Value chain analysis of cassava in south central coastal vietna

Value-chain analysis of cassava in south-central coastal Vietnam Ho Cao Viet et al1 Abstract Value-chain analysis of cassava was carried out in the Binh Dinh, Phu Yen and Ninh Thuan provinces of south-central coastal (SCC) Vietnam to assess limitations that occurred from the production to the consumption stage and to develop strategies and make recommendations to enhance profitability for farmers The key findings of cassava value-chain analysis are: (i) farmers and enterprise agents play a very important role in the chain; however, the processing factory is the primary factor that influences the whole cassava chain; (ii) information about the market and price governs farmer’s benefit and income; (iii) cooperation and coordination among farmers are the best choices to reduce risk and loss if the price were to depreciate; (iv) interaction between cassava producers and beef-cattle enterprises is necessary for sustainable farming system; and (v) small-scale starch-processing units are dependent upon the price of cassava root to mitigate risks Introduction Cassava production came into force in Vietnam at the beginning of the 21st century when some cassava-starch-processing factories were established in Binh Dinh and Phu Yen provinces Initially, the cassava-processing units were very traditional, small-scale and low capacity, using simple equipment and family for labour The product was mainly supplied to the local people and sold in small markets After that, processing factories started to process cassava tuber and root to manufacture large amounts of flour and chips to sell to overseas markets such as China, Singapore and Thailand, and a small portion was used as a raw material for the domestic industry With time, realising the potential of cassava as a niche and cash crop, farmers started to shift their focus from other crops to cassava cultivation Cassava now plays an important role for farming households, particularly for the poor in south-central coastal (SCC) Vietnam Over 90% of cassava produced annually is processed into high-value products, such as cassava chips and starch, to supply both domestic and overseas markets These products are the main source of income for farmers, processors and other agents in the value chain, including collectors, middlemen, dealers, wholesalers, retailers, enterprises, processing units, companies and factories The by-products of cassava are also used as animal feed (for livestock such as cattle and pigs) in this region, and this aspect has played a very imported role in improving the income of farms Surveys of different actors involved in the cassava value chain were conducted to collect information, analyse the chain and assess if it could be improved for the benefit of all the Lecturer in the Faculty of Business Adnimistration - Van Hien University Email of correspondant: hocaoviet2000@yahoo.com participants The price of cassava root fluctuates based on supply and demand in the world market, which affects its production domestically Price fluctuation is also indirectly influenced by the way vertical coordination occurs among farmers and other value-chain actors such as like powderprocessing units, factories and related enterprises Based on the survey results, there was a need to identify limitations that would occur during the process of the cassava supply chain and to further improve it to create a better social and economic environment for all involved The specific objectives for this cassava value-chain project were to:  analyse markets and identify the advantages and disadvantages of the process  support activities and recommend policies for implementation and improvement of the value chain  identify short-term solutions and develop long-term strategies by engaging stakeholders and agents Methodology Analytical frameworks were adopted from international organisations involved in evaluating value chains, such asDeutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), ACDI/VOCA and Making Markets Work for the Poor (M4P), and were applied to develop the investigation framework in the context of cassava value-chain research The methodology of value-chain study of the Food and Agriculture Organization of the United Nations (FAO) (Bockel and Tallec 2005) was also applied Qualitative methods The participatory rural appraisal (PRA) method, formal discussions, key informal panel (KIP) discussions, problem trees, SWOT (strengths, weaknesses, opportunities