Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing

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Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing

Transcript of Organic Vegetable Business in Vietnam: Entrepreneurial Finance & Creative Marketing

  • 1. Organic Vegetable Supply Chain in Vietnam:Marketing & Finance PerspectivesTran Tri Dung DHVP Research & Consultancytran@vietnamica.netPham Hoang NganThe Vietnamese Initiative for Food and Agricultural Policy pham@vifap.org

2. Organic production of agricultureis a traditionHo Chi Minh (left),1962Sustains the health of soils,ecosystems and people.Minimal use of off-farm inputsWorking on fields,Management practices thattodayrestore, maintain, or enhanceecological harmony 3. and ADDA introducedorganic agriculture in 20042004-2010: Agricultural Development Denmark Asia, in collaboration withVietnams National Farmers Union, developed a framework for organicproduction and marketing (http://vietnamorganic.vn/)A non-profit initiativeLack of consideration for resources limitation SUSTAINABILITY?Trial and error processNarrow window for private sector 4. Production Organic agriculture production area Small (2010): 21,000 ha = 0.2% Viet Nams 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% Its hard to expand production area:Relaxation of field is the expense of cost-sensitive farmersSurge of land prices in peripheral areas of big citiesUrbanization and industrializationTough 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 expertsexpenses 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 & CoordinatorOrganize production Trading and marketingEducate farmers jobsTechnical and financial Educate consumerssupports to growersRaise 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 Hanoi2011 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 wantvegetables every day.. but not thesame vegetables Supply of organic produces islimited: 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% ofrevenue Sale volume: $80 to $150 perday Greenlink: Top quarterly sale: $2,000 Manager salary: $1,000/month Ecolink: Monthly revenue: $10,000 Still struggling with financial distress Well-invested businessfacilities.. but for what? 14. An organic vegetable storeAlso organic cosmetics!Shop rental cost: US$600/month 15. Finance: Start-up Most important source offunds: ODA, int aids Venture investment 16. Connecting the dots.. EmpiricalexaminationCulturalDimensionsCreativity RelationshipsLessons forresearch & businessEntrepreneurship 17. CreativityJapanKoreanViet Nam? 18. Organic Car 19. Future: The Entrepreneurs Farmers are entrepreneurs: growers/producers + traders + capitalistsA 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 markets1ha on the side of Red River;(EU, America, Japan)15 minutes to Hanois downtown 20. THANK YOU!