Quality and branding, the answer to Vietnamese agricultural woes

Friday, Jan 10, 2020 09:00

Shin Ca phe was selected by the Government as a gift during ASEAN Summit 2020. Choosing the Vietnamese quality coffee sends a message from Viet Nam to the world that an agricultural nation is seeking its true position.

Viet Nam's agricultural products lead the world in terms of exports and production, but are only in the middle, or even the bottom, in the value chart.

This stems from the characteristics of the Vietnamese agriculture sector, whose exports are mainly raw and semi-processed goods and of uneven quality, resulting in lower value than similar products from other countries.

Cashew and coffee, for instance, are among the country’s key export products and the country is the world’s top exporter of the products, but their prices have been falling consistently.

In 2019 cashew exports increased by 21.5 per cent in terms of volume but decreased by 2.6 per cent in value terms to US$3.3 billion.

Coffee export decreased by nearly 14 per cent in volume and 21 per cent in value to $2.8 billion as prices declined by nearly 10 per cent.

Coffee is a key agricultural product of Viet Nam, but exports are mainly in the form of low-quality raw products.

The paradox of large exports but low value is repeated in the case of many products such as pepper, rice and rubber.

Vu Huy Phuc from the Information Center for Agricultural and Rural Development told a recent agriculture conference: "Viet Nam's agricultural processing industry shows many limitations. Only 5-10 per cent of agricultural output is processed. The processing is mainly manual. There are few modern processing factories and there are not many models that connect processing and growing,”

Besides the lack of investment in the processing industry, farmers’ focus on quantity instead of quality, and the lack of alignment and planning are other reasons that push down the prices of agricultural products.

Agricultural expert Hoang Trong Thuy said the output of the country’s key agricultural products has increased sharply because of an expansion in cultivation area, but quality has not improved much. The products therefore have a low competitive edge and their export prices are usually low.

Viet Nam's post-harvest processing technologies are still modest and so little processing is undertaken.

Viet Nam is the world’s largest exporter of coffee and pepper, but exports mainly unprocessed products.

Quality and branding the answer

To resolve this paradox, experts called for focusing on quality instead of quantity and brand building and developing farming areas’ links with the value chain.

Shin has adopted solutions to build a brand for Vietnamese coffee.

SHIN Ca Phe, a new member of Pan Group, is proud to be selected by the Vietnamese Government to give a small gift to other countries’ leaders attending this year’s ASEAN Summit.

SHIN Ca Phe has chosen a different path to develop its coffee products by focusing on growing areas and creating specialty coffees.

Nguyen Huu Long, the founder of SHIN Ca Phe, said: “If truth be told, producing high-quality coffee in Viet Nam is not difficult as we have everything required to do that. What we need to do now is create a good environment to improve the value of our coffee beans. People are the key in maintaining the quality of coffee from the beginning.”

Shin Coffee focuses on developing coffee growing areas, branding speciality coffees and gradually building geographical indications for its coffee products

To eliminate the paradox in Vietnamese agriculture, SHIN has made great efforts to change the mindset of farmers to make them accept new planting methods for high-quality coffee, which includes frequent training in cultivation methods. It also always supplies farmers with best quality seedlings and pays higher than the average market rates for their coffee.

In addition to the quality, PAN also plans to create geographical indications for its coffee products by making coffees with distinctive flavours for each geographical area.

For example, coffee grown in Son La will have a slight fruity scent with a clear acid level and a sweet aftertaste, whereas coffee from Khe Sanh has a bit of the sour taste of oranges and a long sweet after taste.

SHIN coffee from A Luoi has the taste of sweet caramel, a slight sour taste and a long sweet after taste.

Support from the PAN Group, which holds nearly 80 per cent of SHIN Ca Phe's shares following an M&A deal, means SHIN has greater financial potential and management capacity to take clear steps to improve Vietnamese coffee and other agricultural products.

SHIN may be slower than its competitors in the number of stores it opens, but focusing on quality rather than quantity creates higher value addition.

Choosing SHIN Ca Phe as a gift during ASEAN Summit 2020 sends a message from Viet Nam to the world: that an agricultural nation is seeking its true place. — VNS

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