and threats) analysis and Venn diagram were used to identify the: (i) structure of the chain in different provinces; (ii) interaction of each factor, including the actors in the chain; and (iii) impact of institutions and policies on the chain Collection and analysis of secondary data (annual reports of people committees, statistical data, scientific reports and information from the Ministry of Agriculture and Rural Development (MARD), Department of Agriculture and Rural Development (DARD) in each province, non-government organisations (NGOs), plus institutional and political papers) were also were Individual in-depth interviews, case studies and observations added to the data collection These databases were updated yearly Quantitative methods Face-to-face interviews or discussions were held with the value-chain actors to collect data which were subjected to statistical analysis, cost–benefit analysis and value-added analysis to build a scenario to interpret the overall chain, including subchains and products Survey sampling strategy and participants A non-probability sampling method (proportionate quota sampling combined with a convenience sampling approach) was used in this study mainly due to financial (approach) and technical constraints (timescale and performance) Hence, there was limited the ability of the surveyors to expand the sample size of the actors involved in the cassava value chain Consequently, although the population of farmers was very large, surveying was restricted to one commune in each of the three study provinces These comprised:  Cat Trinh commune, Phu Cat district, Binh Dinh province  An Chan commune, Tuy An district, Phu Yen province  Phuoc Dinh commune, Ninh Phuoc district, Ninh Thuan province From each of these communes, 30 farming households with different land sizes were selected to carry out annual surveys and face-to-face interviews The other actors included eight collectors/middlemen of various levels, five dealers (who trade cassava chips), five processing units (cassava flour and starch) and three processing factories (starch and other products) Data analysis Descriptive statistics were used to analyse the data The basis for calculating the benefit: cost ratio is presented in Table and financial factors that were considered for the descriptive statistics for the cassava value chain are outlineded in Figures and Table Economic parameters used in the cost–benefit analysis Parameter Formula Production (total income) (P) (Productivity × Selling price of main product per unit) + Income from by-products (if any) Total cost (TC) Variable costs (VC) + Fixed costs (FC) Fixed costs Maintenance + Depreciation + Tax Variable costs Fertilisers + Pesticides + Labour wage Collectors/middlemen costs Input materials + Labour wage + Transportation + Energy (fuel, electrivity) + Tax on product (if any) Processing unit costs Input materials + Labour wage + Transportation + Energy + Tax Intermediate Cost (IC) Input materials + Energy Gross profit (GPr) Production (P) – Total cost (TC) Value added (VA) Labour wage + Interest on loan + Communication fee + Tax + Maintenance & repair + Depreciation + Gross profit Net profit (NPr) Gross profit (after tax) World cassava production and trade Global cassava production increased by 5% between 2006 and 2011, reaching around 250 million tonnes (Mt) (Figure 3) The demand of cassava from industrial sectors, particularly for producing ethanol and other products (food and foodstuffs processed from cassava) increased sharply in South-East Asia and Africa in 2011 In Asia, cassava production was estimated to be 83 Mt, an increase of 6% in 2011 Thailand was the largest producer of cassava in Asia, with a total production of 30 Mt; however, Thai production reduced by 8% in 2011 due to pest damage (pink hibiscus mealybug) China produced around 8.5 Mt in 2011 Figure World cassava production of cassava, 2006–2011 Source: FAO (2011) Trading of cassava fluctuates yearly both in terms of product quantities (Figure 4) and price (FAO 2011) China is the biggest consumer of cassava in the world and imports 65% of the total cassava produced Thailand was the largest exporter of cassava products during 2008–2011 and recorded its highest exports in 2009 (Table 2) Figure Trade of cassava in global market, 2006–2011 Source: FAO (2011) Table World exports of cassava and major exporting countries, 2008–2011 (’000 t) Year 2008 2009 2010 2011 Starch and flour Total 4,265 5,929 5,483 5,249 