Study of the Sea Grass Value Chain

Transcription

Value Chain Study for Sea Grass in Thanh Hoa Province, Viet Nam
Crafting out of poverty
VALUE CHAIN STUDY FOR SEA GRASS IN
NGA SON DISTRICT, THANH HOA PROVINCE, VIET NAM
NOVEMBER 2010
Prepared by:
Nguyen Anh Phong
National Consultant
Alfons Eiligmann
International Consultant
While efforts have been made to verify the information contained in this document, the International Trade
Centre (ITC) cannot accept responsibility for any errors that it may contain. The views expressed in this report
can in no way be taken to reflect the official opinion of the MDG Achievement Fund, the Viet Nam Trade
Promotion Agency VIETRADE, the Viet Nam handicraft exporters association VIETCRAFT and ITC. The usual
disclaimers regarding responsibilities apply to this report.
P a g e | ii
PREFACE
This value chain study is prepared by the International Trade Centre (ITC) within the context of the
joint programme entitled ‘Green Production and Trade to Increase Income and Employment
Opportunities for the Rural Poor’.
Viet Nam has achieved impressive economic progress since the doi moi (renovation) process was
launched in 1986. Since 1993, real GDP growth has averaged 7.5% per year and the poverty rate has
been reduced from 58% in 1993 to 13% in 2008. Growth has been driven by accelerated international
integration, market liberalization and job creation in the private sector. However, persistent
inequalities and poverty remain, particularly in rural areas where more than 90% of the poor reside. In
many areas, the income generated from farming is not sufficient for smallholder farmers to reach an
income level above the national poverty line of VND 200,000 per capita/per month.
Against this background, the joint programme works to increase income and employment
opportunities for raw craft material growers/collectors and grassroots handicrafts and furniture
producers. The collection and processing of natural raw materials from forest areas and handicraft
production constitute the most important sources of additional income for rural households. In fact, it
is very often the additional income generated from handicraft production or the collection of raw
material that determine whether rural households can lead a life above the national poverty line.
The programme targets about 4,800 poor farming and craft-producing households in four northern
provinces of Viet Nam: Thanh Hoa, Nghe An, Hoa Binh and Phu Tho. These provinces were selected due
to: (i) the high incidence of poverty, especially among ethnic minorities; (ii) the concentration of raw
materials and local production of crafts; and (iii) the possibility to build synergies with past and ongoing
development activities
Within the four targeted provinces, the programme will focus on the five following value chains: (i)
bamboo/rattan; (ii) sericulture and weaving; (iii) sea grass; (iv) lacquer ware; and (v) handmade paper.
The programme’s approach is to develop better integrated, pro-poor, and environmentally sustainable
“green” value chains, enabling poor growers, collectors and producers to improve their products and
link them to more profitable markets. The complex challenges faced by the five value chains, ranging
from sustainable raw material production, entrepreneurial skills development and cleaner production
to market linkages and trade information deficits, can best be addressed by a joint programme which
combines the core competencies of the relevant UN agencies: UNIDO, FAO, ILO, UNCTAD and ITC.
The authors would like to thank Mr. Ngoc Le Ba, Vice Chairman of the national handicraft exporters
association VIETCRAFT for his advice and guidance during the preparation of the report. Lastly, the
authors would like to thank all sector stakeholders, including farmers, household craft producers,
companies, and officials in Thanh Hoa province for making their time available to the study team and
openly sharing their knowledge and views.
The joint programme is is funded under the Thematic Window ‘Development and the Private Sector’ of
the MDG Achievement Fund. The ‘Development and the Private Sector’ Window seeks “to facilitate the
achievement of the MDGs through interventions that promote the development of private sector,
through enabling policy frameworks, the growth of inclusive markets and the establishment of propoor public-private partnerships that create and sustain decent and productive employment.”
For further details on the present study, please contact Mr. Koen Oosterom, Senior Technical Adviser,
at: pmu@greentrade.org.vn or oosterom@intracen.org.
P a g e | iii
LIST OF ABBREVIATIONS AND ACRONYMS
DARD
DOIT
FAO
GDP
GSO
GTZ
HRPC
ILO
ITC
JP
JICA
UN
UNIDO
UNCTAD
VIETCRAFT
VND
Department of Agriculture and Rural Development
Department of Industry and Trade
Food and Agriculture Organization
Gross Domestic Product
General Statistic Office
German Technical Cooperation
Vietnam Handicraft Research and Promotion Centre
International Labour Organization
International Trade Centre
Joint Programme
Japan International Cooperation Agency
United Nations
United Nations Industrial Development Organization
United Nations Conference on Trade and Development
Viet Nam Handicraft Exporters Association
Vietnamese Dong
P a g e | iv
TABLE OF CONTENTS
Page
I.
INTRODUCTION ....................................................................................................................... 7
I.1
I.2
I.3
I.4
II.
DESCRIPTION OF PROGRAMME INTERVENTION AREAS ........................................................................... 7
MAJOR SOCIO-ECONOMIC STATISTICS ................................................................................................ 8
DESCRIPTION OF DIRECT PROGRAMME BENEFICIARIES .......................................................................... 8
SCOPE AND COVERAGE OF THE STUDY ................................................................................................ 9
MACRO ECONOMIC CONTEXT ................................................................................................ 11
II.1
II.2
III.
III.1
III.2
III.3
III.4
III.5
III.6
IV.
IV.1
IV.2
IV.3
IV.4
OVERVIEW OF SEA GRASS PRODUCTION IN VIET NAM......................................................................... 11
SEA GRASS PRODUCTION IN NGA SON DISTRICT ................................................................................. 13
VALUE CHAIN ANALYSIS ..................................................................................................... 16
DESCRIPTION AND QUANTIFICATION OF VC ACTORS ........................................................................... 16
ECONOMIC ANALYSIS OF THE VALUE CHAIN....................................................................................... 20
CONSTRAINTS ANALYSIS ................................................................................................................. 23
SOCIO-ECONOMIC PARAMETERS (GENDER, WORK AND LABOUR STANDARDS) ........................................ 28
ENVIRONMENTAL CONCERNS .......................................................................................................... 29
MESO LEVEL SUPPORT INSTITUTIONS AND OTHER PROJECTS ................................................................. 29
VALUE CHAIN UPGRADING STRATEGY ................................................................................. 31
MARKET OPPORTUNITIES AND COMPETITIVE ADVANTAGE ................................................................... 31
SWOT ANALYSIS............................................................................................................................ 32
VISION ........................................................................................................................................ 33
SUGGESTED FACILITATION ACTIVITIES ............................................................................................... 35
V.
RECOMMENDATIONS ......................................................................................................... 37
VI.
APPENDICES ....................................................................................................................... 38
APPENDIX 1: LIST OF INTERVIEWEES IN NGA SON DISTRICT ................................................................................... 38
APPENDIX 2: PROJECT AREAS PROFILES (2009) .................................................................................................. 39
APPENDIX 3: PROGRAMME COVERAGE AREA .................................................................................................... 40
Page |v
LIST OF FIGURES
FIGURE 1: MAP OF NGA SON DISTRICT .......................................................................................................... 13
FIGURE 2: SEA GRASS VALUE CHAIN IN THANH HOA PROVINCE .......................................................................... 17
FIGURE 3: VALUE ADDITION OF PRODUCING A MAT OF A PRICE OF VND 55,000/PIECE
(3 KG DRIED SEA GRASS PER MAT) ................................................................................................ 201
FIGURE 4: VALUE ADDITION OF PRODUCTION OF A MAT OF A PRICE OF VND 250,000/PIECE
(6 KG OF DRIED SEA GRASS PER MAT) .............................................................................................. 22
FIGURE 5: VALUE ADDITION OF PRODUCING A SEA GRASS HANDBAG FOR EXPORT TO FRANCE
(0.3 KG OF DRIED SEA GRASS PER BAG).......................................................................................... 223
FIGURE 6: CONSTRAINTS AT MICRO LEVEL ...................................................................................................... 28
