On the study of critical points in the Lychee Supply Chain The case of Bacgiang, Vietnam A Research project Submitted to Larenstein University of Professional Education In partial fulfillment of the requirements for the Degree of Master’s in Engineering in Agri-Chain Management

By Tran Manh Chien September 2003 Supervisor: Mr. Harm Klein

Deventer The Netherlands

© Copyright Tran Manh Chien, 2003. All rights reserved

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Acknowledgment Many people had a great contribution to this work. I would like to take this opportunity for my appreciation to all of you: • • • • • •

My superviser, Mr. Harm Klein, even in difficult situation, but by your kind donation and encouragement made it possible for me to finish this thesis Mr. Bernard Jacobi, I have got much benefits from your consultance and experience in Vietnam. IFPRI staff, even without knowing me, you were willing to provide me your documents and data for this study. Kimbien cooperative, of which Ms. Kim and Ms. Lananh were very enthusiastic providing me information. My parents and brothers and sister, who always encourage me in studying. To many friends and colleagues from Hanoi and my organization, who assisted me in getting data and gave me much of joy. You have done a lot for me voluntarily.

I myself take full responsibility for the content of this thesis. Deventer, the Netherlands September, 2003 Tran Manh Chien

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Preface The newly emerging of commercial Lychee growing makes the Lychee Supply Chain different from others. Even bringing in a great benefit for the grower recently, there are various uncertainties weaknesses in the Supply Chain, which can be improved to promote this promising business. In order to do so, there is a need of a multidisciplinary research, which has not been addressed in Vietnam. In addition, research on Lychee itself is still inadequate. It has been commercialised rapidly without being aware of its great loss due to its short shelf life and only local marketing. This research objective was to indicate more potentials for Lychee business. This can be achieved by careful dealing with not only one aspect in the chain, but the whole from production to consumption, especially right handling after harvest and successful planning for extending its shelf life for serving off season and distant markets. Therefore, the supply chain was analysed from the framework and perspective based on techno-managerial approach. There must be many shortcomings and mistakes in this research due to the author’s limitation in dealing with the complicated chain. All comments and contributions to improve this paper for further successful application are welcome to the address below. Thank you very much. 1st September, 2003 Tran Manh Chien, Vietnam Institute of Agriculture Engineering and Postharvest. A2, Phuongmai, Dongda, Hanoi, Vietnam Tel: +8448689187; Fax: +8448689131 E-mail: [email protected]

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Abreviation IFPRI: International Food Policy Research Institute MARD: the Ministry of Agriculture and Rural Development VGSO: Vietnam General Statistics Office VIAE: Vietnam Institute of Agriculture Engineering UNIDO: United Nation Development Organization RIFAV: Research Institute of Fruits and Vegetables PHTI: Postharvest Technology Institute VIAEP: Vietnam Institute of Agriculture Engineering and Postharvest FAO: Food and Agriculture Organization ADB: Agriculture Development Bank VND: Vietnam Dong Exchange rate last month: 1 Euro = 17,500 VND 1 $US = 16,200

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Abstracts Even planted long ago, Lychee is a newly commercial fruit in Vietnam and in the world. Thus there is still little understanding of Lychee both in its own characteristics and trading. It is one of the most perishables. Its shelf life in ambient air (300C) could not be more than 3 days. In addition, Lychee harvest season is short (1.5 month) and causes a great fluctuation in its price. Therefore it needs 1) being transformed into products with longer shelf life (dried, canned, …) or 2) being quickly transported to markets with proper postharvest handlings and technology or 3) cold storage to extend its shelf life to off season. Among the options above, the customer increasingly prefers fresh one thanks to his/her increased income and more concern of health. From production and marketing side, to maintain fresh channel does not need only right technology but also right management by actors involved. This advocates for the research in fresh Supply Chain. In order to deal with the Supply Chain, various literature was employed in order to have a thorough understanding of Lychee behavour after harvest. Based on that and with the use of techno-managerial thinking, the research framework and perspective was developed for the basis of the research. One of the most problems in Lychee fruit is browning after harvest, attributed for desiccation. Lychee loses water rapidly. In the climate of 200C and 80% RH, water loss is up to 10% of its pericarp. It is interesting that there is no marked water loss from the flesh over the storage (Jiang and Fu, 1999). However, water loss from pericarp leads to loss of weight and also leads to browning that reduce revenue from the fruit. To extend the Lychee shelf life to more than 30 days, strict treatment and storage regime are needed. Temperature ranges between 1 ÷ 50C, RH 90 ÷ 95%, O2 and CO2 content of 3 ÷ 5%. However, only technology could not improve the Lychee performance due to limitation in both technology boundary and management. There are many other factors that have great influence. That is why the research developed the framework and perspective from a systems point of view in chapter 5. In addition, the trend and orientation of prodution and trading in the region as well as the characteristics of the actors involved should be a reference for root problems identification and inovation of possible interventions. Chapter 6 made clear that there are various constraints in all actors in the chain. The links between them are loose. Particularly, trading are mostly done informally. There is little trust between traders and growers, thus there is a waste of packaging. Furthermore, the partnership between the stakeholders involved is poor. The problems discussed above can explain for consequent inefficient production and postharvest operation. In the production side, various researches have proven the benefits of grafting, but its application is still limited. In postharvest phase, the growers are put on passive position. Even drying does not give as much benefit as fresh Lychee, the grower carried out drying his produce up 60% due to saturated local markets and limitation to get access to distant markets. v

The most problems at harvest are harvest technique, microorganism and transport. These problems were investigated more in chapter 7 in order to achieve possible solutions. The paper argued that right preharvest practices would have great effect on solving the above problems. Furthermore, management at harvest, improving partnership and contracting can also possible interventions. One of the most important thing is to improve trust between growers and traders. By contracting and delegation some of postharvest handlings (sorting and grading) from the trader to the grower, there would be significant benefits for both. However, for controled performance of Lychee, the government needs to build public cold storage. Chapter 8 ended the thesis body by the conclusions of what discovered. Consecutively, recommendations for focus on further study were given. Next is the list of references used by the paper. The last is the annex.