Thailand 3,963 4,993 4,864 4,427 Vietnam 946 600 250 500 Total 5,187 6,862 6,127 6,155 Thailand 2,848 4,411 4,411 2,927 Vietnam 437 2,000 1,200 2,000 Chips and pulp Cambodia Overall total 170 100 250 1,000 9,452 12,791 11,610 11,404 Source: FAO (2011) Cassava production and trade in Vietnam Production trends Total cassava production in Vietnam in 2008 was 1.4 Mt, with an export value of US$555 million which was much lower than Thailand where Mt had an export value of US$1.4 billion Although it fluctuated with price over time, by 2011, Vietnam had increased its cultivated area to 510,000 hectares (ha)—mainly in response to the high price of cassava root—with production of nearly Mt However, this increase in area for cassava production was against the government policy (to keep the cassava cultivation area under 450,000 ha) to avoid deforestation The average yield was 17.8 t/ha, which was low compared with Thailand, where average yield was 21.1 t/ha Of total cassava production in 2009 or 8.1–8.6 Mt, 22.4% was used for animal feed, 16.8% for artisanal processing, 12.2% for fresh meals and the remaining 48.6% for export Export statistics and opportunities According to the Customs General Office, in 2011, Vietnam exported 3.2 Mt of cassava and other products valued at US$974.5 million, an increase of 67.5% in quantity and 43% in value (Economic Times online, 2012) The main markets for Vietnamese cassava exports include China, Korea, Taiwan, Philippines, Malaysia and Japan, and Vietnamese cassava products also have a presence in other Asian countries (Indonesia, India, Burma etc.) as well as Australia, Europe and Russia China imported 2.9 Mt of cassava products from Vietnam valued at about US$855 million occupying 88% of total value of cassava exports in 2011 Korea imported cassava products worth US$30.6 million, followed by Taiwan (US$22 million), the Philippines (US$13.55 million), Malaysia (US$8.3 million) and Japan (US$3.15 million) MARD estimated the amount of cassava for export to fetch over US$1 billion by the end of 2012—an increase of US$250 million compared with 2011 Supply problems in Thailand have meant that international buyers have begun to source cassava products from other countries, especially Vietnam and Cambodia (Table 2) There is an opportunity to increase exports if the Vietnamese cassava value chain can improve its performance The export value may further increase if cassava is used for biofuels to replace fossil fuels and may develop opportunities for cassava processors to ethanol Potential for cassava as fuel The Vietnam Government’s project on Development of biofuels to 2015 with a vision to 2025 aims to replace fossil fuels, ensure energy security and protect the environment This project will provide an opportunity for cassava value-chain development in Vietnam According to the plan, by 2015, production of ethanol and vegetable oil will reach 250,000 t (producing Mt of gasoline E5 and B5) to meet 1% demand of fuel domestically By 2025, these figures are expected to be five times higher With this initiative in mind, four ethanol factories have already been set up in Quang Nam, Phu Tho, Quang Ngai and Binh Phuoc provinces With ethanol production of 100 million litres of ethanol production per year per factory, the total demand for cassava is estimated to be about Mt of dried root per year, requiring nearly 58,000 of cassava plantation, assuming the yield to be 17 t/ha With a further 10 ethanol-production projects being set up, the Ministry of Trade estimates that 510,000 with an average yield of 15.7 t/ha would be required for this use alone Given that the cultivation area for cassava already exceeds the limit set by government (as discussed above), to meet demaned it would be necessary to improve cassava yield by introducing new varieties and/or new cultivation techniques to achieve similar yield levels as in India (31.4 t/ha) and Thailand (21.1 t/ha) (KHPT 2010) Fluctuations in price of cassava products and impact on cultivated area The domestic cassava price of roots and processed products such as chips and starch fluctuated during 2009–2012 In 2010–2011, the farm-gate price of cassava root (Vietnamese dong (VND)35 million /ha) and dried chips (5,300 VND/kg) and were double that of the previous year (information compiled from KIP discussions in Binh Dinh, Phu Yen and Ninh Thuan provinces) This higher price of cassava attracted farmers to shift from other crops (such as sugarcane) to cassava cultivation The market