Partnering with Private Actors to strengthen Inclusive Business towards a Sustainable Rice Value Chain

Partnering with Private Actors to strengthen Inclusive Business towards a Sustainable Rice Value Chain

in News

Tackling quality and traceability problems

Vietnamese rice is of low and unstable quality. On export markets, the quality of Vietnamese rice is not as high as that from other countries in the Mekong regions.

Rice seeds in Vietnam are often of low or average value, while other countries major more in fragrant rice. The main export rice commodity in Vietnam is white rice, which is also the lowest share of worldwide rice exports and easy to penetrate into low-income countries. However, due to being famous for selling low-quality rice and a lack of its own brand name, Vietnamese rice is continuously sold at low price to export markets as well as at the sourcing stage from farmers.

Minh Thi Thai Rice Programme Coordinator – Rikolto in Vietnam

Vietnamese rice is also facing traceability issue. Rice companies depend heavily on rice brokers, thus making it difficult to trace back the origins of rice and reducing rice quality.

Milling factories and export companies have been increasingly interested in signing contracts with farmers groups, especially to source high-quality rice for both domestic and international markets. However, these kinds of contracts often benefit only the milling factories and the companies

Tuan Le Senior Rice Programme Officer - Rikolto in Vietnam

Moreover, rice farming in Vietnam mainly is with smallholder farmers whose cultivation areas is often a quarter, or one-sixth of the ideal area. With trending intensive farming, overuse of pesticides, as well as a lack of necessary knowledge to produce high-quality rice, smallholder farmers are struggling to meet the growing demand for quality rice on the market. “Besides the challenges related to small production areas and the lack of organization skills, they also have low voice in negotiation. This makes them the most vulnerable actors within the rice value chain.”, according to Minh. ** Inclusive Business as a solution to address problems**

In 2017, Rikolto in Vietnam started a new programme named “Development of Sustainable and Inclusive Rice Value Chain for smallholder producers in Vietnam” in Dong Thap and An Giang province, Mekong Delta Region. Inclusive business is key intervention strategy based on the ‘win-win plus’ principle. Rikolto and our implementing partners facilitate the participation of and strengthen the benefits for all partners involved in business relations. We view inclusive business as commercialization-based partnerships developed between value chain actors, such as enterprises, farmer organizations, and consumers to produce and market rice products, and to source inputs and financial resources for rice production. Inclusive partnerships promote the integration and participation of farmers, especially smallholder producers, and their organizations into value chains and enhance their mutual benefits from their engagement, taking into account gender equality. Inclusive partnerships also strengthen producers’ and businesses’ commitment to providing ‘safe and healthy’ foods to markets in order to improve consumers’ access to safe food.

Private partners’ engagement in inclusive business partnership

Late in 2018, Rikolto signed the MOU with Dong Thap Department of Agriculture and Rural Development (Dong Thap DARD) to support farmer organizations with techniques on growing sustainable rice using the Sustainable Rice Platform (SRP) Standard.

What is the Sustainable Rice Platform Standard?

The Sustainable Rice Platform, an initiative of the United Nations Environmental Programme (UNEP) and the International Rice Research Institute (IRRI) made up of over 80 institutional members recently adopted a standard for sustainable rice production. The standard consists of 46 requirements, also known as 46 SRP criteria which are structured under eight themes:

  • Farm management: focuses on building capacity for farmers in both rice farming technically and other management skills.
  • Preplanting: focuses at cultivation in a safe way for soil, land, biodiversity and nature conservation, as well as dealing with climate mitigation and adaptation.
  • Water use: building up effective irrigation systems and enhancing water use efficiency in the context of water scarcity.
  • Nutrient management: application of natural systems to enhance soil fertility and to reduce the use of chemical fertilizers.
  • Pest management: adopting eco-friendly management techniques to better prevent weeds, insects, pests, mollusc and prevent food safety risks.
  • Harvest and Postharvest: focus on drying and storage techniques than emphasizes on food safety, keeping nutrients at the highest level, as well as attention to rice straw disposal.
  • Health and Safety: to ensure safe working conditions for farmers, plus eco-friendly disposal and storage of pesticides.
  • Labour rights: to protect farmers’ working rights, with no discrimination related to gender, ethnic background, nation, or religions.

Source: Standard on Sustainable Rice Cultivation – Version 1.0 (the updated version is being revised by Sustainable Rice Platform and soon to be released in February 2019).

Sustainable Rice Platform

Tân Bình, a farmers’ cooperative based in Dong Thap province, joined Rikolto’s rice programme back in October 2018. This was also the starting time for Winter-Spring crop. To prepare for the crop, the farmer cooperative was in charge of conducting soil and water analysis. This makes sure the farmers are following the SRP techniques. Farmers have also received training from Tan Hong company – part of Loc Troi group – leading rice corporation in Vietnam – about SRP rice. The training sessions were organized by Dong Thap DARD – Rikolto’s implementing partner. Dong Thap DARD carried out first SRP survey as well as regular surveys in between and at the end of the crop to check how many criteria the farmers meet. After that, Tan Hong will carry out rice quality analysis at the stage of buying rice from farmers to check that production meets the expected standard. One remarkable contribution from the leading rice group is their financial support to: (1) buy personal protective clothing for farmers, (2) collect the wastes and pesticides bottles, (3) dispose of / or recycle pesticide wastes. 50 waste collection sites are being built with the help of Rikolto. This partnership goes hand in hand with the 39th criteria within the 46 criteria mentioned about pest management to ensure health and safety conditions. On a side note, in December 2018, Phoenix Group – one of the leading rice trading corporations in the world – has established initial agreement with 2 farmer’s cooperatives in Dong Thap to directly buy SRP rice.

The agreement between Phoenix and the two cooperatives was achieved in the context that Phoenix shows our willingness to invest in production-consumption relationship with farmers. Farmers will sell rice according to their cultivation areas, not to a fixed quantity. Phoenix will invest in seeds buying for future crops, and pay farmers at the price equal the selling price on the market.

Anh Tran Lead Coordinator – Sustainability - Pheonix Global DMCC

The Winter 2018 - Spring 2019 Crop is considered as the first trial crop for Phoenix to test the investment model and for farmers to start gaining ownership in heading towards processing and selling rice products themselves. Both Phoenix Global and Loc Troi group have shown initial interests and efforts in working with farmers directly in place of the traditional trading system through rice brokers. This is a great step to see in the desired involvement of private actors in the rice value chain. This helps boosting more market access for farmers, and enhancing stability in rice production, hopefully being strengthened in several years to come. This will, at the same time, help farmers enter into win-win relationship with private actors – whereby they all benefit financially and all are part of the information-sharing and decision-making process - to establish sustainable supply chain in the long run towards 2021.