Báo cáo nghiên cứu khoa học " Developing Good Agricultural Practice (GAP) systems for dragon fruit producers and exporters in Binh Thuan and Tien Giang provinces " docx

Training of national personnel within the project team and in the private sector has seen practical GAP proficiency developed to a high level which will ensure the continued development

Developing Good Agricultural Practice (GAP) systems for dragon fruit

producers and exporters in Binh Thuan and Tien Giang provinces

Campbell J, Nguyen Van Hoa, Nguyen Huu Hoang

December 2007

Final report to Hassall and Associates International

HortResearch Client Report No

HortResearch Contract No 20027

Campbell J

The Horticulture and Food Research Institute of New Zealand Ltd

HortResearch Nelson Region

This report has been prepared by The Horticulture & Food Research Institute of NZ Ltd (HortResearch), which has its Head Office at Mt Albert Research Centre, Private Bag 92 169, Auckland.

Ministry of Agriculture & Rural Development

6 Report on Cross-Cutting Issues 226.1 Environment _ 226.2 Gender and Social Issues _ 22

7 Implementation & Sustainability Issues 237.1 Issues and Constraints 237.2 Options _ 237.3 Sustainability _ 24

8 Next Critical Steps 24

9 Conclusion 25

10 Statutory Declaration _Error! Bookmark not defined.

11 Appendix 1 Certificates of training _ 33

12 Appendix 2 QNEWZ, October 2007 38

Abbreviations:

BRC British Retailers Consortium: Global Standard - FOOD

CARD Collaboration for Agriculture and Rural Development

DARD Department of Agriculture and Rural Development

DGP Dragon fruit GAP Project

EoI Expression of Interest

EUREPGAP Euro-Retailer Produce Working Group; Good Agricultural Practice

FAQ Frequently Asked Questions

GAP Good Agricultural Practice

GLOBALGAP Global Good Agricultural Practice

GPS Global Positioning System

IMO Institute for Marketecology

MARD Ministry of Agriculture and Rural Development

MOU Memorandum of Understanding

NZOQ New Zealand Organisation for Quality

QDPI&F Queensland Government Department of Primary Industries & Fisheries SGS Société Générale de Surveillance

SIPPO Swiss Import Promotion Programme

SOFRI Southern Fruit Research Institute

VinaFruit Vietnam Fruit Association

VNCI Vietnam Competitiveness Initiative

1 Institute Information

Project Name Developing GAP systems for dragon

fruit producers and exporters in Binh Thuan and Tien Giang provinces

Vietnamese Institution Southern Fruit Research Institute

Vietnamese Project Team Leader Nguyen Van Hoa

Vietnamese Project Operations Leader Nguyen Huu Hoang

Australian Organisation The Horticulture and Food Research

Institute of New Zealand Australian Personnel John Campbell, Leonie Osborne

Completion date (original) September 2007

Completion date (revised)

Reporting period Project final report

Contact Officer(s)

In Australia: Team Leader

Name: John Campbell Telephone: +64 3 528 9106

Position: Project Leader Fax: +64 3 528 7813

Organisation HortResearch Email: jcampbell@hortresearch.co.nz

In Australia: Administrative contact

Name: Mrs Leonie Osborne Telephone: +64 9 815 8819

Position: PA, Bioprotection Group Leader Fax: +64 9 815 4202

Organisation HortResearch Email: losborne@hortresearch.co.nz

In Vietnam

Name: Dr Nguyen Minh Chau Telephone: +84 73 893 129

Position: Project Champion Fax: +84 73 893 122

Organisation SOFRI Email: mch@hcm.vnn.vn

2 Project Abstract

Producers of dragon fruit in Vietnam have seen prices for their fruit decline by about 60% since 2000, which can be attributed, in part, to their dependence on local and nearby export markets There are about ten major dragon fruit exporters in Vietnam but a significant proportion of the total production is sourced from many small farmers Returns from dragon fruit could be significantly improved if small growers and exporters can gain access to new high value markets in Europe and North America Unfortunately, regulatory requirements and recent consumer concerns over food safety and security mean that Vietnamese growers can now only export to these high value markets if they have Good Agricultural Practice (GAP) programmes in place The project has established a private sector working pilot of exporter packer and supplying dragon fruit growers in which the European high value market driven standards of BRC at the packer and EUREPGAP at the farmer level have been implemented High value markets have been identified and are due to be tested following certification of the pilot Training of national personnel within the project team and in the private sector has seen practical GAP proficiency developed to

a high level which will ensure the continued development of the pilot and the subsequent distribution of the model to many more small-holder dragon fruit producers

3 Executive Summary

This is the completion report for the Collaboration for Agriculture and Rural Development (CARD) project 037/04VIE and covers the period 1 March 2007 to December 2007 and the reporting of issues that have either not been reported in other progress reports or have changed during implementation of the project

