PART II: CONTENTS AND RESEARCH RESULTS
Chapter 2: ECONOMIC EFFICIENCY OF ORGANIC VEGETABLES PRODUCTION IN KIM LONG WARD, HUE CITY, THUA THIEN HUE PROVINCE
2.2. Organic vegetable producing situation in Kim Long Ward
2.2.4. Distribution channel of market for organic vegetable model in Kim Long
Farmers deliver vegetable to market by some shops and schools which represented in figure 2-2. There are four chains in this channel. The main chain is middle man or collectors who come to farms in order to remind farmers how many kilogram vegetable should be collected in these days.
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Figure 2-2: Distribution channel of organic farms in Kim Long ward
(Source: Data collection, 2017) - SuSuXanh Shop on 32 Dong Da Street, Hue city. Average 15kg vegetable every day per week.
- ThuanThanh Primary School on 26 Dang Thai Han Street, Hue city.
Delivering vegetables twice per week.
- Phu Hoi Kindergarten on 10 VoThiSau Street, Hue city. Delivering vegetable twice a week.
- Special Customers: payment 6 months fee in advance. Delivering vegetable twice a week for around 2kg vegetables each household.
- Selling products in garden by individual directly. Some customers visit gardens and harvest by themselves.
Consumers concern over quality and safety of vegetables has intensified in recent years, and primarily drives increasing demand for organically grown food, which is perceived as healthier and safer. Although some organic vegetables are more expensive, customers are paying for the peace of mind. A group of young people set up an organic vegetable store, which offers organic vegetables to meet the demand for eating fresh and safe vegetables in the city. On average every day the store welcomes about 30 guests. Not only does this protect the planet, but it obviously still protects our health.
After more than a year in applying organic vegetable model, these 8 households have regularly been providing organic vegetables which is clean and safe enough for vegetable shops in the city, especially they signed a contract to supply vegetables to SuSuXanh Shop at No. 32 Dong Da-Hue City, owned by Mrs. Nguyen Thi Van, from 30-40 kg per day on average, selling price 25,000-30,000 VND / kg, many kinds of vegetable are most preferred by consumers. They believe that there is a reliable address guarantees safe and organic vegetables for customers. There are many kinds of
Figure 2-2: Distribution channel of organic farms in Kim Long ward
(Source: Data collection, 2017) - SuSuXanh Shop on 32 Dong Da Street, Hue city. Average 15kg vegetable every day per week.
- ThuanThanh Primary School on 26 Dang Thai Han Street, Hue city.
Delivering vegetables twice per week.
- Phu Hoi Kindergarten on 10 VoThiSau Street, Hue city. Delivering vegetable twice a week.
- Special Customers: payment 6 months fee in advance. Delivering vegetable twice a week for around 2kg vegetables each household.
- Selling products in garden by individual directly. Some customers visit gardens and harvest by themselves.
Consumers concern over quality and safety of vegetables has intensified in recent years, and primarily drives increasing demand for organically grown food, which is perceived as healthier and safer. Although some organic vegetables are more expensive, customers are paying for the peace of mind. A group of young people set up an organic vegetable store, which offers organic vegetables to meet the demand for eating fresh and safe vegetables in the city. On average every day the store welcomes about 30 guests. Not only does this protect the planet, but it obviously still protects our health.
After more than a year in applying organic vegetable model, these 8 households have regularly been providing organic vegetables which is clean and safe enough for vegetable shops in the city, especially they signed a contract to supply vegetables to SuSuXanh Shop at No. 32 Dong Da-Hue City, owned by Mrs. Nguyen Thi Van, from 30-40 kg per day on average, selling price 25,000-30,000 VND / kg, many kinds of vegetable are most preferred by consumers. They believe that there is a reliable address guarantees safe and organic vegetables for customers. There are many kinds of
Figure 2-2: Distribution channel of organic farms in Kim Long ward
(Source: Data collection, 2017) - SuSuXanh Shop on 32 Dong Da Street, Hue city. Average 15kg vegetable every day per week.
- ThuanThanh Primary School on 26 Dang Thai Han Street, Hue city.