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TABLE OF CONTENTS

Acknowledgment................................................................................................................ i Preface .............................................................................................................................. iii Abstracts ............................................................................................................................ v

CHAPTER 1 JUSTIFICATION OF THE STUDY........................................................... 1 1.1 Context and problem identification ............................................................................. 1 1.2 Objectives of the study ................................................................................................ 2 1.3 Definition of Concepts used ........................................................................................ 2 1.4 The outline of the thesis............................................................................................... 3 CHAPTER 2 A SHORT LOOK INTO THE TARGET LOCATION ............................ 4 2.1 An overview to Vietnam.............................................................................................. 4 2.2 Outlook for the coming years ...................................................................................... 4 2.3 Bacgiang overview ...................................................................................................... 5 2.4 Agriculture keypoints .................................................................................................. 5 CHAPTER 3 RESEARCH METHODOLOGY ................................................................ 6 3.1 Research boundary ...................................................................................................... 6 3.1.1 Selection of the area and field.............................................................................. 6 3.1.2 Justification of the research strategy ................................................................... 6 3.1.3 Research limitations............................................................................................. 6 3.2 How to realise the research objective .......................................................................... 6 CHAPTER 4 A STUDY ON LYCHEE .............................................................................. 8 4.1 Introduction ................................................................................................................. 8 4.2 Lychee, an overview.................................................................................................... 8 4.2.1 Origins ................................................................................................................. 8 4.2.2 Cultivars............................................................................................................... 9 4.2.3 Production and Harvest seasons.......................................................................... 9 4.3 Market situation and trends ....................................................................................... 10 4.3.1 Consumers’ preference ...................................................................................... 10 4.3.2 Lychee trade in the world................................................................................... 11 4.4 Physio - Chemical Changes before and after harvest ................................................ 12 4.4.1 Fruit Characteristics.......................................................................................... 12 4.4.2 Changes before harvest...................................................................................... 13 4.4.2.1 Decreased chlorophyll vs. increased anthocyanin.................................. 13 4.4.2.2 Increased sugar vs. decreased acid......................................................... 13 4.4.2.3 Maturity judgement ................................................................................. 13 4.4.3 After harvest....................................................................................................... 13 4.4.3.1 Respiration .............................................................................................. 14 4.4.3.2 Desiccation .............................................................................................. 14 4.4.3.3 Browning ................................................................................................. 15 4.4.3.4 Pathological disorders ............................................................................ 15 4.5 Treatment and Storage Condition.............................................................................. 15 4.5.1 Treatments.......................................................................................................... 16 4.5.2 Climate control .................................................................................................. 16

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CHAPTER 5 RESEARCH FRAMEWORK AND PERSPECTIVE BASED ON TECHNO-MANAGERIAL APPROACH .......................................................................... 19 5.1 Techno-managerial approach ................................................................................. 19 5.2 Framework for the research....................................................................................... 19 5.3 Research perspective ................................................................................................. 22 CHAPTER 6 THE LYCHEE SUPPLY CHAIN PERFORMANCE IN BACGIANG 23 6.1 Introduction ............................................................................................................... 23 6.2 Fruits Pattern.............................................................................................................. 23 6.2.1 Trend .................................................................................................................. 23 6.2.2 Production.......................................................................................................... 24 6.2.3 Consumption trend ............................................................................................. 25 6.2.4 Market orientation ............................................................................................. 25 6.3 Supply Chain Description.......................................................................................... 26 6.3.1 Product flow....................................................................................................... 26 6.3.2 No cold storage .................................................................................................. 27 6.3.3 Poor links ........................................................................................................... 27 6.4 Characteristics of the actors in the Chain .................................................................. 28 6.4.1 Growers Characteristics .................................................................................... 28 6.4.1.1 Farming Systems .............................................................................................................. 28 6.4.1.2 Access to communication ................................................................................................. 30 6.4.1.3 Relationship with extension services ................................................................................ 30 6.4.1.4 Credit Access.................................................................................................................... 31

6.4.2 Trader Profile ................................................................................................... 32 6.4.3 Market characteristics ....................................................................................... 33 6.5 Production Pattern ..................................................................................................... 35 6.5.1 General Information .......................................................................................... 35 6.5.2 Plant material .................................................................................................... 36 6.5.3 Planting and Harvesting profile ........................................................................ 36 6.5.4 Orchard management ........................................................................................ 36 6.5.5 Nutrition and irrigation ..................................................................................... 37 6.5.6 Cropping Patterns.............................................................................................. 37 6.6 Postharvest operations ............................................................................................... 38 6.6.1 Drying ................................................................................................................ 38 6.6.2 Postharvest problems ......................................................................................... 39 6.6.2.1 Harvest maturity............................................................................................................... 39 6.6.2.2 Harvest Technique............................................................................................................ 40 6.6.2.3 Microorganism................................................................................................................. 40

6.6.3 Transportation ................................................................................................... 41 6.6.3.1 Local Transport................................................................................................................ 41 6.6.3.2 Remote Transport............................................................................................................. 42

6.6.4 Postharvest handlings for remote markets......................................................... 43 6.6.4.1 Grading ............................................................................................................................ 43 6.6.4.2 Bagging and labelling ...................................................................................................... 44

CHAPTER 7 INVESTIGATION ON SOME CRITICAL POINTS ............................ 45 7.1 At harvest................................................................................................................... 45 7.1.1 A systems perspective to harvest technique problem ......................................... 45 7.1.2 Microorganism and heat effect .......................................................................... 46 viii

7.1.2.1 Diminishment to heat effect.............................................................................................. 46 7.1.2.2 Contamination.................................................................................................................. 47 7.1.2.3 Cracking........................................................................................................................... 48

7.2 Transport.................................................................................................................... 48 7.3 Partnership ................................................................................................................. 49 7.3.1 Extension Departments ...................................................................................... 49 7.3.2 Research centers ................................................................................................ 50 7.3.3 Possibility of partnership ................................................................................... 50 7.4 Chain cooperation...................................................................................................... 52 7.4.1 Is the cooperative feasible?................................................................................ 52 7.4.2 Contracting between traders and growers......................................................... 52 7.4.2.1 Building trust and delegating of postharvest activities .................................................... 53 7.4.2.2 Criteria for contracting.................................................................................................... 53 7.4.2.3 Farmers as contractors .................................................................................................... 53 7.4.2.4 Production contracts ........................................................................................................ 53

7.4.3 Building cold storage and wholesales ............................................................... 54 7.4.3.1 Why and who should build cold storage and wholesales ................................................. 54 7.4.3.2 Relevance of cold storage in economics........................................................................... 55 7.4.3.3 Where to build cold storage ............................................................................................. 55

CHAPTER 8 CONCLUSIONS AND RECOMMENDATIONS.................................... 56 8.1 Conclusions ............................................................................................................... 56 8.1.1 Lychee knowledge and application of techno-managerial approach ................ 56 8.1.2 Important findings in the Supply Chain ............................................................. 56 8.1.3 Some possible interventions ............................................................................... 57 8.2 Recommendations ..................................................................................................... 57 References ....................................................................................................................... 59 Annex............................................................................................................................... 62 Annex A: Quality standards for export (FAO/WHO), CODEX Standard (adapted from Jevathy J. 1997) ............................................................................................................... 62 Annex B: Fruit appeareance ............................................................................................ 64 Annex C: Quotient of metabolism................................................................................... 64 Annex D. List of lychee cultivars cultivated in Viet Nam .............................................. 65 Annex E: Morphological characteristics of promising cultivars of lychee grown in Viet Nam ................................................................................................................................. 66 Annex F Characteristics of fruits of promising lychee cultivars. .................................... 66 Annex G........................................................................................................................... 67 Annex H: loss by drying.................................................................................................. 68 Annex I Prediction of water loss in Lychee according to ambient air ............................ 68 Annex J Economics of Cold store ................................................................................... 69 Annex K The optimal location in terms of transport cost ............................................... 70 Annex L Farming System 72

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Tables Table 2.1. Construction of Land used (thoudsands hectares).......................................5 Table 4.1. Characteristics of Lychee. .........................................................................12 Table 4.2. Respiration of lychee after harvest ............................................................14 Table 4.3. Value of Q10 along the temperature range.................................................14 Table 4.4 Weight loss, browning index, eating quality and disease incidence of litchi fruit after 30 days of storage at 10C under controlled atmosphere at high relative humidity.................................................................................................18 Table 4.5: Optimal handling conditions for lychee ....................................................18 Table 6.1. Trend of Fruit Production and Value from 1990 to 1999..........................23 Table 6.2. Asset ownership and value by function and type of asset ........................29 Table 6.3. Access to communication and transport (percent of respondents)............30 Table 6.4. Characteristics of trading companies.........................................................32 Table 6.5 Area and production of lychee in Viet Nam...............................................35 Table 6.6. Fruiting trend over ages.............................................................................37 Table 6.7. Cost of drying Lychee. ..............................................................................38 Table 6.8. Shipping distances, costs and duration.....................................................41 Table 6.9. Characteristics of Postharvest activities ....................................................43

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Figures Figure 2.1. Labor and GDP composition................................................................................ 4 Figure 4.1. Distribution of Lychee prodution areas in the world ......................................... 10 Figure 4.2. Price fluctuation in Singapre, Lychee Import 1996 ........................................... 11 Figure 4.3. Sugar level in Lychee compared to some rich sugar fruits ................................ 12 Figure 4.4. Effect of Postharvest Storage at ambient and low temperature on the total soluble solids ................................................................................................................ 17 Figure 4.5. Effects of various RHs in storage on water loss (A), browning index (B). Source: Jiang and Fu, 1999 .......................................................................................... 17 Figure 5.1. Objective Research Framework ......................................................................... 21 Figure 5.2. Research Perspective.......................................................................................... 22 Figure 6.1. The growth of selected fruits over the period 1994 – 1999 ............................... 24 Figure 6.2. Fruits and Vegetable Export 1995-2002 ............................................................ 25 Figure 6.3. Construction of fruit and vegetable export markets........................................... 26 Figure 6.4 Education of growers by genders........................................................................ 28 Figure 6.5. Quality of extension service by types of organizations ..................................... 31 Figure 6.6. Characteristics of the managers of trading companies....................................... 32 Figure 6.7. Accumulated gross revenue of traders (Number of the sample: 104)................ 33 Figure 6.8. Price fluctuation during the harvest season........................................................ 34 Figure 6.9. Use of Irrigation equipment ............................................................................... 37 Figure 6.10. Yield vs Age..................................................................................................... 38 Figure 6.11. Postharvest problems (percentage of respondents reported)............................ 39 Figure 6.12. Types of transport used by growers and rates repectively ............................... 41 Figure 6.13. Transport restrictions reported by traders ........................................................ 42 Figure 7.1 Harvest technique problem fish bone.................................................................. 45 Figure 7.2 Micro-organism problem fish bone..................................................................... 46 Figure 7.3 Transport problems tree ...................................................................................... 48 Figure 7.4 Relationship between growers and other stakeholders ....................................... 49

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CHAPTER 1 JUSTIFICATION OF THE STUDY 1.1 Context and problem identification Since the renovation policy from the government in 1980, especially in 1986, cooperatives and state farms in Vietnam gradually disappeared and were replaced by scattered and small landholders. Farmers have become freer to make decision of his production and marketing, resulting in a variation of agri-food supply chains towards market oriented production. As a result it poses the need for studying the emerging agri-chains to help growers cope with their booming of output. Along with the rapid economic growth recently (6.4% growth1 of GDP in the period 2000 ÷ 2003), it is observed a typical trend in agriculture of a shift from staple foods farming to more perishable and profit crops. This can be explained by 1)an increase in income has resulted in more demands in high valued foods; 2) falling of rice export markets due to more competition. Especially falling of rice export to Iraq recently (one third of rice from Vietnam exported to Iraq, ADB 2002) Fruit production in Vietnam has dramatically increased last decade, especially three varieties, Longan, Lychee and Rambuttan. Since 1993 these three crops have increased their production about 37% per year and accounted for about 26% of total fruit production in 2001 (IFPRI-MARD 2002). Lychee is considered as a high value commodity. Hence, commercial Lychee growing has advantages to improve the farmer’s income. The profit by producing Lychee is estimated 5 times more than that by rice production (Vandeveer, 2000). However, Lychee has been commercialised recently, since 1990s, thus there are various uncertainties to its growth in the future. One of the main problems is its short shelf life. After harvest, Lychee can be kept in ambient air (300C, 80%RH) for less than 3 days (Jevathy et al. 1997). This constraint poses a great challenge for postharvest and marketing research. It needs either being transformed into products with longer shelf life (processed products such as dried, canned, fermented…) or being quickly transported to the market with special care and postharvest handlings to avoid spoilage. Study in fresh business is always a challenge for improving its performance, particularly in case of the newly commercialised Lychee. This is because the fact that the trading of fresh perishable is more vunerable than that of processed produce. It is also the case for Lychee of which its short shelf life causes various problems after harvest (Postharvest problems) Post-harvest losses have been identified as a major loss and a reduction of quality in fresh Lychee. Therefore, there is a need of proper production practices as well as postharvest handling systems and technologies to improve the fruit quality and to reduce its loss. In addition to technologies, management along the supply chain is also an important issue to manage the delivery time of the produce from its orchard to the market. Moreover proper 1

This number is agregated from Asian Development Outlook 2003.