FIGURE 7: CRITICAL POINTS AT MESO LEVEL SUPPORT INSTITUTIONS ................................................................. 30
FIGURE 8: VISION FOR THE SEA GRASS VALUE CHAIN IN NGA SON ...................................................................... 34
LIST OF TABLES
TABLE 1:
TABLE 2:
TABLE 3:
TABLE 4:
TABLE 5:
TABLE 6:
TABLE 7:
TABLE 8:
POPULATION SIZE AND POVERTY RATE BY THE YEAR 2008 ..................................................................... 8
LIST OF TARGETED DISTRICTS AND COMMUNES ................................................................................... 8
SEA GRASS PRODUCTION IN VIET NAM 2001-2008 ............................................................................ 11
CLASSIFICATION OF SEA GRASS PRODUCTS ....................................................................................... 12
EXPORT TURNOVER AND VOLUME OF SEA GRASS HANDICRAFTS FROM VIET NAM .................................... 13
QUALITY OF SEA GRASS IN DIFFERENT LOCATIONS ............................................................................. 31
SWOT ANALYSIS.......................................................................................................................... 33
UPGRADING SOLUTIONS............................................................................................................... 35
P a g e | vi
I.
INTRODUCTION
I.1
Description of Programme Intervention Areas
The programme is implemented in four provinces in the North of Viet Nam: Thanh Hoa, Nghe An, Hoa
Binh and Phu Tho. These provinces were selected due to: (i) the high incidence of poverty, especially
among ethnic minorities; (ii) the concentration of raw materials and local production of crafts; and (iii)
the possibility to build synergies with past and ongoing development activities.
Phu Tho is a mountainous midland province situated at
80 km northwestern of Hanoi, and encompassed by Vinh
Phuc and Hanoi to the East, Son La province to the West,
Hoa Binh province to the South, and Yen Bai and Tuyen
Quang provinces to the North. The province has fairly
advantageous conditions of transport: With the pass-by
of three great rivers; Hong river, Lo river and Da river;
with Hanoi-Lao Cai-Con Minh railway route; and inland
travel on National highway No. 2 and Asian highway
which bridges China to Viet Nam and ASEAN member
countries.
Programme Areas
Nghe An is located at the heart of Northern Central
region, on the North-South transport route and Asian
East-West corridor. It is 300 km south of Hanoi. Following
the Road No. 8, it is 80 km from the Viet Nam-Laos
border and about 300 km from the Laos-Thai border.
Nghe An is integrated into all types of national transport:
Inland road, railway, waterway, airway and seaway.
Having 419 km length of land border and 82 km coast,
the province also has the Vinh airport, the Cua Lo port,
and the entire infrastructure is under improvement,
extension and new construction.
Hoa Binh was re-established in October 1991, sharing border with Hanoi and being the cross-section
amongst northwestern provinces, the Red river delta and the economic hub triangle Hanoi-Hai PhongQuang Ninh on the inland transport with a good road network (National road No. 6, Ho Chi Minh trail,
National road 12B, National road 15) and river transport (on Da and Boi rivers).
Thanh Hoa is the northernmost province of the Central region, at 150 km south of Hanoi, 1,560 km
north of Ho Chi Minh City. It shares borders with Son La, Hoa Binh, Ninh Binh to the North, Nghe An
province to the South, Hua Phan of Lao PDR to the West and North gulf to the East. The province has
good access to the transport network through the North-South railway, Ho Chi Minh trail, national
roads: 1A, 10, 45, 47, and 217; Nghi Son deep port and river system which eases the North-South
waterway transport within the province as well as to the Central region and the international
Page |7
transport. Currently, Thanh Hoa has built the Sao Vang airport and is planning to build another
international airport nearby the sea to serve the Nghi Son economic zone and tourism demand.
I.2
Major Socio-economic Statistics
According to the most recent figures presented in Table 1, the average GDP per capita in 2008 in all
four provinces was lower than the national level of 17,180,000 VND. Of the four provinces, Phu Tho has
the lowest GDP per capita. The statistics also show that the percentage of poor households in the four
provinces is higher than that the country’s average level of 13% in 2008 (based on the national
standard for poor households regulated by the Decision 179/2005/QD-TTg dated 08/07/2005, for
which households living in rural areas with equal or less than 200,000 VND/per capita/month are
considered to be poor households).
Table 1: Population size and poverty rate by the year 2008
GDP per capita
% of poor
(VND)
households
274,908
8,842,097
18.41
788,274
174,198
13,090,660
19.34
Thanh Hoa Province
3,405,000
746,428
10,295,558
21.15
Nghe An Province
2,919,214
758,333
10,490,458
17.54
Provinces
Population
No. of households
Phu Thọ Province
1,364,522
Hoa Binh Province
Source: The 2008 statistical year books of 4 provinces.
I.3
Description of Direct Programme Beneficiaries
In collaboration with the provincial authorities, 4,822 poor farming and crafts producing households
have been selected in the four targeted provinces as direct programme beneficiaries. Criteria for their
selection included poverty, current activity in the value chain, women and ethnic minority.
The list of 25 targeted communes is shown in Table 2. These communes belong to 14 districts of the
four provinces. Tentatively, the programme will implement promotion activities for 5 value chains in
these 25 communes, with the grouping of communes as follows: 12 communes in the bamboo and
rattan value chain, 8 communes in the sericulture value chain, 2 communes in the sea grass value
chain, 2 communes in the lacquer value chain and 1 commune in the handmade paper value chain. Of
the 25 targeted communes, 15 are undertaking Phase II of the national Programme 135.
Table 2: List of targeted districts and communes
Under
Province
No.
District
Commune
Programme
Value chain
PROVINCE
NGHE AN
135
1
Quy Chau
Number of
beneficiaries
1
Chau Tien
Yes
Sericulture
110
2
Chau Hanh
Yes
Sericulture
60
3
Chau Thang
Yes
Bamboo/Rattan
150
Page |8
Under
Province
No.
District
Commune
Programme
Value chain
PHU THO
HOA BINH
THANH HOA
135
2
Nghia Dan
3
Quynh Luu
4
Dien Chau
5
Yen Thanh
6
Nhu Thanh
7
Nong Cong
8
Nga Son
9
Thieu Hoa
10
Luong Son
11
Tan Lac
12
Mai Chau
13
Tam Nong
14
Cam Khe
Number of
beneficiaries
4
Nghia Hoi
Yes
Bamboo/Rattan
100
5
Quynh Trang
No
Bamboo/Rattan
80
6
Quynh Thach
No
Bamboo/Rattan
180
7
Dien Van
Yes
Bamboo/Rattan
150
8
Dien Kim
No
Sericulture
174
9
Kim Thanh
Yes
Bamboo/Rattan
50
10
Lang Thanh
No
Bamboo/Rattan
120
11
Hai Long
No
Bamboo/Rattan
311
12
Thang Binh
No
Bamboo/Rattan
200
13
Tan Tho
No
Bamboo/Rattan
199
14
Nga Tan
Yes
Sea grass
431
15
Nga Thai
Yes
Sea grass
260
16
Thieu Do
No
Sericulture
193
17
Lien Son
Yes
Bamboo/Rattan
604
18
Hop Hoa
Yes
Handmade paper
250
19
Tan Lac
No
Sericulture
50
20
Na Phon
No
Sericulture
100
21
Pa Co
Yes
Sericulture
50
22
Tho Van
Yes
Lacquer ware
180
23
Di Nau
Yes
Lacquer ware
120
24
Tinh Cuong
Yes
Sericulture
200
25
Yen Tap
Yes
Bamboo/Rattan
500
TOTAL
4,822
It should be noted that 41% of the selected direct beneficiaries are considered as poor, in accordance
with the official national poverty line of 200,000 VND/per capita/month. As this percentage is
significantly higher than the general percentage of poor in the 4 provinces (see Table 1), it can be
considered that the programme is indeed pro-poor. In addition, 1,432 beneficiaries from ethnic
minorities have been included in the list of beneficiaries, representing Thai, Muong and H’mong.
Handicraft production also strengthens the economic position of women particularly, who are involved
in many stages of handicraft production in the five different value chains.
I.4
Scope and Coverage of the Study
Contributing towards the realization of JP Outcome 1: “Improved understanding of the handicrafts and
small furniture value chains in four provinces”, five value chain studies are prepared, one for each
value chain identified for the programme: (i) bamboo/rattan; (ii) sericulture and weaving; (iii) sea grass;
(iv) lacquer ware; and (v) handmade paper.
Page |9
The present value chain study covers the sea grass value chain and includes:
 A presentation of key macro-economic framework data;
 An analysis of the main value chain actors from raw material supply to the international market
and support organizations at meso level;
 An assessment of the strengths and weaknesses of the different actors and income generation
along the chain;
 An identification of competitive advantages and market opportunities;
 The development of an intervention strategy for value chain upgrading and value-addition,
with the view to enhance income generation along the respective value chains.
P a g e | 10
II.
MACRO ECONOMIC CONTEXT
II.1
Overview of Sea Grass Production in Viet Nam
There are five species of sea grass in Viet Nam, namely (1) sea grass with white flower (“Coi bong
trang” in Vietnamese or Cyperus tojet Jormis); (2) sea grass with brown flower (“Coi bong nau”Cyperus Coxym bosus); (3) three-sided sea grass (“Coi ba canh” or Cyperus nutans); (4) sea grass with
black-spotted flower (“Coi dau ruoi”); and (5) “Coi ke”.
Due to the favorable climate conditions, sea grass has been cultivated widely along the Vietnamese
coastal provinces. The total sea grass area of the whole country was 12,523 ha in 2008, with an
