| Food Chain - Number 22 - January 1998 |
Due to a lack of in-country processing, Vietnam even imports a number of processed coconut products from abroad.
In Ben Tre in the heart of the Mekong Delta, Vietnam, coconuts are cultivated on thousands of small household plantations covering 312,000 acres. Coconut production has yielded the highest income for the farming families of Ben Tre, each of whom typically owns less than one acre of land. In addition to their agricultural value, coconut trees provide a natural windbreak, so reducing damaging effects of typhoons. Along much of the coastline in the Mekong Delta, they also prevent erosion and sea encroachment of the land on which so many people depend for their livelihood.
Although Vietnam has the fifth largest number of coconut trees in the world, the potential of the crop to farmers, and to the country as a whole through exports, is declining. Vietnam's coconut industry suffered when the socialist block markets, on which it relied for the sale of coconut oil, collapsed. Vietnam was left to compete using outdated technologies in a worldwide, free-market environment, for which it was neither experienced nor equipped. This has resulted in a serious loss of income for the country, with the thousands of farmers who rely on the sale of coconuts as their primary source of income, being particularly hard hit. The province of Ben Tre has experienced a severe economic decline due to the loss of income and jobs dependent on the coconut industry.
While Vietnam has some successful small businesses that process coconuts for fibre and charcoal, these facilities consume only a limited number of coconuts. The bulk of Vietnam's coconut trade today is by the low-value export of whole, unprocessed coconuts to China. Due to a lack of in-country processing, Vietnam even imports a number of processed coconut products from abroad.
No one feels the effect of the declining markets more than the small farmers of Ben Tre and the fall in market demand for their produce has reduced their already meagre income. Over the last six years, 13 per cent of the coconut trees in Ben Tre Province have been cut down as farmers seek alternative higher income crops.
DEVELOPING A VIETNAMESE COCONUT PROCESSING ENTERPRISE
The Swedish Red Cross developed an interest in coconut cultivation as a means of providing a natural windbreak against typhoons which annually hit Vietnam's coastline. Between 1988 and 1991, as part of their disaster relief effort, the Swedish Red Cross financed the planting of 300,000 coconut trees along selected areas of the Vietnamese coastline. As a follow Up to the planting programme, they asked International Development Enterprises (IDE), a small, private, non-profit making organization specializing in the development of market driven, small-scale technologies, to undertake a project to develop a sustainable coconut processing industry.
The aim of the project was to strengthen and expand the market for coconuts, thus making coconut cultivation a greater and more stable income generating activity for farmers. In January 1994, after extensive market research and a manufacturing feasibility study, IDE chose desiccated coconut (dried, finely shredded, white coconut meat), as the most promising product.
Desiccated coconut is used in the manufacture of bakery goods and confectionery and sells for almost twice the price of unprocessed nuts. It is the second most important product, after oil, for the coconut industries of Sri Lanka and the Philippines. However, no manufacturers of this high value product existed in Vietnam.
Over the course of two and half years, IDE developed a production unit to manufacture desiccated coconut. As well as technology development, eighty workers had to be trained in all aspects of desiccated coconut production. Technical development work focused on reducing the size of the production system and machinery used in Sri Lanka. At the same time, IDE sought markets in Vietnam to sustain a desiccated coconut company.
After proving the technical and financial viability of producing and marketing desiccated coconut at an experimental facility, IDE established a stand alone, profitable enterprise for its manufacture and sale. The Dat Lanh Company in Ben Tre Province is equipped with US$30,000 of machinery that was designed by IDE and manufactured in Vietnam. IDE provided a further US$10,000 of start-up capital, and the newly formed company's management secured hank loans totalling US$30,000 to renovate an existing site and upgrade the electrical and water facilities.
IDE trained a seven-member hoard of directors to manage the company and provide leadership. The board comprises the manager of the company, prominent members of the provincial government, an elected worker from the factory and a representative of the Ben Tre Red Cross.
Good hygiene is particularly important in desiccated coconut production. The final product is generally used without any further heat processing. This means that any micro-organisms present can pass directly into the food chain.
FROM FIELD TO CUSTOMER
Farmers gather coconuts from the trees when they are ripe and hardened. They are then transported by boat along the Mekong River to the factory for processing. At the facility the hard shell is removed with hatchets, leaving the coconut meat unbroken. The broken shells are sold to a charcoal enterprise. The brown testa, which coats the white coconut meat, is shaved off and sold for pressing to yield a low-grade coconut oil.
Good hygiene is particularly important in desiccated coconut production. The final product is generally used without any further heat processing, for example sprinkled on cakes and biscuits. This means that any micro-organisms present can pass directly into the food chain. Food poisoning organisms such as coliforms and salmonella have proved a serious problem and some countries have lost their export markets due to their presence. IDE thus placed great emphasis on factory and worker hygiene. All factory operatives receive training from the Vietnam Department of Preventative Health Care. This organization also carries out bacteriological tests of the product each day. Hygiene measures in place include chlorinated hand washers, foot baths (which have to be walked through before entering the factory), and stringent planned cleaning shifts at the end of each week.
