Báo cáo nghiên cứu khoa học " Improvement of export and domestic markets for Vietnamese fruit through improved post-harvest and supply chain management - Milestone 9 Report " pdf

Whilst all participants involved in these strategic supply chain development processes find it easy to analyses their existing chains and develop new chains, the underlying principles of

Ministry of Agriculture & Rural Development

CARD Project 050/04VIE Improvement of export and domestic markets for Vietnamese fruit through improved post-harvest and supply chain

management

Milestone 9 Report

July 2009

Table of Contents

1 Institute Information 2

2 Contact Officer(s) 3

3 Project Abstract 4

4 Executive Summary 4

4.1 Introduction & Background 6

4.2 Implementation Highlights 7

4.3 Small holder Benefits and Capacity Building 14

4.4 Publicity 16

4.5 Project Management 19

5 Report on Cross-Cutting Issues 19

5.1 Environment 19

5.2 Gender and Social Issues 21

6 Implementation & Sustainability Issues 21

6.1 Issues and Constraints 21

6.2 Options 22

6.3 Sustainability 23

7 Next Critical Steps 24

8 Conclusion 24

1 Institute Information

markets for Vietnamese fruit through improved post-harvest and supply chain management

Engineering and Post-Harvest Technology (SIAEP)

Industries and Fisheries (DPI & F)

Dr Peter Hofman

Mr Brett Tucker

Mr Roland Holmes

2 Contact Officer(s)

In Australia: Team Leader

Organisation Queensland Department of

Primary Industries and Fisheries (DPI & F)

In Australia: Administrative contact

(Emerging Technologies) Fax: +61 07 3346 2727

Organisation Queensland Department of

Primary Industries and Fisheries (DPI & F)

In Vietnam

Organisation Southern Sub-Institute of Agricultural

Engineering and Post-Harvest Technology (SIAEP)

3 Project Abstract

The implementation of “doi moi” and poverty reduction policies by the Vietnamese Government have made significant progress in reducing poverty The poverty rate in the Mekong Delta is still at 13.3% with a further 20% of households living just above the poverty line The current recession could see a change in poverty rates, with people migrating from the cities back to their families in the country due to a downturn in employment opportunities

Farmers with higher education levels appear to be able to understand production problems and apply new technologies to solve those problems, whilst farmers with lower education levels implement traditional farming practices and hope the problems that they face will be solved by someone else

About 40 per cent of the Mekong Delta is affected by acid sulphate soils (ASS) Disturbance of ASS through land clearance, drainage, tillage and mounding can cause acid runoffs into the aquatic and marine environment, either killing fish or increasing the incidence of disease in the marine population Saline soils also present further constraints to agricultural development and are located primarily in the coastal zone Development of new, and re-establishment of existing orchards, will require soil to be either moved or disturbed, and a management plan will be needed to eliminate the runoff of acid or nutrients in the environment

Overuse and use of incorrect chemicals will have a significant impact on obtaining GAP and quality assurance for mango and pomelo in the Mekong Delta for both domestic and export markets

Environmental issues identified during consultation with farmers during this CARD Project participatory action learning workshops were:

• contamination of irrigation water (salt and grey water)

The fruit industry in Vietnam has a great potential and plays an important role in agricultural production In 2003, Vietnam exported US$43 million of high value fruit to high-income countries and imported US$14 million of fruit and vegetables Vietnam is experiencing difficulties in competing with other Asian nations in export markets and its own domestic market, especially with China and Thailand This suggests that Vietnam’s horticultural industries require substantial development to be globally competitive Vietnamese consumers are demanding safer and higher quality fruit This project has identified key pre-and post-harvest technology gaps that reduce product quality, safety and consistency Targeted training programs are focusing on the total supply chain and are providing benefits by helping to implement quality management systems and GAP systems at the village level providing greater employment for the farming community This project embraces the five CARD strategies for rural development; and in particular; strategies to increase production and competitiveness of agricultural systems; reduce poverty and vulnerability, and increase stakeholder participation whilst ensuring sustainability

• disposal of grey water and by product contamination of waterways

• agricultural spray application methodology and practices

• type and amount of fertiliser, their application methods to reduce environmental contamination

• mixed farming methodology and cultural practices (mixed plant and animal farming practices)