average yield of 8.7 tons/ha. Thanh Hoa (Nga Son, Quang Xuong) and Tra Vinh are the major supply
areas of sea grass.
The quality of sea grass differs from province to province, even for the same species. Thanh Hoa is
today the major production area of the country. Its cultivation area covers around 5,000 ha and the
total production is about 40,000 tons per year. The sea grass in Nga Son district in Thanh Hoa province
is considered to be the best, especially the sea grass in Nga Tan Commune.
Table 3: Sea grass production in Viet Nam 2001-2008
No.
Province
Northern region
2001
2007
2008
ha
tons
ha
tons
ha
tons
1,400
11,600
1,670
11,525
695
5,204
1
Hai Phong
100
400
20
160
20
141
2
Hai Duong
100
500
-
-
-
-
3
Nam Dinh
200
2,400
385
2,703
180
1,350
4
Thai Binh
200
2,500
300
2,100
159
1,193
5
Ninh Binh
800
5,800
965
6,562
336
2,520
Central region
4,600
32,400
6,202
43,955
6,005
42,780
6
Thanh Hoa
3,800
27,500
5,522
40,000
5,520
39,965
7
Nghe An
200
800
65
390
65
455
8
Ha Tinh
100
1,000
100
700
120
780
9
Quang Nam
200
1,400
315
1,890
130
715
10
Binh Dinh
200
1,300
50
300
50
325
11
Khanh Hoa
100
400
150
675
120
540
3,400
20,100
5,928
44,520
5,823
60,829
Southern region
12
TP HCMinh
200
1,000
-
-
-
-
13
Long An
600
3,500
474
3,792
410
3,895
14
Dong Thap
300
258
1,714
170
1,122
15
Tien Giang
-
-
-
-
-
-
16
Vinh Long
1,200
7,500
703
5,624
455
4,550
1,700
P a g e | 11
No.
Province
2001
2007
2008
ha
tons
ha
tons
ha
tons
17
Ben Tre
200
1,700
400
2,800
310
2,790
18
Kien Giang
300
1,700
30
210
30
285
19
Hau Giang
100
100
80
730
700
7,700
20
Tra Vinh
200
1,800
3,533
26,400
3,500
38,500
21
Bac Lieu
100
300
200
1,500
150
1,125
22
Ca Mau
200
800
250
1,750
98
862
9,400
64,100
13,800
100,000
12,523
108,813
Whole country
Source: Statistic book of Viet Nam
On average, 30% of the Vietnamese sea grass is used for domestic craft and household goods
production. The other 70% is exported to neighboring Asian countries, particularly China. Nowadays, in
line with international trends towards a green life using eco-friendly products, natural fibers such as
sea grass are favorite materials for many manufacturers worldwide.
There are no specific trade statistics available on handicrafts made from sea grass. However, as sea
grass belongs to the product group of bamboo, rattan, and leaf etc., which falls under the Harmonized
System Codes (HS codes) 4601.20, 4602.10, 4602.90, 6504.00, 9401.50, 9403.80 and 1401.90 (Table 4),
trade in sea grass products can be tracked approximately in Table 5.
Table 4: Classification of sea grass products
No.
H.S Codes
Description
1
4601.20
Mats, matting and screens of vegetable plaiting materials.
2
4602.10
Of vegetable material
3
4602.90
Made up from other plaited materials
4
6504.00
5
9401.50
Seats of cane, osier, bamboo, or similar materials
6
9403.80
Furniture of other materials (including bamboo)
7
140190
Vegetable materials, used primarily for plaiting
Hats and other headgear, plaited or made by assembling strips of any material
whether or not lined or trimmed.
Source: General Customs Office, Viet Nam
It can be estimated to have a share of about USD 30 - 35 million/year of the total export turnover of
US$ 108.2 million (in 2007) of the product groups that belong to the HS codes in Table 4 and Table 5.
The key markets for sea grass handicrafts are mainly developed countries like Japan, the US and EU
countries like Germany, France, the UK, the Netherlands, Belgium etc.
P a g e | 12
Table 5: Export turnover and volume of sea grass handicrafts from Viet Nam
Export value (in 1,000 US$)
HS code
2002
2003
2004
2005
2006
2007
650400
338
5,037
6,593
9,194
8,742
8,738
940150
14,723
21,050
19,503
19,584
19,848
25,572
940380
5,475
6,444
7,316
18,129
38,625
47,693
460120
18,888
21,146
20,246
15,496
11,208
8,440
460290
5,458
6,581
8,676
10,756
16,747
14,038
460210
3,556
4,205
5,196
5,196
5,196
3,761
140190
5,004
3,140
1,298
2,679
4,705
n.a.
Total
53,442
67,603
68,828
81,034
105,071
108,242
Source: trademap.org
II.2
Sea Grass Production in Nga Son District
The Nga Son district is close to the sea in the North of Thanh Hoa province. The Nga Son district has a
total area of 158 km2 with a population of 135,805 persons (2009). 98% of the population in Nga Son
lives in rural areas. The district has 1 town and 26 communes with 8 kilometers of coastal line in 8
communes. The annual GDP growth rate of the district is 9.5%. The agricultural sector plays an
important role in the economy. The contribution of the agricultural production, industry and
construction, services and trade to the total GDP are 51.4%, 19.2% and 29.4% respectively.
Though the poverty rate in the district has decreased steadily from 28% in 2006 to 24.5% in 2007, 20%
in 2008 and 15% in 2009, it is still high in comparison with other regions. The child malnutrition rate in
the district was reduced from 29.2% in 2006 to 26.4% in 2009.
The district has a cultivation area of 17,569 ha with 21,453 rural households in 2009. Cultivation and
cattle raising account for 70.4% and 28.1% of the agricultural gross output. Main agricultural products
of Nga Son are rice and sea grass, which are important factors to ensure food security and economic
structural transformation.
In 2009, the total area for the cultivation of sea grass in Nga Son district amounted to 1,570 ha. The
total amount of sea grass that was processed in the district was 30,400 tons, with 19,100 tons coming
from local production and 11,200 tons imported from other provinces. The total output value of sea
grass products was VND 165.46 billion in 2009.
Sea grass is mainly cultivated in 6 communes (Nga Thanh, Nga Thuy, Nga Tan, Nga Tien, Nga Lien, Nga
Thai), which occupy about 77% of the total sea grass cultivation area. In 2009, these six communes
provided 15,662 tons of sea grass, accounting for 82% of the total output production in the district. The
yield per ha in the six communes is similar to the national average of 8.7 tons/ha in 2008 (for instance
P a g e | 13
it was in Nga Thanh in 2009 9.0 tons/ha, in Nga Lien 8.5 tons/ha, in Nga Thuy 8.3 tons/ha and in Nga
Thai 7.8 tons/ha).
The study targets the two communes of Nga Tan and Nga Thai. Nga Tan commune has 1,648
households, of which 501 households are poor. Nga Thai commune has 1,240 households with 239
poor households.1 In Nga Tan commune, 282 poor households are involved in growing and preprocessing of sea grass, while 149 poor households produce handicrafts from sea grass. In Nga Thai
commune, these numbers are 159 and 80 respectively.
Figure 1: Map of Nga Son district
Source: Wikipedia, 2010
Sea grass growing and sea grass mat weaving had started already over 150 years ago. Up to now, sea
grass mat weaving is often still done by hand. People use sea grass thread, jute thread and “Go” – a
traditional device for the weaving of sea grass mats. Products made in Nga Son district include twisted
sea grass cord, sea grass mats, sea grass carpets and handicrafts from sea grass such as baskets,
slippers or plates. 35% of all households specialize in producing and trading sea grass mats and other
products made from sea grass. Annually, over two million mats are sold.
1
Poor households are those who have an average per capita income of less than 200,000 VND/month (according to Viet
Nam’s poverty line applied to the period 2006-2010). Data on number of poor households are provided by Chair people of the
two communes.
P a g e | 14
Finding an appropriate development strategy for the sea grass sector would provide great
opportunities for employment creation in rural areas, which would directly increase income and living
conditions for the rural poor. So, it is very important to answer questions like “Who are the
stakeholders, especially the poor, engaging in sea grass production at all stages?” and “What are the
difficulties/constraints that the poor stakeholders face?” Answering such questions can help to work
out interventions that are necessary to develop the sea grass production and sea grass processing
sector, in order to contribute to improving living standards of the poor in the region.
P a g e | 15
III.
VALUE CHAIN ANALYSIS
III.1
Description and Quantification of VC Actors
The sea grass value chain map (Figure 2) has been developed on the basis of interviews that were
undertaken with a number of stakeholders.
The entire process of making sea grass products starts with sea grass cultivation; sea grass is then
harvested, split and dried. After being classified, high quality sea grass is used to make mats, lower
quality sea grass is twisted and used to make various handicraft items.
Input suppliers
As sea grass has reproductive roots, seedlings are not needed annually, but in a cycle of about 5-7
years, when the sea grass becomes being degenerated. When the new cycle starts, growers have to
replant by plough the land to turn the root upside down. Roots from other sea grass, which are not yet
degenerated, will be used as seedlings for the new cycle. Thus, there are no specialized sea grass
seedling providers in the region. In other words, the sea grass growers are seedling providers for
themselves. However, in the long run, sea grass will be facing the threat of degeneration throughout
the region, which cannot be solved by the farmers themselves. Up to now, input suppliers are mostly
people supplying fertilizer and pesticides, both for sea grass and for other crops.
Sea grass growers
Sea grass growers are farm households. The sea grass growers in the two communes are specialized in
sea grass cultivation on marginal land and most of them have no land that is suitable for rice cultivation
or other crops. Being dependent on a mono-crop, they constantly run the risk of income and food
