Context and background
Ethnic minority farmers located on the hillsides of North-Central Vietnam are being offered opportunities to improve their livelihoods and incomes in a sustainable way, by working together with cassava processing enterprises who want to develop cassava in an environmentally sound manner. With a grant from the Ford Foundation this value chain improvement project affected an estimated 10,000 households during the 2008-2011 period: increasing average incomes by more than 20% with additional improvements in environmental sustainability of growing practices as well as increased reliability in business relations. The companies also benefited from increased supply of cassava of higher quality.
The scaling-up of the project to include 200,000 farmers is now being explored via possible collaboration between IFAD, CIAT and actors in Vietnam, Cambodia and Laos. The potential for collaboration between farmers and processors is enormous in Vietnam and neighbouring countries as cassava is rapidly becoming a major commodity, with hundreds of thousands of smallholders supplying products to processing enterprises.
Since 2008 SNV has been involved in the facilitation of the Cassava Value Chain in North-Central Vietnam. In a multi-stakeholder assessment of the economic opportunities for pro-poor development, the cassava value chain was identified as the main growth opportunity for poor upland farmers, many of whom come from ethnic minority backgrounds with a tradition of slash and burn cultivation. Cassava is their main source of income, but still lacks sustainability, due to price fluctuations and poor growing practices.The cassava produced is processed into raw starch which is then purchased by Chinese traders for further processing into food or industrial use items. Elsewhere in Vietnam, demand for cassava is booming because of Chinese demand for starch and the new domestic market for raw material for bio-ethanol fuel. The commercial viability of the crop therefore seemed assured and farmers were responding to demand by seeking ways of increasing production. The government feared the pressure to find more land to plant cassava would lead to the destruction of forest cover. The future of cassava production therefore lay in the intensification of cultivation rather than expansion in area.Provincial planning and investment authorities responsible for economic development and business planning rapidly agreed to participate in the co-ordination of the programme and supported the development of a business enabling environment. SNV approached three cassava processing enterprises and presented the principles of an Inclusive Business model to them. Two out of the three cassava processing enterprises in the region showed an interest in the model. Based on this interest, an intervention strategy was developed that would strive to link 10,000 cassava producing households in a more reliable and sustainable way to these enterprises with a potential to further scale this up to 60,000 households in the North-Central Vietnam area alone.This case focuses on one of these two enterprises, namely Huong Hoa based in Quang Tri Province, which was only established in 2004 but had already expanded production from 50 metric tonnes (mt) of starch a day to 150 mt and was operating at about 60% of total capacity. It sources cassava directly from 5,000 households and plans to sign supply agreements with 2,000 more to reach around 80% of total capacity in the coming years. Total production area in the target area is around 23,500ha including 60,000 producers. Estimates from production improvement trials are that land productivity could be increased by 30% through better cultivation practices, improved varieties and seasonal spreading.
With a grant from the Ford Foundation, this value chain improvement project directly affected an estimated 10,000 households during the 2008-2011 period. Incomes among beneficiaries in Quang Binh, Quang Tri and Thua Thien-Hue rapidly increased by 19.5%, 54.8% and 17.7% respectively. This increase in household incomes in the target sites was mainly due to cassava production as a result of the programme’s activities. SNV and CIAT are now in partnership exploring with IFAD the up-scaling of the project in Vietnam, Lao PDR and Cambodia, potentially benefiting over 200,000 smallholder producers in the near future.