Delivering vegetables twice per week.
- Phu Hoi Kindergarten on 10 VoThiSau Street, Hue city. Delivering vegetable twice a week.
- Special Customers: payment 6 months fee in advance. Delivering vegetable twice a week for around 2kg vegetables each household.
- Selling products in garden by individual directly. Some customers visit gardens and harvest by themselves.
Consumers concern over quality and safety of vegetables has intensified in recent years, and primarily drives increasing demand for organically grown food, which is perceived as healthier and safer. Although some organic vegetables are more expensive, customers are paying for the peace of mind. A group of young people set up an organic vegetable store, which offers organic vegetables to meet the demand for eating fresh and safe vegetables in the city. On average every day the store welcomes about 30 guests. Not only does this protect the planet, but it obviously still protects our health.
After more than a year in applying organic vegetable model, these 8 households have regularly been providing organic vegetables which is clean and safe enough for vegetable shops in the city, especially they signed a contract to supply vegetables to SuSuXanh Shop at No. 32 Dong Da-Hue City, owned by Mrs. Nguyen Thi Van, from 30-40 kg per day on average, selling price 25,000-30,000 VND / kg, many kinds of vegetable are most preferred by consumers. They believe that there is a reliable address guarantees safe and organic vegetables for customers. There are many kinds of
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vegetables commonly used, sold at affordable prices to consumers. Therefore, that is the reason why SuSuXanh store is always so crowded. Because of the environmental problems, each customer can buy vegetables in cloth bags or paper bags. They bring their own cloth bags or paper bags when shopping next time. They can usually get discount coupon or price will be reduced 5% of the total value of goods. This motivates customers to reduce plastic bags use when shopping and this also contributes to preserve “the green-clean-beautiful environment”. In addition, the Board of Management of Phu Ho Kindergarten and ThuanThanh Primary School visited and used organic products of Kim Long for pupils. These students who volunteer from several universities are also helping farmers to sell product on online.
The average daily sales of organic products by students are from 5 to 10kg.
Organic vegetable has natural processes to conserve all resources and minimize waste and environmental damage, while maintaining or improving farm profitability.
Organic vegetable model is supporting their local farmers’ economy, creating job and keeping farmers thriving. Before growing organic vegetable, many farmers in Kim Long Ward are in financial difficulty. Prices for many commodities that they have grown before have been low. Then they produce safe and organic vegetable, they succeed in selling much more organic vegetables and getting a better income. Average mixed income for each farmer is 4,680,000 VND per month higher than normal salary of worker in factory (2,786,000 VND per month). Moreover, farmers only work five to seven hours each day while workers have to do eight per day. Organic vegetable model earns farmers more–often significantly more–than conventional farming, thanks to the prices that some consumers are willing to pay. Organic vegetable bring very high income than conventional vegetable to farmer as the same scale farm (with conventional farms just have around 600-800,000 VND per month).
Organic vegetable model at Kim Long ward is quite efficient compared to conventional product. With each unit intermediate cost spent, gross output is gained significant high value. In addition, value added and mixed income of each scale farm has several differences and it increases base on scale. The larger scale farms are, the higher mixed income farmers get. In fact, six gather farms have highest mixed income because of biggest scale. Therefore, farmers should expand their land and production to enhance their income. Moreover, Mr. Hung and six gather farms have negative profit at the beginning of production, because in the initial stage, they might paid a huge fixed cost to producing. So in order to get breakeven point in this model, they should last their growing in long time as long as possible. After four to five years, fixed costs are depreciated year by year, farmers will not suffer fixed costs any more.
All their value added will be mixed income.
Organic farming practices today provide many solutions to the resource efficiency challenge in terms of nutrient management, energy use and water efficiency with the potential to produce further perspectives in the future. Relying on its strengths
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of taking a holistic approach to nature and working in line with ecological systems, organic farming relies on and supports healthy soils and thriving biodiversity, which can deliver a number of invaluable services that assist in the successful management of carbon and natural resources such as water and plant nutrients. To this end, this brochure seeks to address the important contribution organic food and farming systems can make to address the resource-efficiency dilemma and to explore the potential of the sector to respond to current and future challenges.