price of cassava (chips, fresh tuber) fluctuated a lot during 2000–2010 The prices were high during 2006–2011 due to high demand from the Chinese market Hence, the cultivated area of cassava increased at the beginning of 2006, as shown for Binh Dinh province in Figure However, during 2009–2010, the price of cassava reduced substantially and a slowdown in the processing of cassava flour was also seen at the factories because the influence of Chinese market The Chinese traders declined both amount of imported cassava and buying price As a result, in 2010, the area of cassava cultivation reduced by 58,000 in Vietnam in comparison to 2008 (Statistical Publishing House 2011&2012) North-central coastal and SCC areas were also affected as a result and the cultivation area reduced by 13,000 (8%) Similar effects were seen in Ninh Thuan provinces (Figure 6) In contrast, in Phu Yen province, the area increased by 1,000 in 2010 compared with 2009 (Figure 6) due to the establishment of a new processing factory that began operating in 2009 However, due to poor weather conditions in 2009–2010, cassava production in most of the SCC region was reduced by nearly 5% and the impact was more severe in Phu Yen (Figure 7) 14.2 6000 14 5000 13.8 13.6 13.4 3000 13.2 2000 Root price 1000 VND/ha 4000 Chip price Cultivated area Log (Cultivated area) 13 1000 12.8 12.6 2006 2007 2008 2009 2010 2011 Figure Relationship between cassava price and cultivated area in Binh Dinh, 2006–2011 Source: calculated from survey data (2011) 18 Cultivated Area (1000ha) 16 14 12 Bình Định 10 Phú Yên Ninh Thuận 2005 2006 2007 2008 2009 2010 2011 Figure Change in cultivated area of cassava in three provinces, 2005–2011 Source: General Statistics Office (2011, 2012) 350 Production (1000Ton) 300 250 Bình Định 200 Phú Yên Ninh Thuận 150 100 50 2005 2006 2007 2008 2009 2010 2011 Figure Change in cassava production in three provinces, 2005–2011 Source: General Statistic Office (2011, 2012) Analysis of the cassava value chain in SCC Vietnam There are two main value subchains of cassava that exist in the SCC region (Figure 8): Cassava producers Chips Chips Fodder manufacturers Processing units Dealers Collectors Dried powder Chips % root Cassava producers (100% root) 10% chip Small-scale husbandry 7% root Collectors in village Middlemen in district and province 7% root 11% root 60 % chip Collectors in commune Export market (80% exported to China) 100% bait (fibre) 20%chip Agri-product companies 40% chip Flour processing unit in local 30% starch Starch processing factories Middleman in district and province Fodder manufactures 20% chip 40% dried flour Domestic market (local markets in district) Centre of Agricultural Extension, Bureau of Plant Protection, Seed & Variety Centre, private services Department of Agriculture and Rural Development (DARD) Banks, public services, processing and trade sector Figure Description the cassava value chain in south-central coastal Vietnam Cassava farmers/producers Cassava yield varies between 18 and 24 t fresh root/ha with an overall average of 20 t/ha which equates to 10 t of dried chips The local collectors buy root directly from farmers and sell directly to starch-processing factories or processing units The producers also sell cassava chips to local collectors after harvesting in the dry season and sell dried chips to get higher margin and benefit than they get from selling root Based on average yield of 20 t root at a selling price of VND1,400/kg, the farmers are able to generate an income of VND28 million/ha (Table 3) The intermediate costs are estimated to be VND9.156 million, accounting for 32.7% of the total income (total production), the majority of which is the cost of fertilisers Value-added costs account for 67.3% of total income, of which 34% are spent on labour costs Hence, the net profit for farmers is around 65.9% of value-added These figures points out that the cassava crop generates high economic efficiency and low intermediate cost The economic efficiency per VND investment of P/IC, VA/IC, NPr/IC are 3.1, 2.1 and 1.4, respectively Producing dried cassava chip incurs extra costs of about VND2.1 million/ha; however, based on cassava root yield of 20 t/ha, with an ratio of fresh root to chip to be 50%, with average chip selling price of VND3,000/kg, the total production (P) per hectare for cassava chips would be around VND30 million which is much higher than for cassava root (Table 4) In addition, the dried chip can easily be stored and