Báo cáo nghiên cứu nông nghiệp "Investigations into the Pomelo Supply Chains in the Mekong Delta in Vietnam " ppt

43 Comparison of the seasonal average farm gate price for 2006 for the pomelo variety Nam Roi between the provinces of Tien Giang and Vinh Long province in MRD.... 43 Comparison of the s

the Mekong Delta in Vietnam

By

Robert Nissen1, Nguyen Duy Duc2, Nguyen Minh Chau3, Nguyen Trinh Nhat Hang2, Do Minh Hien3,Nguyen Thanh Tung3, Vo Huu Thoai3, Doan Huu Tien3, Nguyen Minh Tuan3, San Tram Anh2, Tran Thi Kim Oanh2, Vu Cong Khanh2, Ngo Van Binh2, Tran Thi Ngoc

Diep2

1 Queensland Department of Primary Industries and Fisheries (DPI&F) , Maroochy Research Station, PO

Box 5083 SCMC, Queensland, Australia, 4560

2 Southern Sub-Institute of Agricultural Engineering and Post-Harvest Technology (SIAEP), 54 Tran Khanh

Du Street, District 1, Ho Chi Minh City, Vietnam

3 Southern Fruit Research Institute (SOFRI), Long Dinh-Chau Thanh, P0 Box 203 My Tho Tien Giang,

Vietnam

© The State of Queensland, Department of Primary Industries and Fisheries 2008

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Table of Contents

Introduction 5

Methodology 5

Results 5

Overview and Background 5

World Production of Grapefruit and Pomelo 5

Pomelo:- Botanical description Error! Bookmark not defined Vietnam Country Overview 7

Pomelo Varieties of Vietnam 8

Pomelo Variety Nam Roi 8

Pomelo Variety Da Xanh 8

Pomelo Variety Long Hong 9

Pomelo:- Climatic Requirements 10

Pomelo Production in Vietnam 11

Pomelo Production (yield) 13

Consumers 18

Retailers 20

City Retailers (Ho Chi Minh & Hanoi) 20

Hawkers and Street Vendors 20

Supermarkets 20

Retailers (Fruit Shops) 21

Provincial Retailers 21

Local Retailers 21

Fruit Losses During Retailing 22

Retail Prices 22

Restaurants, Hotels and Tourists Resorts 23

Wholesalers 24

Collectors/Traders/Packing Agents 28

Collector 28

Traders/Enterprises (Companies) 29

Enterprises (Companies) 31

Local Packing Agents 31

Trader/Collectors/Packing Agent Transportation and Packaging Methods 32

Trader/Collectors/Packing Agent selling price 33

Farmers 34

Orchard Location and Size 34

Productivity and Yield 34

Orchard Establishment and Development 34

Orchard Management 34

Harvesting 35

Shelf life of pomelo fruit 35

Grading and sorting on farm 35

Grading: 36

Packaging 36

Farmer selling methods 37

Method 1 38

Method 2 39

Method 3 39

Economics and Market information (Price) 39

Pomelo Yearly Average Farm Gate Price in MRD 43

Comparison of the seasonal average farm gate price for 2006 for the pomelo variety Nam Roi between the provinces of Tien Giang and Vinh Long province in MRD 43

Comparison of the seasonal average farm gate price for 2006 for the pomelo variety Da Xanh between the provinces of Tien Giang and Vinh Long in MRD 44

Comparison of the seasonal average farm gate price for 2006 by variety in MRD 45

Comparison of pomelo farm gate price to wholesale and retail market prices 46

Supply/Value Chain ANalysis 47

Supply/Value Chain Channel 1 50

Supply/Value Chain Channel 2 51

Supply/Value Chain Channel 2 (a) 51

Supply/Value Chain Channel 2 (b) 51

Supply/Value Chain Channel 2 (c) 52

Supply/Value Chain Channel 3 52

Supply/Value Chain Channel 4 53

Discussion and Conclusions 55

References 57

INTRODUCTION

This report provides baseline information on investigations undertaken as part of the Collaboration for Agriculture and Rural Development CARD Project 050/04VIE “Improvement of export and domestic markets for Vietnamese fruit through improved post-harvest and supply chain management” This collaborative project is funded by AusAID and administered by Hassall and Associates International The project is between the Queensland Department of Primary Industries and Fisheries (QDPI&F) and the Vietnamese organisations, Southern Sub-Institute of Agricultural Engineering and Post-Harvest Technology (SIAEP), and Southern Fruit Research Institute (SOFRI)

The aim of this report is to investigate and understand pomelo supply chains in Mekong Delta, Vietnam by:

• determining pre- and post-harvest technology practices of these supply chains

• determining the quality of the product produced by these supply chains

• identifying participants in the existing domestic and export supply chains

• map the existing mango supply chains and their and distribution channels

METHODOLOGY

Several methods were used to collect baseline data on pomelo supply chains operating in the Mekong Delta

of Vietnam Relevant data and information was collected from the internet and reports produced by the Ministry of Agriculture and Rural Development (MARD), The Government Statistics Office (GSO) of Vietnam, and provincial government offices in the Mekong Delta, Vietnam Further information was obtained from the internet and published reports and databases of the Food and Agricultural Organisation (FAO) of the United Nations, World Bank Vinh Long, DARD and Institute of Agricultural Planning & Designing

Survey sheets and process analyses were developed and tested by Vietnamese project staff The supply chain was segmented into the various supply chain participant groups; wholesalers, traders, farmers and one company Investigation was carried out via interviews and surveys with wholesalers, traders and farmers along the pomelo supply chains operating in the Bin Minh District and Vinh Long Province, Cai Be District, Tien Giang Province, in Vietnam in July 2005 to May in 2006

Interviews were conducted with:

• 20 Nam Roi pomelo farmers at Binh Minh District and Vinh Long Province

• 9 Nam Roi pomelo traders at Binh Minh District and Vinh Long Province

• 4 Nam Roi pomelo wholesalers at Cai Be District, Tien Giang Province

• 1 Nam Roi pomelo exporting & processing Co at Binh Minh District and Vinh Long Province