2.2.5. SWOT analysis
Organic vegetable model at Kim Long Ward has many strength, weakness, threats and opportunities, which are showed in table 2-12.
Table 2-12: SWOT of organic vegetable model in Kim Long ward Strength
- Favorable nature al conditions and social- cultural conditions.
- Low investment cost - Unique quality - Competitive price - Support by ACCD
Weakness
- Lack of advertising marketing, promotion
- No specific plans or projects - No official brand
- Small scale farms, household
- Products are not popular to customers
Opportunities
- High demand of domestic market in future
- Vietnam government is going to issue policies to subsidy farmers and organic vegetable. -> Government is tend to subsidies for organic agriculture
Threats
- Production almost depends on weather.
- Require high hygiene standards and close regulation
- Have to lead a moral life
Strength
- Natural conditions: Viet Nam has experienced a very long time in agriculture, so farmers have made use of what is available such as plants, the fertility of the soil, the fertility of streams, muddy ponds, or green manure, ash, manure ... to produce organic fertilizers used in agriculture. The land here also has many underground resources, contains abundant natural minerals such as apatite, phosphorus, feldspar, Mica and minerals contain many trace elements that are essential for plants. Irrigation water system is favorable for the supply of water for irrigation and drainage of the production area. The water source has a certain sediment specific to the Huong River, providing significant nutrition to the crop and fertility of the soil.
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- Social-cultural conditions: the local people are hard worked and they have much experience on planting vegetable. In addition, they are encouraged to continuous learning techniques in order to convert from conventional vegetable to organic vegetable. They are also supported by ACCD not only fiancé but also training organic courses.
- Competitive price: When they produce organic vegetable, they have to follow the rule “no chemicals”. Because the lack of chemicals, the productivity of organic vegetable is low, organic products are small and not beautiful like conventional vegetables. Besides, because of hand-made production, we have to have more labor costs resulting in price of organic vegetables is higher 2-3 times than conventional vegetables, so the production and consumption of organic products are difficult because consumers cannot discriminate what is organic products and what is conventional products.
Weakness
- Productivity: Productivity of plants and cattle decreased more than intensive farming. When the beginning of the shift is from intensive agriculture to organic agriculture, productivity is reduced by 20 - 30%. However, after a few years, productivity will increase, but not as high as intensive farming.
- Input risk: organic farmers said that they face shortages of certified organic seeds, biological pesticides, specialized farm equipment designed for organic cultural practices and other inputs because the market they offer to suppliers may be too small to be profitably served by agribusiness. Besides, they concerned about the availability of good quality compost that has not been contamination by GMOs.
- Organic marketplace risk: There are no or few national standards as well as certificates on organic farming of the State, mainly using standards and certificates of foreign partners. Therefore consumers did not acknowledge and could not distinguish organic vegetable from conventional vegetable. Moreover, a large part of the population has yet to see the important role of organic agriculture as well as the lack of knowledge for organic farming. So it finds difficult to consume goods and expand the market.
- Agricultural policy risks: Organic agriculture has not yet become a movement because there is no state policy mechanism for it. On the other hand, the demand for safe food and food is not necessary for all people, especially in remote areas.
Opportunities
- Market: Organic vegetable market is on development in the recent year.
When demand of customers is increasing, customers are looking for and coming to Kim Long garden to buy organic vegetable, such as monks of temple, domestic
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customers, some agents and others. Local government is interested in helping with application of knowledge of producing organic vegetable. But they are not really issue any regulations to support farmers in direct way.
Threats
- Production risk: In cultivation, organic agriculture is heavily dependent on soil and climatic conditions. The basis of grow and nutrition of vegetable in organic farming is soil, so soil fertility will determine the yield and quality of the product. On the other hand, since organic agriculture is close to nature, unregulated climate change will have a profound effect on crops.
- Pest: Diseases insects and, especially, weeds can cause problems for organic farmers, farmers use cultural practices to prevent pest problem from developing and reducing risk from pests. Plus, crops for rotation are less restricted than conventional farm who risk damage to certain crops from previously applied pesticides.
