Production in the value chain – Development trend of agricultural enterprises

The development objective of the Vietnamese agricultural sector is to build and develop modern, sustainable, competitive agriculture in integration.

The companies producing for the value supply chain will ensure more safety of quality and responsibility for consumers. Photo: collection.

Therefore, the construction and development of the agricultural production models in the value chain is the appropriate direction to contribute to the increase of Vietnamese agricultural products.

To develop the closed chain

In the face of integration opportunities, domestic enterprises have been taking steps towards a new game. Investing the closed breeding and processing chain is a new potential trend for agricultural enterprises.

With the application of the closed model, enterprises can control actively the input quality of the stages in the value chain (eg feeding, breeding stock, finished egg and meat, etc.). Currently, not only the large enterprises but also many small and medium enterprises, and cooperatives have invested facilities and high technology machinery to apply the production chain. In addition, enterprises can be more active in making competitive price and collect higher profit. Establishing a stable supply also helps enterprises reduce the intermediary costs significantly. When enterprises are responsible for all stages of the production process, the problems of origin, product quality are always controlled and trusted.

Talking to the reporter about the closed production chain of the Lan Minh Limited Company (Ha Tinh), Ms. Ho Thi Lan, the Director said, with thinking that we do what nobody does, she and her family invested bravely in growing mulberry trees for fruit. Mulberries are very easy to grow, easy to care for, harvest early, their price and supply are quite attractive, so, she has been building a value chain from production, processing to consumption of finished products. Starting from planting in the home garden, she has reclaimed boldly land to plant in new area of ​​over 1.5 hectares. After just three years, her company has succeeded in producing mulberries with good quality and high quantity. In particular, the mulberries have currently been favoured in the market, fresh fruit price from 50,000-55,000 vnd/kg. With the current area, her company harvests 2 crops each year, nearly 5 tons per crop. From the planting of mulberry plants, she has continued to research and produce more products made from fresh mulberries such as wine, syrup and the mulberry wines branded LanMinh have been exported first shipments into the Taiwan market (China) in early January 2017.

It is also one of the enterprises to build a closed production chain from production - processing - consumption, Ms. Khuat Thi Anh Tuyet, the Chairman of the board of Tuyet Quynh Cosmetic Company said that she has built a closed model from herbal ingredients to high-tech production with the collaboration of scientific researchers for 10 operating years. At present, the company has launched a variety of products which meet the consumer demand and begin to create a foothold in the market of Vietnamese pharmaceutical cosmetics.

The hardest is capital

Although the investment in the closed chain model brings many advantages, there are still many shortcomings when few enterprises can complete the full closed chain at present. Many small and medium enterprises wanting to build the production chain face difficulties from the beginning, it is capital. The enterprises which want to build a production chain need great capital to build components, such as infrastructure costs, plantation and breeding process, production technology and maintenance of distribution systems. It requires the enterprises to have enough strong capital, a long-term and reasonable financial plan.

It is impossible for a small business to have 50 billion or 100 billion VND to build a production plant, but if we have a link, create a raw material area, thence, each company participates in a production, a processing or a consumption stage, it will be easier to develop the production chain.

The second constraint is the development of technology, breeding and processing techniques, relationship and knowledge in the industry. In order to overcome this difficulty, many enterprises often choose a link with satellite farms to build a production chain, take initiative gradually in terms of input supply. For this form, enterprises may not need to invest too much capital at the beginning and reduce some technical difficulties when joining the new industry.

Ms. Khuat Thi Anh Tuyet said that her company has currently used \Vietnamese materials and plants for refining and extracting in Japan, however, it is impossible for a small company to do this. Because it will face great barriers about the rule of law, and the economic potential. Especially the coordination with scientists to improve technology, build closed production process according to high technical standards are very difficult.

In order to help the small and medium enterprises in building a closed production chain, according to Ms. Tuyet, a green agricultural library should be built. At present, there is no connection between agricultural enterprises in Vietnam, so, a green agricultural library will create a bridge between the scientists and enterprises and farmers. The entrepreneurs will not waste the time to find the scientists, researcher, through the library, both scientists, businesses and farmers will have room to interact. If the farmer has the idea of business development without enough potential or facing difficulty, the enterprise can support by this channel. Besides, the enterprise does not have enough knowledge about technology, the scientist can support. The model is simple and does not cost much.

According to Mr. Nguyen Xuan Duong, the Director of Ngoc Duong Company (Ha Tinh), another reason that the agricultural enterprises are not interested in building the production chain is the highest profit is in the stage of trade, consumption in the closed production cycle. The remaining stages have to invest in the long term with high investment but the lowest profit. That is the reason why the enterprises are not interested in investing in maintenance, deep processing.

The average peanut output of the Ngoc Duong Company is about 2,000 tons per year, however, currently, the company has only done the peeling stage by machines with a capacity of 15 - 20 tons per year, the rest are imported to provide the partners. Because the products through processing and classifying are not much, so, it is difficult for them to compete with Indian peanuts. Therefore, it is necessary to build a strong scientific support mechanism to support the development of the enterprises and replicate models of preservation, processing, enhance product productivity and quality, and certificate ownership for goods of the locality.

According to many experts, in order to achieve the success of the model of a closed production chain, besides the efforts of enterprises themselves, it still need the support policies of the State. Specifically, it is necessary to consider supporting enterprises with real capacity to access loans more easily, technology transfer mechanisms, especially genetic breeding technologies. If the support is good, the enterprises will invest boldly, farmers will earn more, consumers will access cheap and safe food.