New Chance From Agriculture

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SaigonTimes English - 27 month(s) ago 7 readings

New Chance From Agriculture

In recent times, several local companies have shifted to investing in agriculture. They see the new business area as a long-term and much safer investment strategy to cope with the tough situation in which many industries are facing numerous risks and the global economic crisis is still going on.

New Chance From Agriculture

By Son Nghia

Growing orchids for export at a farm in HCMC
In recent times, several local companies have shifted to investing in agriculture. They see the new business area as a long-term and much safer investment strategy to cope with the tough situation in which many industries are facing numerous risks and the global economic crisis is still going on.

In the backdrop of the global economic downturn, local firms tend to turn to agriculture, according to chairman Le Duy Minh of the Vietnam Agricultural Enterprises and Farms Association (VAEFA). A large number of farmers are inclined to develop their own farms nationwide. Additionally, those incentives in the agricultural area to stimulate the development of plants, poultry and cattle and agricultural investment have shown positive changes, thus attracting businesses and farmers to make investment in the sector.

The urban agriculture development program in HCMC has gained certain achievement. The cultivation of clean vegetables, orchids and ornamental fish has attracted many investors owing to high returns. Dong Duong Cao Nguyen JSC under C.T Group has developed a clean vegetable farming area covering over 10,000 square meters in Phu Trung Hamlet, An Phu Commune, Cu Chi Distrtict, HCMC. The project will provide clean vegetables, meat and eggs for restaurant and supermarket chains run by C.T Group in the coming time. As the global economic difficulties have shown no signs of abating, companies consider investment in agriculture a long-term strategy that is safer than other fields whose markets are already saturated and full of risks.

Enterprises in HCMC have also paid attention to orchid cultivation. Each 1,000-square-meter orchid farm needs investment of VND300-400 million, Minh of VAEFA said, adding the investor would harvest more than 3,000 orchid branches a month priced at least VND10,000 each, fetching a monthly sum of around VND30 million. In fact, an owner of a one-hectare orchid farm may earn a net profit of up to VND1.5 billion annually.

Similarly, afforestation is considered a stable business activity under the current climate. Phat Dat Property Development Corp. has expanded its business scale to afforestation and it plans to use the stable revenue from the new sector to prop up its core real estate business. A director of a wood export company in Binh Duong Province said investing in large-scale afforestation would bring in lucrative returns thanks to low input costs, about VND10 million per hectare. Growers can earn profit of nearly VND100 million per hectare of land after five to seven years planting keo lai (Acacia hybrid).

“Apart from stable wood sales due to steadily increasing prices year after year, growers are also able to sell carbonic emission credits to developed nations. This is the certified emission reduction (CER) credits for developed countries under the Clean Development Mechanism (CDM). Export markets of wood products are also stable given the present shortage of input materials at wood exporters,” the director asserted.

In addition, he reckoned that afforestation was favored among investors, partly because it suffers fewer crop and climate risks. Businesses should take the chance to cooperate with Japan and South Korea as soon as possible in afforestation investment to be able to export wood, he added.

Income from medicinal herbs

Local firms have also eyed the large-scale cultivation of medicinal plants. Necessary costs for growing such plants are inconsiderable while cultivation methods are simple and the farming time is not very long.

Over the past year, the HCMC-based Huu Tin Co. has shifted to investing in agriculture and has obtained some positive results beyond expectations. After a long period of studying the potential of the industry, chairman Nguyen Van Minh of the company has decided to invest in growing medicinal plants that are popular in the local market.
Minh noted the limit of local traditional medicine supplies, insisting the highly potential sector with increasingly growing demand at home would bring about more profits for both firms and farmers in the near future. At present, the country has to import over 120,000 tons of traditional medicines from China every year, Minh stated.

Total investment capital for traditional drug development is some VND200 million a hectare, with the harvest time of four to eight months depending on each medicinal herb. Investors can even earn higher revenue, up to VND300 million per hectare, with good post-harvest care. Meanwhile, the average profit of one hectare for farmers is some VND150-200 million a year. With the cultivation area of up to 24 hectares, Huu Tin is estimated to obtain annual profit of VND5 billion, exclusive of all related input costs.

VAEFA and its partners have tried to promote cooperation opportunities with farming households to expand medicinal plant farms. The association has just clinched some preliminary agreements with Domesco, Duoc Hau Giang and Phytopharma to deploy the project of cultivating 1,000 hectare of medicinal plants in 23 provinces and cities across the country. With the scheme, entrepreneurs will act as suppliers of capital, varieties, fertilizers and technology for farmers and they are in turn entitled to buy products from the farmers. The association predicted those farmers having 2,000 square meters of growing area would reap VND10-15 million a month from the sale of drug to companies just after three months of taking care of the plants.

“Through such a project, VAEFA hopes to raise the economic efficiency of agricultural investment, allowing local farmers to enjoy more benefits from their fields,” Minh added.

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