activity 1.5 current fresh mango value chains

Activity 1.5 Current fresh mango value chains

NV Binh, Le Thu Lam, Tran Ngoc Linh, Nguyen Vinh Phuc, Nguyen Hoai Nam

SIAEP

15 October 2019

Improving smallholder farmer incomes through strategic market development in mango

supply chains in southern VietnamAGB/2012/061

© Griffith University 2018 2

Introduction

Activities• Review of existing value chain research• Identify collaborative packhouses in Tien Giang & Dong Thap• Identify VC participants to and from the packhouse• Interview VC participants to gain an understanding of their role in the

chain• Analyse and develop a VC map resulting from the data• Identify key issues and opportunities within the chain


Seven different mango supply chain channels identified in Unido study(Source: Nguyen Duy Duc, 2015)

1: Farmers/Cooperatives Domestic Consumers

2: Farmers/Cooperatives Exporters.

3:Farmers/co-operatives Collectors Processors Domestic Consumers

4:Farmers/co-operatives Collectors Processors Exporters

5: Farmers/Cooperatives Collectors Retailers Domestic Consumers

6: Farmers/Cooperatives Collectors Wholesalers Retailers Domestic Consumers

7: Farmers/Cooperatives Collectors Wholesalers Exporters

Desktop review


Cat Chu mango value chain in the MD identified in CAS report

Source: Vo Thi Thanh Loc, et. Al, 2014

Desktop review


• Verbal contracts• Current chains very price sensitive “Farmers often change

collectors/or packhouses, collectors often change packhouses”• Grade standards set by buyers usually base on size alone• Farmers/collectors tend to be disconnected from the markets• Farmers do their own picking• Motorbike is the most common method of transportation to the

packhouses

Desktop review


Understanding the partner chains methodology

• Identification of partners’ packhouses then work in both directions following product

• Develop an understanding of the VC using qualitative information collection

• Connect with 4 packhouse for interviewing in Tien Giang and Dong Thap and the list of supplying for packhouse from farmers, collectors, and traders

• Interviews• Mapping, analysing data, and reporting


Data collection

Packhouse Kim nhungdong thap Ba xoai Cao lanh Cat hoa

loc Total

SuppliersCollector /trader

06 05 02 0 13

Farmer 25 46 13 15Wholesaler/retailer

/exporters07

[W11]Add more 3 wholesaler, retailer in the north


Data collection

Cao Lanh districtCity

KIM NHUNG DONG THAP

PACK HOUSE

BA XOAI PACK HOUSE

CAO LANH PACK HOUSE

CAT HOA LOC

PACK HOUSE


Key results

Trader/collectorContents Result of survey

Total collectors/traders participated in the interview

13

Collector/trader owners Female: 30.76%

Male: 69.24%

Business typesIndividual business households with

collecting station: 100%

Employees4–20 (employees that sort and wrap fruit at farm and collecting station.)

Mango varieties Cat Hoa Loc, Cat Chu, Green

elephant.


Key results

Trader/collector – GroupsGroup 1: Purchasing with farmer near collecting station in hamlet or communeGroup 2: Purchasing with farmers in Dong Thap provinceGroup 3: Purchasing farmers in Dong Thap province and other provinces

Group 1 Group 2 Group 3< 50 farmers 50 – 100 farmers > 100 farmers

Farmer baseType 1: Collectors/traders have a core group farmers base on long term relationshipsType 2: No long term relationship and just based on quality, quantity and price of mangoType 3: Combination of long-term and short-term relationships

Type 1 Type 2 Type 3- Long term relationships- The quality and quantity of mango- Keep prestige in business- The price of mango

- Short term relationships- There is no criterion, base onnegotiation price and quality

- Combination


Key results

Trader/collector – Criteria for choosing packhouse customerChoosing packhouses:

Group 1: To have a strong relationship and only supply mangoes to the packhouse.Group 2: Not committed to single business supply mango multiple packhouses.

Basis of decision to supply mangoes to the packhouse• Maintain prestige in doing business

• Higher purchase price

• Stable market outputChanging packhouse and reasons

• Collectors/Traders do not usually change packhouse/customer due to long-term relationships. However, with strong collectors/traders with potential finance and a large number suppliers, they can actively select and supply to many customers including other packhouse, processors, exporter and wholesale markets.

Communication between packhouse and collector• Requirements with the quality of the mango varieties to purchase at the farm.

• Feedbacks from packhouse that the quality of mango fruit usually is good.


Key results

Trader/collector – Practices• There is no intervention with fertilisers and pesticides in the pre-harvest

stage by collector/trader.• Farmers are responsible for harvesting in the morning after negotiating

between farmer and collector/trader.• Collector/trader is responsible for sorting, wrapping with paper, put on the

plastic crate and transporting to collecting station and packhouse.