The HortResearch project leader has made two visits to Vietnam during this reporting period

as scheduled: 6th - 18th May and 19th August - 7th September 2007

There have been no changes to project personnel during the reporting period Mentoring of the Vietnam project team has been ongoing The Southern Fruit Research Institute (SOFRI), Ministry of Agriculture and Rural Development (MARD), Department of Agriculture and Rural Development (DARD) and commercial personnel are included in the training which covers all facets of Good Agricultural Practice (GAP) at the various levels of the international standards Enhancement of the national capability of people and infrastructure continued to be given high priority by the project for ultimate sustainability obligations

The “Introduction to Internal Auditor Training Course’s” delivered to selected SOFRI staff and to the pilot packhouse key personnel and particularly the skills attained by Mr Nguyen Huu Hoang reported on previously have been of great assistance to the stakeholders understanding of GAP quality systems especially when undertaking the final internal audit of the pilot prior to the Certifying Body assessment for Pilot Certification to EUREPGAP and BRC Standards

Field observations for the farmers’ benchmarking survey were completed in the first reporting period The data were subsequently translated into English, entered into a web based database and analysed The benchmarking survey report was prepared by HortResearch personnel and delivered as a PowerPoint® presentation by the project leader to

SOFRI personnel, packers, farmers, MARD and DARD personnel of Binh Thuan during March - April 2007

Selection of a packer/exporter and farmer group for the project pilot to receive project input, confirmed during the September 2006 visit, was formalised Training of the pilot members for improvement towards British Retailers Consortium: Global Standard – Food (BRC) for the packer and EUREPGAP for the farmers continued, to enable them to reach compliance in all areas The training involved quality systems, health and safety, technical, product traceability and environmental issues

A component of the field visits by the project leader had been to observe the current practices

of the dragon fruit farmers and packers These findings formed the basis for the quality manual preparation The dragon fruit quality manuals for the farmer and packer were developed in a way that closely related to the current practices, including appropriate improvements to enable the farmer and packer to meet compliance with the EUREPGAP and BRC standards, and are user friendly Translation of the Manual into Vietnamese has been completed and copies distributed to the project donor HAI/CARD, the pilot (full manual) supplying farmers (EUREPGAP “C” section) and to other packers and farmers progressing GAP production, packing and export The manual issued to the pilot packer and supplying farmers is the documented quality system of the pilot and has been used as a training tool when developing the pilot to meet the Standards The standards being implemented incorporate all issues identified in the project objectives However, small-holder farmers, even with continuous training exposure throughout the project have generally failed to respond to GAP to the level whereby the project could have them exposed to certifying body inspection and certification Constraints to small-holder participation have been identified during the project and will be overcome during the future development of the project pilot Constraint mitigation employed by the pilot will form a practical demonstration for replication to any new dragon fruit, or other crop, quality unit being established in the future

During the project leaders December 2006 and May 2007 visit, extensive training was provided to the pilot packhouse senior staff and farmers, which involved all the physical changes to facilities, quality systems establishment, personnel training, compliance issues and auditing requirements as documented in the Dragon fruit Quality Manual for the pilot to reach compliance with BRC and EUREPGAP Standards The intensive training of pilot personnel was progressed to include internal auditing of the pilot to identify any issues of non-compliance and corrective action requirements and to demonstrate process “control” and sustainability

The final internal audit for the pilot was completed in August/September 2007 to confirm readiness for Certification Body inspection The external audit was completed during September by the certifying body ‘SGS Vietnam’ Corrective actions for non-conformity issues were completed and a follow-up external audit was completed on 8 November 2007 with full compliance with the EUREPGAP standard being confirmed The BRC external audit is scheduled to be undertaken by the certifying body in late 2007

High value markets are being identified and evaluated for dragon fruit to be exported from Vietnam, both for fruit when certified and for the project-improved fruit exported during the transition period towards certification A financial incentive is paid by the packer for qualifying fruit during the transition period

Utopia UK, who import fruit to the United Kingdom for TESCO’s, have expressed a strong desire to access GAP certified dragon fruit from the pilot They have already implemented a third party ethical audit of the pilot, and have indicated they will assist the project team with the dragon fruit value chain analysis and achieving high prices for the safe, legal and quality dragon fruit exported from the project pilot

Inputs identified in the project document had been purchased in year 1 as documented in the

2nd Progress report, February 2006

The CARD dragon fruit project continued to be well publicised in the local and national newspapers and television during this reporting period The projects achievements are being held in high regard by the donor, MARD and the private sector HAI/CARD requested the project to submit an Expression of Interest for a new two year project to expand the initiative During the project leaders May 2007 visit stakeholder meetings were held and an EoI prepared and submitted The new dragon fruit project EoI was short listed by the CARD Programme Coordinating Committee at its meeting of 11 July 2007 Subsequently a full project proposal for the new project was submitted to HAI in Hanoi on 27 August 2007 and was subsequently selected for funding

4 Introduction & Background

Objective 1

To increase small holders’ competitiveness and capacity to supply dragon fruit to high-value international markets, introducing new concepts of food safety, environmental responsibility, sustainability and worker safety into their production practices

It is intended that the development of the Vietnamese personnel, both in the public and private sectors, will be through the practical application of:

¾ Establishing the current status of the dragon fruit industry against EUREPGAP standards through a benchmarking survey

¾ Improving the current understanding of dragon fruit agronomy within SOFRI and establishment of systems for constant improvement and problem solving

¾ The development of pilot models of EUREPGAP-compliant Exporter/Packer/Farmer group in the field

¾ Establishing manuals, Codes of Practice and the development of training material that is appropriate, user friendly, developed by the Vietnamese extensionists, and appropriate to the dragon fruit industry for transfer to subsequent “models” and ultimately other crops

¾ Establishing the required quality systems for the dragon fruit industry to adopt and obtain proof of the system robustness, by obtaining EUREPGAP certification for the pilot model

¾ Maximising the impact of current initiatives to develop GAP in the dragon fruit industry through full participation in the Dragon fruit GAP Project

5 Progress to Date

5.1 Implementation Highlights

5.1.1 Benchmarking

The field portion of the benchmarking survey was completed by the SOFRI team in late July

2005 Some 124 farmers from Binh Thuan and 30 farmers from the Tien Giang Province were questioned The SOFRI team recorded farmer information for the formal EUREPGAP oriented questionnaire (Inception Report: August 2005 Appendix 2) and also recorded additional current agronomic and technical information relating to the surveyed farmers dragon fruit production practices

The benchmarking survey data were analysed at HortResearch by Dr Jim Walker and Patrick Connolly who also prepared a PowerPoint® presentation (3rd Progress Report, August 2006, Appendices 1 and 2) for delivery during the scheduled March 2006 visit It was originally planned for Dr Walker to travel to Vietnam to make the PowerPoint® presentations, but this was not possible because of his other work commitments

As a consequence, the benchmarking PowerPoint® presentations were delivered by the project leader during his March/April 2006 visit, initially to the staff of SOFRI then to DARD and some industry personnel in Binh Thuan The presentation has subsequently been used as a training tool for the farmers and packers of the area

During the PowerPoint® presentations, care was taken to emphasise the standards observed in the survey and to relate those conditions to the standards required to meet the high value customer-driven demands as detailed in the EUREPGAP and BRC Standards

The PowerPoint® presentation and other information contained in the benchmarking survey database are being used by the SOFRI scientists during their research work

5.1.2 GAP Manual Development

The Dragon fruit Quality Manual has been completed in English and now translated into Vietnamese This manual was to be completed by the end of March 2006 (milestone #4) in the draft form but had been delayed because of time constraints and the clarification of copyright issues The manual has been developed specifically to meet the needs of the quality systems of the project pilot, at the farmer level to the EUREPGAP Standard and in the packhouse to the BRC Standard and apart from being a living document, has been completed in the final form Future use and adaptation of the manual to other dragon fruit packhouse/farmer groups (and other crops) will have the advantage of a manual that is the

actual documented quality systems of a working model The HACCP report for the quality manual was not included in the printed manual as this is of specific application to the pilot packhouse quality system The Vietnamese and English version of the HACCP report is provided electronically

Full verification of the appropriateness of the Dragon fruit Quality Manual to address the specific standards of BRC and EUREPGAP and the requirements of the customer, the pilot packer and farmers are in the process of being confirmed

by the independent certifying body, SGS Vietnam Compliance assessment by the certifying body was planned to take place during December 2006 however the pilot was not ready and significant modifications were planned/being implemented for the pilot packhouse to better comply with the standards

5.1.3 Develop Implementation Plan – Completed: First Progress Report

5.1.4 Establish pilot GAP programme for year one

As documented in the 2nd Progress Report, February 2006 report, Mr Hiep’s packhouse was identified to be the project’s pilot for packing dragon fruit Subsequently project personnel negotiated with Mr Hiep to define the level of commitment to and cooperation with the project for the development of his packhouse to meet the BRC Standards and project expectations During the July 2006 visit by the project leader, a contract between Mr Hiep and Dr Chau as Project Champion was generated and signed Agreement to work together with the pilot is based on the memorandum of understanding that was under discussion as described in the February 2006 report Indeed many of the issues for improvement highlighted by the project during the previous visits were being or had been addressed by Mr Hiep

Mr Hiep of Queen Farm, Hoang Hau Dragon Fruit Farm Co Ltd committed his resources and staff to the project pilot development As well as committing the packhouse to the project,

Mr Hiep also committed his 50 hectare dragon fruit producing farm to the pilot to be developed for compliance with the EUREPGAP Standard

During the February 2007 reporting period Mr Hiep indicated that he was proposing development of a large packhouse modelled on the pilot packhouse for future expansion, indeed construction for buildings to house the packing facilities were well advanced at the time of the project leader’s visit in May 2007

The Dragon fruit Quality Manual was presented to Mr Hiep, in both the English and Vietnamese language

During this reporting period the project team continued to conduct intensive training/mentoring sessions with the pilot’s staff holding responsible positions within the packhouse and participating farm owners/managers The areas of training and guidance covered included:

¾ The project scope and delivery

¾ The customer and customer demands

¾ Quality systems, their purpose, structure, establishment and management

¾ Defining the “Processes” for the; on-farm through the packer to the exporter

¾ Linkages between farmer and packer and responsibilities and expectations

¾ The dragon fruit quality manual, its development, scope and application

¾ Feedback to ensure the “appropriateness/workability/fit’’ of the manual for the intended purpose

¾ Identification, guidance and purpose for physical improvements required by the project pilot facilities, both on-farm and at the packhouse, to comply with the dragon fruit quality manual and adopted standards

¾ Identification of positions in the “process” and ensure responsibilities had been correctly documented in the position descriptions within the manual

¾ Provide training to people designated for positions of responsibility in the pilot

¾ The role of the internal audit

¾ The responsibilities of the internal auditor

¾ Process corrective action and initiative sustainability

One of the most gratifying elements of project implementation for the project leader has been the uptake and understanding, of the training provided, by the pilot management Progress in developing the documented quality systems and preparation for certification during the project leaders between visit periods has been significant and robust Of particular note is the traceability system employed by the pilot packhouse from the farm through to the market – the packhouse can now instantly identify the specific origin (farmer, block, date of harvest, day of packing, export date, etc.) of any dragon fruit in the market place as well as all supporting documentation if challenged by the market The packer and farmers documentation can also verify all inputs to production, quality and handling

Non-compliant storage of agrichemicals,

equipment and food containers

Compliant agrichemical store

5.1.5 Implementation of Quality Systems

In previous reporting periods the project had provided training in quality systems to any group which was identified that would benefit from adopting GAP Confirmation of the pilot participants and pilot scope during the last reporting period saw the training programme of the project become more focused and addressed the specific needs of the farmers and packer

of the pilot to enable them to meet compliance with the Standards before the proposed assessment visit by the certifying body During this reporting period training provided was very specific to the pilot’s needs and included all components as detailed in the Dragon fruit Quality Manual, guidance on physical changes required at the packhouse and on the farm, internal auditing and for an understanding of the quality systems and being market driven

Choice of quality system standards:

The project chose the existing BRC and EUREPGAP quality standards as the most suitable

to meet the demands of the target customer while protecting the interests of the Vietnamese stakeholders (a copy of the EUREPGAP General Regulations Fruit and Vegetables will be provided electronically) At the farmer level the EUREPGAP Standards are being applied and at the packhouse the BRC Standards are implemented Both standards complement each other to ensure the dragon fruit produced and packed is confirmed as safe, legal and of the quality expected by the high value market customer

The choice of the two standards has been determined by the access conditions to high value markets identified in the project document The project is very “customer driven” and the quality system will meet all the customer’s requirements when fully implemented and will specifically provide documented proof of compliance for safe, legal quality control and traceability for the entire product during the production and packing processes The quality systems developed will easily respond to any additional requirements from specific customers

The quality checking and documentation systems being employed in the pilot can also protect the farmer and packer from claims for damage to product (non-compliance issues) subsequent to the product leaving the packhouse

The current process and status of the quality system of the pilot is:

¾ Pilot participants identified and their association with the project formalised

¾ The BRC Standard has been selected for the packhouse quality system

¾ The EUREPGAP Standard has been selected for the farmer quality system

¾ The Dragon fruit Quality Manual has been developed in English and translated into Vietnamese

¾ The English and Vietnamese version of the manual has been distributed to the packer and relevant portions of the manual provided to the farmers of the pilot

¾ Physical changes, required by the quality system, in the packhouse and on the farm initiated during project implementation have been completed

¾ Vietnamese project personnel have the skills to train dragon fruit industry stakeholders in all areas of quality

¾ Intensive and targeted training has been provided to packhouse staff and farmers

¾ Quality systems have been developed in the pilot as described in the manual, under the training and guidance of the SOFRI project team

¾ HACCP, Health and Safety and Risk analysis studies have been made for the pilot and documented as required by the standards

¾ Internal Audits have determined the quality status of the pilot with corrective action and training process implemented meets the standards requirements

¾ Arrangements have been made for the external audit of the pilot by the certifying body SGS Vietnam

Unprotected tractor power takeoff with Well protected power takeoff

Workers exposed to hazard

5.1.6 Review Compliance

The project leader negotiated with Société Générale de Surveillance (SGS Vietnam), (in Vietnam, Regional Indonesia and New Zealand) an international certifying agency, to provide an estimate for certification evaluation of the project initiatives Quotations for the inspection and certification of project farmers and the packer were received from SGS Vietnam and subsequently a proposal was presented to CARD for the funding of the SGS services CARD approved the funding of the external audit and certification services and this component has been included in the project as a new and separate milestone

During discussions with SGS Vietnam at their Ho Chi Minh office, the project team were informed that SGS Vietnam now has trained inspectors for both EUREPGAP and BRC Standards SGS Vietnam was chosen by the project as the preferred certifying body to do the external auditing and certification services for the project pilot and its future certifying requirements on the grounds that:

• They have suitable qualified auditors for the EUREPGAP and BRC Standards

• The quality of their work is of a high standard which is respected in the market place