farmers can take advantage of family workers to generate extra income Selling dried chips to collectors costs VND2 million/ha compared with supplying directly to the market Table Financial analysis of farmer based on root production/ha), 2010–2012 Total (VND ’000) Proportion (%) Total income (P) (1+2) 28,000 100.0 Intermediate costs (IC) (materials costs) 32.7 (IC/P) Seed 9,156 470 Chemical fertilisers and pesticides 7,886 Items Manure/compost Value added (VA) (labor costs + GPr) Land preparation 800 18,844 67.3 (VA/P) 1,400 Planting 600 Fertiliser & pesticide application 660 Weeding 360 Harvesting 2,400 Transportation 1,000 Net Profit (GPr = NPr) 12,424 Source: Survey data, DASR, 2010–2012 Table Financial analysis of farmer (dried chip production/h), 2010–2012 Total (VND ’000) Proportion (%) Total value (P) 30,000 100.0 Intermediate cost (IC) 9,156 30.5 (IC/P) Items - Seed 470 - Chemical fertilisers and pesticides 7,886 - Manure/compost 800 Value added (VA) 20,844 - Land preparation 1,400 - Planting 600 - Fertiliser and pesticide application 660 - Weeding 360 - Harvesting 2,400 - Transportation 1,000 - Processing (remove peel, slide from root to chip) 1,440 - Drying chip 69.5 (VA/P) 720 Net Profit (GPr = NPr) 12,264 Source: Survey data, DASR, 2010–2012 Purchase of root by local collectors The collectors purchase root from farmers/producers in the village or neighbouring places The expenditure to buy t of cassava root varies from VND1.0–1.4 million The transportation cost from farmer to delivery dealers is from VND50,000–60,000 and labour wage is VND20,000– 25,000/t, making a margin of VND100–200/kg depending on harvesting time (Table 5) When purchasing from farmers, collectors often deduct 5% to the total cassava weight to account for impurities Table Financial analysis of local collector (1 t fresh root), 2010–2012 Total (VND ’000) 1,500 Proportion (%) 100.0 Intermediate cost (IC) 1,400 98.0 (IC/P) - Cassava root 1,400 Items Total value (P) Value added (VA) 100 - Labour wage 20 - Communication - Transportation 50 Gross profit (GPr) 29 - Depreciation Net profit (NPr) 28 2.0 (VA/P) Source: Survey data, DASR, 2010–2012 The quality of root is dependent on the harvesting season and length of storage The starch ratio is reduced by 10% if stored in a warehouse over days The delaying payment by the processing factory by 1–2 weeks influences collector’s business Purchase of chips by local collectors The collectors buy dried chips from farmers and sell 70% to flour-processing units and 30% to wholesalers in adjacent districts The profit margin for t of dried chips varies between 139,000 and 150,000dong (Table 6) 10 Table Financial analysis of local collector (1 t dried chips), 2010–2012 Total (VND ’000) Proportion (%) Total production (P) 3,200 100.0 Intermediate cost (IC) 3,038 94.9 - Dried chip 3,000 Items - Bag & package 38 Value added (VA) 162 - Labour wage 15 - Communication Gross profit (GPr) 143 - Depreciation Net profit (NPr) 139 5.1 Source: Survey data, DASR, 2010–2012 Purchase of chips by local wholesaler During July to September, the wholesalers buy dried chips from local collectors in the district The transaction quantity varies from 15 to 20 t/day in peak season and at other times varies from to 15 t/day with an average of 2,000 t/year of purchase During the rest of the year, the wholesalers buy dried chips from neighbouring provinces (e.g Gia Lai province) The margin for t of dried chips varies between VND88,000 and VND101,000 (Table 7) Table Financial analysis of wholesaler agent (1 t dried chips), 2010–2012 Items Total (VND ’000) Proportion (%) Total production (P) 3,401 100.0 Intermediate cost (IC) 3,210 94.4 - Cassava chips 3,200 - Energy for transportation Value added 10 191 - Labour wage (salary) 20 - Handling 45 - Communication - Tax Gross Profit (GPr) 5.6 124 - Depreciation 36 Net Profit (NPr) 88 Source: Survey data, DASR, 2010–2012 11 Flour-processing enterprises/units The local collectors sell dried chips to flour-processing units The selling price of flour varies from VND4,000 to 4,200/kg, mainly for feedstuff companies On average, the processing unit buys 20 t dried chips/month, with an estimated 280 t/year The processing unit get profits from 292–320 thousand VND by processing one tonne dried chip to flour (Table 8) Table Financial analysis of processing enterprises/units (1 t flour), 2010–2012 Items Total (VND ’000) Proportion (%) Total production (P) 4,040 100.0 Intermediate costs (IC) 3,452 85.5 - Cassava chip 3434 - Electric & energy 18 Value added (VA) 588 - Labour wage 214 - Communication - Transportation 40 Gross Profit (GPr) 332 - Depreciation 40 Net Profit (NPr) 292 14.5 Source: Survey data, DASR, 2010–2012 Starch-processing factory The starch processing factory of Binh Dinh province was equipped by a German joint-venture company, uses Thai technology to minimise costs, and can be upgraded in the future to match changing demand for different cassava materials The current processing capacity of the factory produces 15,000 t starch/year The factory has a wastewater treatment facility covering an area approximately 10 The strategy of factory is to processing of starch from dried cassava chip The processing cost is VND900,0001 million/t starch In 2010, the price of starch was US$485/t whereas the previous price is at around US$250/t Starch prices increased by 250% during 2008– 2011 from 3.5 millionVND/tonne in 2008 to12 million VND in 2011) Nearly 3.5 t of cassava roots produces t of cassava starch and about 315 kg of dried cassava pulp valued at VND6.3 million The intermediate costs are around 87% leaving a net profit of VND232,000–250,000 (Table 9) 12 Table Financial analysis of starch-processing factory in Binh Dinh province (1 t starch), 2010– 2012 Items 1.Total value (P) - Starch - Cassava pulp Total (VND ’000) Proportion (%) 6,360 100.0 6,000 360 2.Intermediate costs (IC) 5,553 - Cassava root 5,250 - Bag & package 110 - Electricity & energy 193 Value added (VA) 807 - Labour wage 245 - Transportation 100 Gross Profit (GPr) 462 - Depreciation 230 Net Profit (NPr) 232 87.3 (IC/P) 12.7 (VA/P) Source: Survey data, DASR, 2010–2012 Analysis of the contributions made and profit shared in cassava chain The value-added contribution for starch processing chain for the farmers, processing factories and the local collectors is calculated to be 74%, 18% and 8% with a net profit of 87%, 9.3% and 4%, respectively (Table 10) However, for cassava flour and chips chain, the value-added proportion and the profit margin of the farmer are lower in comparison to other agents in the chain (Table 10) 13 Table 10 Contribution and profit sharing of actors in cassava value chain, 2010–2012 VA Production (VND’000) 4,455 Chain 1: Starch export GPr Proportion Production (%) (VND’000) 100,0 2,738 NPr Proportion (%) Proportion (%) 100.0 Production (VND’000) 2,504 100.0 Farmer 3,298 74,0 2,174 79.4 2174 86.8 Collector 350 807 3,005 7.9 18,1 100,0 102 462 1,838 3.7 16.9 100.0 98 232 1,758 3.9 9.3 100.0 2,105 162 190 548 70.1 5.4 6.3 18.2 1,239 143 124 332 67.4 7.8 6.7 18.1 1,239 139 88 292 70.5 7.9 5.0 16.6 Factory Chain 2: Cassava flour (domestic consumption) Farmer Collector/middleman Wholesaler Enterprise Source: Survey data, DASR, 2010–2012 Assessment of the economic efficiency by investing one VND of intermediate cost (IC) for both the export of starch and for domestic markets, the farmers have better ratios of P/IC, VA/IC, NPR/IC than other agents in the chain (Table 11) Table 11 Economic efficiency of each actor in the cassava value chain Parameters P/IC VA/IC NPr/IC Chain 1: Starch export - Farmer 3.06 2.06 1.36 - Collector/middleman 1.07 0.07 0.02 - Factory 1.15 0.15 0.04 Chain 2:Cassava flour (domestic consumption) - Farmer 3.28 2.28 1.34 - Collector/middleman 1.05 0.16 0.05 - Wholesaler 1.06 0.06 0.03 - Enterprise 1.16 0.16 0.08 Strategies to improve the cassava value chain Through the range of qualitative methods employed, including surveying the actors in the cassava value chain in the SCC region, the problems in the chain became apparent In Tables 12 and 13, we outline the problems and suggest solutions and the agencies and agents who would need to be involved to bring about those actions The problems are categorised into technical (Table 12) and economic and market (Table 13) challenges Table 12 Technical challenges and proposed solutions to improve cassava value chain in southcentral coastal Vietnam Problem Solution Relevantagents/ag encies 14 Cassava varieties Testing and introducing new cassava varieties that have high productivity and starch, short growth duration (compared with KM94) -Fertiliser application -Processing and storage -Marketing knowledge & skills -Processing technology -Farmers should organize the self-help group to produce the cassava varieties, meet demand of cassava variety and reduced costs of variety Government, private -Transferring modern technologies in fertiliser application and enterprises, use of manures for soil-quality