RESULTS

OVERVIEW AND BACKGROUND

WORLD PRODUCTION OF GRAPEFRUIT AND POMELO

Pomelo belongs to Citrus maxima or Citrus grandis Pomelo is a native to Southeast Asia and is widely

cultivated in Malaysia, China, Vietnam, India, Thailand, Indonesia and other Asian countries Pomelo is the

third largest fruit exported from Thailand and accounts for 11% of total fruit exported FAO statistical data

on pomelo production in the world does not exist, but data on the world production of pomelo and grapefruit does World production of pomelo and grapefruit peaked in 2000, with 5.4 million tonnes produced Over the next three years production steadily decreased before rising slightly in 2004 then dropping sharply to

4 million tonnes in 2005 Since then, production has increased rapidly to about 5.1 million tonnes in 2007, see Figure 1 (FAO Stats 2003)

Figure 1 World pomelo production from 1999 to 2004

Source: FAOSTAT 2008

The United States of America is the largest producer of grapefruit and pomelo in the world, closely followed

by China and then South Africa (Table 1) In 2006, the Ministry for Agriculture and Rural Development (MARD) indicated there was 30.4 thousand hectares of pomelo, producing 242.2 thousand tones of marketable fruit in Vietnam

Malaysia harvests a yellowish pear shaped pomelo all year round while those from Thailand have a green skin colour, are round and available from June-October China exports pomelo in small quantities, mainly to Hong Kong, about 420 tonnes in 1999 and 3828 tonnes in 2000 (Hien &Tung, 2006)

In 2004, Japan was reported to be the largest importer of pomelo in the world with 288 000 tonnes, followed

by Canada, 51 000 tonnes and Russia, 46 000 tonnes (Hien &Tung, 2006)

Table 1 Top Ten Grapefruit Producers (inc pomelos) — 11 June 2008

VIETNAM COUNTRY OVERVIEW

Vietnam is socio-economically dependent on agricultural production About 85% of Vietnamese households are involved in some way in vegetable, fruit and flower production These people, especially the farmers, are experiencing dramatic changes in moving from a centrally-planned to a market-orientated economy

(Nguyen Dinh Hung, et al., 2004) Following key reforms through the renovation strategy “doi moi”

implemented in 1986, the country has made remarkable progress across a broad range of socio-economic development measures For example, the poverty rate dropped from 58.1% in 1993 to 19.5% in 2006 but rural poverty rates remain high at 29% (Swinkels and Turk, 2006; Vietnamese Academy of Social Sciences Vietnam, 2007) Much of the poverty reduction in Vietnam can be traced to the high annual economic growth combined with integration into international markets, increasing agricultural exports, investments in infrastructure and policies that encourage agricultural and rural development (FAO; 2003) Agriculture's share of economic output has continued to shrink, from about 25% in 2000 to 20% in 2006 and 19.4% of Gross Domestic Product in 2007 (CAI World Factbook 2008.)

Vietnam’s main export horticultural products are cabbages and spicy vegetables; mango, dragon fruit, pomelo and litchi Vietnam’s main export markets are currently Taiwan, China, Hong Kong, Malaysia, Singapore and Indonesia (Phan Thi Giac Tam, et.al 2005) Food safety and product quality requirements

in these markets are not as strict as the European markets Vietnamese feel they are facing saturated

Asian markets; therefore a few Vietnamese exporters have made their best efforts to penetrate into and

enhance their markets in Europe The Vietnamese producers and exporters’ of pomelo, awareness and application of the key food safety and quality requirements have increased significantly since 2000 and are now being applied to the production and export of pomelo Some farmer/exporter groups have obtained EUROGAP 2 Certification for the export of pomelo into Europe

POMELO VARIETIES OF VIETNAM

There are many pomelo varieties in Vietnam In Northern Vietnam the pomelo varieties grown are, Dao, Kha, Linh, Suu, My and Dien In Central Vietnam, Thanh Tran and Dao are the main varieties grown in backyard gardens and not commercially farmed In Southern Vietnam the pomelo varieties, Thantra, De Xanl, Nam Roi, Duong Da Lang, Dung La Vam, Da Xanh, and Long Da Lang are grown in orchards

N AM R OI

The pomelo variety Nam Roi is famous in Vietnam because of its special fruit qualities; it is seedless, pear shaped and has yellow coloured flesh that is crisp and sweet Average weight is approximately 0.9-1.45 kg/fruit Fruit skin colour when ripe, is a green-yellow to a bright yellow The average thickness of the Albedo layer is about 15-18mm Flesh colour is a light yellow and is easily separated from the segment Flesh has a rich sweet sour taste The average Total Soluble Solids of the flesh is about 9-11o degree Brix Flesh has a sweet smell with 0-10 small seeds per fruit Flesh recover ratio is greater than 50% of the total weight Nam Roi variety is highly sought after, especially during festival periods and family occasions in Vietnam (Figure 2)

Figure 2 Nam Roi pomelo variety

D A X ANH

Da Xanh has round shape, green skin colour and pink flesh that is crisp and sweet and also sought after by the Vietnamese (Figure 3) The average fruit weight is about 1.5kg/fruit Fruit has a yellow green skin colour and is easy to peel Flesh is a rosy red colour and separates easily from the segment When eaten, flesh has a sweet smell, rich sweet taste with no detectable acidity on the palate Da Xanh fruit have many seeds, about 10-30 large seeds per fruit Flesh weigh recovery ratio is greater then 55%

Figure 3 Da Xanh pomleo variety

L ONG H ONG

It is reported that this variety has a lower quality when compared to Da Xanh and Nam Roi This variety is higher yielding and highly tolerant of pest and diseases Trees of Long Hong pomelo variety are vigorous, woody tree with a rounded canopy (Figure 4) Trees start bearing 2.5-3 years after planting Long Hong produces fruit all year round, but the main season is from August to December From flowering to harvest takes about 7-7.5 months Seven year old trees produce about 100 fruit per tree and the average fruit weight is about 0.9-1.5kg/fruit Fruit are pear shaped, with a yellowish green skin colour and are easily peeled and have about 20 -30 seeds/fruit Flesh colour is pinkish in colour, juicy with a slight bitter taste and a good sugar acid balance

Figure 4 Long Hong pomelo variety

POMELO:- CLIMATIC REQUIREMENTS

Pomelo is a tropical region fruit and performs best in the lowland tropical areas of South East Asia The temperature requirement for optimum growth is between 23 to 30oC and optimum light requirement is 32.3

to 86.1 Klux with an annual rainfall between 1500 to 1800 millimeters per year Pomelo trees perform best

in a soil type that is a loam or sandy loam with depth greater than 1.0 meter The pH range of the soil should be from 5.5 to 6.5 Water logged or heavy clay soils should be avoided

