks in the uplandsof Tan Lac

no vegetable marketing networks in the uplands ofTan Lac

high marketing risk due to the highly perishable nature of chayote leaves

in late 2007 provincial and district agenciesestablished three chayote pilots

location area (ha) number of growers

4 villages, 3 communes 1.8 87

but at the start of the harvesting season (April 08)farmers had no buyers for their chayote.

was this about to become another failed, subsidy-driven pilot?

it was then that CIAT (through SADU project) decided to work with local stakeholders to address

market access problems

Section 3

Intervention strategy during the first marketing season (April – October 2008)

target markets: provincial

TAM ĐẢO

TÂN LAC

key entry point for intervention:development of a local collection network

lower marketing costs

feasibility of intermediate means of transport (motorbike)

lower risk of product spoilage

less strict buyer requirements (product quality, regularity of supply)

lower levels of competition (competition from other leafy vegetables, but no supplies of chayote leaves from other areas)

advantages of provincial markets (vis-à-vis Hanoi)during the initial chain development stages

in Vietnam local collectors play a critical role in linking vegetable growers to mainstream (wet) urban markets

there was no vegetable collector in the whole cluster of5 upland communes (the key missing link in the chain)

rationale for establishing a local collection network

the option of attracting outside traders was deemed inferiorto the development of a local trading network

coordination with farmers would be more problematic due to distance

mobilization of district traders would be difficult in view of the small product volumes and the marketing risks involved

potential for generating local income from marketing activities would be lost

opportunity for developing local entrepreneurial skills would be missed

in theory, farmer groups can replace collectors by taking onproduct assembly and other marketing functions

but attempts to instigate group action failed!

Section 4

CIAT interventions during the first season

1. identification and mobilization of farmers who couldtake on the role of collectors

2. provision of market information to new farmer-collectors(as well as local government staff and farmers)

3. provision of advisory and mentoring servicesto the new collectors

(bargaining strategies, record keeping etc)

4. transfer of production and post-harvest know-how to farmers:

harvesting skills…

and bundling skills

Section 5

Outcomes and impacts during the first season

estimated harvest (tons) 33

average yield (tons/ha) 18

production

marketed volume (tons) 29

average farm-gate price (US$/ton) 240

marketing

chayote chain 87 farmers

5 collectors

Consumers in Hoa Binh Province

Phuong Huyen

RetailersRestaurants

40%26%34%

one farmer-collector (w/ helmet) selling to retailersin Hoa Binh town

another farmer-collector selling to consumersin Hoa Binh town

income impacts: additional local net incomes in 2008

(assuming no production pilot subsidy)

chayote (1)

USD

maize (2)

USD

(1) – (2)

USD

farm 5,100 3,000 2,100

marketing 1,700 100 1,600

total 6,800 3,100 3,700

Note: maize is the counterfactual crop

encouraged by these positive results, local government agencies decided to expand the pilot area

location area (ha) number of growers

8 villages, 3 communes 3.5 197

Section 6

Intervention strategy during the second season

(December – October 2009)

target markets: Long Bien, Hanoi

(largest wholesale market for fresh produce in Hanoi)

provincial markets are too small to absorb additional production from Tan Lac

prices in Hanoi are significantly higher than in Hoa Binh

supermarket demand for fresh produce is still very small (in the case of chayote, about 50 kgs per day per chain)

the transport logistics associated with deliveries to supermarkets are challenging and transportation costs too high

suppliers to supermarkets must be formally registered and have a bank account

supermarkets do not pay upon delivery

rationale for targeting wet markets instead of supermarkets

promote an upgrading of product quality,in line with the requirements of wholesalers in Hanoi

facilitate an expansion and consolidation ofthe collectors’ network

support the development of commercialinput distribution networks

Section 7

CIAT interventions during the second season

mobilization and mentoring of new farmer-collectors

exposure visits involving collectors and commune officers

markets within the province and in neighbouring provinces

Long Bien, Hanoi (main target market)