improvement multimedia agents, -Training farmers in processing and storage techniques, agricultural combined with using cassava by-products (fermented cassava leaf, peelings) in animal husbandry(particularly for beef cattle), extension service, universities and cassava by-products used as a supplement feed for animal in research institutes the dry season -Organising training courses on marketing and providing timely market information to farmers using a range of media -Investing and enhancing high-value processing technologies to produce a wider range of end products, such as pharmaceuticals, cosmetics, industrial chemicals, biofuels etc Table 13 Economic and market challenges and proposed solutions to improve for cassava value chain in south-central coastal Vietnam Problem Solution Relevant agents/agencies Economic -Cassava material region -Export and domestic consumption -Vertical coordination between farmers and factories/proc essing units -Adjusting the master plan following market signals and available resources (land, labour, capital) -Diversifying the market, product lines for export, searching for new markets and mitigating risks by avoiding dependence on the Chinese market, stimulating domestic demand for cassava for highvalue products, including biofuels, food and foodstuffs -Forming and consolidating vertical coordination of farmers and enterprises through policy development and institutional agreements -Strengthening horizontal coordination among cassava farmers in the region through cooperatives or self-help groups, leading to greater opportunity to sign contracts with factories Government, private enterprises, cassava producers/farming households -Devising a master plan and policies to support artisanal processing units for domestic consumption of products such as sticky fresh and dried flour for food, cassava cake, chips, ethanol, pharmaceuticals, cosmetics, premium and functional foods etc 15 Market -Distribution channels -Market fragmentation -Improving transparency of market information and methods used by starch factories for root sampling and assessing for impurity ratios -Starch factories -Introducing contracts between farmers and factories to provide cassava root -Conducting the market research to identify opportunites for product diversification, such as supplying cassava for animal feed manufacture and devising new product lines -Business, government, processing units -PromotingVietnamese cassava more widely to export markets Conclusions High prices for cassava starch, flour and chips provided farmers with higher incomes during 2009– 2010 However, a 20% reduction in price combined with increasing input-material costs lowered their income by 30% in 2011 compared with 2010 The artisanal and small-scale processing units (sticky and dried starch processing) generated stable incomes and were able to mitigated relative risks of falling price during the past years The storage of cassava root by traditional methods and its use as a feed for fattening the cattle and as a source of modified feed during the dry season was a highly efficient option for farmers, especially during the period of falling cassava prices Processing of cassava chips was a better option than relying on fluctuating fresh root prices However, the processing of chips is weather dependent and needs a big labour force even if carried out on a small scale Processing factories play a very important role in the cassava value chain, however they are dependent upon Chinese market which is very unstable and risky References Bockel L and Tallec F 2005 Commodity chain analysis: financial analysis EASYPol Module 044 Food and Agriculture Organization of the United Nations (FAO): Rome Available at Bureau of Statistic of Binh Thuan (2011) Statistical Data in 2010 Bureau of Statistic of Phu Yen (2011) Statistical Data in 2010 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Change in cassava production in three provinces, 2005–2011 Source: General Statistic Office (2011, 2012) Analysis of the cassava value chain in SCC Vietnam There are two main value subchains of cassava. .. cassava value chain Through the range of qualitative methods employed, including surveying the actors in the cassava value chain in the SCC region, the problems in the chain became apparent In. .. chips chain, the value- added proportion and the profit margin of the farmer are lower in comparison to other agents in the chain (Table 10) 13 Table 10 Contribution and profit sharing of actors in