POMELO PRODUCTION IN VIETNAM

Vietnam has had a significant increase in the number of hectares planted to pomelo since 2004 In 2004 Vietnam had 25 470 hectares (ha) of pomelo and in 2006 Vietnam had 35 600 ha of pomelo This is an increase of 10,130 ha or a 39.7% in 2 years and a rate of increase of 18.2% per year compounding

The Mekong River Delta (MRD) has the largest area of pomelo in VN with about 21,800 ha or 61.2% of the total area planted (Figure 5 and Table 2)

Figure 5 Area planted to pomelo in Vietnam by regions in 2006

(Source: Agriculture Planning and Designing Institute)

Table 2 Area and production of pomelo grown in the Mekong Delta Zone Area planted (ha) Harvest area(ha) Production (tonnes)

Table 3 Production Area for Pomelo in Southeastern Vietnam

Zone Area Planted(ha) Harvesting area (ha) Production (tonnes)

(Source: Institute of Agricultural Planning & Designing, 2004)

Vinh Long province has the largest plantings of pomelo, with 6,600 ha planted in 2006 This accounts for

30.3% of the total area planted to pomelo in the MRD, followed by the provinces of Tien Giang with 27.1%

and Ben Tre 14.7% (Figure 5)

The province of Vinh Long in the Mekong Delta, southern Vietnam, has long been famous for its production

of Nam Roi pomelo Nam Roi pomelo is also grown in the Tien Giang, Tra Vinh, Dong Thap, Long An, Can

Tho and Ben Tre Provinces, of the Mekong Delta, but fruit with the highest quality, reportedly come from the

Vinh Long Province

In Vinh Long, pomelo production is concentrated at the Binh Minh District where the My Hoa Commune has

specialized in the pomelo variety Nam Roi In Tien Giang, the pomelo variety Long Co Co is the dominant

variety grown in the Cai Be District, followed by Nam Roi which is grown in the Cai Be and Cai Lay Districts

In the province of Ben Tre, the pomeo variety Da Xanh is the dominant variety grown in the Mo Cay, Cho

Lach Districts and Ben Tre Township

Table 4 Pomelo production area (ha) in the Ben Tre Province, Mekong River Delta southern

Source: Ben Tre Department of Science and Technology

In the Ben Tre Province Mo Cay and Ben Tre Town have the largest areas planted to pomelo with 573 and

300 ha respectively (Table 4) Their combined production is about 4 000 mt per year or 91% of the provinces total production of pomelo

Figure 6 Area planted to pomelo in MRD in 2006

(Source: Agriculture Planning and Designing Institute)

P OMELO P RODUCTION ( YIELD )

Highest yields of pomelo are achieved in Red River Delta (RRD) and MRD According to Agriculture Planing

& Designing Institute, the average yield for pomelo in VN was 11.76 tons per ha in 2006

In VN, pomelo production has seen a significant increase in the last three years In 2004, about 163,085 tonnes of fruit was produced and compared to 227,900 tonnes of pomelo produced in 2006 For the period

2004 to 2006 pomelo production the increase is 64,815 tonnes or 18.2% per year (Figure 7) In the Vinh Long District, peak season is from August to September and off season is February to April A special Tet harvest is undertaken in Vietnam, pomelo fruit are held on the tree and harvest is for the Tet holiday (20-25 Tet month of the lunar year) when prices are high

Figure 7 Pomelo production of VN for the period 2004-2006

(Source: Agriculture Planning and Designing Institute)

Figure 8 Pomelo production (by weight) in VN in 2006

(Source: Agriculture Planning and Designing Institute)

The MRD region produces 169,700 tons which is 62.2% of the total production for Vietnam (Figure 8) In the MRD region in 2006, the province of Vinh Long produced 60,000 tons, which accounted for 35.4% of the total production from the MRD The province of Tien Giang produced 56,500 tons or 33.3% (Figure 9)

Tien Giang 33,3%

Vinh Long 35,4%

Other countries 1,3%

Can Tho 3,5%

Soc Trang 3,9%

Hau Giang 5,3%

Tra Vinh 5,4%

Ben Tre 11,9%

Figure 9 Pomelo production (by weight) in MRD in 2006

Figure 10 Pomelo variety Nam Roi average farm gate price in MRD for years 2002-2007

In the MRD of VN the average farm gate price, wholesale and retail selling price for the pomelo variety Nam Roi is not constant throughout the year and varies from year to year (Figures 10, 11 and 12) This is typical for most fruit and vegetables in Vietnam due to the supply and demand variability Average farm gate prices for the pomelo variety Nam Roi in MRD for the period 2002-2007 are presented in Figure 10 Average farm gate prices from year to year have larger price variations compared to the wholesaler sale price (Figure 11) and retailer sale price (Figure 12)

Since 2002, the average farm gate price, wholesale price and retail price for pomelo has been falling steadily Further research is needed to determine factors that causing this reduction in price Many new

plantings have been made since 2002, with significant plantings occurring 2005 In 2005, the average farm gate price fell to about 3,100 VND/kg due to oversupply (Figure 10)

In 2007, findings of a study by scientists at the Universities of Southern California in Los Angeles and Hawaii in Honolulu reported that older women who consumed about one-quarter of grapefruit per day had a 30% higher risk of breast cancer than those who did not consume grapefruit A science information officer

at Cancer Research UK, however, stated that this is the first and only study to show a link between grapefruit and breast cancer to date and that the researchers themselves say that the results need to be confirmed in follow-up studies (Vietnam Net, 2007) This caused a significant drop in the average farm gate price, wholesale price and retail price of pomelo in the MDR in VN as many women have stopped purchasing pomelo fruit (Figures 10, 11 and 12)

Figure 11 Pomelo variety Nam Roi average wholesale price in MRD in period 2002-2007

Figure 12 Pomelo variety Nam Roi average retail price in MRD in period 2002-2007

CONSUMERS

Vietnam is currently undergoing a rapid economic development, high-value supply chains will rapidly gain market share at the expense of more traditional sub-sectors Many Vietnamese citizens worried about high levels of pesticides and bacteria in their vegetables They are now taking food safety into their own hands

by planting their own organic vegetable patches (Ha Nguyen, 2008) Vietnamese consumers have a significant problem - they do not know if the fruit and vegetables they purchase adhere to standards established by Food and Agricultural Organisation (FAO) the world Health Organisation (WHO) and the Vietnamese Health Ministry

