Vietnam: Investing in safe agricultural products

A recent study by the Institute of Policy and Strategy for Agriculture and Rural Development shows that Vietnamese consumers in Hanoi struggle to find 'safe' fruit and vegetables; consumption in Hanoi is about 2,600 tons per day, or 950,000 tons a year. But the current amount supplied to the city is only 600,000 tons a year, equivalent to only 60 percent of demand.

This creates a paradox; while US and Japanese consumers can easily purchase specialty fruit labelled “Made in Vietnam” with details on origin and hygiene clearly stated, in Hanoi and Ho Chi Minh City consumers can’t determine where products are grown or what quality control they have undergone.

Local companies

VinEco, a food supply company, began selling safe vegetables last October. VinEco is expected to supply up to 30 tons of 14 different types of vegetables a day, grown under the GlobalGAP and VietGAP standards, using modern technology imported from Japan.

In August, VinEco built a 24.5 ha greenhouse in Vinh Phuc, at the cost of $44.2 million. The greenhouse, the largest of its kind in Vietnam, is equipped with Israeli technology. This facility can supply 3,500 tons of organic vegetables each year, which meet VietGAP and other global standards.

Mobile World (MWG), a giant in retail electronics in Vietnam, announced that it would also step into fresh food; Mr. Nguyen Duc Tai, CEO of MWG, said that existing demand for fresh food as well as clean agricultural products was high and supply failed to meet demand.

Challenges for local investors

Despite the huge demand for safe agriculture products, investing in agriculture is not easy, experts said.

Mr. Nguyen Nhu Tiep, Head of the National Agro-Forestry-Fisheries Quality Assurance Department, said that to have a clean supply of agricultural products enterprises must invest in the entire chain, from farming to manufacturing and supply and this requires huge capital. However, food safety chains in Vietnam remain quite small, despite receiving support from the State budget.

A report from the Vietnam Chamber of Commerce and Industry showed that the number of enterprises investing in agriculture is low, accounting for just 1 percent of all enterprises in the country. Up to 95 percent of agricultural investors are small enterprises, while large enterprises account for only 3.7 percent and medium-sized enterprises only 1.32 percent. Meanwhile, SMEs involving in safe agricultural production often struggle to obtain capital, according to experts.


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