Key results

Trader/collector – FinanceOn farm•Receive quality requirements and prices of mango variety from packhouse during the day.

•Estimate grading outturn weight and color, then negotiating the price with the farmer.

•Verbal contract in trading with farmer

At packhouse•Transported to packhouse then re-sorted (size, skin blemish)

•Verbal contract in trading with packhouse

Payments•Advance payments from packhouse to buy crop (rare)

•Deposit before buying about 20 - 50% value of amount of mango fruit in orchard

•Pay cash after sorting at farm /collecting station

•Payment on delivery cash/bank transfer at packhouse

•Delivery to customers, payment via bank transfer


Key resultsPackhouse

Contents Result of surveyTotal Packhouse participated in the interview

4

Packhouse ownersFemale: 25%Male: 75%

Business typesCompany: 75%Co-operative: 25%

EmployeesMedium: 4 – 10 employeesLarge: 20 – 35 employees

Suppliers

Co-operative: 100% farmerCompany:

- Farmer: 33,6%- Collector/trader: 63,4%

Mango varieties Cat Hoa Loc, Cat Chu, Green elephant, and Keo


Packhouse

Key results

Current status of mango supply chain of Cat Hoa Loc packhouse Current status of mango supply chain of Cao Lanh packhouse

Current status of mango supply chain of Ba Xoai packhouse Current status of mango supply chain of Kim Nhung Dong Thap packhouse


Key results

PackhouseCapacity of the packhouse

Contents CAT HOA LOC

CAOLANH BA XOAI KIM NHUNG DONG THAP

Capacity (tons/day) 4 - 8 4 – 10 20 – 30 30 – 35 Capacity (tons/year) 100 485 5,520 15,050

Seasonal operations:3 packhouses stop in May and June and 1 participates in packing other fruits such as dragon fruit and rambutan fruit.


Key results

Packhouse – Choosing supplier (Farmer/collector/trader)

Supplier selection•Based on relationship, to keep prestige in doing business, have good finance, able tomeet requirements

Quality standards• Determined by customer specifications weight, blemish level, color, bagged fruit,VietGap, Global.G.A.P

Monitoring quality standards•Spray diary by farmers (applying GAP)•Packhouse staff monitor quality of mango at farm, sample for Test MRLs

Reject fruit:• Small fruit <180gr, sapburn, blemish, overripe• Losses at packhouse less than 1%• Mechanical damage is major in mango skin caused by plastic crates and sapburn causeby broken mango stem


Key results

Packhouse – Choosing supplier (Farmer/collector/trader)

Receival and grading

1. Based on customer requirements, the packhouse will issue quality requirements and price notifying to the collector on the day

2. Farmer/Collector/trader pre-grades fruit into three types base on weigh, skin and color, then transports to packhouse

3. Packhouse re-grades fruit into 3 grades base (exporter, processing company or buyer) 1. 1st grade based on weight and appearance usually is exported to high quality market as

Australia, Korea, US2. 1st, 2nd and 3rd grade is usually sold to China, Super market, wholesale market,

processing company


Key results

Packhouse – Customer (exporter/wholesaler/retailer participants)

Mango market:Packhouse Wholesale market Retailer Processer ExporterCat hoa loc cooperative

Supermarket Chanh Thu, Kim Nhung, Cat Tuong (US)

KNDT Company Cuc Ti (Hoc mon) Chubbi Company (Ha noi)

Hung Hau, Long Uyen

China Trader (China)T&T, Red Dragon, Cat

Tuong, Hoang Phat

Ba Xoai Company Thuong Tin, Long Bien

Long Uyen Hung Thao, Hoang Huy, Cat Tuong

Cao LanhCompany

Supermarket GoDang Red Dragon, Hoang Huy, Cat Tuong


Customers

Packhouse Export China DomesticHCM Hanoi Other Processing

CAT HOA LOC Little (2019) 100%

CAOLANH 33.3% 33.3% 25% 8.4%

BA XOAI 10% 70% 20%

KNDT 20% 70% 10%

Key results


Key results

Packhouse – Practices Packhouse Equipment

availablePractices

ExportPractices domestic

HCM HanoiPractices

China

CAT HOA LOC Desapping table, hotwater tank, drying table, air-condition room

re-sorting, packing and transporting to export company

re-sorting, packing and transporting hot transport


None

CAOLANH Plastic tank wash and Umikai




None

BA XOAI Collector station in wholesale market




re-sorting, packing and transporting refrigerated transport

KNDT Desapping tank, hot water chemical treat, grading packing tables cool rooms

re-sorting, remove sap washing, HWT, packing system, cooling & refrigerated transporting



re-sorting, packing and transporting refrigerated transport


Key results

Packhouse – Customer (exporter/wholesaler/retailer participants)Dealing with losses

