VietCham’s very first workshop on “Vietnam Agriculture Value Chain – Challenges and Opportunities” held on Saturday, 15 Aug 2015 at SMU, School of Accountancy & Law was another full-house event with overwhelming interest from the investors, importers in Singapore and young aspiring professional community. The workshop showcased outcome of the research project by VietCham Agriculture Working Group (AWG), established in end March 2015 under mentorship of Mr. Nguyen Son Vien, Managing Director of Eames Capital Pte Ltd and member of VietCham’s Board of Director, with a fundamental objective of improving farmers’ income, while taking into account challenges by key stakeholders in the value chain, in order to propose win-win solutions and suggest investment opportunities in Vietnam agriculture sector to uplift the value chain. We were honoured by the presence of experts in Agriculture industry including representatives from International Rice Research Institute (IRRI), CNH Industrial, Asia IIX, SGS, NTUC Singapore, etc.; and Embassy of Vietnam in Singapore.
The workshop commenced with AWG presentation on research findings of Vietnam’s agricultural value chain, with a deep dive into post-harvest export value chains of Rice (commodity chain) and Fruits & Vegetables (cold chain) in Mekong River Delta. Key issues observed in Rice export value chain lie in fragmented and small scaled production, poor post-harvest primary processing, presence of intermediaries, and double milling process that cause high percentage (10%, 15% and 25%) of broken milled rice, inconsistent quality and traceability of final produces. These are major hindrances to Vietnamese exported rice in gaining quality competitiveness in international market, fulfilling international standards such as GlobalGAP, HACCP, etc. and establishing a trusted rice brand. Consequently, Vietnamese export rice are often repacked under importers’ in-house brand and sold at lower price than competitors like Thai rice. Direct export is small compared to domestic sales to traders/private exporters or assigned exports by SOEs under G2G contracts. At the same time, presence of intermediaries have put farmers’ income at a disadvantage given their limited direct market access. Though the large-scaled farm model (contract farming) has been implemented in Vietnam, breach of contract by farmers or companies is common due to price fluctuation and insufficient volume of export contracts secured, coupled with a non-stringent legal framework on contract enforcement.
The AWG moved on to share similar issues experienced in fresh Fruits & Vegetables export value chain i.e. fragmented production, presence of intermediaries and isolated packing house from farms. It entails such problems particular to fresh, perishable produces as unsafe pesticide application, limited cool storage at farm/packing house and cold transportation from farm to packing house which are critical in maintaining produce shelf life. As a result, only 10% of total F&V production is qualified for export, and our produces are often not price competitive with other countries given high processing cost and air freight cost incurred due to lack of scale. Again, large-scaled farm model organised in form of agricultural or service co-operatives still face challenges in securing stable, long term supply contracts or quality delivery given inadequate cool storage and primary processing facilities at farm.
In light of the common theme for both value chains, VietCham AWG proposed an integrated value chain aiming to remove intermediaries, ensure traceability of produces and allow for direct market access to farmers. It comprises three main pillars: 1) large-scaled agricultural co-operatives or producers; 2) one-stop processing facilities at farms; and 3) a distribution platform (a marketplace) connecting importers with producers. The distribution platform would partner with international quality assurance companies to ensure registered producers fulfil international certification; with a panel of logistic companies to ensure timely delivery and leverage on scale; and with banks to facilitate Trade Finance. The platform would also work with producers in branding and marketing front, building brand equity for Vietnamese exported produces in international markets. Success of the model would require investments in the one-stop processing facilities at farm and cold transportation, as well as necessary changes to legal framework i.e. flexible land use policy to facilitate large scaled farm model, and deployment of processing plants at farm; liberalised export regulations; and stringent contract enforcement framework, etc.
Following the presentation was an interactive Q&A session by a panel including AWG members and mentor, Mr. Nguyen Son Vien. Lots of questions were received from the audience around the proposed model; lots of sharing by invited guests on certifications and import experience with Vietnam counterparts, with suggestions on other aspects that the AWG could cover, including success stories and lessons learned from best practices. The workshop ended with fruitful networking session between AWG and importers and investors, opening up further discussions on investment opportunities and expanding the gate into Singapore markets for certified agriculture producers from Vietnam.
VietCham really appreciates your support in this event, and we do look forward to seeing your interest in our future initiatives. Do look out for news of our developments through updates on our website, Facebook page, Facebook group and LinkedIn page.
Here are some of the photos of the event: