Report Feasibility study organic bitter tea Cao Bang - Helvetas

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Feasibility Study Organic Bitter Tea in Cao Bang: 2007 even satisfy yet the domestic market) but also because of a lack of knowledge of these markets. 2.3. Current status of organic agriculture in Vietnam Although it can be said that, as in all other countries in the world, all farmers were growing crops organically hundred years ago, organic farming according to the international understanding is quite new to Vietnam. Around 10 years ago some foreign companies started working with local companies and farmers to grow crops organically for export. After many years with only a few hundred hectares under organic management, there is presently an estimated 6,475 hectares of organic land (Willer & Yussefi, 2006). However, according to additional information collected by the consultant an additional 6000 - 7000 ha has not been included in the report. The main organic products are herbs such as cinnamon, star anise and ginger, fruits, tea, cashew, shrimps and basa fish. These products are certified according to the standards of the importing countries, such as Europe and the USA, and foreign certification agencies carry out the inspection and certification work. The local market has not been developed at all, although one company tried to introduce organic vegetables to consumers in Hanoi some years ago. Few international and local organizations are supporting organic agriculture (main exceptions ADDA and GTZ). The Government also has no specific policies to support the development of organic agriculture in the country and as a result there is still little attention for organic farming from research and the extension service. However, in December 2007 the Ministry of Agriculture and Rural Development (MARD) issued national basic standards for organic production, which can now be used as a reference for producers, processors and others interested in organic products for the local market. MARD is planning to set up a certification system for the local market but a timeframe for this activity has not been developed yet. 3. WHY ORGANIC BITTER TEA FROM CAO BANG 3.1. Assessment of the Bitter Tea Market In 2006, the Cao Bang bitter tea market chain was assessed using the Rapid Market Appraisal approach (RMA). The main objectives of the appraisal included: To analyse the actual state of the Cao Bang bitter tea market chain; To identify appropriate intervention actions in order to improve the Cao Bang bitter tea market chain; To elaborate the concrete plan for the intervention actions. The RMA estimated that Cao Bang bitter tea has a share of about 10% of the domestic market, with the majority of bitter tea coming from China. With regards to the national production, the Cao Bang Bitter Tea Company (BTC) is the largest producer, with an annual return of around 1 billion VND per year (on a total turnover of around 4 billion VND). There are, however, also many smaller processors, who use the name (Cao Bang) bitter tea while allegedly they source their tea from China. (The shape of the BTC's bitter tea is quite specific and very different from the shape of the Chinese bitter tea.) Market demand for bitter tea started to decline in 2004. As a result, the number of BTC outlets and distributors has declined across the country. Bud tea is still in high demand but the tea bags (using cut tea leaves and left-overs from the production of bud tea) are more - 3 -
Feasibility Study Organic Bitter Tea in Cao Bang: 2007 and more difficult to sell. At the time of the feasibility study the production of tea bags was already stopped completely. According to the RMA, bitter tea is mostly bought as a gift, with the highest demand in winter, during holidays, festivals and in particular the Tet holiday. A small group of people buys bitter tea for personal consumption, mainly because of its health properties. Some of the reasons for the low sales volume include the fact that consumers are not convinced about the health qualities of the bitter tea or even have a negative feeling about the tea (since it has been reported that bitter tea has a negative effect on fertility and reproductive health) 1 . For the BTC in particular, the price of their products is relatively high while the packaging is not so attractive. However, despite the apparent health benefits, many people are not very interested in bitter tea because the product is just too bitter and they would prefer drinking green tea or some other beverage. The RMA concluded that the following solutions should be prioritised in order to improve the Cao Bang bitter tea value chain: To mark the boundaries of growing materials according to cultural and ecological conditions and habits of each region; To determine the origin of the bitter tea tree's origin; To invest in and protect existing growing areas continuously; To (set up strategies and implement research to) diversify the product; To change some products into functional products; and To design the product and its packaging in accordance with the targeted clients and in a more professional manner. (Pham, 2006). 3.2. Feasibility study In parallel with the RMA, Helvetas had some discussions with the BTC on activities to improve the bitter tea production and marketing. One of the topics of the action plan identified by the RMA is to focus on product diversification. Since some foreign companies, mainly from Korea, have shown interest in organic bitter tea, Helvetas and the BTC agreed to carry out a feasibility study of organic bitter tea production in Cao Bang. Main objectives of the feasibility study: To review the existing bitter tea value chain (inputs, production, processing, marketing) by emphasising the most important topics in regard to the conversion to the organic farming system; To review the standards for organic products for some of the main markets (Japan, Korea, and EU) To make a cost benefit analysis to assess whether or not a conversion to the organic standard is profitable To analyse the changes or modification in the bitter tea value chain (inputs, production, processing, marketing) necessary to met the standards and propose approaches and strategies on how to do it 1 : A more recent study has, however, demonstrated that this in unfounded and there is no negative effect of bitter tea on fertility and reproductive health. (Bui and Bui, 2006) - 4 -
Page 1: Helvetas Vietnam Swiss Association
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Page 6 and 7: SUMMARY Feasibility Study Organic B
Page 8 and 9: 1. INTRODUCTION Feasibility Study O
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Page 32: ANNEX 1 - LIST OF PEOPLE INTERVIEWE

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