In Vietnam, there is a significant need to develop small and medium sized agricultural enterprises Areas of significant need for developing small and medium agricultural enterprises are:

1 Marketing and trade development

• Training on understanding supply/value chains:- They need to understand all the participants and the roles they play in a supply/value chain (domestic and export)

• Training on how to develop and establish a supply/value chains:- Understand the supply/value chain development process, then build their own supply/value chain to create improved value for all the chain members

• Market analysis and development:- Understand their market; segment their market; adjust their product to their target market segment; develop new products

2 Technology areas including plant and equipment

• Information on new technologies

• Implementation of new technologies

• Access to new technological equipment to create added value

• Efficiencies in use of equipment (reduction in idle time)

3 Business development

• Establishment of associations:- Codes of conduct, rules and membership etc

• Development of the business model:- Setting up the business; Structuring the business:-Business plan, including marketing plan and financial plan etc

• Training and development of entrepreneurial skills

For mango, farmers who still use the traditional supply/value chain system receive a net return of about 6,514 VND (A$0.45) per kg of fruit Farmers who implemented new GAP systems and develop new markets achieve net returns of about 15,423 VND (A$1.07) per kg of fruit Farmers who joined a cooperative and implemented GAP and best practice, plus develop new markets achieve net returns of about 21,793 VND (A$1.51) per kg of fruit By being in a cooperative, farmers can substantially reduced costs of implementing GAP systems and developing new markets in HCMC

Comparison of mango to rice farming in the Mekong Delta indicates that horticultural crops provide significantly higher returns For example:- rice farmers in the Mekong Delta grown on average two rice crops per year The average yield is about 4.8 tonnes per hectare with a net income of 3,652 VND per kg of rice (Berg 2002, pp.100 and 102) Therefore, farmers of Cat Hoa Loc Mango receive a seven fold increase in net returns compared to rice farmers in the Mekong Delta of Vietnam

Mango fruit bagging, increased fruit quality, decreased losses due to pests and diseases and increased the farm gate returns The increased benefit farmers receive by fruit bagging a 10 year old mango trees was 645,000 VND/tree for the secondary crop

Pruning and training (Canopy management) of Cat Hoa Loc mango trees increased yield, obtained better commercial quality fruit and reduced input costs such as chemicals, spray application and labour costs In the off season, pruned orchards benefited by 10,420,016 VND/1,000m2 or 3.4 times more profitable compared with traditional orchard canopy management methods

Organic fertilising use in Nam Roi pomelo production achieved higher yields, better quality fruit and saved on fertiliser costs Tree health improved and the production life of the tree also increased Farmers using organic methods benefited by 2,390,000 VND / 1,000m2 or 1.7 times more profitable compared to inorganic methods

The retail scene, especially in Ho Chi Minh City, is undergoing a great deal of change that is beginning to benefit the end consumer Retailers of Ho Chi Minh City reported that consumers are becoming more fastidious on choosing fruit Supermarkets and department stores have grown in number, and many are modernising their services and products to boost sales and their competitiveness

Both vertical and horizontal integration of a supply chains has to occur if chains are to be effective and efficient Whilst all participants involved in these strategic supply chain development processes find it easy to analyses their existing chains and develop new chains, the underlying principles of developing high levels of trust, open effective communication and information flows are very difficult to achieve due to the business culture operating in these transitional economies

4.1 Introduction & Background

Ford et al., (2003) analysed the competitiveness of fruit industries in Vietnam and identified:

• poor unstable product quality

• no quality standards

• poor post harvest technologies

• poor pre-harvest practices

• lack of group co-operative marketing structures

• little information about supply chains, prices and customers needs

Stakeholder/beneficiary analysis of fruit crops in the Mekong delta showed that both mango and pomelo (with plantings of 33 000 ha and 9 000 ha, respectively) are very important fruit crops in Southern Vietnam The objectives of this CARD project 05/04 VIE are to:

• Improved pre-harvest technologies to produce high quality mango (integrated pest management, integrated crop management, fruit fly control, maturity indices, reduced pesticide residues, better environmental and human health etc)

• Improve mango and pomelo post-harvest technologies (eg, cool chain management, packaging, post-harvest dipping, ethylene ripening, waxing, washing and wetting agents, quality assurance)

• Improve quality standards and quality assurance programs for mango and pomelo The approach and methodologies developed for these crops through this project will be applied to other fruits and vegetables