In Ho Chi Minh City (HCMC), 33% of the poor households have never shopped in supermarkets and only 38.5% shop there regularly This sharply contrasts with the figures for non-poor households in HCMC, where only 2% have never shopped in supermarkets and as many as 81.2%, shop there regularly (Vietnam Economy, 2006) Vietnamese shopping habits are changing with hundreds of customers queuing in Hanoi Hanoi and HCMC at supermarket checkouts on weekends Shoppers visiting the supermarkets are usually the more prosperous sector of the population and the younger generation For example a cashier at Big C supermarket said the each cash register takes at least 40 million Vietnamese Dong (VND) on a Saturday and Sunday (Vietnam News 2008) In Hanoi and HCMC Vietnams Retailers Association provided figures showing shopping at supermarkets and shopping centers has dramatically increased In 2005 15% of consumers shopped at supermarkets and shopping centers and in 2007, 24% of consumers shopped there Even though high inflation has caused prices to rise sharply, this has failed to dampen demand by Vietnamese consumers Vietnam’s Retailers Association indicated this is expected to rise to 37% by 2010 According to Vietnams Retailers Association the country has now 140 supermarkets and hypermarkets and

20 shopping centers with a further 1 million square meters of new retail space being developed (Vietnam News 2008)

Vietnam’s population earning power and living standards have also increased The Vietnamese Government Statistics Office database showed that in 2002 the average income was 356 thousand VND (Aud$25) per month Food expenditure was 135 thousand VND (Aud$9.48) and living expenses 269 VND (Aud$18.89) per month In 2004, income increased to 484 thousand VND (Aud$33) per month, food expenditure to 193 thousand VND (Aud$13.55) and living to 359 thousand VND (Aud$25.21) per month This represents a 26% increase in income, a 30% increase in food costs and 25.1% increase in living standards For example in Can Tho City Nguyen Tan Quyen, Secretary of the Can Tho City’s Peoples party indicated that Can Tho City’s GDP growth reached 16.08% in the past three years and in 2007 it reached 16.27% Per capita income rose to US$1,122 in 2006 and increased by a further US$142 in 2007

Vietnamese consumers spend up to 28% of their total income on food Wet markets are still the main supply of food with 87% of consumers purchasing some of their fruit and vegetables They believe food is fresher at the wet markets compared to food from supermarkets Consumer purchase fruit and vegetables

by eye appeal as well as feel (touch and hand feel) and price Consumers use a set of criteria for selecting fruit Consumer interviews indicate that consumers purchase pomelo by a set of selected and ordered criteria The order consumers use when selecting fruit is:- eye appeal (lack of defects), size (big), good weight, skin flat or straight, maturity or ripeness and colour is even throughout the fruit, shape, and price (Nguyen Minh Chau, 2006) Taste or flavour or aroma cannot be directly assessed on purchase, but consumer past experience is used to determine their purchase choice Value for price is highly important to Vietnamese consumers They look for good value for the lowest price

Farmer’s description (data collected from farmer interviews) of an ideal pomelo fruit for consumers is more specific than the descriptions derived from consumer interviews Farmers believe that consumers want a pomelo that is pear shape, yellow colour, bright, shiny, weighing about 750g – 1.4 kg; no scratches, no sunburn and no scars or marks Segments should be light yellow in colour, watery, round, fat and

transparent pulpy bulbs; clear, sweet taste with no seeds and easy to peel Even though farmers are highly descriptive of what they feel consumers want, but this quality description is very rarely achieved by farmers (Nguyen Minh Chau, 2006)

Hien & Tung, 2006, reported that Vietnamese consumers make decisions to purchase pomelo based on size, appearance and price About 79% Vietnamese consumers purchase grade 1 and 2 pomelo fruit 1-2 times per week 76% of pomelo purchases by Vietnamese consumers are made close to home at retail street shops due to convenience The remaining 24% of purchases are from supermarkets, where consumers believe they are assured of the right quality for the right price At each purchase, Vietnamese consumers buy 1-3 kg of pomelo Pomelo is sometimes cooled to enhance the eating quality and taste About 65% of Vietnamese consumers store fruit in the fridge for 1 to 2 days (Hien & Tung, 2006) For consumers, pomelo food safety is not a highly critical issue

Vietnamese consumers prefer to purchase the pomelo variety “Nam Roi” but 90% of Vietnamese consumers say they cannot identify the different varieties of pomelo Some retailers will sell low quality pomelo for a high price, claiming the variety they are selling to the consumer is the high quality variety About 80% of Vietnamese consumer does not know the pomelo variety “Da Xanh” The remaining 20% know Da Xanh but cannot differentiate Da Xanh from other similar shaped and skin type pomelo varieties (Hien & Tung, 2006) Vietnamese consumers purchase the pomelo variety “Da Xanh”, mainly for gift giving and social purposes, but for their own consumption they prefer the pomelo variety “Nam Roi” Consumers

in HCM city pay approximately 10,000-15,000 VND/kg higher for pomelo than in Ben Tre Province, where pomelo prices are about 20,000-25,000 VND/kg Vietnamese consumption of pomelo is 5kg per person per year (Chau, 2006) and total fruit consumption is 45 kg per person per year (VLSS-GSO, 2006)

Consumers regard pomelo as a good, nutritious fruit Pomelos are one of the 5 traditional fruits displayed

on a 5-fruit plate for Tet Vietnamese consumers are prepared to pay high prices for good quality pomelo especially during Tet Consumers can spend 50 000 to 70 000 VND to purchase a couple of pomelo fruit to give to friends or display on a five fruit plate for Tet Consumer survey responses indicated that consumers found pomelo prices to be too high and only low quality pomelo fruit are priced low enough, compared to their eating quality Vietnamese consumers find pomelo to be not a convenient fruit compared to other tropical fruits, as it takes too long to peel, you need a knife to help peel the fruit, and the two layers surrounding the flesh (skin and albedo) have to be peeled away before eating the segments

