The person who raised the level of Vietnamese agricultural products

Capital processing is not only a difficult problem for our country's agricultural sector, but also a desire and aspiration to improve the value of agricultural products and add value to agricultural products. The country's current fruit and vegetable output is about 31 million tons per year, but the processing rate is only about 12%-17%. Because they are not processed, many of our country's agricultural products, which are inherently of very good quality, have to be dumped, sold off, exported at cheap prices or thrown away because they cannot be stored for a long time. Deeply understanding that pain, there is a businessman who has been working hard for decades to find ways to deeply process agricultural products, increase value and bring many Vietnamese agricultural products into the most demanding markets in the world. , including products that account for up to 60% of the world market share.  

 “I am attached to agriculture like fate. Wherever I go, I see agricultural land and agricultural products and am very passionate and passionate. Up to now, it can be said that my whole life is associated with agriculture and devoted to agriculture" - Chairman of the Board of Directors of Dong Giao Export Food Joint Stock Company (DOVECO) Dinh Cao Khue opened the story with us. I'm like that.

And perhaps, thanks to that passion, that long-term and dedicated pursuit, DOVECO has become as strong as it is today. Owning more than 5.500 hectares of cultivated land and 13.000 hectares of land associated with production and consumption of products, DOVECO has become the largest enterprise producing, processing, and exporting vegetables and fruits along a closed value chain in the world. The country has vast fields of pineapple, passion fruit, lychee, banana, mango, dragon fruit, durian, sweet corn, soybeans, spinach, onions, chives,... stretching from the north into the vast Central Highlands. Currently, many DOVECO products have dominated the markets of Europe, America, Japan, South Korea, China....

Reporter: Sir, deep processing has long been a difficult field for Vietnam's agriculture industry, so what is the reason why you chose the "difficult path" right from the first days of starting your business? And what is the reason for you to choose Europe - one of the markets considered to have the highest requirements in the world - to develop your products?

Mr. Dinh Cao Khue: I surveyed the world food market quite early, 30-40 years ago to see what the market needed, and to learn about the market, I mainly went to fairs. World fairs are not about displaying and selling a few products, but are where business owners meet and discuss signed contracts and new products, thereby negotiating and signing. Sales contract right at the fair.

Those continuous trips made me realize that the world food and beverage market is very diverse and has great potential, especially Europe. The processed beverage market in Europe is as vibrant as the rice market in Asia. The same goes for the South American market. Europe and South America drinks are very important, even in difficult economic times, the beverage market in this region is still growing.

Thanks to contact with most of the fruit beverage business groups in the world, I see that Vietnamese drinks have a very strong position. For example, products made from passion fruit, durian..., Vietnam currently has the ability to dominate the market.

Prime Minister Pham Minh Chinh inspected the construction progress of DOVECO Son La factory in 2022.

Besides, Europe is also a market with very high quality requirements. This is a challenge and at the same time will be the motivation for the Company to do it right, do it well, and do it to the right standards right from the beginning. Specifically, when European partners come to evaluate the quality at DOVECO, they not only check production and products, but they also check toilets, workplaces, workers' accommodation, etc.

In addition, Europe also has conditions on labor use, environment, social responsibility... Most recently, there are regulations on anti-deforestation. Accordingly, products exported to Europe must not be related to cultivation or production on deforested land.

Therefore, businesses must have a diagram of the growing area, and when checking, European partners can go to the growing area to "see" the growing area, even to each growing household to check... I always consider the strictness of the growing area. That gap is a condition for DOVECO to develop sustainably.

Reporter: Could you tell us about DOVECO's current main export products and competitiveness in the world market?

Mr. Dinh Cao Khue: DOVECO's main product is passion fruit. This is DOVECO's strong product, grown mainly in the Central Highlands. Thanks to favorable natural conditions, planted at an altitude of 700-800m above sea level, passion fruit trees grow very well and give high yields. Currently, Vietnamese passion fruit accounts for 60% of the world passion fruit market share, and can adjust world passion fruit prices, while previously this role belonged to South American countries such as Peru and Ecuador. Vietnam has also surpassed South American countries in growing and exporting passion fruit.

In addition, DOVECO also has traditional products such as pure fresh pineapple and other fruit juices such as: fresh banana, fresh peach, passion fruit... Besides, there are canned products such as corn kernels, crushed sweet corn …; frozen products: pineapple, mango, lychee pulp, whole lychee... and other fresh fruits. Recently, DOVECO also purchased and exported durian to China. This is a highly competitive fruit with high export turnover and the ability to dominate the market.

Reporter: Sir, what does the construction of raw material areas mean for DOVECO's operations in particular and agricultural product processing enterprises in general?

Mr. Dinh Cao Khue: Raw material areas are the top factors that businesses pay attention to before building an agricultural product processing factory because only when there are enough raw materials can the factory operate stably, regularly, long-term and effectively. .

For example, in Bac Giang province, the main harvested agricultural products are lychees, however the lychees here only have enough capacity for the line to operate for about 2 months, other crops do not have enough volume to be processed. .

Similarly, in Son La province, there are only a few types of vegetables that have raw material areas that meet the factory's operating capacity, including mango trees. However, mango output in Son La only meets production for about 2 months. Therefore, to maintain regular operations, businesses are forced to find and plant new raw material areas.

Reporter: In your opinion, what is the solution to the raw material area problem?

Mr. Dinh Cao Khue: With practical production experience, to have a stable source of raw materials to meet production needs, each processing factory like DOVECO needs to have a raw material area with an area of ​​about 25.000-30.000 hectares.

However, in Vietnam, it is difficult for any enterprise to own such a large available agricultural area. One of the effective solutions to this problem is to have policies to create conditions for businesses to cooperate and link agricultural production with localities through different forms.

The first is to link production with new-style cooperatives along the value chain associated with processing and consumption. The cooperatives will produce according to the quality requirements of the affiliated enterprises. The second is to contact farms and forestry farms that grow coffee, pepper, rubber, and farms with ineffective crops so that businesses can rent land to intercrop short-term vegetables and fruits effectively. high economic value such as: passion fruit, banana, sweet corn...

Reporter: How do you evaluate the pilot project to build standard agricultural and forestry raw material areas for domestic consumption and export in the 2022-2025 period?

Mr. Dinh Cao Khue: This project aims to pilot the development of 5 standard agricultural and forestry product material areas for domestic consumption and export, which will overcome current limitations on raw materials and contribute to the implementation of sustainable linkages. between agricultural cooperatives and processing and consumption enterprises, meeting requirements for output, quality and reducing the cost of input materials for processing and consumption.

However, even though there is a raw material area, we should not build a processing factory in the style that every province does to avoid the phenomenon of buying and selling due to lack of raw materials. Currently, the construction of coffee processing factories in Son La also needs to be carefully considered from an economic perspective because Son La's coffee area is only about 20.000 hectares while in the Central Highlands, the coffee area is only about 500.000 hectares. up to XNUMX hectares of coffee but some processing factories are not yet operating at full capacity.

Reporter: As a typical enterprise that cooperates in production with farmers across regions, has DOVECO ever encountered a situation of "breaking the deal" in the association and what is the solution to this problem? Sir?

DOVECO Son La workers process pineapple products.

Mr. Dinh Cao Khue: DOVECO is currently affiliated with farmers through cooperatives. In the Central Highlands, we are affiliated with 20 cooperatives, providing raw materials according to our requirements. In Son La, too, cooperatives are the main source of raw materials for businesses. There are many cooperatives providing a large amount of raw materials for DOVECO. Specifically, Trung Hieu cooperative (Son La) provides about 700 tons of corn within 1-2 months; In particular, there are cooperatives in the Central Highlands that from the beginning of the year until now have provided us with 40 billion VND in raw materials. This is a very large number.