• They are prepared to develop their horticultural certifying body services in cooperation with that industry

Internal reviews of the pilot have been undertaken in the form of BRC/EUREPGAP internal audits The data collected has been used to determine the compliance status of the project pilot development and to initiate/tailor corrective action and training It is intended that the learning process of the pilot development will be adapted for subsequent training during the outreach programme

5.1.7 Expanded Year 1 Programme and delivery to additional farmer groups

Word of the CARD dragon fruit project and how it can assist packers and farmers access high value markets is spreading in Vietnam and the SOFRI project team continues to receive serious approaches from interested parties for assistance

Although the project has had difficulty in encouraging small-holder farmers to complete GAP development to the EUREPGAP Standard the project has continued to provide encouragement and training to this sector in an endeavour to enhance their GAP capability in line with the project document requirements It is expected when the greater returns from GAP produced dragon fruit exported to high value markets become known then the small-holder farmers will be motivated to lift their operations to compliance with the standards A basic understanding of GAP and some implementation, through project training within this sector forms a great foundation for subsequent pilot expansion

5.1.8 Implement Year 2 training

Farmers and packers showing an interest in the project have been included through invitation

to training sessions being undertaken, or were mentored separately as time permitted Following success of the pilot it is expected that this training will become more formal and serious The training will be done utilising the “increasing” capability of the Vietnamese personnel

Leading dragon fruit farmers and packers in the Binh Thuan province and packers wishing to develop GAP production and packing units in Tien Gien and Long An based on the project pilot were identified and also received assistance and training At project end more than one packhouse was being constructed and one independent farmer had been certified compliant with EUREPGAP

During the project scoping and subsequent project implementation visits by HortResearch personnel considerable effort was made to identify individuals both in the public and the private sectors who have the capacity to be leaders of change, and quality systems development, improvement and maintenance

A high priority was given to all aspects of national capacity building to ensure sustainability upon project completion

The project tried very hard and expended a lot of project time on the identification of small holder farmers and to subsequently provide quality training

to fulfil the project document’s obligations However, the ability of small-holder farmers to commit themselves in a sustainable way to GAP at the level required by the customer and the project

remains an issue For this reason the project had accelerated the development of the pilot to demonstrate that GAP is viable at the small holder farmer level All farmers were welcomed into the project training programme when they indicated that they could step up to the required commitment to customer standards

As the project developed the pilot towards

the quality standards of BRC and

EUREPGAP, high value markets were

identified It is intended that product from

the pilot will be, following negotiations with

the customer, exported in a form that can go

directly to the high value market and not be

subject to any rework in the country of

destination It is the desire of the project to

maximise returns and reduce waste from

product exported to ensure increased

revenue for the farmer and sustainable

returns for the service operators such as the

packer and exporter Higher values for dragon fruit product will be sought in negotiation with the customer as proficiency in the pilot GAP becomes settled For example: add–on quality requirements; nature’s choice, reduction of carbon footprint; sea-freight verses air-freight; packaging types, etc

Every effort was made by the project to facilitate ease for entry and management of GAP dragon fruit production through housing the quality systems in the packhouse The pilot model quality system coordinates the completion of all appropriate farmer section standards

so they meet compliance, provides technical advice as required by the customer such as grade standards, chemical application, withholding periods, marketing, improvement, corrective action, etc in a transparent and honest way

At project completion there is no doubt that the project pilot now has the capacity to attract many more supply contracted smallholder farmers There is also no doubt that when high returns for GAP dragon fruit exported to high value markets become known by non-GAP farmers they too will seek admission to the certified systems The envisaged replication of the project pilot will see rapidly increasing numbers of small-holder dragon fruit farmer’s greatly improving their living standard

The project has observed three major perceived constraints preventing small-holder farmers from participating in GAP to the EUREPGAP standard They include:

1 A lack of resource to enable the small-holder farmer to make the physical changes to their property and meet the standards:

It is expected that when the compliant pilot high value dragon fruit returns become known and demand for product increases then credit will become available

2 The technical requirements of the standards were beyond the capability for the holder farmer to understand and sustainable implement:

small-The project had housed the quality system management in the packhouse for the major purpose of making it technically easy for the farmer to meet compliance, for the quality system to be “in control” at all times and for the system to be the most economical model to implement

3 It had been previously thought that the small size of small-holder properties (0.3 to

1.0 hectare) was a constraint to their inclusion in a large packhouse GAP operation:

This is not the case as large farms supplying the packhouse do in fact subdivide their properties into even smaller units with many blocks as small as 0.2 hectare

There is a dearth of appropriate and approved infrastructure for the GAP dragon fruit industry at the level that meets the high value market driven standards However, for the project pilot this constraint has been largely overcome in the short term and on a small scale through the use of recognised related specialists and services and the training of people to perform specific duties (Appendix 1 Certificates of training)

Early indications are that there is a significant and continuous volume high value export market available for safe, legal and quality dragon fruit that has been produced, packed and exported by certified operators These markets are initially in the United Kingdom and Europe but the top end market in China is developing rapidly, the markets of North America, Japan and other countries are possible if market access constraints are overcome

