"Vietnam’s surging agro-economy marked by challenging opportunities"

Things are going well in Vietnam – in 2017, the GNP of the country with its 96 million inhabitants grew by 6.8%. This meant the Vietnamese economy had its fastest growth in the last ten years. As a result of the rapidly-growing middle class and the increasing demand for high-quality, local and safely-produced products, the Vietnamese agriculture and horticulture sector offers an attractive investment climate. Wage rises and a lack of knowledge however do present challenges.



Agrofood development
Various Vietnamese investors are showing interest in injecting their capital into the resurgent domestic agriculture and horticulture sector. There is much demand for agricultural products and some big industrial heavyweights see a chance to invest in the horticulture chain. These developments are associated with the necessary contributions from Vietnam’s export partners. Although the Vietnamese government designated the Netherlands as a preferred partner for agrofood development, many Japanese and Korean partners are also involved in projects. These countries are interested in Vietnam’s export potential and realise that further technological development of the Vietnamese horticulture sector is needed.

Asia’s market garden
Jan Hoogewoning, Business Development Manager for Southeast Asia at Ridder, is following the developments in Vietnam closely. He notes that much more knowledge and support will be needed to help the local horticulture sector get going. “Vietnam, and particularly the higher altitude southern region round Da Lat, have everything that’s needed to become the primary horticulture area in Southeast Asia. There is a favourable climate for greenhouse cultivation and also an increasing demand for safe and year-round cultivated products. However, many growers are not yet capable of raising a high-quality, uniform and food-safe product. They lack the right technological resources, and also frequently the knowledge and insight to invest in these. Often they don’t know all the possibilities.”



Rise of the restaurant chains
Hoogewoning explains that such investments can be simple to justify. “Fast-food chains like McDonalds, Burger King and Pizza Hut are on the up and up in Vietnam and demand a uniform supply of ingredients. There’s also a growing market for fresh produce and rapidly-growing demand for healthy and pure products. The local supermarkets are on the lookout for a consistent inflow of high-quality, food-safe products. Besides this, there are favourable sales opportunities for ornamental cultivation products in Japan and Korea. Investments in the right technical solutions to cultivate these products can therefore be earned back relatively straightforwardly.

Bottleneck
According to Hoogewoning, the increasing demand for food is at the same time a bottleneck for professionalisation: traditional Vietnamese growers are used to earning back their investment within three years. Cultivation happens in relatively simple, poor-quality greenhouses with no or little automation, little ventilation and a poor quality substrate. The quality that is harvested is poor and could be improved, just as could the production per square metre, while there is definitely a dependable market for the product. Neither are growers much in favour of investing in materials or systems with which a better product can be grown. “Many see no necessity because they can still earn reasonable money, is the oft-heard answer from the market.”

Long-term vision
“Investors fortunately take a different view,” Hoogewoning continues. “They look at these developments with a long-term view and realise that the present Vietnamese horticulture sector offers much potential, though it’s often not future-proof. They are for example much more conscious of the rising labour costs – wages in Vietnam are in fact rising at around 13% annually. They understand that an automation step needs to be taken. They also see that better quality yields better prices on the market.”



Screening
As an example, Hoogewoning mentions some projects where growers have been helped with sun-screening and diffusing shade cloths from Ridder. “The lion’s share of plastic greenhouses in Vietnam have no screen system – growers don’t see the benefit of it because most of the light is screened off anyway by a thick layer of dirt or algae on the greenhouse roof. However, this means the quality of light in the greenhouse is very poor as parts of the light spectrum cannot be fully exploited. As a result of the poor light distribution and its inconsistency, the crop becomes stressed and the quality and production suffer. We’ve been able to convince growers of the importance and effectiveness of a screen system featuring our open diffuse RLD screen cloth – they see that the climate and the light in the greenhouse can be much better controlled, and the production and quality can be optimised. The same applies to the sun-shading RSS screen cloth – growers observe that it’s much better to protect the crop against radiation in a controlled way. It gives them the grip they want on production and quality.”

According to Hoogewoning, the effect of the screen systems can also be noticed in another way: “We noticed clearly that growers who use RLD and RSS screen cloths expand sooner to a larger greenhouse area than growers who don’t invest in screen systems. Naturally they immediately install our screen cloths in this expansion.”



Automation
Another important development is the increasing interest in automation of processes. “Automatic watering and climate control is fairly common, but growers frequently fail to enjoy the full potential of these solutions, due to a lack of knowledge. We notice that simple and accessible solutions like our Ridder FertiMix-Go! irrigation systems and the HortiMaX-Go! climate computers link up better to the demand and the local knowledge level.” Hoogewoning states: “Recently I was talking to a grower who during a meeting received a call and obtained an order for a couple of tonnes of tomatoes. However, delivery was to be in a month and the growth cycle of the tomatoes would have to be controlled immediately in order to meet this. The grower excused himself for two minutes and opened the HortiMaX Go! app on his smartphone and immediately started to change particular settings in the watering and screen installation to influence the growth cycle. The result was that the grower was able to obtain better prices.”

New generation
In present-day Vietnam, a young generation is on the rise, with a great deal of interest in computer-controlled cultivation. This means agriculture is a popular sector. “This offers opportunities for the further integration of our solutions. Where in the past the grower could be found in the greenhouse 95% of the time, there are ever more aspects that need attention. Packing, cold storage and labour management demand ever more time. Today’s grower has become more of an all-round manager and this grower will only remain successful with the right tools.”



For more information:
Ridder
ridder.com

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