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management can help growers and retailers to cope with larger market due to an increase of production in a 1.5 month harvest season. Lychee is grown in the northern part of Vietnam, which its production is about 40,000 tons per year. Particularly, Lychee is booming in Bacgiang province, where its prodution accounts nearly a half of that in Vietnam. It contributes a significant income for growers. The survey by IFPRI-MARD (2002) revealed up to 96% of the Lychee commercial growers specialised in Lychee business. However, recently profit from growing Lychee is under threat because of saturation of local markets in harvest season, while extending shelf life for distant markets not achieved yet. Considering all above, it is emerging a need of studying on the whole fresh Supply Chain of Lychee, in order to assist Lychee business of the commercial grower in Bacgiang, Vietnam. 1.2 Objectives of the study The overall objective of the study is: To indicate some critical points in the Lychee supply chain and possibilities to improve its performance by analysing secondary data and reviewing related literature and research papers from a systems perspective. In order to realise it, the study poses the following question What can be done to improve Lychee performance in Bacgiang, Vietnam? This question can be answered by answering the questions below: 1) What are the charateristics of Lychee with regards to its shelf life and quality after harvest? 2) How is the production and prosperous markets for lychee in Vietnam and in the World? 3) How is the Lychee supply chain in Bacgiang? 4) What are characteristics of stakeholders in Bacgiang, especially commercial growers? 5) What are the critical points in the fresh supply chain for lychee? 6) What can be done to improve some of those critical points? 1.3 Definition of Concepts used In this study, there are two main terminologies. 1) Supply chain “A supply chain is two or more parties linked by a flow of goods, information, and funds” (Wang, 2002). According to Jack J.A.G.V. (2000), The aim of the supply chain is to produce value for the ultimate consumer whilst satisfying other stakeholders in the SC.

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However, in this study, the actors in the Lychee supply chain are simple and not consistent in terms of its links and performance of each actors involved. So the study dealt with the Supply Chain in the simple meaning as follow: Supply Chain is the flow of produce from the grower to the consumer within the whole context of its actors and environment factors 2) Critical points are any points and factors found along the Chain, which may have great impacts on the Supply Chain performance, and which may be feasible for intervention. 1.4 The outline of the thesis After this chapter, we will have a short look in the target location of the research by examining some key indicators in Vietnam and Bacgiang. Then chapter 3 indicated the boundary of the research as well as justification of the methodology to be employed. Chapter 4 provided characteristics of Lychee before and after harvest as well as its main problems in postharvest storage. Chapter 5 continued by developing the research framework and research perspective which played as a compass for the two next chapters. Before giving an insight in the Lychee performance in Bacgiang, chapter 6 examined the trend in production and markets of the fruits in the region as well as a description of the Lychee supply chain and characteristics of the actors involved. Based on what discovered above, chapter 7 provided an analysis to some critical points found along the chain. The thesis content ended up with chapter 8, which gave a summary of contributions and findings of the research as well as some recommendations for further study. In addition, the thesis gave the list of references and last is the annex for more detailing in the text.

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CHAPTER 2 A SHORT LOOK INTO THE TARGET LOCATION 2.1 An overview to Vietnam1 Location: In Southeastern Asia (ASEAN), bordering the Gulf of Thailand, Gulf of Tonkin, and South China Sea, alongside China, Laos, and Cambodia. Geographic coordinates: 16 00 N, 106 00 E Mean temperature in June: 290C; mean relative humidity in June: 81% (Hanoi); Map references: Southeast Asia (ASEAN) Area: Total: 32.9 million hectares of which 3 quarters by mountains & hills Population: 78.6 millions Agriculture based economy: 70% GDP per capita: 410 USD/capita/year Although nearly 70% of population works with agriculture, its share in GDP accounts to only about 25% (VGSO, 2002). The rice production of self-sufficient is shifting to more profit production such as fruits and vegetables. 100% 90% 80% 70% 60%

Services

50%

Industry

40%

Agriculture

30% 20% 10% 0% Composition of GDP

Compostion of labor

Figure 2.1. Labor and GDP composition 2.2 Outlook for the coming years2 • • • •

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A strong progress in economic transition. More consistent in policy and operational links GDP growth: 6.9% (2003); 7.1% (2004). GDP growth from agriculture will stay substantially as before.

This section was based on VGSO (2002) This section was based on ADB (2003)

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2.3 Bacgiang overview1 Geography: midland and mountainous. Location: 50 kms from Hanoi; 100 kms from Huunghiquan border-gate with China to the North Population: 1.5 millions, among which 870,000 are in working age. Transportation: roads (National highways such as: 37, 31, 279), railroads, rivers. Electricity: 220, 110, 35, 10 and 6 KV. Accessible to 100% of districts. Land: Favorable for agriculture. Table 2.1. Construction of Land used (thoudsands hectares) Total Agriculture Forestry Specially used land Homestead

382 124 111 55 12

Source: VGSO 2002 2.4 Agriculture keypoints 1) The North’s largest concentrated fruit area 2) Main crops: Lychee, Pineapples, Longan, Persimmon, Custard Apple. 3) Investment Priority in crops: “To continue investment to develop commodity-oriented agricultural production. The structure of plants and animals shall be rapidly transformed in order to increase value per cultivated acereage”.2 The province has also planned to transform the area of volatile rice paddy into development of fruit trees, industrial plants and aqua-products. What' s more, the 55.000 hectares of unused land of hills and mountains promise a great potential for investors and enterprises to co-operate in afforestation and forestry products processing3.

1

This section was based on the website of Bacgiang People Commitee: http://www.bacgiangdpi.gov.vn/

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Cited from the website above

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CHAPTER 3 RESEARCH METHODOLOGY 3.1 Research boundary 3.1.1 Selection of the area and field The research focused on the fresh channel of Lychee in Bacgiang province, Northeast Vietnam. The reason for this selection is that the fresh channel is the most profitable but also most unstable and Bacgiang is the largest Lychee growing region in Vietnam. The province is located about 50 km northeast of Hanoi, thus has potential for promoting Lychee marketing. The thesis will make it as an initial step towards more commitments expected to this topic. 3.1.2 Justification of the research strategy Considering the research objective, it is the purpose of the paper to produce a clear picture of the Supply Chain and initially understanding of the root problems hindering Lychee performance and the feasibility of employing both technology and management solutions to some critical points in Lychee Supply Chain. In the context of various separate projects and approaches to the agriculture development in Vietnam, especially technology biased work, it is necessary now to start integration of those approaches, taking into account of also the managerial aspects. So at the first step, it may be advised to review the available literatures before any further steps. With consideration of the discussion above, this research is mainly based on available documents. This makes the project a desk study, which will carry out an analysis of secondary data and literature review from various aspects. 3.1.3 Research limitations • • • •

The target area is diversified in both topography and the stakeholders involved, especially the growers. This made the research less typical and specific for the region. While the subject of the research is broad, the author has little chance contacting with stakeholders involved. The data was carried out by other people. While the situation in Vietnam was changing rapidly, there was little effort to update the data.

3.2 How to realise the research objective Based on the research framework and perspective to be developed, the problem oriented solving is employed to identify the reasons behind every critical points found in Supply Chain. In order to do so, a review of current situation and surveys of related themes (Lychee production to consumption, current postharvest treatment and handling, government and provincial policy with regards to fruits business, changes in the local 6

society) are to be carried out. The focus will be on both technology and managerial aspects, so that the nature of those critical points is profoundly understood and not only the relevance but also the feasibility for improvement of the critical points can be judged. The research will therefore use knowledge in various papers from different contexts about Lychee physiology, Lychee postharvest handling, supply chain coordination, organizational aspects, and management as well. By reflecting the critical points on the knowledge reviewed, the thesis will discuss the feasibility of application of techno-managerial approach to improvement of the supply chain performance.