insecurity, because in case prices are unstable, their incomes are jeopardized and they have no
alternatives for the cultivation of other crops.
After harvesting, the sea grass is pre-processed immediately on the field by
splitting it into smaller size strands. These split strands are then dried for
storing. The sea grass can be sold by farmers in different forms, such as raw
material (sea grass strand), semi-processed sea grass (sea grass cord) and as
handicrafts (rug, carpet, basket, etc). How exactly the farmers process the
sea grass, mainly depends on the farmers’ major field of occupation in the
sector.
The sea grass strand is split from the fresh fiber. When dried, it becomes
slim and soft, retaining the fresh greenish grass color. But when it ages, it
mellows to a light brown color. This fiber is the best material for making
sleeping mats, bags and other household goods. The better quality sea
grass will be sold as strand, while the lower quality will be processed to sea
grass cord.
P a g e | 16
Figure 2: Sea grass value chain in Thanh Hoa province
Source: Study team, 2010
Note: Dark grey: Actors within target communes
The sea grass cord consists of multiple fibers being twisted together to form the cord. It looks like
coarse string or fine rope. As it is long and tough, it is used mostly in weaving carpets, rugs, baskets,
storage ware and especially in the packing industry. Sea grass cord can be produced in different
thickness for different requirements (e.g. 2.8-3.0 mm, 3.1-3.3 mm, 3.6-3.8 mm, 4.2-4.5 mm or 5.0-6.0
mm diameter). Sea grass strands and cords can be dyed in different colors for weaving purposes.
Growers sell the strand to mat producers or use it as raw material for household mat production. The
cord will be sold to collectors or to larger handicraft producers or traders, who will export the cord,
mainly depending on their household supplier network and offers received from buyers.
P a g e | 17
Sea grass collectors/processors
The main function of collectors is to act as intermediaries between raw material suppliers and material
users. Sea grass collectors are the people who collect dried, split sea grass from the planters to supply
for the sea grass material traders, sea grass material processors or even handicraft producers. Some
large scale collectors may have storage places and they often use sulfur to prevent molding for a
certain period of time.
However, in fact, they also often act as processors (to twist sea grass to become double twisted yarn).
Cords can be sold domestically to sea grass producers or exported. Most of the processed material is
currently exported to China.
The sea grass processors turn split strand into other semi-finished forms, like double or multiple
twisted yarns to make different designs of sea grass handicrafts. As mentioned above, farmers also do
some processing.
Large scale processors, after having bought cords from farmers, have
to dry the cords before keeping them in storage. The cords then can
be sold to domestic handicraft producers or will be exported.
Trading companies or large scale sea grass processors are used to
outsourcing the pre-processing activity to growers. Some companies
(e.g. Nga Son sea grass company, Huy Hoang Co. Ltd, etc.) provide
twisting machines to farm households for them to produce cords on
behalf of the company.
Sea grass handicraft/mat producers
Handicraft producers are people who make sea grass products from raw materials. There are two types
of producers: households and handicraft producing enterprises/companies.
Household producers often produce mats. At household level, most of the processing stages are done
by hand, with farmers using simple looms and twisting tools. Most of the craft persons involved in sea
grass weaving are women. Enterprises buy raw materials either directly from farmers/ processors or
through collectors/traders for their production. In the enterprises, mats are made by machines.
Farmers have the options to either work as employees or as sub-contractors for enterprises. If they are
sub-contractors, they are provided with raw material by an enterprise/company which they use to
produce handicrafts on behalf of the enterprise.
Sea grass mats are mostly sold domestically, while other sea grass handicrafts are made on order for
export. Products made by household producers (mostly mats) are often sold to retailers or wholesalers
in the commune or district and then to final consumers.
P a g e | 18
Mats that are made by large scale enterprises (e.g. Son Phu Company) are often sold in bulk to large
organizations like the army, prisons, hospitals, schools. Handicrafts are almost exclusively exported. In
2006, Viet Trang Company was the first company in Nga Son, which
was contracted to export sea grass products to Japan directly (see
box 1).
However, currently no companies in Nga Son export sea grass
handicrafts directly, except Hoang Long Company. Producers
usually sell through other Vietnamese enterprises working as
intermediaries between the handicraft producers and international
buyers (e.g. in 2008, Viet Trang Company had a contract to produce
cushions and carpets for Vinh Long Company, who then sold the
products to IKEA). Most handicrafts go to Europe, the USA, South
Korea, China and Japan.
Handicraft traders/exporters
The exporters/traders are companies and cooperatives which
operate under the trade and co-operative law of Viet Nam. They are mainly performing functions such
as (1) marketing (2) arranging and financing of the production (3) finishing and inspection of products
and (4) arranging shipment. In the past, the major customers of the local handicraft producers were
state-owned handicraft companies, but now their capacity has improved considerably and they often
supply traders in other provinces like Hanoi and Ho Chi Minh City. Many handicraft producers are still
suppliers of state-owned companies, but these relationships tend to be less and less important and
private handicraft trading companies increase their market share.
International handicraft traders
With the Vietnamese government’s policies
to encourage foreign companies to do
business in Viet Nam, there are a number of
foreign companies and representative offices
sourcing handicraft articles. They come from
many parts of the world and deal with a wide
range of handicrafts, e.g. Nitori (Japan), IKEA
(Sweden), Gibson (USA) etc. Usually, the
foreign companies source sea grass
handicrafts through private traders and stateowned craft exporters.
Box 1: Case of Viet Trang Company
Viet Trang Export Sedge Products Enterprise in Nga
Son district, Thanh Hoa province has signed many
contracts worth totaling US$ 500,000 to export their
sedge (a type of reed) products to Japan.
The products include sedge cushions, carpets and
sandals. The enterprise is currently producing highquality sedge mats, cushions, carpets and sandals for
the European and US markets. The enterprise has
invested in a modern assembly line to dry sedge and
cold storage to increase the quality of their products.
These foreign companies play an important
role in providing Vietnamese producers and
traders
with
internationally-recognized
designs, which is much improving their
Around 1,000 local farmers in Nga Son district are
taking part in producing sedge products.
Source: Vinanet online newspaper dated 9/03/2006
P a g e | 19
capacity in approaching and understanding international markets.
Most of the foreign companies are really traders, they just buy and sell the products to get some profit,
but some others want to co-invest with Vietnamese traders and state-owned exporters for production.
III.2
Economic Analysis of the Value Chain
An economic analysis of the two typical types of final products made in Nga Son district, i.e. mats and
handicrafts, will be described in this section. While mats are mostly for domestic consumption,
handicrafts are mainly for export purpose. The distribution of benefit along the value chain is also
examined.
The price of products varies not only by the quantity of material used but also by different costs of
craftsmanship, and especially the quality of raw material (for example, the prevailing prices for dried
sea grass vary from VND 5,500/kg to VND 10,000/kg due to different quality, length, color, etc. of the
sea grass).
Usually five types of actors are involved in the process of sea grass mat production: (1) growers who
plant, harvest, split and dry sea grass, so they take the two steps in our general value chain map, (2)
sea grass collectors who collect dried split sea grass, (3) household producers or enterprises who
weave the mat and (4) wholesalers, (5) retailers engaging in domestic market. The actual share of each
actor is shown in Figure 3.
The most popular type of mat in Nga Son is sold at a price of VND 120,000 -180,000/piece. However,
mat prices are ranging from VND 55,000/piece (mats are thin and made from normal quality material)
to VND 250,000/piece or even higher (which is thick, shiny and smooth looking as it is made from high
quality material). In order to ensure comparison of the various mat types, the economic analysis of mat
production in Nga Son will estimate both the lowest and the highest mat prices, as shown in Figure 3
and Figure 4. The low quality mats are made from cheap material (about VND 5,500/kg) and require
only 3 kg of dried sea grass. The high quality mats are made from high quality and expensive material
(about VND 10,000/kg) and require 6 kg of dried sea grass per piece.
According to the estimate made in Figure 3, the added value generated by each actor involved at the
respective stage of the value chain is explained as following:



One low quality mat is sold at retail level for VND 55,000/piece. Total value addition at this
level is VND 5,787 (after deduction of the value of intermediate goods and other
inputs/operational services);
The wholesaler supplies a low quality mat for VND 47,000 and get a high value addition of
more than VND 10,000;
The household producer gets VND 34,700/low quality mat. His costs for buying the raw
material per mat are VND 25,500. In addition he has to pay for other inputs VND 4,200. Total
value addition at this level is VND 5,000 per low quality mat;
P a g e | 20


The sea grass collector sells 3 kg of low quality sea grass at an average of VND 25,500, which he
had bought from the grower for VND 21,000;
Total value addition at grower level is VND 11,200, which is 53% of total revenue of 3kg of low
quality sea grass.
Figure 3: Value addition of producing a mat of a price of VND 55,000/piece (3 kg dried sea grass per mat)
Source: Own compilation by the authors
Figure 4 shows that high quality mats can be sold for VND 250,000/mat. Retailers can get a value
addition of VND 17,500/mat (3 times higher than they get in selling low quality mats) after they have
purchased mats from wholesalers at VND 220,000/mat. Wholesalers benefit from a value added of
VND 9,000/mat, which is the same as what they get by selling low quality mats. Household producers
benefit from high value addition of VND 125,000, which is a share of more than 65% of the total value
addition in the chain.
The sea grass collector sells 6 kg of high quality sea grass at an average of VND 69,000, which he has
bought from the grower for VND 60,000. Total value addition at grower level is VND 40,500, which is 4
times higher than what they gain from low quality sea grass raw material.
P a g e | 21
Figure 4: Value addition of production of a mat of a price of VND 250,000/piece (6 kg of dried sea grass per mat)
Producing high quality sea grass can benefit farmers twice as much as low quality products would.
However, due to many reasons (see details in the constraint analysis), the share of high quality
products will be decreasing gradually within the next few years. Sea grass growers will be the ones to
suffer most if prices decrease. As highlighted in the above calculation, farmers have mainly benefited
from the high prices that prevailed in 2010, which is 3 times higher than the prices in the years 2004 –
2005.
The value chain for sea grass hand bags involves five actors: (1) sea grass growers, (2) material
processors who twist the sea grass; (3) collectors who collect dried twisted sea grass, (4) household
handbag producers, and (5) handbag exporters (Figure 5).
Hand bags are made from yarn, which was twisted from lower quality and cheaper price sea grass. This
is one of the reasons why the share of sea grass growers in this value chain is much smaller than that in
the mat production, both in terms of share (only 2.1%) and absolute value of benefit (VND 821/bag or
VND 2,460/kg). Most of the value added goes to the hand bag producers (VND 15,000 or 38.4%) and
exporters (VND 22,300 or 57.2%). Sea grass collectors and sea grass processors have a relatively minor
share in the value chain, with a value of VND 360 and VND 558 per bag respectively.
P a g e | 22
However, it should be noted that hand bag producers are also sea grass grower households, who have
subcontracting arrangements with enterprises/companies. In this case, farmers can earn more benefits
from sea grass handicraft manufacturing as a non-farm income source.
Figure 5: Value addition of producing a sea grass handbag for export to France (0.3 kg of dried sea grass per bag)
III.3
Constraints Analysis
Input supply constraints
Sea grass is a type of plant, which can re-grow after harvest, but needs to be replanted every 5 years.
Sea grass in Nga Son is one of the best qualities in Viet Nam. However, to obtain a good quality sea
grass strand, the sea grass plantation needs certain conditions and treatment such as water level,
water with proper sea water content, pest control and fertilizer application etc.
Recently, problems incurred through the intrusion of saltwater during the dry season have threatened
the development of sea grass plantation. After a long time of re-planting from the same root, the
P a g e | 23
alluvium caused the sea grass fields being heightened gradually, which lowered the natural water level
in the fields and, therefore, negatively affected the productivity of sea grass production. If, in these
cases, the irrigation system works well, it can compensate for the lacking water resources. But if
irrigation functions poorly, watering of sea grass becomes more difficult and costly.
Technically feasible options to overcome these constraints are an improvement of irrigation systems or
lowering of the land level. However, these two options require huge investments, which are estimated
to be at least VND 100 million/ha for the initial change of land level. Further on, the irrigation system
requires reinvestment for maintenance every 1-2 years because the channel edge may collapse. Unless
the irrigation and land problems are solved, it is difficult to improve the productivity of sea grass
cultivation in many areas of Nga Son district.
Degeneration caused by continuous re-planting using own planting material is another issue, which
affects productivity and sea grass quality.
Production constraints
According to indications received from some major buyers of sea grass material, sea grass can be
classified by length. It is often divided into 7 sizes (grade 1: 1.75 m; grade 2: 1.65 m; grade 3:1.55 m;
grade 4: 1.45 m; grade 5: 1.35 m; grade 6: 1.15 – 1 m and grade 7: 1- 0.60 m) and the quality of sea
grass stem is graded by three levels A, B and C regarding the diameter of stem, color, even split,
number of moles, etc. For any grades, the prerequisite conditions of sea grass specifications are: Welldried, fresh, at least 80% of the sea grass strand in a bunch has the same length.
In order to reach a larger amount of the highly-graded sea grass, all activities along the chain from
growing, harvesting, via processing, to drying etc. need to be conducted in an appropriate way that
often requires labor intensive methods. After cutting, the sea grass needs to be processed as soon as
possible. Otherwise, it will turn to brown color, which cannot be used for handicraft production. For
example, the quality is better, if sea grass is harvested in the afternoon and then split the next
morning. Or the technique of natural drying contributes to retaining the fresh color and plasticity of
sea grass, which may require a 4-5 days intensive and careful treatment by farmers.
However, after a period of dealing with low quality sea grass demand from the Chinese market (highest
demand for multiple twisted yarns/cords), the incentives for farmers to produce high quality sea grass
are gradually lowering and the growers, collectors/traders feel reluctant to work with high quality sea
grass now.
In other provinces (e.g. Ninh Binh), when the price of sea grass went down 2-3 years ago, sea grass
growers tended to replace sea grass fields by aquaculture (e.g. raising shrimp/prone and crab). This
trend of change helped to increase farm income for some time, but they were soon faced again with
market difficulties such as price fluctuations, diseases and sanitary and phytosanitary issues. No indepth study has for far been conducted to analyze the differences in competitiveness between sea
grass production and aquaculture, so it is difficult for farmers to take decisions on the selection of
farming activities.
P a g e | 24
Processing is done with very simple tools instead of using splitting machines.
Black root disease currently is another problem that sea grass growers are facing. Insects, which cause
black spots on the stem cannot destroy the plant, but have severe effects on the quality of strands.
The lack of agricultural extension service officers
specialized in sea grass plantation is another problem in
the area, which directly affects productivity and quality
of sea grass production. Many growers learn farming
practices and pre-processing techniques through passing
on skills from one farmer to another and by training-onthe-job.
Box 2: Interview in Nga Son sea grass
Association
The quality of sea grass in Kim Son, Ninh
Binh is often lower than that in Nga Son.
Whereas a big quantity of Ninh Binh sea
grass is transported to Nga Son to be sold
to Chinese customers, at the same time,
Handicraft producers are facing constraints in storage of
high quality sea grass from Nga Son is
harvested materials that are to be used for handicraft
supplied to handicraft producers in Kim
production. A long supply chain with many small scale
Son for further processing to make high
growers and collectors without proper preservation
quality products for export.
activities results in a low quality and perishable products.
This constraint is causing huge losses, as the price gap
between materials of good and poor quality can roughly be estimated at 4,000 - 6,000 VND/kg.
Household producers do not seem to have any constraints in mat production, as they normally use
their own material. However, enterprises/companies face difficulties to source adequate raw materials
for regular production. Only during the sea grass harvesting season (6 months/year), material supply is
sufficient for the large companies. The key constraint of those companies is the lack of capital to keep
stock of raw material during off season. Also, they lack investment in upgrading their machinery for
large scale production of mats. Handicraft enterprises/companies also face the lack of skillful workers
and designers. This is dictated through the fact that they have few designs and rely on buyers’ samples.
Nga Son is famous for its raw material, and the highest quality mats in Viet Nam are from Kim Son,
Ninh Binh. Nga Son’s high quality sea grass strands are exported to Kim Son to produce high quality
and high value mats.
Market access constraints
China is by far the predominating market for sea grass from Nga Son and the producers in Nga Son
depend highly on demand fluctuations from the side of the Chinese buyers. These demand
fluctuations, in turn, depend highly on general world market trends and were recently heavily affected
by the general slowdown of international demand due to the world financial crisis.
Though Nga Son is a famous location of sea grass, till now, a geographical indication (GI) of Nga Son has
not yet been established. It is also difficult to build up a “brand name” for Nga Son sea grass and for
handicraft products due to the inconsistence of product quality produced by both farmers and
handicraft producers.
P a g e | 25
The main output of Nga Son is raw material, which has low value added and bears a high risk at all
stages of the supply chain. Handicraft production using sea grass material is underdeveloped in Nga
Son, which causes a big loss of Nga Son in utilizing their natural resources.
The most difficult issue of sea grass handicraft production in Nga Son is access to foreign markets with
high value addition. Very few enterprises in Nga Son now have the capacity to export directly to foreign
countries. Most of them have to export through foreign representatives located in Viet Nam. Lack of
qualified staff with professional knowledge on international business has been mentioned by most of
the companies as a reason for this constraint. International product requirements are also not yet well
