Supply chain of dragon fruit in

Binh Thuan province

Group 1
1. Trương Hoài Anh
2. Lê Vân Hương
3. Võ Phước Lâm
4. Đỗ Thị Diệu Linh
5. Nguyễn Thị Ngọc Anh
6. Lê Hữu Thuyên
Group 1 Supply chain of dragon fruit in Binh Thuan province

CONTENT

CHAPTER I: INTRODUCTION ……………………………………………………… 2

CHAPTER II: METHODOLOGY ……………………………………………………. 3
2.1. Research method …………………………………………………………………….. 3
2.2. Research process …………………………………………………………………….. 3

CHAPTER III: SUPPLY CHAIN OF GREEN DRAGON FRUIT IN

BINH THUAN PROVINCE …………………………………………………………….. 4
3.1. Description of the supply chain of green dragon fruit in Binh Thuan province …….. 4
3.1.1. Binh Thuan dragon fruit supply channels …….……………………………….. 4
3.1.2. Roles and characteristics of elements in the supply chain …….……...……….. 5
3.2. SWOT analysis of Binh Thuan dragon fruit …….…………………..……………….. 6
3.2.1. Strengths ……………………………………………………..……………….. 6
3.2.2. Weaknesses …………………………………………………..……………….. 7
3.2.3. Opportunities ………..………………………………………..……………….. 7
3.2.4. Threats ……………………….………………………………..……………….. 8
3.3. Problems of the Binh Thuan dragon fruit supply chain ………………………..…….. 8
3.3.1. Quality of green dragon is not stable ……………………………………….…. 8
3.3.2. Lacking of necessary technology and capital …………………………………. 8
3.3.3. Lacking of feedback information among elements within the supply chain ….. 9
3.3.4. High transportation cost ……………………………………....……………….. 9
CHAPTER IV: CONCLUSION AND RECOMMENDATION ………………..…..... 10
4.1. Conclusion ……………………………………………………………………………. 10
4.2. Suggestion …………………………………………………………………………..... 10

REFERENCE ……………………………………………………………………………. 11

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Group 1 Supply chain of dragon fruit in Binh Thuan province

CHATER I: INTRODUCTION

With favorable conditions in the tropical climate, Vietnam is known as a famous country
with many tasty fruits varieties for both domestic and foreign market. In 2014, total fruit
production area of Vietnam is about 831,334ha, exported value is estimated at US$830 million
and increasing 30 percent per year.
Dragon fruit had been long before imported into Vietnam in the beginning of the 20th
century. The total Dragon fruit area of Vietnam is about 10,000ha with total yield 150,000tones
per year mainly from 3 provinces: Binh Thuan, Long An, and Tien Giang.
With favorable weather and soil, Binh Thuan before and now, has been considered the
most advantageous province to plant and develop dragon fruits in Vietnam. Now Binh Thuan
province is considered a principal place producing dragon fruit fruits in Vietnam. Developing
dragon fruit brings lots of benefits directly to regional cultivation, such as using idle time of
local labor force in dry seasons, giving more farming jobs; improving household land use,
diversifying local products, preventing usual inconvenient farming productivity, contributing
to the variety of growing structure and to development of regional farming economic
development.
However, there are many problems related to quality, scope and distribution of
agricultural products in generally, especially dragon fruit. Therefore, it is necessary to
investigate a sustainable development method from production to consumption for this kind of
fruits.
This study is proposed to discuss current green dragon fruit supply chain, identify all
possible problems occurring within the supply chain and suggest feasible solution in order to
improve the value chain of Binh Thuan dragon fruit and maintain the position of Vietnam in
the world food market.

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Group 1 Supply chain of dragon fruit in Binh Thuan province

CHAPTER II: METHODOLOGY

2.1. Research method
As considered as a report study, this paper is appropriate to approach qualitative method
with secondary data based on statistical data and outcome of previous researches which have
been published.
2.2. Research process
The research process is visualized in the following figure:

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Group 1 Supply chain of dragon fruit in Binh Thuan province

CHAPTER III: SUPPLY CHAIN OF GREEN DRAGON FRUIT IN BINH THUAN

PROVINCE

3.1. Description of the supply chain of green dragon fruit in Binh Thuan province
3.1.1. Binh Thuan dragon fruit supply channels