• Map current supply chains to domestic and selected export markets, with particular emphasis on determining consumer preferences and needs, and reporting results back

CARD Project Milestone 9:- Improve supply chains operational for selected fruits The deliverables for Milestone 9 are:

• Documentation of improved quality, quantity and value obtained by cluster groups, including documentation of reduction in post-harvest losses

• Analysis of socioeconomic benefits and sustainability of project outcomes, including revenue streams, use of appropriate packaging and village employment

4.2 Implementation Highlights

To complete the requirements of Milestone 9 above by documenting fruit quality, quantity and value obtained by cluster group’s surveys were conducted on the mango and pomelo supply chains operating in the Mekong Delta of Vietnam and analysis of the economic and socioeconomic benefits carried out These results are presented in the ten reports listed below

1 Report on Investigations into Mango Supply Chains in the Mekong Delta Vietnam

2005-2007

2 Investigation into the Pomelo Supply Chain in the Mekong Delta in Vietnam

3 Fruit Quality Comparisons of Three Cat Hoa Loc Mango Supply Chains in Southern Vietnam

4 Maintaining Fruit Quality and Increasing Shelf Life of Pomelo in the Mekong Delta of Southern Vietnam

5 Study on economics and socioeconomics of small scale mango farming and cooperatives

in the Mekong River Delta, Vietnam

6 Efficiency Evaluation of Pruning and Training in Cat Hoa Loc Mango Production

7 Economic Evaluation of Fruit Bagging for Cat Hoa Loc Mango Production

8 Economic Evaluation of Organic Fertiliser in Nam Roi Pomelo Production

9 Mango Strategic Plan Development by Project Participants in the Mekong Delta of Vietnam

10 Pomelo Strategic Plan Developed by Project Participants in the Mekong Delta of Vietnam Reports 1, 2, 9 and 10 provide an assessment and overview of the mango and pomelo supply/value chains operating in Southern Vietnam Reports 3 and 4 are the results of the reduction in postharvest losses and increases achieved in fruit quality Report 5 are studies conducted on the socioeconomic and economic benefits of the cluster group marketing Cat Hoa

Loc mango in the Mekong Delta of Vietnam by implementing pre-harvest and postharvest systems Reports 6, 7 and 8 evaluate the economics of changing pre-harvest aspects to increase fruit quality, quantity and value obtained by farmers in the Mekong Delta of Vietnam

Investigations into Mango Supply Chains

The retail scene, especially in Ho Chi Minh City, is undergoing a great deal of change that is beginning to benefit the end consumer Retailers of Ho Chi Minh City reported that consumers are becoming more fastidious on choosing fruit Supermarkets and department stores have grown in number, and many are modernising their services and products to boost sales and their competitiveness

The mango variety ‘Cat Hoa Loc’ was the most popular variety and it could be purchased anywhere in Ho Chi Minh City at any time for reasonable prices, even for the poor Survey data indicated that prices did not fluctuate widely over the seasons for the years 2005 to 2006

Most consumers select fruit on colour and appearance with uneven ripening and fruit quality being the greatest concerns for consumers Consumers indicated that they would prefer a mango fruit that is sweeter, has a smaller seed, is more fragrant, and has a longer shelf life

Retailers sold the mango variety ‘Cat Hoa Loc’ during the main season for 50% more than the purchase price and for 140% more than the purchase price during the off season

Terms of trade and verbal agreements with collectors and farmers need to be quickly overhauled and a new system put in place that protects the wholesaler, collector and farmer Even though this supply chain appears to be a model of efficiency, the inability of wholesalers and exporters further down the chain to meet price and quality demands points to a significant problem Also risks faced

by supply chain participants are significant For example one collector/wholesaler/exporter is owed

a significant amount of money, some 49,000,000 VND after exporting mango fruit Their options are extremely limited in options to receive payment for fruit all ready supplied Many collectors, wholesalers, traders, transporters and middlemen act in an opportunistic way in order to minimise the risk of opportunism, resulting in less-than-desirable supply chains Weaknesses in the Vietnamese legal system fail to address oblivious and dubious transactions, adding to less than desirable supply chains operating in Southern Vietnam