known by the companies and most of the enterprises are not able to meet international standards to
sell directly to international buyers.
Most of the traders in Nga Son are deficient in marketing skills, not having appropriate strategies for
product development, pricing, market access and promotion.
The producers and traders in Nga Son also lack information on how to access markets, and they do not
have access to business-related information. Even if there are some sources of information available
(VIETRADE - Viet Nam, CBI - The Netherlands, JETRO - Japan, EBIC –EU etc.), the local traders of sea
grass in Ninh Binh often find it difficult to use them. They do not understand trade practices and legal
requirements nor do they know about design trends on foreign markets. This lack of information and
knowledge increases their reluctance to approach foreign markets directly. This is compounded by the
fact that they also lack capital to invest in marketing.
There are some kinds of natural materials that can be used to replace sea grass or, at least, to produce
similar products. Many of them are available in Viet Nam, such as bamboo, rattan, fern, palm, jute,
water-hyacinth, abaca (banana fiber), pandan or rice straw and forest creeper. Some of them can
compete with sea grass because of their lower prices and more consistent quality and productivity. If
the sea grass sector cannot be upgraded to more efficient production and quality consistency, it may
lose its competitiveness.
Technology and product development constraints
The technology used by the farmers to preserve raw material and finished products poses additional
constraints on the sea grass sector of Nga Son district. Being constantly exposed to high humidity, sea
grass and the products made from sea grass can easily mold. Therefore, raw material and products
need to be kept under cool conditions. Presently, only one enterprise in the district has a small cooling
warehouse that was established within a pilot project conducted by the Department of Commerce and
Industry in the district.
Another constraint lies in the fact that producing firms in Nga Son do not have access to professional
designers and in addition have difficulties to obtain the required qualities within their outsourcing
systems. Since a large part of handicraft products in Nga Son are produced at farm household level, it is
very difficult and expensive for the producing companies to change to new designs. It is recorded that
P a g e | 26
some buyers have requested their supplier firms to make products with new designs, but that the local
companies are not able to provide them, since they do not have the time to train all their producers at
farm level and, in addition, face the risk to get a high proportion of bad quality products.
In order for producers to diversify their product range, they need to train the producers within their
outsourcing structures on design of handicraft products. As mentioned by Viet Trang company, a
customer from Russia requested the company to show new designs for a new contract, but the
company was not able to provide new designs. Moreover, according to leading enterprises in the
region, they also need new machinery (sewing machines) for better finishing of final products. Carpets
are potential products, but handicraft companies are still reluctant to invest both in term of machinery
and technical workers to develop this product.
Handicraft producers also lack basic knowledge on material requirements and information on the use
of the products, which would help them to control the production system better. This does not only
concern producers, but also the collectors and even traders.
Organization and management constraints
Many managers of enterprises in Nga Son district lack management skills, despite their experience in
the sea grass trade. As a matter of fact, almost none of the small and medium scale handicraft
producers have a clear development strategy in place. They simply produce according to orders and
samples received from buyers.
Services constraints
For sea grass plantation, extension services play an important role. But each commune has only one
extension service officer who, in addition usually lacks updated information and expertise. All
communes in the district need more and more qualified extension officers.
Existing sea grass associations have not been active enough and thus unable to provide timely and
efficient assistance to their members.
Financial constraints
Lack of capital is a problem mentioned by every stakeholder in the value chain. Farmers are usually
short of funds when it comes to improving their land plots for plantation. Companies are always short
of capital, especially if they have to handle large orders. They also need capital to finance material for
storage and off-season production and to invest in new machinery. The traders often mobilize capital
from many sources such as advance payments from buyers, loans from banks or borrowing from
informal sources. Banks are important sources of finance, but the banks usually take their time in
granting loans (7 to 10 days) and on top of that require collateral. Therefore, in many cases, companies
have to get the loan from informal sources at higher interest rates, which then will increase the cost of
their production
P a g e | 27
Figure 6: Constraints at micro level
III.4
Socio-economic Parameters (Gender, Work and Labour Standards)
Women account for about 95% of the total labor force in the sea grass industry and are involved in
most of the activities along the value chain (e.g. in plantation, harvesting, processing and collecting raw
materials, weaving and selling final products). Men only participate in activities that need great
physical strength, such as harvesting, dyeing and transportation. Besides working as sea grass weavers,
the crafts women can be good trainers for young workers in the industry.
Women can produce handicrafts at home or on the premises of the manufacturing companies. They
have only mufflers to protect them from the dust created in producing and weaving. Most of them
have neither health nor social insurance.
The reasons why poor people in Nga Son district remain poor are manifold: First, their main crop is sea
grass, which is vulnerable to weather changes. Second, they are not trained sufficiently to produce
handicraft products. They are just able to do simple jobs (e.g. harvesting, splitting or twisting), which
they prefer because of quick earnings. Third, they hesitate to participate in handicraft training courses,
as they are afraid of the opportunity costs for not being able to generate income while participating in
the courses.
P a g e | 28
III.5
Environmental Concerns
Though sea grass enterprises in Nga Son district are using more and more dyeing substances in making
their handicraft products, they are not aware of the necessity to have environmentally friendly dyeing
techniques, especially regarding the treatment of waste water after the dyeing process. Moreover, the
use of fertilizer and pest control are other threats especially for intensive farming systems.
III.6
Meso Level Support Institutions and other Projects
There was no project in the sea grass VC in Thanh Hoa province before this project was formed. There
exists a Sea Grass Association in Thanh Hoa province and almost every sea grass enterprise is a
member. However, they all claim that the association has not been able to provide them with efficient
services.
Leaders of Nga Tan and Nga Thai communes also mentioned that the Plant Protection Research
Institute had studied sea grass pesticides (brown plant hopper (Nilaparvata lugens) and other pest)
during the last 3 years. However, still no solution has so far been found for the pest problem in the
communes.
Sea grass growers in Nga Thai commune can convert their land to use other crops such as rice if
necessary. In 2007-2008, when sea grass prices went down, Nga Thai leaders encouraged sea grass
growers to replace sea grass by rice to ensure food security in the area. Support with fertilizers had
been provided to farmers for this replacement. However, sea grass growers in Nga Tan commune
cannot convert their land to use other crops, since the land is in a saline water area. In the year of 2007
– 2008, when prices for sea grass went down, leaders of the Commune People Committee also
supported sea grass growers in order for them to have enough food.
P a g e | 29
Figure 7: Critical Points at Meso level Support Institutions
P a g e | 30
IV.
VALUE CHAIN UPGRADING STRATEGY
IV.1
Market Opportunities and Competitive Advantage
Sea grass of Nga Son is estimated to be one of the best sea grass raw material in Viet Nam (see Table
6). However, sea grass of Nga Son is sold mostly as raw material (strands and twisted yarns, cords) and
the potential to produce higher value handicrafts for both the local and international market is hardly
exploited.
Mats are the main final sea grass product being fabricated in Nga Son. But, currently, the production is
nearly exclusively done for the national market. And it concerns particularly the lower market
segments, offering a very basic quality and cheap prices. Companies also used to export the simple
qualities to the former Soviet States, but complain that demand on these markets has collapsed. The
largest client left on the national market is the Vietnamese army.
The southern provinces are the most competitive sea grass articles producers, due to their large
cultivation areas and a well-developed handicraft sector structure. The sea grass itself is in general
cheaper in Southern Viet Nam and sea grass is only sourced from Northern Viet Nam at times of high
peak seasonal demand. A discussion with one of the largest producers of sea grass articles in Southern
Viet Nam evidenced that the natural resources and the enterprise structure to be found in Southern
Viet Nam are sufficient, and that there is little interest from stakeholders in intensifying the
cooperation on sea grass products with Northern provinces.
Table 6: Quality of sea grass in different locations
Place
Kim Son
Nga Son
Quang Xuong
Sa Dec
(Ninh Binh)
(Thanh Hoa)
(Thanh Hoa)
(Dong Thap)
Root’s colour
Black
White
White
White
Stem’s diameter
Even
Even
Uneven
Even
Plasticity
Good
Good
Good
Not good
Source: Ngoc, 2005
Over the last years, many developed countries have demonstrated their interest in eco-friendly and
energy saving production. Many consumers have changed their habits towards preferring natural
“green” products.
As a result of the recovering world economy, the demand for sea grass is rising again, which should
offer as well again better market opportunities for sea grass farmers, particularly with regard to reincreasing sea grass raw material exports to China.
In order to develop more stable market relations, there is a potential to promote direct market
linkages between Vietnamese exporters and Chinese handicraft manufactures, avoiding intermediary
P a g e | 31
traders in China. Sea grass companies in Nga Son may as well be able to supply Chinese companies
with semi-finished sea grass articles.
If value addition and economic development are to be increased further on, it will be necessary to
address additional market segments, taking into consideration changing customer demand for more
sophisticated products. Main market opportunities for final sea grass articles can be characterized as
follows:




Nga Son has a national reputation, a “name” for sea grass mats, on which it can build to supply
higher value products to the national market;
Higher value, design-oriented mats can be exported as well to international markets in Europe,
Asia and America. For instance, well-designed Cambodian sedge mats of a size of 1.25 m x 2 m
sell for an fob price of about 15 $;
Additional products, such as foldable mats, can serve as picnic or beach mats. Some companies
in Nga Son are already experimenting with these;
Solid sea grass rugs (woven sea grass cord instead of simple sea grass strands as done for mats)
in different grey shades (without using dyes) are sold by IKEA and other companies. Some
examples of such sea grass carpets, and how they fit into European “green” lifestyle interior
decoration trends, can be found at www.brigitte.de/wohnen/wohnen/einrichten-leder-holz555774/. Similar 6 ft - 9 ft rugs can also be found on the American market, where they sell at a
retail price of about 100 $ per rug.
Although sea grass mats and carpets are still sold on niche markets in Europe, being a “light”,
fashionable kind of carpet, they meet with growing interest of importers, provided quality
requirements are met. Sea grass mats fit particularly well with Asian and Southern European
“Mediterranean” interior decoration styles. Market opportunities are provided through changing taste
and growing demand of both Asian middle-income families and “green” European/American
customers.
At present, sea grass carpets from Nga Son are far from being competitive on these markets. In order
for the Vietnamese producers to seize these opportunities, the sea grass mat production needs to be
upgraded in Nga Son in terms of design (patterns, colors, collections), quality (firmness, durability,
finishing), production (AZO-free dyes) and export logistics (packaging, export documentation, customer
communication). If this is achieved, and if producer groups organize themselves well, competitive
products can be produced at enterprise level as well as at household level.
There is also a particular potential for the development of markets for door mats made from twisted
rope. The producers in Nga Son are very skillful in weaving door mats. Russia and neighboring countries
were a large market for such products in the past.
IV.2
SWOT Analysis
The following table summarizes strengths, weaknesses, threats and opportunities (SWOT) that were
identified for the sea grass value chain in Nga Son, Thanh Hoa.
P a g e | 32
Table 7: SWOT analysis
Strengths
Weaknesses
 Good species of sea grass, high quality
 Sea grass is degenerating due to long time of re-
compared to sea grass of other regions all over
the country
 Well-known quality of Nga Son sea grass not
only in Viet Nam but also abroad
 Long tradition of cultivating sea grass and
making sea grass products, especially mats.
 Sea grass has received attention from local
authorities as it is one of the two main sources
of income and job creation for people in the
region. Household labor can work as growers
and mat producers.
 Sufficient labor force with reasonable labor
cost
cultivation from the root
 Degrading irrigation system
 Sea grass cultivation area is reduced as a result of
year-by-year increasing alluvium and salt water
intrusion
 Difficulties in pest control
 Farmers lack capital to invest in intensive farming
systems
 Handicraft producers lack professional handicraft
designers
 Handicraft producers are not very skillful at
handicraft making
 Sea grass traders mainly trade raw material with low
value and high market risk
 Lack of business management skills
Opportunities
Threats
 International market demand is increasing
 Stronger competition from companies in other
again
 Potential for direct market linkages with
Chinese handicraft producers
 Demand for higher value, well-designed
fashionable sea grass mats and carpets
 Potential market demand for novel products
(e.g. foldable mats, pic-nic mats)
provinces (e.g. Ninh Binh), especially from southern
provinces in accessing international markets
 High dependence on the Chinese market
 Price fluctuations reduce incentives for growers to
cultivate sea grass
 Climate changes with severe drought will jeopardize
maintaining of existing cultivation area
 Improvement in government policies has
created better business environment for
enterprises to trade sea grass products
domestically and internationally
IV.3
VISION
An appropriate vision for upgrading the value chain for sea grass value chain in Nga Son Thanh Hoa can
be proposed as follows:
“The productivity and quality of sea grass production is improved and sea grass
processing companies have diversified their product range and markets, which then
creates more non-farm jobs for rural labor force in the area.”
P a g e | 33
Figure 8 shows the main constraints with regard to achieving the vision and how these can be
addressed by different solutions.
Figure 8: Vision for the sea grass value chain in Nga Son
Higher benefits can be obtained by the growers if the productivity of sea grass cultivation can be
enhanced. Local authorities in Nga Thai and Nga Tan expect that it is possible to increase productivity
by 50%, if farmers apply proper cultivation practices. Higher productivity and better quality will be
factors that make Nga Son sea grass more competitive in the domestic raw material market. It also
ensures that sea grass production can continue to exist even under the pressure of other competitive
sectors like aquaculture/shrimp production.
In the next 1-2 years, the export of raw material will retain its importance for the sea grass value chain
in Nga Son. If pre-processing techniques (splitting and drying sea grass after harvest) are improved, so
will be the quality of sea grass strands and yarn, which creates more income for the growers and
processors. By bringing about this improvement, producers of sea grass articles will upgrade their
production to meet high-end market demand.
In addition, the promotion of a “brand name” of Nga Son sea grass can stimulate domestic
consumption of more fashionable sea grass mats. On the export market, results can be achieved if
producers in the sector manage to improve on their quality (more firmness, durability, AZO-free dyes
etc.), to have better export logistics (packaging, export documentation, customer communication) and
P a g e | 34
to offer more attractive designs. This would help Nga Son sea grass products approach high-end value
markets such as Eastern Europe, US America, Japan etc.
By having improved business management capacities and improved access to market information,
producers of sea grass articles in Nga Son will be able to diversify their export markets. Given the
economic development in the past few years, Asian and South East Asian economies will be potential
markets for Vietnamese sea grass products. Both the changing taste and growing demand of Asian
middle-income families and “green” European/American customers provide sea grass producers with
market opportunities.
IV.4
SUGGESTED FACILITATION ACTIVITIES
The following upgrading solutions and facilitation activities are recommended.
Table 8: Upgrading Solutions
Upgrading solution 1:
Related facilitation activities:
Improve productivity and quality of sea grass