The UK cancer warning sent grapefruit prices in Vietnam tumbling and many farmers, particularly in southern Vietnam, suffered hefty losses A 11% drop in the price for pomelo resulted from this report Sales of grapefruit dropped from 10,000-12,000 to 200-250 grapefruits per day Pomelo growers in Mekong Delta provinces of Can Tho, Tien Giang, and Ben Tre have reportedly incurred losses of hundred billions of dong (VND100 billion=Aud$62,500) in august 2007 The Southern Institute for Research on Fruits revealed that the species of grapefruit sited as causing breast cancer in women is different from the one grown in Vietnam The grapefruit variety was Citrus paradise, known to be grown and consumed mainly in the US and Europe The Vietnamese species, Citrus maxima, was not only safe but also healthy since it reduced blood pressure and lowered cholesterol levels in the blood (Chau, 2007)

RETAILERS

CITY RETAILERS (HO CHI MINH & HANOI)

The retail and consumer scene, especially in Ho Chi Minh City, is undergoing a great deal of change that is beginning to benefit the end consumer Not only have supermarkets and department stores grown in number, but many are already modernising their services and products, from better-designed shelves, promotions, to point-of-sale (POS) terminals to help boost sales and competitiveness Fast moving consumer goods (FMCG) have experienced the highest growth rates, growing at a rate of 10% per year for the past four years (Vietnam Economy, 2007) Vietnam Economy (2007), reported growth rates for 2006 for FMCG are:

• 18% for dairy products (milk)

• 13% for personal care items (shampoo, facial moisture, skin care and beauty products)

• 13% for non-alcoholic beverages (tea, fruit juice, etc)

In contrast, the traditional markets and street vendors are the major sellers of fruit and vegetables in Vietnam This is based on quantities sold, area of sales and employment (Moustier, 2006) These markets and vendors are the main point of sale to poor customers, who rarely purchase from supermarkets because

of their high prices and inconvenient locations

All retailers in HCMC, reported that consumers are becoming more fastidious in choosing fruit This change can be attributed to the increase in living standards over the past ten years All street vendors surveyed see their particular line of business as a temporary job Most vendors have been in this line of business for only two to three years compared to market retailers, fruit shops and supermarkets who have been in their line of business for 5 years or longer (Nissen et al., 2008) Street vendors cut up pomelo fruit and sell the flesh/pulp to consumers in small plastic bags as a refreshing treat

HAWKERS AND STREET VENDORS

In Hanoi, from 1 July 2008, street vendors have been banned from commercial streets An estimated 5,000 mobile vendors – mostly women - operate in the city centre, selling goods from bamboo baskets and bicycles They have little education and few other means of support and this income is sent back to village

In Ho Chi Minh City, a Government leader has asked local authorities to move roadside farm-produce vendors into markets At a meeting between the city People’s Committee and market oversight agencies, Nguyen Thi Hong, deputy head of the city administration, called for issuing licenses to the vendors since a ban on hawking along certain roads is set to take effect After being allotted stalls at wholesale markets, anyone caught hawking on the street will be fined Hong also urged wholesale markets to remain vigilant about food safety Tran Van Bac, director of the Binh Dien Wholesale Market in district 8, 290 traders have been allotted stalls at Binh Dien by draw of lots While 257 people have signed contracts, 210 have already started selling beef there (Le Tuan Minh, 2008) Hawkers of pomelo in the large cities will have long standing orders from customers, other retailers or sellers of goods These hawkers usually deliver to their customer house or place of business about 10-20 fruit per order

SUPERMARKETS

Pomelo fruit is sold through supermarkets in HCMC, Hanoi Supermarket numbers are increasing due to consumer demands for safe food and the Vietnamese Government promotion of ideals on safe food As

Vietnamese wages increase and consumers demand a safe product, the number of supermarkets has increased dramatically in Ho Chi Minh City between 1990 and 2004, at a rate of 17% per year In Hanoi, supermarket expansion also occurred at a rate of 14% per year from 2000 to 2004 In 2004, there were 43 supermarkets and nine trade centers in Hanoi In 2005, there were 71 supermarkets in Ho Chi Minh City (Moustier, et al 2006) Producers must be highly adaptable; inflexible producers will not be able to generate added value to the supply chain and will be forced out of their industry Producers must adopt new supply chain strategies that will deliver value for money to their customers and ultimately the end consumer

The number of purchasers direct from farmers by supermarkets is low because supply of pomelo fruit from farmers is usually inconsistent Supermarkets only use this method as a last resort Many farmers produce only small quantities of pomelo due to their small farm sizes Many farmers are not interested in selling direct to supermarkets or large retailers This is due to the fact that this method does not provide extra benefits or greater profit for them The cost of transporting the fruit to the supermarket or large retailer is high and the payment system is usually very complicated

RETAILERS (FRUIT SHOPS)

Most retailers purchase 30 to 150kg of fruit each time, repeating this purchase every 1 to 3 days Due to this short sales cycle and high turnover, loss in fruit quality is minimal and no significant changes in fruit appearance occur The only change to occur is that fruit lose about 3 to 5% in weight To balance price with quality, retailers sell pomelo fruit at a high price to early customers, then as fruit quality drops fruit are sold a lower price to late customers

The market for pomelo in Vietnam has expanded rapidly in the last few years with supermarkets selling fruit

in HCMC, Hanoi, and dealers in the Mekong Delta, Nha Tranag, Ba Rai Vung Tau, Da Nang Pomelo is now been displayed and sold at Tan Son Nhut Airport of HCMC Poor packaging is limiting the sale and consumption of pomelo at Tan Son Nhut Airport Ho Chi Minh City

Once retailers receive pomelo from the wholesaler or trader they wash the fruit to prepare for sale All retailers re-classify the pomelo fruit they receive form wholesalers and traders into categories according to their consumer preferences Retailers use as variety of packaging material (bamboo baskets, fiberboard cartons and plastic bags to assist customers in transporting fruit to their home

PROVINCIAL RETAILERS

The provincial retailers referred to here, are those retailers that sell pomelo in provinces where pomelo is not produced Provincial retailers purchase pomelo fruit via a number of different methods They purchase from big and small wholesalers, at wholesale markets, packers, traders (dealers) in the province that produce pomelo, or direct from pomelo farmers All of these suppliers of pomelo fruit, have to transport and distribute their fruit to these retailer shops

LOCAL RETAILERS

Local retailers referred to here, are those retailers who sell pomelo in the provinces which produce pomelo Local retailers in Ben Tre and Vin Long purchase their pomelo fruit from traders, packers and occasionally farmers They purchase only grade 2 and 3 fruit Their profit is about 1 000-2 000 VND per fruit Retailers

in Vin Long on average purchase 50 to 100 kg of grade 2 or grade 3 fruit They will only purchase grade 1 fruit when the customer has pre ordered grade 1 fruit This is due to what they regard as the high cost purchasing of grade 1 fruit at the local level

