The Netherlands and Vietnam are both world players in the export of agricultural products. VIR’s Hanh Tung talks with Simon van der Burg, the Netherlands consul-general in Ho Chi Minh City, on the business opportunities offered by Vietnam’s agriculture and food sector to Dutch firms.
Dutch agriculture is renowned for its high-quality know-how and has a good international reputation concerning food safety and sustainable production. There are examples of Dutch success in Vietnam’s agriculture sector like FrieslandCampina, De Heus, Dalat Hasfarm or Nedcoffee. What are the reasons behind their success?
The Dutch Prime Minister Mark Rutte came for a visit to Vietnam on the 16th and 17th June 2014. He was accompanied by Minister for Agriculture Sharon Dijksma and a large Dutch business delegation. A key milestone of the visit was the signing of a Strategic Partnership Agreement on agriculture and food security between the Netherlands and Vietnam.
Minister Sharon Dijksma attended the Forum on Horticultural Cooperation and Development together with the Dutch business delegation. During the Forum, Fresh Studio Director of Marketing and Business Development, Sigrid Wertheim-Heck, delivered a presentation entitled ‘Supplying the market of Tomorrow’ with insights on Vietnam’s horticulture.
Vietnam is challenged by major climate change issues, dependency on imported horticultural products during off season, concerns about food safety due to agro-chemical residue, micro-nutrition deficiencies, and the low level of technology in horticulture which results in unsustainable development. However, there are opportunities yet to be realized including a very large domestic market (90 million people), diversified climate conditions of production areas, and farmers’ willingness to adapt as long as they have access to technologies, training and finance. Vietnam is already an agriculture powerhouse for a large range of commodities, being in the top 3 of largest exporters in the world for products such as coffee, rice, seafood, cashew nuts, pepper etc. With the Vietnamese entrepreneurial spirit this can also be achieved in horticulture.
A consortium consisting out of Koppert, Rijk Zwaan, BVB Substrates, Svenson, Priva, Yara, Rabobank, Wageningen UR and coordinated by Fresh Studio, have brought their resources together to speed up the ambition of Vietnam to become a key supplier of fresh produce for urban Asia. The consortium will implement an innovative greenhouse development program in the Central Highlands of Vietnam. Supported by the Transition Facilty of the Dutch Ministry of Economic Affairs, the consortium aims to accelerate the adoption of basic climate controlled plastic greenhouses by local farmers. By offering local farmers all knowledge, technologies, financing through local banks, and linkages to the market, an important step is made to make the 30,000 hectare vegetable production in the Central Highlands more productive and more sustainable.
^ Visiting modern supermarkets during the tour organized by Fresh Studio
As part of the visit programme, Fresh Studio coordinated a tour to modern supermarkets and traditional wet markets for the Dutch delegation. The tour provided the delegates with real life experience of Vietnamese urban retail and wholesale channels and an understanding of the retail modernization process.
To introduce Zespri® SunGold kiwifruits to potential business customers, Fresh Studio organized two launching events in HCMC and Hanoi. These kick-offs are part of the marketing activities for New Zealand’s kiwifruit season 2014.
Zespri® SunGold is considered the strategic product of New Zealand kiwifruit under the brand name Zespri from this year in Vietnam. It has been developed based on the techniques of natural hybridization between different varieties of kiwifruit. The rich sources of nutrients like Vitamin C, fiber, folate and potassium make Zespri® SunGold a “Super fruit’.
The launching events occurred on the first two weeks of June – as the start of the Zespri kiwifruit season. It attracted participants from all levels of sales channels ranging from importers, fruit wholesalers, supermarkets, shop owners and press. The conference provided the participants with information about Zespri company, Zespri® SunGold, nutritional facts, and techniques to preserve and prepare the new variety for retail. The information presented can help business customers become more confident in successfully selling Zespri® SunGold.
^ Zespri® SunGold launching event in HCMC
Since 2009, Fresh Studio has cooperated closely with Zespri International Ltd. in managing the brands and contributed essentially to the thriving growth of kiwifruit consumption in Vietnam. Following the success of Zespri® Green and Zespri® Gold, Zespri® SunGold is on its way to capture the Vietnamese market.
Nearly 50% of Hanoi’s urban population lives on 4 USD or less a day. This group represents a food value of circa 5 million USD/day. Despite their demand for safe and nutritious food, this economy of scale is not yet targeted with fresh food quality improvements.