It is expected that when the high value markets have been tested with dragon fruit that is certified safe, legal and of the expected quality sustainable high prices for the product will result At this time the demand for dragon fruit that meets the standards will be high and beyond the capability of the current operators to satisfy

To date those farmers embarking on the quality path for dragon fruit production, packing and handling have been the top end, affluent operators and capable of resourcing and understanding the changes needed to implement their quality operations To date the project has been unable to retain small-holder farmers in the quality initiative to enable them to be able to receive the benefits from supplying high value markets

The quality system developed in the dragon fruit project pilot was modelled on quality systems being applied in other horticultural crops of other countries The problem of including the poor farmer who doesn’t understand or doesn’t want to participate is not unique

to the Vietnamese small-holder farmer

It is anticipated that demand for safe, legal and quality dragon fruit by the high value markets will increasingly exceed the capability of the initial pilot’s ability to satisfy Already provisions are being made to expand the postharvest handling and export facilities at Hoang Hau and other packing and export facilities in response to the expected demand On the GAP production side, the current large holder dragon fruit farmers are expanding their production areas Quality production of dragon fruit beyond this capacity will be required to satisfy high value market demand

It has never been the intention of this project to facilitate affluent farmers, packers and exporters to be the only dragon fruit stakeholders to improve their living standards The intention of the project has been to establish the facilities, systems, infrastructure and human capability to meet or exceed the safe, legal and quality expectations of the high value export market as the conduit for small-holder dragon fruit farmers to access maximum returns for their dragon fruit

The project’s dragon fruit pilot at Hoang Hau Dragon fruit Farm Co Ltd now meets the standards expectations of the market and has the ability to now bring in many small-holder dragon fruit farmers through:

• The provision of GAP training to the necessary standards

• Provide quality system guidance and internal auditing services

• Include, guide and control the small-holder farmer in the SGS Vietnam certification process to ensure compliance at Certifying Body external audit time and ongoing compliance maintenance and confirmation/documentation

• Enter into a supply agreement with each farmer to lock in all compliance issues and obligations and to give security of market and income for the farmer

• Provide the farmer with income guarantee to enable the farmer to resource necessary compliance issues changes

• Assist small-holder dragon fruit farmers with small business and financial management training

An extension of this dragon fruit project is for all the recipients of the project to work together with the aim of being market driven, maintain compliance with the standards honestly at all times in the pilot and to bring in as many small-holder dragon fruit farmers as possible

Project benefits of the future

The dragon fruit GAP project does not claim all the credit for bringing the Hoang Hau pilot packhouse and farmer group to its current GAP quality status but it has certainly made a major contribution The combination of the private sector unit supported by the CARD dragon fruit GAP project initiative at this particular time is having a major impact in the Vietnam horticulture industry for demonstration of a working quality model meeting the standards of the high value markets

The project was unable to train the original numbers of small-holder (poor) dragon fruit farmers envisaged in the project document to the level of EUREPGAP compliance However the project has developed the mechanisms within its pilot that will overcome constraints which previously precluded the small-holder farmers responding to the GAP challenge This will allow an increasing number of those farmers to sustainably raise their standards and enjoy the benefits of increased returns for their dragon fruit

Following is a brief analysis of the proposed development of the project pilot over the next two years:

¾ The packhouse is currently packing 20,000kg of dragon fruit per 8 hour day

¾ The packhouse employs up to 150 people for the packing and handling operations

¾ Dragon fruit has been supplied from the Hoang Hau farm, contracted supplier dragon fruit farmers and from collectors

¾ All fruit is packed and sold to adjacent country export markets and on the local market

¾ The packhouse now has 70 hectares of production that has been GLOBALGAP Certified: consists of the owners farm and two other medium to large farms Over the life of the project EUREPGAP was upgraded to GLOBALGAP and the project pilot

is GLOBALGAP compliant

¾ Compliant dragon fruit will be exported to the high value markets of UK and Europe

¾ Hoang Hau has a development programme for both the packhouse and for the area of production

¾ A new planting of 120 hectares will bring total area on the Hoang Hau farms to approx 200 hectares which will be in full production in 2009

¾ It is the intention of the director of Hoang Hau, Mr Hiep, to produce about 50% of the throughput of his new packing facility capability

¾ It is expected that the other 50% (some 200 hectares) will be produced by contracted dragon fruit farmers, many of whom will be small-holder farmers

¾ The aim is to have all areas of the development meet the GAP standards installed in the pilot by the project

¾ Packhouse throughput of dragon fruit is expected to exceed 10,000 tonnes in 2009 (400 hectares producing approx 40 tonnes per ha with packouts of 50% to 70%)

¾ It is expected that <100 small-holder dragon fruit farmers will ultimately be brought into quality dragon fruit production and become certificated for the GLOBALGAP standard

¾ Each small-holder farmer of about 1 hectare producing for the quality initiative has employment for at least 1 permanent and 5 casual labourers

In summary there is clearly something very special going on in the project pilot that is having

a major impact in many areas For example:

¾ The dragon fruit GAP project pilot has completely embraced the project’s quality initiative

¾ The packhouse provides direct employment for over 150 people which will increase

as the business develops; possibly more than doubling

¾ The pilot will expand to some 400 hectares of quality dragon fruit production and handling by 2009

¾ New areas contracted to the packer will include more than 100 small-holder dragon fruit farms that may not otherwise be capable of reaching the standards demanded by high value markets

¾ Accessing the high value markets will increase dragon fruit returns and greatly improve the living standards of all quality producers

¾ The employment and spending power improvement will have a significant and beneficial effect to the community of the pilot

¾ The model and leadership provided by the pilot is providing an excellent example for replication to other dragon fruit units and across to other crops

¾ High value markets are seeking safe, legal and quality dragon fruit from the pilot

¾ The achievements of the project, through the increase in national capability and delivery to the dragon fruit pilot have received much publicity and respect in Vietnam

5.3 Capacity Building

5.3.1 To initiate capability building of Vietnamese project collaborators

Capability building of Vietnamese project collaborators has again advanced dramatically over this reporting period Dr Chau has set up an environment at SOFRI that is encouraging his staff to adopt the GAP initiative This environment is greatly assisting the project leader

to transfer his quality skills to the project team and subsequently to farmers and packers The

Vietnamese project collaborators have an excellent understanding of GAP, and are showing confidence in delivering the project training to farmers and the packer both while the New Zealand project leader is in Vietnam and also between visits

Mentoring and communication, both ways, between the project leader and the Vietnamese team, are excellent Dr Chau’s enthusiasm for the CARD project’s success continues to lead

to the establishment of GAP support facilities being developed at SOFRI that, while outside the scope of the project, are required by a future GAP-driven horticultural industry and will ultimately be of benefit to the project and its sustainability

A formal Introductory Internal Auditor Course was presented to eight appropriate SOFRI staff by the project leader and Mr Nguyen Huu Hoang The New Zealand Organisation for Quality (NZOQ) gave official approval for the project leader to use a percentage of the same course material as that used during Internal Auditor training in New Zealand This is the same material as the two day course that Mr Hoang attended during his New Zealand study tour in June 2006 Due to the requirement of NZOQ to only use a portion of their course material the SOFRI training was done over one day and was called an “Introduction to Internal Auditing” The Internal Auditor training has continued and its principles incorporated into much of the training programmes As part of the obligation to NZOQ in accessing the Internal Auditor training material the project leader was required to present a report to NZOQ This report was subsequently published in the NZOQ monthly newsletter QNEWZ in the October 2007 issue (Appendix 2)

Time constraints have precluded the project leader from seeking approval from NZOQ for him to use their material and present the previously requested, full two day Internal Auditor course at SOFRI and in the field It is hoped to continue with this initiative if the new dragon fruit project materialises

The horticultural Good Agriculture Practice initiative in Vietnam has gathered momentum during the life of this project It is important to note that the dragon fruit project pilot is the only working model for Good Agricultural Practices in fruit in Vietnam The SOFRI national capability, the quality manual developed for the pilot and the pilot working model are available to be used for further expansion of GAP into the dragon fruit industry and across other crops

The project and project trained personnel are making a major contribution to this initiative in

a positive and quality approach For example:

¾ Project trained personnel have an understanding of the customer driven concept which, accompanied with their quality practitioner skills, can apply the GAP technology at any appropriate level of:

o VietGAP at the local market level

o AsiaGAP and EUREPGAP at the close neighbouring country export level

o EUREPGAP to access markets in Europe and the UK with the product still being reworked in those market countries

o EUREPGAP plus BRC at the high value market level of the United Kingdom and Europe – direct specialist market access

o Specific elevated standards to enable elite markets to be accessed (through special packaging; market access protocols – disinfestation for the Japan, North America and South Pacific markets )

¾ The project Dragon fruit Quality Manual has been prepared in a form so that it can be easily adapted to the different quality standard levels and also applied when installing quality systems to the selected standards across other crops

¾ Material generated by the project for training stakeholders is relevant for many other applications in horticulture in Vietnam

¾ A measurement of the capability built within the project team at SOFRI over the life

of the project is clearly demonstrated by the respect of colleagues and management and the responsibilities assumed which have included:

• Dr Nguyen Van Hoa and Mr Nguyen Huu Hoang were involved in a MARD funded international project developing GAP systems in mango in the Mekong Delta

• Mr Nguyen Huu Hoang travelled to Cuba as a consultant to evaluate horticulture

• Mr Nguyen Huu Hoang accompanied Dr Nguyen Minh Chau and others to Malaysia to attend an International Tropical Fruit Networks (TFNet) conference – Market and Marketing of Tropical and Sub-Tropical Fruit 16-18 July 2007

• Dr Hoa and Mr Hoang attended a workshop: Increasing Quality of Vegetable and Fruit (BRC Standard) for EU export: Held by VinaFruit and SIPPO (Swiss Import Promotion Programme) held at SOFRI 12/13 July Workshop material has been subsequently used during training