FRUIT LOSSES DURING RETAILING

All retailers estimated their fruit loss during the selling stage to be about 1-2% Fruit that shrivel, wither, or the stems fall off are sold at a lower price

RETAIL PRICES

City retail prices for pomelo are about double the provincial retail prices The price for Nam Roi pomelo from the 25th of the 12 lunar month to Tet increases very sharply, especially for pomelo with branches attached High class pomelo fruit sell for about 35 000 VND per fruit compared to the normal price of about

15 000 - 30 000 VND per fruit

Table 5 Comparison of average retail prices of pomelo, Tam Binh Retail Market, Vinh Long

Province vs Ho Chi Minh City, in Southern Vietnam

Classification category of pomelo

fruit Average retail price per kg in Vinh Long Province Average retail price in Ho Chi Minh City

Category 1 8 000 – 9 000 VND / kg 12 000 – 17 000 VND / kg Category 2 5 000 – 6 000 VND / kg 6 000 – 12 000 VND / kg

Source: Reference Price of Tam Binh market Vinh Long, Available:- http:www.agroviet.gov.vn

RESTAURANTS, HOTELS AND TOURISTS RESORTS

Eco-tourism is developing fast in Vietnam and the demand for tropical fruit in high The variety Da Xanh is highly sought after by this sector and is the main variety consumed fresh by customers or offered as gifs to customers They usually obtain fruit directly from collectors and farmers bypassing many middle men Restaurants in HCMC use exclusively the pomelo variety Da Xanh and purchase directly from wholesalers Payment is by cash and no contracts are enforced

Figure 13 Retailer supply chain relationships in southern Vietnam

Hawker/Street Vendor

Local Retailer in Province

Wet Market Retailer Consumer

WHOLESALERS

There were approximately 346 fixed markets, 2 000 street markets and 6 000 small pop up stores in HCMC

in 2002 (Hayden 2002) All pomelo wholesalers deal in a few commodities, they also purchase other fruit such as king mandarin, orange, mango, pineapple, watermelon etc All wholesalers interviewed at the Cai

Be Markets, Tien Giang Province purchase pomelo, orange, mandarin, and mango and have about 10 to 30 years experience in running wholesale business at these markets Their main customers are the supermarket, retailers, restaurants and hotels The large wholesalers usually purchase in excess of 2 tonnes of pomelo per purchase Small wholesalers usually sell 200 to 300kg of pomelo per day (GTZ, 2006.) The majority of large wholesalers of pomelo are in HCMC, but there are a few large wholesalers located in the larger cities and provinces of the Mekong Delta These large wholesalers have located their business in the big wholesale markets, while smaller wholesalers are located in the smaller markets of HCMC Pomelo fruit are transported to HCMC by boat at collected at the wharf (Ton That Tuyet, District 4) and Ong Lanh Markets, District 1 Ong Lanh Markets, District 1 has now been moved to Thu Duc District

on the outskirts of Ho Chi Minh City There are three major wholesale markets in the surrounding districts

of Ho Chi Minh City These are: Thu Duc Wholesale Market in Thu Duc District; Binh Dien Wholesale Market, District 8; Tan Xuan Wholesale Market in Hoc Mon District The Ong Lanh Markets located in District 1, now have only a small number of little boats delivering pomelo compared to the past, where larger boats delivered, large quantities of pomelo Traders are still responsible for transport pomelo from the wharf to the wholesales at the markets Some large wholesalers are now going into the regional areas to purchase pomelo from traders and they also participate in exporting pomelo fruit through small channels, about 3 – 6% to Cambodia and China (Pers Comm., 2006) See Figure 14

Figure 14 Wholesaler supply chain relationships in southern Vietnam (Chau, 2006)

Nam Poi pomelo purchased by the wholesalers is supplied from Vinh Long and Can Tho Provinces Almost all of the wholesalers interviewed prefer to purchase Nam Roi pomelo from traders, because farmers normally bargain to obtain the best price, while the traders know the market price and know how to grade

Large wholesaler

Export

Small wholesaler Retailer

the fruit About 60% of wholesalers pay the same price for fruit purchased from farmers and collectors while the remained say they pay 500 VND/kg more for fruit from collectors Comparison of the wholesalers purchasing price and selling price for the pomelo variety Nam Roi, we found that fruit are sold at double the purchasing price and Da Xanh pomelo is sold at 30 to 50% above it purchase price

These collectors have a long time relationship with the wholesaler and a reputation for supplying consistent lines of pomelo fruit which is in contrast to farmers who supply small volumes of inconsistent grade standards and fruit quality The key principle wholesalers follow is consistency in quality and maintenance

of reputation Traders are paid, 300-500 VND per kg more by the wholesaler for class 1 pomelo fruit This

is due to the trader paying for transportation and harvesting

All wholesalers perform re-grading and sorting at the wholesale markets The baskets the pomelo fruit arrive in at the wholesale markets are owned by the traders or collector who sent the fruit Therefore, all fruit is removed from these baskets and repacked and the baskets returned to the trader or collector Wholesalers hire fruit graders to grade and sort the fruit Fruit arrive at the wholesale markets packed in 80-

85 kg bamboo baskets (Figures 15 & 16) Fruit are graded and sorted by eye and hand according to size and feel, and the occasional fruit may be placed on a set of scales to check its weight Immature or fruit less than 400 grams and fruit with excessive pest and disease damage are rejected Fruit are sometimes graded and sorted on the ground, especially low quality fruit Occasionally a ground sheet is used to sort fruit on, as the floor of the wholesale markets is usually wet, dirty and very unhygienic Fruit are often graded by removing fruit from one bamboo basket and tossing the fruit into a 80-85kg wire or bamboo basket that contain fruit of a similar quality and size Grading classification and sorting is shown in Table 6

Table 6 Wholesaler Grading classification and average sale price of pomelo at Tam Binh Wholesale

Markets, 2006

Grading Classification Nam Roi

VND per 10 fruit VND per 10 fruit Da Xanh

Special Category (2-3 kg fruit) 130 000

Wholesalers reported that pomelo preserve better than other tropical fruit e.g mango, rambutan etc Some wholesalers indicated that fruit can last up to one month Most wholesalers say pomelo fruit can last for up

to 10-13 days in excellent condition Wholesalers may keep the fruit for 1-2 days before selling They believe this enhances the flavour of the fruit as most fruit are harvest at 70% maturity If all the pomelo fruit are not sold on the same day they are kept to the next day They are not wet or kept in the hot sun but under shade Pomelo are kept and displayed in bamboo or wire baskets at the wholesale markets Wholesalers do not label pomelo fruit According to the wholesalers, their customers recognise the fruit quality and they can be trusted, therefore there is no need to place a label on the fruit (Chau, 2006) Once

a wholesaler makes a sale to a retailer or customer, they usually package fruit in about 50-60kg plastic bags with holes or load into bamboo or wire baskets (Figures 15 & 16)

Figure 15 65kg Wire baskets used in Thu Duc

Wholesale Markets Figure 16 65kg Wire and Bamboo Baskets used in Thu Duc Wholesale Markets

Wholesaler expenses include costs of hiring floor space or shop front in the wholesale markets, costs of handling, unloading and loading fruit, labour costs for grading and sorting, and packaging Most of the business activities of the wholesalers are undertaken by their family members Many wholesalers will employ 2-4 labourers to do the physical work The majority of wholesalers today have purchased mini-trucks capable of delivering fruit to their customers, retailers, restaurants, hotels etc., within the city area This has considerably reduced their costs Paying for the transport costs to deliver the fruit by tricycles and motorbikes to their customers was significant

Wholesalers do not sign written contracts but verbal agreements are made via the phone with traders Wholesalers receive cash payments for their product from street vendors who come to the markets to purchase fruit They prefer that all their business dealing to be in cash, and payment made at time of sale For the supermarkets, restaurants and fruit shops the payment can be received on the next delivery after the customers is satisfied with the fruit quality Wholesalers in southern Vietnam also sell Nam Roi pomelo

to other wholesalers, retailers, in the central and northern Vietnam Wholesalers also sell to processors and pomelo companies such as Hoang Gai Most wholesalers prefer to sell to distant wholesalers because they usually sell large volumes

Wholesaler income is regarded as rather big in Vietnamese terms, particularly when they purchase price is about 60 000-80 000 VND per 10 fruit and the selling price is 100 000-130 000 VND per 10 fruit Wholesalers in Cai Be obtain a profit of about 200 VND per kg for class 1 Nam Roi pomelo

Table 7 Comparison of the average seasonal selling price of Nam Roi pomelo at Cai Be Markets,

Mekong Delta southern Vietnam in 2006

(July-Aug) Season middle (Sep.-Dec.) End of season (Jan April)

Class 1> 1000 gr/fruit 4500-5000VND/kg 5000-6000 VND/kg 9000-1000 VND/kg Class 2: 700-900gr/fruit 4500-5000 VND/kg 4000-4500 VND/kg 7000 VND/kg Class 3: 400-700gr/fruit 2000 VND/kg 2000 VND/kg 3000 VND/kg

Table 8 2005 average sale price for Nam Roi pomelo and wholesale markets in Vinh Long, Mekong

Delta southern Vietnam Month Special class Class 1 Class 2 Class 3

Jan 5621 4479 3499 2465 Feb 6233 5225 4008 2542 Mar 6992 5400 4308 3008 Apr 7192 6100 4650 3208 May 6840 5813 4373 3078 Jun 7133 5650 4233 2983 Jul 6733 5500 4050 3042 Aug 6189 5289 4367 3078 Sep 4747 3753 2613 1947 Oct 4533 3578 2500 1878 Nov 4650 3700 2575 1925 Dec 4678 3678 2578 1933

Source: Southern Fruit Research Institute, 2005

COLLECTORS/TRADERS/PACKING AGENTS

COLLECTOR

A pomelo collector in Vietnam is defined as a person who collects fruit from growers, then transports and on sells the fruit to wholesalers, traders and packers The collector in the supply chain plays the role as the connection, mediator, and information provider to growers, from wholesalers, traders and packers Collectors, communicate information on fruit quality and storage life, market prices and volumes to growers

A collector may be a local pomelo grower who has developed a relationship with a wholesaler or may be a relative of a wholesaler Some collectors may also harvest the fruit from a grower’s property Farmers accept a lower price for pomelo fruit from collectors This is usually due to the small quantities involved and farmers are paid in cash This eliminates the farmers having to pay for the transport costs of the fruit to the wholesaler If a collector has a contract with a farmer, the farmers has to supply a certain quantity of fruit to fill that contract Many Vietnamese farmers are very unsure about contracts, because they worry a great deal about not meeting the terms of a contract and saving face

Figure 17 Pomelo transported by boat to

wholesale markets in Vinh Long City, Mekong

River Delta, Southern Vietnam

Figure 18 Pomelo fruit transported by boat to wholesale markets at Cai Be, Mekong Delta,

southern Vietnam

Many collectors use their own family as the labour source Collectors purchase and sell fruit within one day, which does not require a large amount of capital A collectors capital requirement may be low as 10-15 million VND ($900-$1,400Aud) Collectors work on a commission basis, this is usually of 5-7% of the exchange value

When supply of pomelo is low and the market supply is inconsistent, collectors will increase payments to farmers They may pay 20-50% of the total estimated value of the product This is usually an oral agreement between the collector and farmer The collector will then pay the farmer remaining value at the current market price Many Vietnamese believe this increases competition between collectors

TRADERS/ENTERPRISES (COMPANIES)

Traders may be small or large, local or travel long distances to conduct business In Vietnam, traders have increased in size and competition between traders has intensified Many traders have now invested in infrastructure, purchasing boats and sampans in order to reach every pomelo farmer’s orchard, so they inspect and purchase fruit Customers of traders are wholesalers (90%) and retailers (10%) All of the trader’s retail customers live in the same regions as the trader and come to the trader’s place of business to purchase fruit The majority of traders transport the fruit to the wholesaler in cities, Ho Chi Minh City, Nha Trang, Ba Ria, Vung Tau and Da Nang