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CHAPTER 4 A STUDY ON LYCHEE 4.1 Introduction Lychee is quite new to a majority in the world. It has been cultivated long ago but commercialised recently. There is no statistics of Lychee even in data source from FAO. However, recently some conferences have been organised. This chapter is based on the proceedings of fruits, especially Lychee in recent years. It gave a brief picture of Lychee in terms of its production, bio-chemical characteristics as well as physical characteristics as related to its performance after harvest. It began by describing an overview of the fruit production in the world as well as its specifications. Here you would find that the fruit has its long history. The bulk falls on Asia with 95% of the world production. The chapter then reviewed market potential for Lychee. The Lychee commercial flow is mainly locally marketed and still low. The export share is only 100,000 tons/year (5% of its produce-RAP 2002). The fruit is considered as one of the most valuables among fruits. Its two short harvest seasons bring in big fluctuation in the price. In addition, Asia, the bulk of production, still lags behind in export. The constraints to low export are attributed for the fruit short shelf life and lack of suitable storage technology. Then you would find the Lychee physio-chemical changes as well as its physiology before and after harvest. Lychee is a newly commercial thus exist various disputes of its postharvest behavior (RAP 2002). Discoloration and dehydration are considered as the main problems of Lychee postharvest. Even the fruit is non-climacteric, it is considered as delicate, environmental and chilling sensitive. Browning is the principal incidence caused by the fruit desiccation, mechanical damage, pathogen attack. The fruit are particularly prone to water loss. In the first instance, dehydration only causes cosmetic injury with most of the initial water lost from the pericarp (Jiang and Fu, 1999), causing it to lose colour and turn dull brown. The aril is largely unaffected at this stage. Eventually, the aril also loses water and the fruit become flaccid and bland. Eventhough there is some disagreements of Lychee postharvest behavour, some storage regimes in ideal condition have been given. 4.2 Lychee, an overview 4.2.1 Origins Lychee (Litchi chinensis Sonn.) belongs to Sapindaceae family. It is regarded as one of the kings of subtropical fruit and has a very long history in Asia. Fruit are very attractive, with bright red skin covered by angular or conical protuberances. Longan resembles Lychee, but the fruit are smaller, smoother, yellow-tan to brown, milder in flavour and less acid. About a third of people in Asia prefer Longan to Lychee, whereas in Australia, America and Europe, Lychee is more popular. Canned Longans are more acceptable than canned Lychees. Rambutan and pulasan are similar to Lychee, with red or yellow skin, however, long hairs or spinterns replace the protuberances 8

Lychee is native to the area between southern China, northern Vietnam and Myanmar, but is now cultivated in many countries with both tropical and sub-tropical climates. It is very well known in Asia, but relatively rare in Africa, the Middle East and America. 4.2.2 Cultivars The Lychee tree of ten years old can be as high as 12m and it produce 20 – 100 kg/tree, depending on cultivars. The average orchard is 300 trees/ha. However, it is different depending on cultivars and methods of propagation. In Vietnam, the density is only 150 ÷ 200 for the marcoting (air-layer) as traditional (Hai et al. 2000). There are more than 100 cultivars in the world with few commercially meet the consumer’s needs and desires. There are only one or two main cultivars in each country. This brings in the short harvest season. Thus, it is necessary to promote breeding programs, which would be to produce cultivars with earlier or later harvests. In Vietnam, the varieties of Lychee grown have not been scientifically classified, particularly local varieties. Because of this, existing varieties of Lychee are mainly named by local people and based significantly on appearance and morphology of the ripe fruits including the colour. It is obvious that the exact number of Lychee varieties is much less than those named and recognized since the same varieties can be named differently from location to location. Till 2000, RIFAV has collected and characterized 33 accessions that can be identified as 33 cultivars of Lychee grown in different locations in home gardens and consolidated farms. The names of cultivars collected and their areas of origin are presented in annex D. Of the 33 cultivars studied, 8 cultivar (annex) are considered to be the most promising and have been commercially developed in the main areas of lychee production. However, only one cultivar, so called Vaithieu (Thieu Lychee) is popular with more than 90% of production. 4.2.3 Production and Harvest seasons According to RAP (2002), Lychee produce reached 2 millions tons in 2000. There are two main harvest seasons in Winter and Summer. In any case, in its flowering period, Lychee prefers the temperature below 150C. The bulk harvest (95%) which falls in Summer between May and July belongs to Asia such as China, India, Thailand, Vietnam… (see figure below). The small one (about 5% of the world production) which falls on between December and February of the next year belongs to Australia, South Africa, North America and a small part of Thailand. The short harvest season brings in a big fluctuation in both the supply and price during the course of the year.

9

4.3 Market situation and trends 4.3.1 Consumers’ preference Most markets prefer large, highly-coloured fruit with sweet flesh and small seeds. Cultivars with a unique flavour, firm flesh and a high proportion of chicken-tongue seeds are highly appreciated in Asia, while it is less discerning in Europe, the Pacific and North America. There are some concerns about sulphur residues from fumigated fruit especially in Europe, prompting this technology to be phased out. There are also barriers to exports into Japan and the USA for some countries such as Australia because of quarantine issues associated with fruit flies (RAP 2002). The standards for export of Lychee were approved by FAO and WHO (see annex A). In general, Lychee should meet the following criteria (RAP, 2002)

India 21%

Rest 6%

Thailand 4% V ietnam 2% Taiw an 5% Hannan 1%

Guangdong 39%

Fujian 7% Guangxi 15%

Figure 4.1. Distribution of Lychee prodution areas in the world Source: RAP, 2002 a) Fresh appearance: uniform red colors, free from blemishes and mechanical damage b) Size: length > 3 cm; weight >20 grams; Diameter > 20cm for second class (standard fruit) and >33cm for extra class. c) Pulp easily removable from seed coat and at least 75% of its weight d) Total soluble solid content >18% e) Sulphur residue less than 10mg/kg pulp and 250mg/kg of pericarp