Regarding difficulties and limitations in linking with farmers, perhaps every business more or less faces them. As for the phenomenon of "breaking deals", the Company has encountered it before but now it almost does not exist. The reason is that DOVECO has a mechanism to build trust with farmers through ensuring benefits. Specifically, Trung Hieu Cooperative, last season they provided 700 tons of corn, 400 tons of soybeans and vegetables, and the Company paid promptly at a guaranteed price. When farmers are profitable, everything is very favorable and the deeper the connection, the more stable it will be.

In addition, an important thing when dealing with farmers is that in many cases businesses have to accept their losses to maintain their credibility. For example, right now in Lai Chau, the Company signed with households to grow passion fruit at a price of 12.000 VND/kg, but now the price has dropped to only 5.000-6000 VND/kg, so we still buy it at 12.000 VND/kg. as signed.

That way people can trust us and cooperate long-term and effectively. However, businesses also have long-term benefits there. That is when farmers believe, it will be a favorable condition to build and expand other raw material areas later.

Reporter: What is DOVECO's future development direction, sir?

Mr. Dinh Cao Khue: DOVECO continues to develop the food and beverage segment, promoting exports to European, Chinese and other markets.

In particular, the Company determined to promote investment in production and processing in the Central Highlands region. Because this is a large, fertile land with lots of development potential, especially for other fruits and vegetables. If we can take advantage of land potential, Vietnamese agriculture will have great competitiveness.

Specifically, in the Central Highlands, if we convert low-yield short-term crop growing areas to high-yield pineapples, passion fruits, bananas, etc., then I dare to affirm that Gia Lai province alone will have vegetable export turnover. The equivalent result for the whole country today is about 5 billion USD. Of course, it must be done methodically and have a close connection between farmers and businesses.

DOVECO's processed products are diverse in types.

Reporter: Through production and business practices, can you tell us what are the "bottlenecks" of Vietnam's agricultural product processing industry today?

Mr. Dinh Cao Khue: The most difficult point to develop the agricultural product processing industry today is that the raw material area is large enough to serve the capacity of the factories. An equally important issue is investment capital. The initial cost of an average agricultural product processing unit is at least VND 400 billion, with some factories even reaching up to VND 2.000 billion.

However, current interest rates in the agricultural sector are still high, on par with the industrial sector, so it is difficult for businesses to invest. Therefore, it is recommended that the Government and the State Bank research appropriate policies to prioritize enterprises investing in agricultural product processing on issues such as: loan period, capital repayment period and loan interest, loan interest rate.

Another limitation is the problem of finding and expanding markets. There cannot be a developed agricultural processing industry without a market. The best way for businesses to access the market today is to participate in international fairs.

However, after attending the fair many times, we see some shortcomings such as: It is very difficult for businesses to register to attend the fair, and information about the fairs is limited. At fairs, display booths are allocated to businesses with small areas, only 4,5-6,5m2 is not enough for businesses to display products and interact with partners; The average booth area means that businesses, whether large or small, are allocated the same area.

Therefore, to participate effectively in the fair, businesses need to have a booth with an area large enough to display their products; Enterprises with large production scale need to have a larger booth area than small-scale enterprises. In addition, the authorities consider creating conditions for businesses that want to expand their booth area at the fair to spend additional funds to rent the expanded booth area.

Reporter: For many years, agriculture has always been identified as the pillar that supports the economy. What is your view on this issue?

Mr. Dinh Cao Khue: I have been farming for many years and find that statement to be completely correct. If our country did not have agriculture, it would be very difficult. Specifically, in Europe, because it is completely dependent on industrial development, there are times when food is more difficult than ours, especially in times of economic, political, social or epidemic fluctuations. Diseases occur like the recent Covid-19 pandemic.

In Vietnam, the GDP of the entire agricultural sector is at 3-5%/year but the value of agriculture is extremely large. For example, if an agricultural enterprise exports 1 million USD, the agricultural products of the enterprise and farmers crystallize about 95% of Vietnamese people, but when exporting 1 million USD of industrial goods, the value crystallizes. of Vietnamese people is only 5-10% of labor.

This is the difference, so Vietnam's agricultural, forestry and fishery export turnover increases sharply each year, proving the great value of agriculture.

Reporter: Sincerely thank you!