Of the 9 traders interviewed in Binh Minh District, Mekong River Delta, southern Vietnam, 6 of them purchase from farmers and 3 purchase from other small traders and farmers All of these traders interviewed in Binh Minh District have been in this business for 5-6 years Six of these traders sell the fruit

to wholesalers in HCMC, and the remaining 3 other sell to different customers at Ton That Thuyet Port in HCMC Traders indicated that the Nam Roi pomelo wholesalers at Thu Duc Wholesale Markets in HCMC are their representatives Benefits traders obtain are the linkages with these wholesalers and this is based

on the fruit quantity they sell to their customers (wholesaslers)

Traders collect pomelo fruit all year round The average Nam Roi pomelo trader in the Vinh Long province

of southern Vietnam will trade about 140 tonnes of pomelo per year Traders usually make 2-3 business trips per month collecting 20 to 50 tonnes per business trip depending upon the trader’s size and availability

of product Traders invest a significant amount of capital for each business trip For example, a small to medium trader will invest 12-15 million VND and large traders will invest 20-30 million VND per business trip

Traders purchase from farmers in bulk and then cover all the costs of grading, sorting, packing and transporting to wholesalers Traders will store fruit before packing in a fresh open area Fruit are then cleaned before packing for transporting to wholesalers Traders grade pomelo fruit using two methods, weight or roundness of the fruit, neglecting fruit size Because traders mainly supply wholesalers with large quantities of fruit, the sorting and classification of fruit is very minimal and regarded as not being very important If fruit are sorted or classified on roundness, then the trader will sell small and large fruit at the same price, usually 3 000-4 000 VND/kg If private trading enterprises sell fruit for export or to supermarkets then grading and classification is strictly applied and only fruit in category 1 are supplied Category 1:- fruit weight of 1.4-2 kg or above with an even yellow colour, nice, even size Fruit in category 3 are sent for processing into juice or canned for domestic consumption

Traders obtain a greater profit when purchasing Nam Roi pomelo from the farmers They benefit by about 300-500 VND/kg or 8-10% greater profit than purchasing fruit from other small traders This is because they have to pay the other trader for harvesting the fruit Almost all traders buy from farmer because they can select and grade the fruit as they want to purchase and sell

Table 9 Traders grading and classification of pomelo fruit for sale

Categories Weight Fruit Number (tens)

Special category (1.4 kg and above) Price is continuously

changing significantly higher from Tet to the fifth 60 000-70 000 /10 fruit (prices are

lunar month of the year Category 1 (>1-1.4 kg) 4 500-5 500 VND / kg

Category 2 (0.7- 1 kg) 2 700-2 800 VND /kg

Category 3 (less than 0.7 kg, small

and bad fruit) 700 – 1 000 VND / kg

Certain traders and private enterprises are applying some post-harvest practices They are now using chlorine wash to clean and sterilise fruit then dip in ethephon at 500ppm (to give fruit and even yellow colour) and wrap in polyethylene bags to reduce moisture loss and increase shelf life up to 3 months

Traders are the participants in the supply chain who suffer the greatest losses in the pomelo supply chain Storage of fruit to enable economies of scale (quantity of fruit to enable economically viability) results in significant weight loss Traders interviewed estimated a loss of 0.5 to 1% in weight occurs during storage and a further 5% loss occurs during handling and loading of boats and trucks etc This is due to impact damage when fruit a thrown and dropped into boats and bins

Trader wholesaler agreements are verbal and there are no legal contracts Traders do not know how to do business via contracts Traders sometimes lose a significant amount of money because their customers (wholesalers) will not settle as per the agreement Traders do not want contracts as they fear they will become the person to break the contract (saving face concept in Asia) Traders sell to other traders and wholesalers and use the waterways to deliver their product This form of transport in Vietnam is cheap, but unexpected delays are frequent and traders deliver without agreeing to an exact delivery time

Traders when doing business n doing business with retailers and wholesalers opt for a different business model Settlement is based on a verbal agreement and is in cash upon deliver or if the relationship has been developed over a long period of time, then an overlapping settlement system may be in place When doing business with farmers, traders usually pay in advance, 30% of the estimated total orchard crop then the balance is paid when the trader receives the agreed amount of fruit

Assessing a trader’s income somewhat complicated, but on average it is usually about 20-50% of category

1 and 2 For example:

• Sale of category 1 fruit minus the taxes and transaction fees, the traders will obtain about 35% of the sale price

• Sale of category 2 fruit minus the taxes and transaction fees, the trader will obtain about 30% of the sale price

• Sale of category 3 fruit minus the taxes and transaction fees, the trader will obtain very little as they have to sell this product at a lower price, often they may lose money on this category, because they buy in bulk

Traders in Vinh Long have a very stable and high income (Chau, 2006), although the market is changing and supply cannot meet demand

E NTERPRISES (C OMPANIES )

Hoang Gia Company purchases about 5-6% of pomelos produce in the Vinh Long Province Hoang Gia Company supplies fruit for local markets and export In 2004 Hoang Gia Company sold 145 tonnes to METRO Vietnam, and exported 50 tonnes to Germany In 2005, about 100 tonnes was exported to Germany, Russia, America with and Free on Board (FOB) price in HCMC of $590USD/tonne or 9.2 million VND/tonne The Hoang Gia Company also processes about 370 tonnes/year of pomelo into juice and jam

LOCAL PACKING AGENTS

Packing agents also play an important role They bear all the costs of collecting, sorting, paying the taxes and transporting the fruit to the wholesalers Packing agents are local people with 2-20 years (majority 5-15 years) of experience in the business They usually trade in one product, but supplement their business income with two to three different types of citrus products during the off season

Most local packers employ family members or relatives to do the packing Most packers also employ 2-5 labours during the peak season (October to February) for sorting, packing grading and handling Local packers pay a lower price to farmers compared to that paid by collectors The reason is that the local packers have to sort, graded, pack the fruit If a collector supplies fruit to a local packer the fruit are all ready sorted, therefore the farmers receives a lower price for his fruit

Most local packers have a business house or plot close to local markets It is extremely hard for them to expand their business due to the large capital expense needed If they move their business to a new place, the loss in business customers and the increase in transport costs will significantly affect their business operations Local packers usually obtain credit from family member or relatives Obtaining loans from banks or financial institutions is considered too hard, as the amount of paper work is extensive and interest rates are higher

Figure 19 Fruit being unloaded from a truck and

pack at Cai Be Wholesale Markets for transport to

Thu Duc Wholesale Markets HCMC

Figure 20 Fruit being unloaded from a truck and pack at Cai Be Wholesale Markets for transport to Thu Duc Wholesale Markets

HCMC