Yen Bai, Vietnam – Dao Thinh commune is in the lowland of Tran Yen district, Yen Bai province, Vietnam. Previously, farmers in the area grew cassava and sticky rice in the forest. In 1992, the farmers in Dao Thinh started to grow cinnamon trees, which takes 7-10 years before harvesting. People eventually realized the other value of growing cinnamon—its leaves can be used for distilling essential oils and its woods and rinds can be sold. It became their source of income. After a decade, the forest cover is 60% and people developed positive consciousness when it comes to forest management and investment in intensive farming and production forestry to develop the economy. Seven hundred fifty (750) households or 100% of farmers in Dao Thinh grew cinnamon trees from which they were able to get different kinds of products, but those products were mainly sold in the local market or depended on the Chinese market with a low and unstable price. Furthermore, farmers lack proper techniques to grow, cultivate, and process cinnamon.
Created in 2008 under the call of Vietnam Farmer Union (VNFU) to promote collective economy, the Cinnamon Cooperation Group (CCG) was established with 35 members including 8 female-headed households and managed 135 hectares of forest. Before VNFU-Forest and Farm Facility (FFF)’s intervention, CCG was not officially registered with the Commune People’s Committee as a collective. People sold the products individually and mostly to middlemen in the commune. The group also did not have an investment fund in machinery for processing, which resulted in limited power in negotiating prices with buyers. Most of the group leaders were not trained so they did not know how to organize and manage groups and they have no orientation on how to develop and operate forest and farm producer organizations (FFPOs) more efficiently. These groups have no access to preferential loans because they are unregistered. Realizing the important role of the collective groups in commune social-economic development, the Dao Thinh Commune People’s Committee has included development support for collective groups in the commune social-economic development work plan.
In 2014, FFF started its intervention in Vietnam. The VNFU, as the programme’s implementing agency, selected Yen Bai Province and the cinnamon grower collective group in Dao Thinh commune as one of the target beneficiaries. Leaders and members of the group were invited to several training courses on Market Analysis and Development (from phase 1 to phase 4), wood sawing techniques, facilitators skills, proposal writing skills and numerous study visits to successful forest-based business models in Northern and Central Vietnam. They also had a chance to participate in roundtable discussions at the commune, district and provincial levels to dialogue with local authorities, banks, and other stakeholders to express their requests for support.
The VNFU team had a discussion with group leaders and representatives of farmers. The activities taken by FFF project significantly helped to raise people’s awareness of the benefits of grouping, how to cooperate and how to start a real business together. By October 2015, 15 households out of 35 members decided to contribute their own money (ranged from 10 million VND to 50 million VND per household) to make up a total of 300 million VND (approximately US$ 15,000) of initial capital to buy, gather cinnamon bark, leaves and sell for companies in Hanoi City. With the support of FFF team, the group was able to conduct their own market research and started reaching out not only to local customers but also to big processing companies in Hanoi and other provinces such as Hagimex Company or Lam Son Hai Company and Vietnam Cinnamon and star anise processing and exporting company. After nine months, the cinnamon production and business have brought revenue of approximately 520 million VND (USD 25,500) and the income of group members increased by 3-7%. In addition to this, the benefit is also shared with people outside the group when their cinnamon products are bought by the group at a higher price than other middlemen.
Working with big customers made the group realize the importance of an organic certificate for their planted forest and the need for upgrading to a cooperative to have a legal entity and eligibility to issue an official tax invoice. As explained by the leader, being a cooperative will help them to meet the requirements of organic certified companies and also take full advantage of the government’s support in policies in promoting the collective economy. Therefore, with the support of FFF small grants and Yen Bai Department of Forestry, in 2016, the group is planning to extend its membership, submit an application to form a cooperative and ask all members to comply with organic criteria in forest planting and harvesting.
In achieving these good results, it helped to have a community leader that is very active, broad-minded, willing to take risks, happy to share the benefits to other people, and has a good financial foundation to turn all plans into real actions. Continuous trust-building is also necessary among members and leaders through transparent financial management, frequent communication, and raising awareness activities and regular monitoring. Appropriate support should come in time like what FFF is doing to catalyze the movement of an organization from an infant stage to a more mature stage so that it can start investing in processing rather than solely selling raw materials. Networking with other producer organizations and cooperation with the local authority and other stakeholders also helps increase the compositeness of the business and make use of supporting policies.
To further this initiative, the cinnamon group still needs organization management knowledge and skills to build up their group and develop the cooperative. In terms of production and business, they need support for capacity-building, especially in market research and market information, exchange visits and group experience in production, trade partners, product network, etc. The group needs more support such as training courses on accounting and financial management, advance cinnamon harvesting and processing techniques to produce high-quality products, organic cinnamon development, dialogues with banks and local government to approach favorable loans, more study visits to learn experience from successful models, link producer groups with processing companies and conduct further market research and strengthen their organizational capacity.
Local authorities can also help by providing forest producers the policy information related to credit, loans, land and forest certification, forest road investment. With support from local authorities, especially the district people committee, organic cinnamon can be promoted and expanded and get ore farmers involved. It will also help to have a network of service providers (local authority, relevant departments, farmers union) producers and sharing information mechanism of this network so that groups can have access to information frequently.
VNFU also recommends mobilization of resources to support the cinnamon group to build forest roads. From individual farmers, set up farmer groups, and then a cooperative. If this cinnamon group is successful, the district people committee may want to expand to other communes in the district. The province plan to scale up to other districts of the province. Furthermore, VNFU also recommends providing support to the development of sustainable forest management, the establishment of sustainable mechanisms for access of non-timber forest products to external markets and support to the involvement of women in these initiatives. #
About MTCP2
The Medium-Term Cooperation Program Phase 2 (MTCP2), a five-year capacity building program supported by the International Fund for Agricultural Development (IFAD), the Swiss Agency for Development and Cooperation (SDC), and the European Union (EU) , has been implemented in 22 countries across three sub-regions—Southeast Asia (through the ASEAN Farmer Organization Support Program-AFOSP-MTCP2), South Asia, and the Pacific—engaging 86 national federations of farmers organizations with 1,628 sub-national farmers organizations (FOs) with a total membership of around 43.5 million small-scale women, men and young farmers. The funding support (12 million USD) served as a catalytic fund that allowed FOs to enhance their capacity to engage in policy dialogues and to be effective channels of economic services to farmers. The program has contributed to the formation of strong national platform of FOs with improved capacity to engage in constructive policy processes and mobilize resources from mainstream agricultural development programs like extension services, credit, and pre and post-harvest facilities. The program also helped in re-structuring farmers’ associations into community-based social enterprises or as commodity-based cooperatives as well as consolidating FOs into agricultural cooperative federations/union to strengthen the role of small-scale farmers within an inclusive and sustainable value-chain. The program is being implemented by the consortium Asian Farmers’ Association for Sustainable Rural Development (AFA) and La Via Campesina (LVC).
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