Binh Thuan dragon fruit is mainly supplied through 3 channels, there are:
 Channel 1 – traditional channel:
Farmer Local collector  Enterprise/Wholesaler  Small wholesaler/Retailer  End user
Because Binh Thuan dragon fruits have been trading on large scope, so this value chain
has to count for local collectors who support wholesalers/enterprises.
 Channel 2:

Farmer  Enterprise/Wholesaler  Small wholesaler/Retailer  End user

In this channel, farmer sells their products directly to enterprise/wholesaler. Therefore,

farmer can get a high price and process time also is shorten.
 Channel 3:
Farmer  Co-operative  Clients (customers, wholesalers, retailers…)
Export
Another channel in the map of value chain of dragon fruits, rather popular, originating
from a group of farmers in certain cooperative. The leader of cooperative develops their
products to sell to other clients like retailers or exporters.
Ham Long co-operative and Phu Hoi co-operative are the two most famous co-operative
in Binh Thuan. They are trying to find out more potential markets for cooperative’s members.

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Group 1 Supply chain of dragon fruit in Binh Thuan province

3.1.2. Roles and characteristics of elements in the supply chain

 Farmer
The main function of farmer is producing dragon fruit through the cultivation process.
There are now in Binh Thuan about 9,500 farmer households planting dragon fruits, mostly
grouping in two districts of Hàm Thuận Bắc and Hàm Thuận Nam.
Actions taken by farmers after cropping:
a. Transport immediately to enterprises/collectors/Cooperative
Or: b. Storing-> packaging -> transport
Some farmers who are very active, besides being owners of certain land growing dragon
fruits, they are also in charge of all work phases from cultivation to consumption, including the
role of enterprises to collect enough quantity for export. Hoang Hau and Long Hoa companies
are enterprises established by farmers that cultivates and exports dragon fruit with more than
100ha. They even exported their product to EU market with rigorous standards. Furthermore,
they also play a role as a collector collecting products from other farmers for export.

 Cooperative
Agricultural cooperatives play an important role in supporting small farmers. They offer
small agricultural producers opportunities and a wide range of services, including improved
access to markets, natural resources, information, communications, technologies, credit,
training and warehouses. They also facilitate small producers’ participation in decision-making
at all levels, support them in securing land-use rights, and negotiate better terms for
engagement in contract farming and lower prices for agricultural inputs such as seeds, fertilizer
and equipment.
Through this support, small producers can secure their livelihoods and play a greater role
in meeting the growing demand for food on local, national and international markets, thus
contributing to poverty alleviation, food security and the eradication of hunger.
 Local collector
Local collectors usually collect products from small farmers. These farmers could not
develop bigger, they don’t have early stage processing point, means of transport, cropping etc.
With small scope of product, it is difficult for wholesalers/enterprises transport with big vehicle
like truck or container. Therefore, local collectors play a role as a buffer between farmers and
wholesaler. They purchase dragon fruit from farmers, classify product and sell them to
wholesalers/enterprises.

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Group 1 Supply chain of dragon fruit in Binh Thuan province

 Enterprise/Wholesaler
Enterprises collect dragon fruits from farmers, cooperatives or enterprises themselves
cooperate with farmers in cultivation. Then products are classified, packaged, labelled and
stored here. From enterprises, products shall be exported, or consumed locally through
wholesalers.

The function of wholesaler of dragon fruits in Binh Thuan is like enterprise. The only
different point is the wholesaler usually sell a smaller quantity of products to retailer in the
region or nearby provinces.

The wholesaler could also be an exporter who mainly exports to Asian countries, the
product output could attain 10 – 15 % of total output. However his role here is the same as a
trader exporter, so in this section we just mention the local consumption process of wholesaler.

− Small wholesaler/retailer
Retailer usually comes to wholesale markets or wholesale points to buy dragon fruits.
Some retailers have good relationship with wholesaler, he could check prices and order the
products, he also gets the product delivered to his place. Therefore, the relationship between
wholesaler and retailer is a two way contact.
The second role of retailer is distributing products to their customers. Retailer also
maintains special relationship with large customers such as restaurants, hotels (especially
supermarkets). They have to select the right quality products to offer to these customers. In
turn, they sell at higher prices or with bigger quantity.
− Consumer (domestic and foreign market): include final customers, importers… who
consume dragon fruits from supermarkets, retailers or exporters.
3.2. SWOT analysis of the Binh Thuan dragon fruit.
3.2.1 Strengths
 Binh Thuan has very appropriate climate and soil condition to plant green dragon fruit
twelve month a year with high quality and variety of sizes of dragon fruit.
 Binh Thuan dragon fruit varieties have red skin white flesh, easy to care, have less
disease, develope very fast and bring high economic effectiveness.
 Farmers in Binh Thuan have traditionally cultivated dragon fruit with good experiences
to increase quality and quantity of output.