Tam Dao (largest production area in Vietnam, main competitor)

mediation between collectors and wholesalers in Hanoi, especially during the initial stages

facilitation of linkages with transport service providers

1. market information and product market linkages

provision of useful telephone contacts (producers in Tam Dao, collectors in Tam Dao, traders in Hanoi) to collectors for regular access to price information

promotion of collective action amongst collectors to ensure

joint negotiation with wholesalers in Hanoi

minimum daily deliveries to key buyer in Hanoi

standardized product quality, in line with the requirements of wholesalers in Hanoi

integration of a trader servicing a chayote pilot in a neighbouring district in the Tan Lac chain (scaling-out)

collectors discussing the market situation and opportunities with retailers in Hoa Binh province

one collector and one commune officer discussing the market situation and opportunities with retailers in a

neighboring province

collectors and one district officer checking the qualityof chayote in Long Bien night market

collectors discussing the market situation and opportunitiesin Long Bien night market

collectors from the uplands of Tan Lac loading chayoteinto a truck on its way to Long Bien market

collector in a neighboring district linked to the Tan Lac chain

dau trau pilot with Phuong Huyen, with an emphasis on upstream links with an Hanoi agent and downstream links with the collectors in the uplands of Tan Lac(note: dau trau is a nutrient-rich chemical fertilizer = NPK++; Phuong Huyen is a small agribusiness firm based in Hoa Binh town)

facilitation of linkages between the collectors in the uplands and a growth regulator agent in Hanoi

2. input chain development

dau trau agent loading a truck for delivery to Phuong Huyen

one of the collectors that supplied dau trau to farmers

training and mentoring of farmers and commune officers

production practices

bundling

discussions with collectors on the need for communicating buyers’ quality requirements to farmers and only purchasing from them chayote that meets those requirements

3. product quality

transfer of production knowledge and skills

improving bundling skills

practicing bundling

facilitation of visits by outside traders with a potential interest in buying chayote and investing in vegetable cultivation in the uplands of Tan Lac

facilitation of meetings between these traders, local authorities, and local collectors

4. investment linkages

Mr. Thao (a wholesaler from Long Bien) leased 5 ha withinan idle, 40 ha commercial farm in the uplands of Tan Lac

for cultivation of chayote fruit and other vegetables

Mrs. Tam (a farmer and trader from Tam Dao) and her husband leased 3 ha within the same commercial farm for cultivation of

chayote leaves and other vegetables

5. policy and strategy dialogue with local authorities and collectors: scaling-up and diversification strategies

Section 8

Outcomes and impacts during the second season

2008 2009 % change

estimated harvest (tons) 33 67 103

average yield (tons/ha) 18 19 6

production

marketing

2008 2009 % change

marketed volume (tons) 29 61 110

average farm-gate price (US$/ton) 240 355 50

197 farmers

9 collectors

Consumers Hoa Binh Province

RetailersRestaurants

Long Bien night market,Hanoi

Consumers Red River Delta

RestaurantsRetailers

Phuong Huyen 11%

25%64%

49%

15%

chayote chain

income impacts: additional local net incomes in 2009

(assuming no production pilot subsidy)

chayote (1)

USD

maize (2)

USD

(1) – (2)

USD

farm 18,500 5,000 13,500

marketing 5,000 200 4,800

total 23,500 5,200 18,300

Note: the data excludes the profits earned by Phuong Huyen, wages at the two commercial vegetable farms, and the additional income flowing to the Mai Chau trader and

30 pilot growers in that district

Section 9

Cost-effectiveness, sustainability and scalability

cost of SADU Intervention (two seasons)

Cost Item USD

Project staff salaries 10,000

Travel cost 2,500

Per diem for staff 300

Allowances for local staff 400

Accommodation 900

Other 500

Total 14,600

how sustainable and scalable are these processes?

skills and knowledgecommercial

input distribution chains

marketing networks

PROFIT

but there is a danger that Moc Chau will become anew, major supplier…

the market is growingbut

remains thin

risk of oversupply

need for diversification beyondchayote leaves

expectations for the 2009/10 season

doubling of areas in the uplands Tan Lac

consolidation of input distribution chains

increase in yields

diversification of buyers

significant reduction in marketing costs ↑ farm-gate price

diversification to chayote fruits

scaling-out of processes to Mai Chau

Section 10

Some final considerations

multi-stakeholder (and multi-client)

facilitative

pragmatic

flexible and opportunistic

some key features of the CIAT approach(considered good practice and critical for achieving success)

production and marketing are regarded as intimately linked and equally important

agribusiness-inclusive (working w/ the private sector for pro-poor innovation and leverage)

chain competitiveness and value as guiding concepts

win-win as a guiding principle

time, not lots of money

flexibility in the design and implementation of interventions (log-frame; planning procedures)

flexibility in the targeting of geographical areas (opportunities for scaling-out)

other critical success factors: issues for donor agencies

indirect impact trajectories

stance towards the private sector

two key issues for implementing agencies

Thank you for your attention!