10

4.3.2 Lychee trade in the world The fruit is comsumed mostly in fresh, at about 60%. 20% is destined for drying and the rest is for canning. The fruit consumption in Asia is done dominantly in local markets. In 1999 just 50,000 tons of lychee was exported from Asia (its produce of over 1,700,000 tons). It is accounted for two main constraints: short shelf life and poor marketing systems. The fresh Lychee volume of world trade accounts for 100,000 tons/year (RAP, 2002) in which one third is from South Africa. The bulk in Asia has a small proportion for export. Only Australia and South Africa have their considerable export as compared to their produce. Competition in off-season occurs. However, Australia is in favor thank to its transport with no use of sulfur. There are two main channels of supplying of the commodity. The first comes from Australia, North America and South Africa to Europe (competition occurs as they exhibit their commodity at the same season, from December to February). The second is from China, Australia, etc. to Singapore, Hongkong, Europe for the Summer season. Such short seasons produce a big variation in supply and price fluctuation. In the peak season, the price drops down to US$ 0.4. in the Winter season, it can reach US$ 10 and even more than US$ 15 in America. Take Singapore Market as an example. 10

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Figure 4.2. Price fluctuation in Singapre, Lychee Import 1996 Source: http://www.marketag.com/ The major part of harvest is now locally marketed. So there is a potential market waiting for Lychee. Especially in Europe, where there is almost no production of Lychee, but Lychee is considered expensive, even more valuable than longan. With the ability of longer shelf-life for the fruit (resulting from improved cultivars, postharvest technology, …), the fruit is expected approaching to export more and more. The potential markets such as Europe, Japan and America are the focus for the exporters from the bulk in Asia. In order to extend the market and satisfy the customer, the fruit should be handled, treated and stored in such a way that can maintain its color and quality to consumption. Therefore, the following will examine some important physio-chemical and physiological changes during the maturation and storage of Lychee that have great effects on the shelf life and quality of the fruit after harvest. 11

4.4 Physio - Chemical Changes before and after harvest Even originated thousands years ago, Lychee has been traded recently. There is a great shortcomings in the knowledge of its characteristics and behavour after harvest needed to study more (RAP, 2002). 4.4.1 Fruit Characteristics The fruit is highly variable, depending on the cultivar. They can be round, ovoid or heartshaped, and from 2.0 to 3.5 cm in diameter. The skin can be smooth or rough with distinct protuberances, thick or thin, and pink-red, bright red or purple-red. The flesh or aril is an outgrowth of the outer cells of the seed coat (outer integument). The aril is generally translucent white, juicy or firm, and sweet and aromatic in better cultivars. Many cultivars can be distinguished by their flavour and aroma. The fruit contains a single dark brown seed 6 to 12 mm wide and 10 to 23 mm long. Some cultivars have a high proportion of aborted seeds and thus a high flesh recovery. Table 4.1. Characteristics of Lychee. Diameter (cm) 2 ÷ 3.5 Weight (g) 8 ÷ 20 Pile density 545 kg/m3 Water content (%) 77 ÷ 83 Protein (%) 0.8 ÷ 0.9 Fat (%) <1 Ascorbic acid (mg/g) 0.4 ÷ 1 Source: Holcroft and Mitcham (1996). Pile density was based on FAO 20.00 18.00 Sugar levels (G/100 G)

16.00 14.00 12.00

Sucrose

10.00

Fructose

8.00

Glucose

6.00 4.00 2.00 0.00 Banana

Lychee

Grape

Carambola

Mango

Type of Fruits

Figure 4.3. Sugar level in Lychee compared to some rich sugar fruits Source: Extracted from Wills R. et al 1998 As other fruits, water is the greatest constituent in Lychee. However, it varies depending on cultivars. As shown in the annex F, the water content in Lychee is average among fruits, about 12

80% for the promising cultivars in Vietnam. Second to water is carbohydrates, of which the dominant sugars are glucose, fructose and sucrose. Lychee is one of the richest in sugar content among fruits, mainly glucose and fructose. 4.4.2 Changes before harvest There is no upsurge of respiratory activity in the fruit during ripening, thus Lychee is considered as non-climacteric. It can only ripen on the tree. Ripening and senescence in Lychee are rapid, thus result in its short life span. Ripening initiates about 40 ÷ 60 days after its anthesis. Red color is characterised for fully ripening in most of cultivars, which ranges from 55 ÷ 80 days after anthesis. Bright red color reprerents that the fruit may overripe. Lychee turns brown at 75 ÷ 90 days after anthesis (Revathy and Narasimham, 1997) 4.4.2.1 Decreased chlorophyll vs. increased anthocyanin The degradation of chlorophyll (representative for green color) coincided with anthocyanin synthesis were observed. This leads to the attractive color of bright red in Lychee. The anthocyanin pigments are in vacuole bound, first appearing in the upper mesocarp tissue beneath the pericarp protuberance apex, then progressively distribution to form a continuous layer thoughout the mesocarp. 4.4.2.2 Increased sugar vs. decreased acid Sugar content increases while organic acids decrease. Sucrose, glucose and fructose increase (Jevathy and Narasimham 1997). The major change in acid concentration was succinic acid, which declined from about 350meq/100g to 0.4meq/100g. Malic acid, the principal acid in Lychee, decreased to 1/4th of its initial value. The pH of pericarp homogenate gradually increased, up to about 4.0 at maturity. 4.4.2.3 Maturity judgement To judge whether the fruit is matured or not, Batten (1989) advised to base on titratable acidity (TA), or the ratio between total soluble solids (TSS, in degree Brix) and titratable acidity. There were various recommendations depending on regions and cultivars, but it is recommended of a TSS:TA of 40 or above for commercial Lychee. In reality, however, harvesting is based mostly on taste and appearance. The flattening of the fruit segments on the skin is a good indicator of telling the fruit’s maturation. When the fruit is over-ripe, it is sweet but bland. 4.4.3 After harvest Besides chemical characteristics above, there are two more physical characteristics of Lychee pericarp which might be important for Lychee after harvest. • Even the pericarp is thick, it has poor capacity in moisture preservation and can be easily damaged, which has been proven as one intrinsic reason for rapid moisture loss in Lychee (Underhill and Simons, 1993). • With much conductance tissues and large intercellular space, the stem-end of Lychee has the greatest respiration and transpiration and is easily to be infected by microorganism and insects (Shi et al., 2001)

13

4.4.3.1 Respiration The fruit weight decreases due to desiccation of the deteriorating fruit and respiration. Revathy and Narasimham (1997) found that ethylene production rapidly decreased and undetectable when Lychee was about 4% of its final weight. In fact, there was an increase in Ethylene production in the first few days at room temperature store before the reduction occurred (Underhill and Critchley, 1993). Table 4.2. Respiration of Lychee after harvest Respiration rates (ml CO2/kg-h) 50 C 100C 200C 5–8 10 - 15 25 - 40 Source: UC Davis, http://postharvest.ucdavis.edu/

Ethylene production (µl/kg-hr) 1 - 10

Respiration rate within the physiological temperature range generally increases exponentially with an increase in temperature. From the table above, we can draw out the value of Q10 (shown as the relationship between the respiratory rates in a certain range of temperatures) as follows (refered to the formulae at annex) Table 4.3. Value of Q10 along the temperature range Range of temperature 5 ÷ 10 Value of Q10 3.7

10 ÷ 20 2.6

4.4.3.2 Desiccation Desiccation is a serious problem in Lychee postharvest and might act negative in Lychee browning (Shi J. et al. 2001). Rapid moisture loss occurs seriously due to cracks at harvest. This problem is increased just after harvest. Susceptibility to pericarp splitting (crack) depends on cultivar as well as pre-harvest cultivation and is enhanced by desiccation (Holcroft and Mitcham, 1996). This can be explained by the fact that the aril develops during the final stage of the fruit growth and thus exerts pressure on the pericarp, which is not actively growing anymore. In addition, mechanical or pest induced damage, a fluctuation in weather conditions (wet and dry) during late fruit development and whatever as a consequence of nutrition stress can make the fruit splitting more serious. However, dehydration always occur regardless of splitting or not and act to disrupt the compartments, increasing the permeability of the membranes, causing to an increase of pH of the vacuole, and accelerating the oxidation of anthocyanins and other cell components. As a result, the distinctive Lychee pigments fade, and a range of brown pigments appears. Jiang and Fu (1999) found that the rate of water loss was correlated with membrane permeability, the rate of browning, PPO activity and tissue pH, and negatively correlated with anthocyanin content (also related to browning) Once its loss of water attains 20% of the harvested pericarp fresh weight, fruit starts browning (Jiang and Fu, 1999). Below 50 percent of its initial fresh weight, the pericarp is 14

entirely brown. Dehydration first causes cosmetic injury with most of the initial water lost from the pericarp, leading to losing colour and turning dull brown. The aril is unaffected very much at this stage. Eventually, the aril also loses water and the fruit becomes flaccid and bland (Underhill and Critchley, 1993), but more slowly. 4.4.3.3 Browning Dehydration was attributed for exacerbating browning in pericarp, recognised as one of the most problems in Lychee after harvest (Jevathy et al. 1997, Robert et al. 1998, Zhang et al. 2001). Browning that occurs during the first few days after harvest is usually attributed for dehydration of the pericarp, not flesh. Browning is also related to anthocyanin. However, there is some dispute about the effect of anthocyanin on browning. Underhill et al. (1993) found no obvious relationship between the content of anthocyanins and browning, while Zhang et al. (2001) found the inverse relationship. This could be because of different cultivars experimented or different ways of measuring anthocyanins. However, it is agreed that the anthocyanin pigments (which represent for the red color) in the peel of Lychee fruits, like in other fruits are relatively unstable. This advocates for Zhang’s argument. When these pigments declined, the fruit loses its attractive colour. The anthocyanins are stable at pH below 3. As pH rises, anthocyanins are converted to colourless chromenols, in an acid-reversible reaction. They are also prone to enzymatic and non-enzymatic oxidation, especially peroxidase (POD) and polyphenol oxidase (PPO), often leading to melanin by-products (Kaiser, 1995), which represent for brown colour. Other factors also cause the fruit to brown, including: mechanical stresses of various sorts (tugging the pedicel at harvest, sliding the fruit down a rough picking bag, dropping fruit from short heights); microbial and insect attack; and extremes of temperatures (Dasgupta and Mandal, 1989). In short, anything likely to accelerate cell breakdown will increase fruit browning and desiccation 4.4.3.4 Pathological disorders Rich nutrition, special pericarp and stem-end structure in Lychee are attributed for being easily infected by microorganisms, especially when harvested in the summer with high temperature and humidity. Bacteria, yeast and other fungi are attributed for postharvest decay. Dasgupta and Mandal, discovered the most important disease organisms as Aspergillus, Pestalotiopsis, Peronophyhora and various yeast. The pathology is induced more severely by: • Microscopic cracks in pericarp results in easier occupation for bacteria. • Increased heat: generally, temperature between 25 ÷ 40 is favorable for bacteria development • Increased desiccation weaken the tissue of the fruit, thus bacteria impact will be faster. 4.5 Treatment and Storage Condition The main purpose of Lychee postharvest treatment and storage is to reduce negative activities in the fruit after harvest, especially its desiccation, browning and microorganisms. After harvest, the fruit is still a living entity after harvest, thus it needs proper treatment so 15

that its metabolism can be maintained for its freshness, while minimal negative activities achieved. 4.5.1 Treatments Before storage, pathology should be inhibited. Traditionally, this was done by Hot Water Brushing (HWB) or SO2 fumigation followed by dipping the fruits in HCl acid containing the fungicide prochloraz in order to recover the red color on pericarp (Amnon et al., 2000). The use HWB resulted in peel damage and induced browning. While the use of SO2 was very effective on limitation of browning. Initially, SO2 was thought to inhibit PPO (Underhill, 1992). In fact, SO2 and anthocyanin form an anthocyanin – SO2H complex, which is more stable. This may be the effect of SO2 fumigation other than PPO inhibition (Robert et al. 1998). Until recently SO2 has been the concern of health. Thus this method was prohibited in many countries, especially in developed countries. However, a limited content of SO2 is still acceptable in developing countries. Robert et al. (1998) developed a combination between HWB and SO2 fumigation and resulted in sulphur residue in the edible aril on a fresh mass basis of less than 5 mg kg-1. In short, his treatment protocol is as follows: Sulfur dioxide treatment (30’/220C/1% SO2) followed by HWB/Hot air (20’/390C/ SO2, Loadfactor: 53kg/m3). More interesting he found is that hot air might be more useful in reduction of SO2 residues. Moreover, irradiation was reported effectively at does of 2 ÷ 5kGy. However, this method needs advanced technology and careful control due to the fact that the lower doses (0.5kGy) increased fungal development, while doses over 0.25kGy caused sensitivity to darkening of the pericarp. Therefore, HWB and SO2 are more in use. 4.5.2 Climate control The temperature and relative humidity are the most important factors on the fruit shelf life and quality retention and at the same time have a great effect on the microorganism activities. Low storage temperature will lower the fruit’s desiccation and its respiration as well as activity of bacteria and pathogen. However, the too low temperature has the inverse effect due to the fruit chilling injury. The high relative humidity is to shorten the gap between the vapor pressure in the ambient air and in the fruit, so that the desiccation rate can be reduced. However, the too high RH (above 95%) normally induces the activity of microorganism, which was attributed for rapid deterioration in the fresh produce. In order to win this dilemma, some researches have been done.

16

Percent (TSS)

Jevathy (1997) found that at room temperature (300C), the fruit loses water rapidly, from 18% TSS at the beginning to 25% TSS at the day sixth. However, if kept in low temperature (1 ÷ 50C), the respiration rate and the loss of TTS and weight are sharply declined (Fig. and table ). To lose the same amount of water, it takes more than 35 days in 50C storage.