All the kernels first pass through a series of chlorinated and fresh water wash tanks to reduce contamination levels. They are then heat treated in a blancher which destroys any remaining heat sensitive micro-organisms such as salmonella. The blancher is a small version of the type used in Sri Lanka. It consists of a tank 2m by 1m fitted with a rotating stainless steel auger along its length. The auger speed is set so that the kernels are blanched for a minimum of 90 seconds. The water temperature is maintained above 95°C. Should the temperature fall below this the auger stops automatically until the temperature rises. The 95°C thermostat is checked weekly before blanching. The blancher feeds the coconut kernels into a high sterility area - the drying room. Here the kernels are ground into small pieces using an imported Malaysian mill with a capacity of 3 tons/day (double the drying capacity of the factory). Initially a locally designed and built mill was used but this proved unsatisfactory. The particle size produced was uneven and it was very difficult to clean.
The milled coconut is loaded onto wooden frame trays (1m by 1m) with mesh bases, which are passed through driers - again based on those used in Sri Lanka. Heat for the drier is supplied by a coal-fired steam boiler. Essentially it is a semi-continuous counter-current drier, i.e. the hottest and driest air first passes through the bottom tray of almost dry material about to leave the drier, then passes through subsequent trays and finally passing through the top tray of very wet material that hats just been pushed into the drier. The drier holds five trays and it takes 40 minutes for a tray to pass though giving a final product with a moisture content below 2 per cent. Air enters the drier at 100°C.
Once dried, the desiccated coconut is cooled, inspected, and if needed, ground to a fineness to meet individual specifications. It is then packed into woven sacks with heat sealed polythene liners. Samples of the product are taken for bacteriological testing. After clearance, the desiccated coconut is transported by truck throughout Vietnam, to confectionery factories that produce a number of different products for sale both within the country and for export.
The company retains 50 per cent of the profits for expansion, 30 per cent is distributed to workers and management, and 20 per cent is donated to support the humanitarian activities of the Ben Tre Red Cross and the Ben Tre Child Care Committee.
FIRST YEAR RESULTS
The factory employs 80 workers and uses over 160,000 coconuts per month, putting $190,000 per year into the hands of the 1,000-1,500 coconut-farming families. It sells over US$500,000 of desiccated coconut annually to Vietnamese and foreign joint venture confectionery manufacturers who have switched from using imported desiccated coconut. The new company exported its first container of desiccated coconut to Taiwan in early 1997.
Since its establishment in mid 1996, the desiccated coconut company has expanded its monthly sales to 30 tons and anticipates after tax profits in excess of US$80,000 in its first year. The company retains 50 per cent of the profits for expansion, 30 per cent is distributed to workers and management, and 20 per cent is donated to support the humanitarian activities of the Ben Tre Red Cross and the Ben Tre Child Care Committee.
The Red Cross uses the income to finance its relief and infrastructure programmes in the villages of Ben Tre. Among other things, these programmes provide food and health care for victims of floods and typhoons which strike the province almost every year. The Child Care Committee uses its funds to provide educational and vocational training facilities for handicapped, orphaned and street children in Ben Tre Province.
When successful, such projects increase jobs and available income to the rural poor, and shift economic benefits of processing from large centralized processing factories in cities to rural areas.
Besides being a successful development project, which was initiated by an international NGO and then turned over to a local entity as a self-sustaining enterprise, there are other lessons that may be learned from this project.
1. It added 80 jobs to the local rural economy
2. Economic benefits from the added value derived from processing stayed in Vietnam, rather than accruing to countries to which coconuts were being exported.
3. Job creation in poor rural areas and the economic benefits from the multiplier effects of these jobs, reduced pressure for rural to urban migration.
4. The coconut processing factory was totally handed over to become a locally owned enterprise within the three-year term of the project.
5. Total investment in the plant and equipment was US$40,000 which is currently producing net annual profits of US$50,000 per year. Both output and profits are increasing rapidly. (Indeed since this paper was prepared we have heard that drying capacity has been doubled.)
Recently, two new independent desiccated coconut factories have opened. This means that raw coconut sales have risen to 7.5 million coconuts per year and output of desiccated coconut to 135 tons/month. Whilst IDE are very pleased to see this increase, there is concern that the new factories may export some contaminated product which could then destroy the whole Vietnamese export market. IDE is thus currently seeking finance to send the directors of the new factories and government officials to Sri Lanka in order to study government regulations and standards of production, (especially sanitation), storage and export requirements for desiccated coconut. It would also be an opportunity for them to meet potential machinery/equipment suppliers. It is hoped that this trip would result in the development of a Government Code of Practice.
The desiccated coconut processing factory can be seen as a model for identifying niches in the market place for profitable small-scale, value-added processing of agricultural products in poor rural areas. When successful, such projects increase jobs and available income to the rural poor, and shift economic benefits of processing from large centralized processing plants in cities to rural areas.
This article was sent in by Dan Salter and Nguyen Van Quang. Dan Salter is currently the Vietnam Country Director for IDE. He started the coconut project in January of 1994 and turned it over to the Dat Lanh Company in later 996. Nguyen Van Quang was the Senior Project Officer on the coconut project and is currently the Central Vietnam Regional Director for IDE. For further information they can be contacted at IDE: 52 Mai Dich, Tu Liem, Hanoi, Vietnam. Email: email@example.com