Food that carries formal food safety certification by government authorities is mainly traded at registered and certified food safety retail outlets, targeting middle and upper income classes. Even though Hanoi’s lower income residents are explicitly demanding for safe and healthy foods, they are generally excluded from these channels.
The exclusion of lower income consumers from more controlled formal food provision systems urges innovative approaches.
The Ministry of Agriculture and Rural Development (MARD) has held a conference on PPP (Public Private Partnership) investment in agriculture which shows its high interest in the investment mode. Vietnam is one of the 11 countries in the world which applies the PPP model in agricultural projects on a trial basis.
Innovative public private partnerships are a key instrument to improve food security and agricultural sustainability in Vietnam. The model has attracted the participation of 15 trans-national groups, including Metro Cash & Carry, Unilever, Nestle, Syngenta and Fresh Studio.
Fresh Studio has been involved in several PPP projects, amongst others to build up a fish production chain meeting international standards which supports the penetration of Vietnamese seafood products in retail chains.
Fresh Studio is also committed to developing business partnerships to improve the safety and quality of vegetables, while benefiting farmers. In 2013, Fresh Studio organized a conference, titled ‘Supplying the market of tomorrow’. This event took attendees on a one-day journey into the future of safe, healthy and high value food in Vietnam and offered a platform for (inter)national businesses to meet with key stakeholders from the public sector including Vietnamese government, foreign embassies, NGOs, academia, media and consumers.
The successful results of agriculture projects implemented under the mode of PPP show great opportunities for the participation of more foreign and domestic companies to realize the sustainable development of five industries: tea, coffee, vegetables, fisheries and commodities.
Sigrid Wertheim-Heck, Gert Spaargaren and Sietze Vellema conducted a research with the aim to investigate how Vietnamese citizens in their everyday lives are confronting the health risks and other side effects related to the consumption of fresh vegetables.
Concerns about food safety influence the way in which Vietnamese consumers confront the question of where, how and from whom they buy their fresh vegetables. In this paper we analyze in what manner and to what extent existing shopping practices inhibit the adoption of modern retail based food safety strategies. Using a social practices theory based approach; we analyze in detail the sales practices of sellers and the purchasing practices of consumers in a Vietnamese provincial city.
This study reveals how both sellers and buyers in wet-markets, Asian style fresh food markets, apply different sets of skills and knowledge, based on locality, personal contacts and private judgment, to match supply and demand in the context of food safety threats. Within the everyday practice of shopping for vegetables, trust is shown to be continuously reproduced along pre-given lines.
Consumers do not easily look outside or move beyond their existing routines even when food safety concerns would urge them to do so. From these findings we conclude that in situations where wet-markets serve as the dominant channel for distributing and purchasing fresh food, the efficacy of government and retail induced food safety strategies depends on their articulation within existing food purchasing routines of Vietnamese consumers.
What explains the persistence of vegetable shopping at street markets even while they do not offer formal food safety guarantees in Hanoi? Sigrid Wertheim-Heck, Sietze Vellema and Gert Spaargaren, with support of Fresh Studio Team, conducted a practice-based research in order to understand the motivation and constraints of consumers relating to their daily vegetable purchase practices.
Food safety is a widely recognized concern in Vietnam. Public officials, companies and consumers find different ways to address risks of pesticide residues and bacterial contamination related to the use of fresh vegetables in daily diets. The response of the government to these food safety risks includes the modernization and regulation of the food retail system. However, reforms that aim to offer a controlled and predictable provision of fresh vegetables through supermarkets seem to contrast with the daily consumer practices in a dynamic city as Hanoi; over 95% of vegetables is still being purchased at long-established open-air markets, importantly the informal and unhygienic street markets. Using a practices theory approach, this paper aims to explain this persistence of street-market shopping for vegetables.
Detailed accounts of consumer practices, case studies at different retailing sites and daily logbooks of consumers demonstrate that the way consumers cope with food safety risks is largely shaped by the temporal and spatial constraints of their daily shopping practices.
We identified how vegetable shopping is either enjoyed as social interaction within the local community or is regarded a time-consuming activity that conflicts with other activities in everyday life. Our findings indicate how these constraints constitute a reinforcing mechanism for the persistence of uncontrolled and unhygienic street markets.
To make policy responses to food safety risks both more realistic and effective, it is essential to connect to and accommodate the daily realities of consumers managing time and space in a modernizing city rather than to impose an ideal, typical market exclusively driven by the wish to control food safety risks.