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Group 1 Supply chain of dragon fruit in Binh Thuan province

 Binh Thuan Province has made contributions and interest in having programs planning
expansion of arable land dragon, encouraging cultivation and prioritizing investment
on dragon-fruit trees, built a number of successful models in cultivation.
 Binh Thuan dragon fruit supply chain is flexible.

3.2.2 Weaknesses
 Dragon fruit production is still fragmented, small scale, lack of focus, it is difficult
manage and control the amount of output and quality.
 Just some businesses or large farms have location processing, preserving and storing,
almost all participants in the supply chain still does not have or if any, the facilities for
the processing and packaging, storage is still cramped, poor sanitary, especially
technology of product storage is poor.
 Means of transport and packaging consumption of domestic products are poor, and
have no labels, so they cannot build the brand image of domestic consumers.
 Lack of human resources management qualifications and experience, so that
coordinating the activities in the supply chain are discrete.
 Transport fees is high.
 Exported dragon fruit is affected by increasing oil prices, higher transport prices makes
the export price higher compared to other countries (Thailand, Israel ...).
 Domestic market prices are not stable, especially in the main season, from the
procurement market disturbance.
3.2.3 Opportunities
− Accession to the WTO, in January 2007, will continue to benefit Vietnamese exporters,
with the gradual removal of market barriers and trade restrictions set to increase
competition.
− Rising income levels and changing lifestyles, particularly in urban areas, are increasing
consumer demand.
− Vietnam’s large domestic market, growing export opportunities and low labor
costs, as well as the prospect of acquiring newly privatised food companies, offer
further investment opportunities.
− The country’s agricultural sector is in need of significant investment, and willing
investors can expect assisted entry.
− A growing tourism sector fuels interest in convenience categories.

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Group 1 Supply chain of dragon fruit in Binh Thuan province

3.2.4 Threats
 Although joining in AFTA, especially WTO has many positive opportunities it also
brings in many challenges to Binh Thuan dragon fruit, the competition become more
and more tough from foreign producer such as Thailand, Israel, Taiwan, China, etc.
 Elevated agricultural commodity costs will remain a risk for the profitability of
processed food manufacturers; farmers themselves also claim this as a threat, with the
primary level reportedly seeing little in the way of these higher prices.
 Rising unemployment levels are taking their toll on consumer confidence.

3.3. Problems of the Binh Thuan dragon fruit supply chain

3.3.1 Quality of green dragon is not stable
Quality of input plays a very importance role in supply chain. If input don’t meet quality
standard, quality of output can be affected and sellers can’t store products in long time. In case
of dragon fruit, those are both input and output. Therefore, quality of fruits is more important.
The biggest problem is that Vietnamese farmers lack of long-term plan. Joining in the
world economic associations brings many opportunities to farmers. They can sell their product
with larger quantity in boundary-across markets. However, this also leads to many challenges
that farmers must guarantee that their product meet the strict requirements about quantity and
quality exactly like what they signed in contract. The most popular quality standard applying
for agricultural product is GAP. Nevertheless, GAP implementation requires large capital to
invest in technology, machine… This will increase production cost. Besides that farmers must
obey a strict cultivation process. Because of lacking information, knowledge and skills, many
farmers, especial small scale ones, cultivate mostly depend on their experience without
perception of obeying provisions relating to stable consistent quality. Furthermore, lack of
sharing knowledge among farmers of the same region, province also affects in product quality.
Therefore, as a result:
− Product quality not equal in the same garden and among farmer households.
− Product quality is unstable
− The product quality, in general, doesn’t attain the standards of difficult markets like
Europe, America and Japan.
3.3.2 Lacking of necessary technology and capital
95% of producers of Binh Thuận dragon fruits is small scale farmers. These farmers
could not develop bigger and get influenced by traders, or cooperatives in regards to prices,