Fruit losses along the supply chain can be high, due to farmers not applying any post-harvest practices such as culling damaged fruit Fruit are continually graded as they move along the supply chain, significantly reducing the effectiveness and efficiency of a supply chain This also impacts heavily upon the cost to supply quality fruit to the consumer

Artificial ripening of mango using Calcium Carbide can be hazardous to human health Excessive use of calcium carbide can result in direct contact with fruit, causing contamination Calcium carbide can produce carcinogenic compounds and may contain other compounds such as arsenic

or produce phosphorus hydrides, causing serious health issues Ethrel is a considerably safer chemical and ethylene released is highly effective in ripening mangoes

Prior to developing supply chain maps for mango and polmelo farmers in the Mekong Delta in southern Vietnam, many chain participants felt that they had an excellent product, but data collected from supply chain sampling revealed losses of up to 40% for mango and 30% for pomelo This mapping revealed that losses were due to incorrect handling procedures, no cool chain, poor packaging, inadequate transport and stacking systems employed This indicated a lack of infrastructure, knowledge and skills along the supply chain

Both vertical and horizontal integration of a supply chains has to occur if chains are to be effective and efficient Whilst all participants involved in these strategic supply chain development process find it easy to analyses their existing chains and develop new chains, the underlying principles of developing high levels of trust, open effective communication and information flows are very difficult to achieve due to the business culture operating in these transitional economies

Investigations into Pomelo Supply Chains

Many farmers are now realising that pomelo is a perishable fruit and traditional chains may have to change Farmers, wholesalers and collectors at the district level are starting to sell directly to supermarkets and high quality retail shops in HCMC No fruit class and quality standards exist for many of the supply chains Opportunistic marketing practices by collectors and wholesalers are evident (Quinn et al., 2006) Verbal agreements between chain participants are not strictly enforced or adhered due to a less than desirable legal system Problems with traditional procurement supply chain practices include low- or no product standards, supply inconsistencies, highly variable transaction costs and limited or sequestered market information

Even though Vietnam has had a significant increase in the number of hectares planted to pomelo since 2004, domestic consumption has also increased and absorbed this increase in production Mixed farming systems and small scale planting of pomelo are causing yields and fruit quality to be low, thereby reducing Vietnam ability to tap into new emerging export and domestic markets Traditional pomelo supply chains in southern Vietnam are long in terms of number of participants and number of times fruit are handled compared to developed countries Almost 80% of the fruit is moved from farms to the collectors to local wholesale markets by boat Fruit are usually stacked in the bottom of boats with little or no protection from contamination

High quality, extra or super class fruit, class 1 fruit are marketed with stalks attached This is done

to reassure customers that the fruit they are purchasing fresh pomelo These stalks often break off during handling and transport and also draw moisture from the fruit Farmers, collectors, traders, packaging agents and wholesalers estimates of damage fruit is from fro 1 to 2%, but surveys found

it is often above 10%

Supermarkets are now setting new procurement practices and supply systems which focus on reducing costs and improving quality to enable them to sell at lower prices This will allow them to win over consumers and obtain a larger share of their target market The ability of many small farmers, collectors and wholesalers in the Mekong Delta of Vietnam to meet safe food levels and quality demands of domestic and overseas supermarkets can only be obtained through investing in improvements in their production and supply chain practices

Fruit quality comparison of mango supply chians

Mango fruit quality was compared along three different supply chains, these were traditional, new and a metro cool chain We found that keeping mango fruit cool along the supply chain reduced fruit weight loss by 35% to 61% and extended the shelf life by 4 days Implementation of a new packaging (fibreboard carton), hot water dipping and cooling of the fruit as along the supply chian reduced disease infestation by 55% to 93% A cool mature green mango can withstand handling without being damaged but if temperatures are too high, handling damages will significantly increase the incidence of disease Mangoes should also be ripened at 18 to 22 to allow fruit to develop maximum colour flavour, texture, and limit the loss of Vitamins

Maintaining pomelo fruit quality and increasing shelf life

All of the farmers, collectors, traders, packing agents, wholesalers, retailers and consumers use colour as one of the indicators of maturity in the Mekong River Delta of southern Vietnam Our CARD Project research found that skin colour is not a good indicator of Nam Roi pomelo fruit maturity All citrus are non-climacteric fruit, meaning that they ripen gradually over weeks or months The best indices of maturity for citrus are internal Total Soluble Solids (oBrix or sugar), Titrateable acid content (acid), and the oBrix/acid ratio which has been well established in the literature and used by many countries including Australia and the United States of America as a test of maturity and harvest index The oBrix or sugar and acid content continued to increase in Nam Roi pomelo fruit even after the fruit were harvested This may be due to the significant moisture loss which occurs within the pomelo fruit after harvest and the concentration of sugars and acid in the fruit