cultivation
Develop a training manual for intensive sea grass
cultivation (soil preparation, plantation, caring, pest
and disease control, etc.;

Train local trainers and conduct pilot trainings with
farmers;

Support for the development of demonstration
areas (5 ha), if possible in form of a PPP with a local
company;

Conduct a study on the environmental impact of sea
grass plantation in Nag Son;

Support improvement of planting material and sea
grass varieties.
Improve the quality of sea grass raw material after

harvesting
Train farmers to adopt pre-processing techniques
applied to sea grass right after harvesting;

Support to develop storage systems, which create
benefits for both the service provider and other
stakeholders along the chain;

Support the formation of a production group to
focus on high quality mats and door mats for both
the local and international market;

Introduce new techniques of sustainable and
durable dyeing;

Introduce techniques which allow to keep the
natural green color of sea grass;

Study eco-friendly preservation techniques of sea
grass products to be free from mold for a certain
P a g e | 35
period of time (6 months) and promote such
techniques in the value chain. The Institute for
Agriculture Machinery and Post Harvest Technology
is one of the possible research institutes that can
conduct such study.
Diversify sea grass handicraft products to meet

potential high-end market demands
Establish direct business relationships with Chinese
handicraft producers, who source sea grass raw
material through intermediary traders in China;

Organize a business matchmaking event with
potential Chinese buyers;

Develop the production of semi-finished products
for Chinese handicraft producers;

Conduct an in-depth study about market demand
for sea grass handicrafts and alternative materials,
with particular focus on Russia/Eastern Europe;

Organize a study tour for company management
staff to enhance their market understanding;

Assess the feasibility to invest in the production of
high quality sea grass rugs with latex undersurface.

Support exporters to expand their sales network;

Train workers of to learn techniques to produce
high value products (e.g. carpets);

Training in trade promotion for company leaders or
their potential successors;

Support leaders of companies to participate in SYB
(Start Your Business) and IYB (Improve Your
Business) courses.
Improve capacity in product design

Invite foreign designers to develop new product
ranges for sea grass handicraft manufacturers;

Build capacity of in-house designers employed by
the companies;

Develop internship programmes with the Hanoi
Industrial Art College.
Address
environmental,
labour,
occupational

Investigate
and
build
capacity
to
address
safety and health issues in order to meet market
environmental concerns in the sea grass production
requirements.
process;
Investigate

and
build
capacity
to
improve
occupational safety, health and labour conditions
among sea grass workers, taking international buyer
requirements fully into account.
P a g e | 36
V.
RECOMMENDATIONS
As the present study suggests, the JP is coming at the right time, as market demand is increasing again
and local authorities are willing to support the development of the sea grass cultivation and handicraft
industry. Currently there is no strategic development plan available, which may include prioritized
activities and a clear roadmap for sea grass cultivation and handicraft sector development at district or
provincial level. The development plan worked out in the past was mainly supply-oriented and is
considered as an administrative burden by the local authorities rather than a real strategy or
framework for the sector’s development. It was also found that the previous development plan lacked
the participation of important stakeholders (e.g. the private sector) in the establishment process. As a
consequence, key private stakeholders felt the plan was irrelevant as they were excluded in the
process.
Thus, it would be helpful, if the present value chain study can contribute to stimulating new, concerted
efforts to promote the sea grass value chain with the participation of all stakeholders, especially from
the private sector and researchers.
Up-scaling the production can help growers to increase productivity and income. A diversification of
products and markets is necessary in order to reduce the dependence on the Chinese raw material
market and in order to be able to benefit from opportunities on the domestic and international
market. Trainings in business skills and design development can increase international
competitiveness.
The present value chain study should also help to strengthen again the Nga Son Sea grass Association,
which should play a key role in promoting and coordinating all activities as a main partner for the local
authorities and the JP. The commitment of the major stakeholders such as large scale companies and
large scale collectors must be sought to discuss joint efforts to develop the sea grass value chain. It is
suggested that the JP meets regularly with the association and its advisory board for further
coordination of promotion activities.
P a g e | 37
VIII.
APPENDICES
Appendix 1:
List of interviewees in Nga Son district
No
Name
Function
Location
1.
Mr. Tuyen
Nga Tan commune chairman
Nga Tan
2
Ms. Thao
Sea grass collector
Nga Tan
Ms. Tuyet
Sea grass grower
Nga Tan
4
Mr. Phu
Sea grass mat maker -Son Phu Co
Nga Thai
5
Mr. Vu Thanh Ly
Nga Thai commune chairman
Nga Thai
6
Ms. Yen
7
Mr. Duong Anh Tuan
8
Ms. Tran Thi Viet
9
Mr. Tho
DOIT Nga Son
Nga Son town
11
Mr. Hai
DOIT Nga Son
Nga Son town
3
Nga Thai sea grass worker in Son Phu
company
Sea grass handicraft maker – Hoang
Long Co.
Sea grass mat maker – Viet Trang
enterprise
Nga Thai
Nga Son town
Nga Son town
P a g e | 38
Appendix 2:
Project Area Profile (2009)
The socio-economic situation of Thanh Hoa province
Total area (ha)
Population
Kinh
Others
Ethnic minorities rate (%)
Total GDP (million dong)
1,112,034
3680418
3,071,837
608,581
17%
22,141,000
Agriculture – Forestry – Aquaculture (million dong)
6,715,000
Industry (million dong)
8,090,000
Services (million dong)
7,336,000
GDP per capital (million dong)
Poverty rate (%)
6.02
30.80%
Source: GSO, 2009
P a g e | 39
Appendix 3:
Programme Coverage Area
P a g e | 40

Study of the Sea Grass Value Chain

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