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means of transport, cropping etc. They don’t have enough financial capital for basic structure,
modern equipment, early stage process, technology, storage warehouses, etc. but the approach
to loans is still limited and difficult. If they don’t sell off they have to do the cropping
themselves with old carts then handle by big baskets for loading on trucks (of traders) or they
can use other means of transportation such as bicycle, motorcycle, three-wheel cart to carry
dragon fruit from garden to traders collecting point. This problem will reduce product quality
affecting effectiveness of the supply chain.
3.3.3 Lacking of feedback information among elements within supply
chain.
As the paper mention above, there are no official channel to farmers share their
experience or update related information (like: price, demand, time, etc.). The same problem
occurring for retailers and customers. Almost retailers contact directly with consumers and
directly receive feedback. However the receiving and transferring these feedback information
is still limited. Customers still lack of information on source of dragon fruit bought, supplier
of dragon fruits of high quality, label and clear source of supply.
3.3.4 High transportation cost
High transport costs for Vietnam derive from poor transport infrastructure,
underdeveloped transport and logistics services, increasing of fuel price, and slow and costly
bureaucratic procedures for dealing with both exported and imported goods. A study by the
World Bank (WB) in turn reflects that Vietnam’s total transport costs comprised 11.8% of GDP
while the figure in the US, Singapore, EU and Japan was significantly lower at 4.5%, 4.8%,
5.8% and 6% respectively. A reduction in the transport costs would make a great contribution
to reducing production costs and stimulating economic growth.

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CHAPTER IV: CONCLUSION AND RECOMMENDATION

4.1. Conclusion
Even though Binh Thuan dragon fruit are having many opportunities to expand in both
domestic and international markets, these still face many challenges throughout the supply
chain based on lacking information, knowledge, skills, technology, and capital. Both
effectiveness and efficiency of Binh Thuan supply chain are affected. In order to develop
sustainably, each actor within the supply chain must be seeking potential solutions to solve
their own problem.

4.2. Suggestion
Based on SWOT analysis, the corresponding solutions are suggested in order to solve
problems mentioned before.
First of all, models of cooperative, multiple enterprises should be encourage to establish
more for easier application of modern science and techniques and transfer of technologies.
Secondly, training courses should be conduct for all elements of the supply chain to
improve skills, speed, knowledge and techniques. Particular training programs must be
designed for each type of actors.

 For farmers: conduct training courses to upgrade cultivation knowledge involving

safety guarantee process, and the techniques of cultivation of safe dragon fruits.
 For wholesaler/enterprise/retailer: conduct training courses for early process,
preserving, packaging and transportation to minimize loss and obtain capacity
certificates that enable working in both domestic and foreign markets.
Thirdly, an official information center should be establish to manage the value chain of
fruits in general, including information update for each provincial market (including Binh
Thuan dragon fruits), it also helps to receive feedback from each stage of the value chain on 2-
way manner and this is very important prompt adjustment of drawbacks, or distribution of
information to the right partners in order to solve problems, consequently the value chain shall
become more effective.
Finally, improving transportation facilities is necessary to reduce transport cost.
Moreover, wholesaler/enterprises should maintain delivery data within the system, as well as
the ability to quickly run and create reports. Some specialized software also should be applying
for analytics functionality, which creates easy-to-read summaries of delivery details.

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REFERENCE

Burfisher, M., J. Dyck, B. Meade, L. Mitchell, J. Wainio, S. Zahniser, S. Arita, and J. Beckman.
2014. Agriculture in the Trans-Pacific Partnership, USDA, Economic Research Service, ERR-
176. October.

Website: Vietnam dragon fruit (www.vietnamdragonfruit.com)

Campbell J, Nguyen Van Hoa, Nguyen Huu Hoang, Rankin M K. 2010. Extending export
opportunities to small-plot dragon fruit growers through Good Agricultural Practices

Ngoc Han N. 2013. Value chain of Binh Thuan dragon fruit

Thanh Tung. 2015. Binh Thuan dragon fruit price reduce sharply

Hanh N. 2014, Agricultural exports: When can they reach their potential?

Minh Thi N. 2014. Export Binh Thuan dragon fruit 2010 -2013

Thanh N. 2015. Finding solutions for Binh Thuan dragon fruit sustainable consumption

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