- Genetically Modified Organisms: GMOs may destroy the effectiveness of natural pest controls. For example, many organic farmers use Bt-based foliar pesticides, which are approved for organic use, to control insects.
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Chapter 3: ORIENTATION AND SOLUTIONS FOR ORGANIC VEGETABLES PRODUCTION IN KIM LONG WARD, HUE CITY, THUA
THIEN HUE
3.1. Orientation of organic vegetable production in Kim Long ward The orientations of organic vegetable model are development of organic production, improvement of the productivity of organic production and quality of products, improvement of production efficiency and through ameliorating the common effort and activities of organic farmers.
Besides, others orientations are development of organic distribution and raising the awareness of customers about organic farming through different activities. The achievement of the objective will be measured through the proportion of customers having bought organic food, the proportion of regular organic food consumers, proportion of crop produced organically and distributed under organic labeling.
To develop cooperation, taking more organic food into use in catering enterprises and through different activities for raising the awareness about organic food
Diversify the organic farming related subjects in scientific and applied research, supporting cooperation projects related to organic farming training and information distribution, organizing training and informing activities, teaching the public about organic farming through different activities.
3.2. Some of solutions to improve the efficiency of organic vegetables production in Kim Long ward.
3.2.1. Solutions about land
Planning and ensuring that the land and source water are not contaminated or uninfected. Since soil is the heart of the organic farming system, it is crucial that new entrants understand the various characteristics and limitations of the soils found on their farm. Soil suitability may vary significantly from one field to the next. Fields with good drainage, good level of fertility and organic matter, adequate pH, biological health, high legume content, and with less weed and pest pressure, are excellent assets.
Often these fields are the first ones ready for transition and certification. Many tools exist to assess soils. Soil chemical, physical and biological analyses, soil survey and legume composition field assessments, and field yield histories are very important and should be considered early in the transition. Unhealthy soils require particular attention. If farmers plan to grow crops without raising any livestock, it may be necessary for them to source allowable soil amendments such as composted manure,
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limestone, rock dust, and supplementary sources of nitrogen, phosphorus, potassium and micro-nutrients. Even with the best of crop rotations that include green manure crops like legumes (nitrogen fixing crops), transitional growers will be challenged if they want to obtain optimal yields without additional livestock manure, compost and/or other off-farm soil inputs. When these inputs are scarce or expensive, producers may benefit from integrating livestock on their farm.
Under organic production, farmers must be able to recycle nutrients through proper nutrient management practices: recycling through good manure and compost utilization, crop rotations, cover crops (green manure, catch, and nitrogen fixing crops), and by reducing nutrient losses due to leaching, over-fertilization, as well as poor manure and compost management (storage, handling, and spreading).
Conventional farmers who want to go organic face high transition costs. They need as many as three years before their soils are pesticide-free, which means during that time they incur the higher costs of organic farming without being able to charge higher prices for their products. There is already a direct-loan program in place to help new organic farmers, but it leaves out farmers who switch from conventional methods and those who inherit their land.
=> Have the budget or grant program for universities and organizations to help farmer better transition to organic. The administration could help more farmers successfully transition to organic by refunding the research program and expanding the transition grant program.
3.2.2. Solutions about infrastructure investment
Most of the potential organic products are located in difficult areas of traffic, conditions of storage, storage and processing are not favorable, therefore should support infrastructure investment. Infrastructure, especially the infrastructure for processing organic fertilizer, bio-fertilizer, micro-organisms in place to reduce transportation costs.
Small farmers lack infrastructure. Organic farmers should operate in or near counties with metropolitan centers, where more farmers markets take place; demand for fresh, local produce is higher; and customers are willing to pay more. But organic farmers in Hue are less likely to enjoy those advantages.
=>One way to reach more consumers is to allow local farmers to expand to nearby school districts. Programs that encourage healthy eating for children at home and at school will work better if the administration de-incentivizes the use of processed foods instead of merely giving schools money to buy locally.
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