Comparing our Control treatment to the Vacuum Wrapping and Citra Shine Special Wax treatments, we found that the Citra Shine Wax significantly reduced fruit moisture lost Pomelo fruit treated with Citra Shine Special Wax increased the shelf life of pomelo fruit based on fruit colour The increase was about 2 weeks compared to the control and Vacuum Wrapping treated fruit Citra Shine Special Wax also caused a delay in fruit colour from green to yellow The delay was about one week compared to the control and Vacuum Wrapped fruit

Taste evaluations showed that the fruit treated with Citra Shine Special Wax were significantly better than the Control and Vacuum Wrapping treated fruit At day 63, the Citra Shine Special Wax treated fruit rated at 5.5 (neither liked nor disliked), whilst the Control and Vacuum Wrapping treated fruit rated 1, (disliked very much)

Further studies are needed to test the effectiveness of Vacuum Wrapping and Citra Shine Special Wax treated fruit on cool chain exported pomelo fruit as there may be additional benefits in delaying the ripening process and increasing the shelf life

Socioeconomic studies of mango and pomelo supply chains in southern Vietnam

Socioeconomic Issues

Demographics

The average population growth rate in Vietnam in the early 1990’s was 3.5%, but it is now slowing

to 1.35% This may be due several factors; a decreased in fertility rates and better education provided to the ethnic minority groups who traditionally had large families and an increase in living standards has reduced fertility rates Comparing Vietnam’s population growth rate of 1.35% to the Mekong Delta population growth rate of 2% the Mekong Delta is 0.65% above average

Poverty

The implementation of “doi moi” and poverty reduction policies by the Vietnamese Government have made significant progress in reducing poverty The average poverty rate in Vietnam is now 19% The poverty rate in the Mekong Delta is still at 13.3% with a further 20% of households living just above the poverty line This economic recession could see a change in poverty rates as people are migrating from the cities back to their families in the country due to a downturn in employment opportunities

The Mekong Delta Economic Cooperation stated that the Mekong Delta provides 90% of rice exports, 70% of fruit production and 60% of aquatic products exported from Vietnam Therefore, whenever people mention to the Mekong Delta, they usually mention its advantages only People usually consider the Mekong Delta region as a "rich food but poor knowledge" region Education and training of people is low in the Mekong Delta For example, the number of regional students studying in the vocational schools is at the lowest rate The Mekong Delta has a low intellectual standard compared with the whole country The Mekong Delta has not reached its full potential and regional agricultural production is unsustainable and poverty rate will increase if this continues Farmers with higher education levels appear to be able to understand problems and apply new technologies to solve those problems, whilst farmers with lower education levels implement traditional farming practices and hope the problems that they face will be solved by someone else

Environment

About 40 per cent of the Mekong Delta is affected by acid sulphate soils (ASS) Disturbance of ASS through land clearance, drainage, tillage and mounding can cause acid runoffs into the aquatic and marine environment, either killing fish or increasing the incidence of disease in the marine population Saline soils also present further constraints to agricultural development and are located primarily in the coastal zone Development of new, and re-establishment of existing orchards, will require soil to be either moved or disturbed, and a management plan will be needed to eliminate the runoff of acid or nutrients in the environment

Farm design

Good farm and orchard design is essential to ensure any water, fertiliser, chemicals and soil runoff

is trapped on farm This is an essential element of GAP This element is often overlooked or neglected due to the cost of re-establishing an orchard or loss of viable producing area to ensure the environment is protected There are no incentives or subsidies and farmers are forced to cover these costs out their own pocket, reducing their viability even though there are wider social, ecological and environmental benefits, such as reduced incidences of contractible diseases, cleaner environment (fewer pollutants) and a healthier life for the community from such practices

Chemicals

Farmers and other pesticide users usually ignore the risks, safety instructions and essential protective measures in using chemicals Records showed that 11% of all poisonings in the country