BoP Innovation Center (BoPInc) and partners (among others Fresh Studio) published the fifth and final publication of the series on the inclusive innovations process at the Base of the Pyramid (BoP), named ‘The process of innovation to create inclusive business’.
The publication ‘The process of innovation to create inclusive business’ is the final publication in the Three Pilots for Pro-Poor Innovation (3P4PPI) series and discusses experiences and insights gathered from implementation on market-driven pro-poor innovations in Bangladesh, Ethiopia, Kenya, Rwanda and Vietnam.
One of the main challenges for companies, international organizations and NGOs who embark on creating new business opportunities in BoP markets, are optimizing the outcome of the innovation development and to cope with high level of uncertainty inherent in inclusive innovations.
The Three Pilots for Pro-Poor Innovation (3P4PPI) consortium has been able to test a BoP Innovation Cycle, which represents the iterative phases within the process of inclusive product and service innovation development. Developing innovation at the Base of the Pyramid requires a specific approach. The cycle goes from identifying opportunities to the actual implementation of it. Key business dimensions of a BoP venture are developed in each phase. The acquired knowledge is used to improve the BoP Innovation Cycle.
As part of the study program of the University of Dalat, Dan conducted a three months internship at Fresh Studio. “It was just a short time, but a wonderful experience.”
Choice for Fresh Studio
I found Fresh Studio by Internet. I wrote a motivation letter, in which I described my previous experiences, and applied at the company. I was so happy that Fresh Studio accepted my request.
Internship assigment My internship assignment was to make a ‘Green lolo trial’.
Furthermore, I had the opportunity to work with farmer at Suoi Thong B village in the Metro Requirement project. The first days, I was guided enthusiastically by Fresh Studio’s agronomists. I was introduced in the company and they informed me about the production process “Metro Requirement”. I also visited farmers in Dalat with the agronomists.
I started working at the Demo Farm. I provided different seed varieties, soil and fertilizers for testing green lolo. I worked with farmers, who produce safe vegetable in “Metro Requirement” project. I found this the most exciting part of the job. I checked their farm, noted their plants, fertilizer storage, pesticide storage… I experienced that farmers have multiple personalities; some are very friendly but some are very picky. But after some time, I was close to them. They shared many things about farming, crop and some things in life with me. My knowledge increased a lot.
Reflection Looking back at those 3 months, I have a lot of happy memories and unforgettable impressions. Fresh Studio is a professional working environment. People are very passionate about their work and we always made a lot of fun. When my internship ended, the company organized a farewell party. I was deeply moved.
At this moment, I am back in college to continue my education. If I think about past time, I feel so happy and grateful for the company. Fresh Studio is not only a company but a family. I will strive and study hard to have the opportunity to be a member of the Fresh Studio family again.
Moc Chau and Son La government agronomists and extension officers will start to join Fresh Studio, Northern Mountainous Agriculture and Forestry Research Institute (NOMAFSI) and Hanoi University of Agriculture (HUA) in the monitoring of farmers.
The farmers participate in the project: Improved market engagement for counter-seasonal vegetable producers in North West Vietnam. The engagement of Moc Chau and Son La governments is part of 1) handing over project activities to local stakeholders and 2) developing a certification system to produce and market Moc Chau vegetables under a trademark.
One of the objectives of the project is to evaluate the economic potential and improve the current supply chain model. This model is introduced in 3 villages in Moc Chau, Vietnam: An Thai, Ta Niet and Tu Nhien. In order to achieve this objective, farmers are participating in trainings executed by experts from the Australian Centre for International Agricultural Research (ACIAR), NOMAFSI, HUA, Fruits and Vegetables Research Institute (FAVRI) and Fresh Studio. After 3 years, the supply chain model is working and getting stronger. Farmer groups are now supplying and coordinating directly to the retailers.
^ Reviewers together with project team inspect the fields of potential farmers
Initially, the project focused mainly on supplying Hanoi market with safe vegetables during the off-season (March-November). However, due to a constant volume and improving quality of Moc Chau vegetables, Hanoi retailers are more than willing to purchase vegetable from Moc Chau whole year round.
The project will continue to train and support the local stakeholders until 2015. For the coming months, strengthening the farmer groups in the 3 core project villages is top priority together with registration and implementing control and monitoring of the trademark and logo. By the end of the project, farmers together with the local government of Moc Chau and Son La province will take over and continue the activities in supplying certified Moc Chau vegetables under one certification trademark.