•Some supermarket customers will reduce payments for fruit that arrives out of specificationse.g. pay 95% of the invoice there are problems with 5% of the fruit•If rate of ripen or rotten mango is below 10%, the customers is responsible for handling itthemselves, over 20%, vehicle owner must to pay for rotten mango (domestic)•Reducing the amount paid for buying mangoes based on the quantity of the ripen and rottenmangoes rate (Chinese customer)

Deciding to sell to a new buyer•Need to understand customers requirements of quality and price•New customers required to sign a contract and deposit before purchase at farmer/collector.•Keeping prestige in business and having potential finance


Key results

Packhouse – Finance

Supplier (farmers/collector)• Farmers, traders payed at the packhouse after grading.• Small capital traders, can advance money up to 50% to buy mangoes

Customer (exporter/wholesaler/retailer participants)• Pay upon receipt of fruit.• Signed contract 2 payments: first, 50% of the contract value and second

the remainder at the weekend.• Customers with long term relationship, can pay by week or month.


Key results

Exporter/wholesaler/retailerContents Result of survey

Total exporter/ wholesale/ retailer participated in the interview

07

Business typesCompany: 71.4%

Individual business households: 28.6%

EmployeesMedium: 12 employees

Large: 30 – 50 employees

Main supplier Kim Nhung Packhouse; Ba Xoai

Packhouse; Cao Lanh Packhouse; Cat Hoa Loc Packhouse

Mango varietiesCat Hoa Loc, Cat Chu, Green elephant,

Keo and R2E2


Key results

Exporter/wholesaler/retailer – Packhouse supplier

Choosing supplier (Packhouse)• Keep prestige in doing business• Supplier must have production unit code for management and traceability• VietGAP standard and GlobalG.A.P. standard depending on and specific market (little)

Monitoring quality standards• Quality assurance staff at supplier packhouse and exporter company• Equipment monitoring temperature and humidity of mango cold container on sea

shipmentReject rates

• Mangoes are rejected for low weight, high blemish, immature, and over ripe may besold to wholesale market (10%)

Grading standards• Quality assurance staff or director (owner) of company decide mango grading standard

based on requirement of customer from each market


Key results

Exporter/wholesaler/retailer – Packhouse supplier

Company authorityThe owner who is primarily responsible for the input to the output, including the classification standard and post-harvest technology.

Receival and grading proceduresStep 1. The exporter/wholesaler/retailer will issue quality standard and contact the supplying packhouse re: quantity, quality and priceStep 2. Receival at packhouse, re-sorting base on quality standard, washing, hot treatment, packingStep 3a. Export: Transport to the 3rd party for phytosanitary treatment irradiation or VHStep 3b. Distribution to consumer markets including domestic and export


Key results

Customer (exporter & domestic market)

Mango market• Export – Korea, Japan, Australia, New Zealand, USA, Singapore, Hong Kong, China• Domestic – wholesale market, supermarket, retailer shop, (HCM, Hanoi, other cities)

Feedback from buyers e.g. quality, customer• The quality of mangoes is too ripe, rotten, immature, heat injury, blemish or poor skin.

Monitoring quality• Pictures of received mango at the export market provided by the buyer or • Chip monitoring temperature in cold container (T&T Company)• Representative office in the market (T&T Company)

Handling customer complaints• Payment will be deducted based on the reject rate (immature, heat injury, rotten, overripe)• Recall the rotting mango and bring it to destroy

The criteria when deciding to sell to a new buyer• Continuity of supply, terms of trade, ability to meet requirements


Key results

Exporter/wholesaler/retailerTechnology

TransportingDomestic Wholesale: Hot truckExporting: Cold chain from company to air shipping and sea shipping

Irradiation treatment Vapour heat treatment at Hoang Phat Company


Key results

Exporter/wholesaler/retailer – Finances

Customer (buyer): depending on the specific customer• Prestigious customers: No deposit required and pay after receive mango• New customers: need deposit required (50%) and pay the remaining amount after

receive mango


Value chain map example Kim Nhung Dong Thap


Summary of key issues• Breakdown of product causing rots• Limited cool chain infrastructure and knowledge• Inconsistent supply off-season• Poor awareness of market requirements• Limited packhouse equipment• Implementation of a sap management program• Lack of hygiene specifications for packhouses• Poor to no quality assurance programs in place• Opportunities to capture value within the chain by reducing post-harvest losses

Conclusion


Future areas of research

• Improved flowering techniques to align with market opportunities• Improved cultivation techniques to maximise fruit quality• Improved post-harvest and ripening techniques• Remove sap burn to neutralise latex• Improved market awareness of changes happening, quality and

compliance requirements• Implementation of cool chain management study

activity 1.5 current fresh mango value chains

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