• The project team participated in the SOFRI dragon fruit clinic in the Tien Giang Province on 23 August 2007

¾ It is great to report that two of the projects key people, Dr Nguyen Minh Chau, director of SOFRI, and Mr Tran Ngoc Hiep, director of Hoang Hau Dragon Fruit Farm Co Ltd (the project pilot), have been appointed as directors of The Vietnam Fruit Association (VinaFruit) It is expected their input to VinaFruit will add momentum to the development of a well organised and sustainable GAP dragon fruit industry

¾ Capability building of the SOFRI project team has been clearly demonstrated by their contribution as quality practitioners to the project pilot, to the improvement of small-holder farmers understanding of GAP, at the political level, through setting examples

to their colleagues and in the implementation of GAP principles to other crops of Vietnam (PowerPoint® presentations given for Sri Lanka, Mango and Citrus will be sent electronically on CD)

5.3.2 An assessment of the impact on stakeholders/beneficiaries: Farmer dragon fruit

returns

Pre-project values:

In May 2005 at the commencement of the Dragon fruit GAP project the prices being paid by export and local market packhouses to the farmer at the packhouse were advertised as:

ƒ Fruit weighing >320 gms @ 3.000 dong per kg

ƒ Fruit weighing >500 gms @ 5,000 dong per kg

ƒ Fruit weighing >550 gms @ 8,000 dong per kg

Current non-GAP values:

At project completion in September 2007 prices being received at the farm gate were observed as being very similar to those at the start of the project Seasonal fluctuations saw prices fluctuate between 2,500 dong and 12,000 dong per kg during project implementation

The SOFRI project team had received a report that a consignment of non-GAP certified dragon fruit had been condemned in an export market

GAP values:

It is the custom in the Vietnam dragon fruit industry for the packer to purchase the fruit for export direct from the farmer Prices paid for the farmers fruit is determined by the current export and local market demand – orders received by the packhouse Farmer’s dragon fruit are graded for appropriateness to each market standard upon receipt at the packhouse so fruit prices can vary considerably depending on size, maturity and quality There can also be significant amounts of fruit being downgraded as not suitable for any of the markets and this fruit is usually returned to the farmer

During the transition period of installing GAP in the project pilot the pilot packhouse operator paid those suppliers embarking on quality production a bonus of 2,000 dong per kg above the rate paid to other suppliers

The project’s intention from the start of the pilot development was to have dragon fruit market returns come back to the farmer with all costs deducted by the packhouse All components such as packing, packaging, compliance, market access, cool storage, freight, levies, etc would be on a fee for service basis and where possible, documented in a pre-agreed schedule of costs between the packer and supplying farmer This arrangement was

required to determine the potential viability of the project initiative: “Does safe, legal and

quality dragon fruit exported to high value markets significantly increase profits to the farmer?”

Now that the dragon fruit pilot farmer group has met with EUREPGAP compliance, certified dragon fruit can be exported to the high value markets of the UK and Europe This fruit will

be sold into supermarkets When the pilot packhouse complies with the BRC Standards, export to elite markets in those countries will commence and even higher prices for compliant dragon fruit can be expected

Certifying Body external audit

The new dragon fruit project will document market returns and production and export costs

to accurately determine this project’s impact on stakeholders/beneficiaries

The following schedule documents all stages of the process from the farm to the customer and includes the value of each step of the pilot:

ƒ Fruit presented at the farm gate to the safe, legal and quality standards demanded by the market and conveyed to the farmer by the packhouse

ƒ Transport of fruit to the packhouse

ƒ Packing of the dragon fruit

ƒ Freight to the market – by air

ƒ Freight to the market – by sea

ƒ Port of entry compliance

ƒ Levies

ƒ Sales

Following is a report, as a result of a request by the project leader, from Utopia UK in relation to dragon fruit prices, quality and supply chain information:

• Potential dragon fruit returns from various high value markets

Dragon Fruit is sold for £1.99 per piece by the major high street supermarkets We are buying the fruit at £12 - £14/ box of 12 fruit We are making anything up to 15% selling it to them The lion's share obviously goes to the supermarkets who are making at least 30% It

is important however to realise that we in most cases are making minimal profits (4%) and sometimes losses because of the obvious quality issues associated with the highly perishable product This is the reason why sea freight is the main target for future developments (short term) and the reason we feel Hoang Hau are in the right position to drive this forward with

us They have made attempts in the past and we feel with the ideal and structured assistance and help from you (HortResarch), their Southern Fruit Research Institute and us we should

be able to succeed

• The quality standards associated with those markets

I have attached for you our specification for Dragon Fruit Please note that our market demands smaller fruit though for full flavour and maximum taste it is the larger fruit that delivers We therefore need to educate the market and change somewhat the perception that small is better which is the case for other products Having said that I believe with the current China market that usually takes the bigger fruit Vietnam would be in a better position to supply the more lucrative UK market with the smaller fruit

• Supply chain steps and associated costs - can you work back from the market end

as it is difficult to get information out of Vietnam