30.0 25.0 20.0 15.0 10.0 5.0 0.0 0

5

10

15

20

25

30

35

40

Storage period (days) 5 Degree

30 degrees storage

Figure 4.4. Effect of Postharvest Storage at ambient and low temperature on the total soluble solids Source: Adapted from Jevathy et al. (1997), Litchi Fruit: Influence of Pre and Postharvest Factors on Storage Life and Quality for Export Trade – A Critical Appraisal

Figure 4.5. Effects of various RHs in storage on water loss (A), browning index (B). Source: Jiang and Fu, 1999

The water loss, browning index rate were 0%, 1.24 at harvest, respectively. The values of the water loss and browning index1 are the means for 18 fruits in the sample. The vertical bars indicate standard errors. ● = 60% RH; ■ = 70% RH; ▲ = 80% RH; and ▼= 90% RH (ambient air 200C)

Jiang and Fu (1999) agreed with Underhill (1993) that water loss mostly occurred at the skin of the fruit that led to browning and was highly correlated with weight loss. The pity is that no data were shown. However, their conclussion of negligible water loss and reduction 1

Note from Jiang: Browning index was calculated using the formula &(browning scale]percentage of corresponding fruit within each class). Its values are as follows: 1 = no browning (excellent quality); 2 = slight browning; 3 = <1/4 browning; 4 = 1/4 ÷ 1/2 browning; 5 = > 1/2 browning (poor quality)

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in quality in flesh is consistent with the fact that the growers (familiar with the fruit already) do not have much concern about initial browning for eating. On the contrary, red color retention is important for remote markets. As shown in the above figure, water loss is dependent on relative humidity in the ambient air and also is the browning. At 60% RH, the water loss from the pericarp of the fruit after 3 days of storage was up to more than 50%, while only was it 19% at 90% RH for the same duration. Browning occurred in the same rate. It took only two days for the initial red colour of Lychee to disappear and become unacceptable for commercially marketing at 70% RH storage rather than up to 7 days at 90% RH storage. Table 4.4 Weight loss, browning index, eating quality and disease incidence of litchi fruit after 30 days of storage at 10C under controlled atmosphere at high relative humidity1 Weight Browning Eating Disease TSS (%) Total Ascorbic titratrabl acid loss (%) index quality incidence e acidity (mg/100 (%) g pulp) Initial value 0 1.2 8.1 0 16.6 0.67 28.6 Air 4.8a 2.4a 6.3b 5.5a 15.3ab 0.58 17.9b (control) 1.4b 7.8a 1.5b 16.1a 0.63a 24.5a 3÷5% O2 & 1.2b 3÷5% CO2 Source: Jiang and Fu, 1999 The corresponding means within a column followed by the same letter are not significant at the 5% level.

Table 4.5: Optimal handling conditions for lychee Storage Temperature 1 ÷ 20 C Relative Humidity 90 ÷ 95% Controled Atmosphere Condition 3 ÷ 5% O2 + 3 ÷ 5% CO2 Approximate Storage Life 3 ÷ 5 weeks Source: Extracted from Marita, C., in Postharvest Technology of Horticultural Crops, 2002 There are various recommendations for optimal advanced storage. As shown in the above table, the optimal temperature range was between 1÷20C. However, Qadir and Hashinaga (2001) suggested 50C. These different suggestions can be due to their consideration to different cultivars. In fact, the optimum temperature may range differently depending on the extent of temperature the fruit exposed to during and at harvest. For growing areas with high temperature at harvest (370C), it seems that the fruit is more chilling sensitive. This behavior needs more research to fully understand and have precise storage regimes for extending the fruit shelf life. Moreover, the storage duration to be expected should decide on the extent of storage temperature. This is because of the fact that, the lower temperature it is, the more chilling injury the fruit may suffer. 1

Note from Jiang: Eating quality rating of pulp was assessed hedonically by a six-member panel and disease incidence monitored by recording the percentage of fruit showing visible fungal growth or bacterial lesions on the peel surface. Weight loss, browning index, eating quality, and disease incidence were 0%, 1.2, 8.1 and 0% at harvest, respectively. The corresponding means within a column followed by the same letter are not significantly different at the 5% level.

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CHAPTER 5 RESEARCH FRAMEWORK AND BASED ON TECHNO-MANAGERIAL APPROACH

PERSPECTIVE

5.1 Techno-managerial approach Fruit products are living materials that change over time due bio-chemical, physical and microbiological influences. This leads to a huge variation and complex interdependence in perishables. Thus in analysing the system are needed both the use of human behavior accompanied with the use of technology to understand behavior of living materials. In addition, the aspects such as sociology, economics, legislation should be included in problem identification following by possible interventions. They are all affecting on whether the technology can be acceptable to the situation or not. Therefore is emerging the concept of integrated use of technological disciplines and managerial sciences, so called techno-managerial approach (Luning P.A. et al. 2002). One of the typical claims from the centralized management thinking is “we can solve this problem within this period, there is no technological restriction”. That is, technology has to be proved feasible first of all. Thus it is not surprised hearing typical claims that “it is cheap, but it is still a Dream1 for farmers”, or “it works very well, but why it does not work?”. Obviously, the failing of these projects arises from lack of multidisciplinary preproject research in order to understand what the root problems are. This situation can be overcome from a systems perspective to understand the whole picture and its rational as well as its unrationale behind. This is the place for the techno-managerial approach, in which not only technological aspects but also complicated aspects bounding the entity are carefully considered. In short, the techno-managerial approach encompasses integration of both technology and management aspects from a system’s perspective. Both sciences should be integrated in such a way that interactions and the effects they have on between them can be judged. On the other word, the integration of these two sciences will help understanding insight of the problems and then feasible and sustainable interventions can be judged in terms of economics and behavior of the related objects as well as policy and future development. 5.2 Framework for the research From the system perspective, the final objective of Supply Chain is to maintain the quality and shelf life of the products as much as possible with minimum cost. As discussed in the previous chapter, the factor that has the greatest effect on the produce quality is browning, which is attributed for desiccation, heat injury, senescence, consequence of insect or pathogen attack (see also the previous section). In fact, browning and desiccation are coherently related to each other (Zhang and Fu, 1999). One of the important factors affecting the degree of desiccation is the interval between abscission of the fruit and treatment and handling of fruits (the transit time). After harvest, the fruit is still a living entity. Thus it consumes energy for its metabolic process, represented by respiration. This process is proportional to temperature by a factor of 10. It 1

Dream is also a popular motorbike brand among urban dwellers but not farmers.

19

is therefore, critical important bringing the harvested products to lower temperature as soon as possible. In addition, the longer this interval is, the more severe the attack of insect and pathogens. On the other hand, whenever the equilibrium of water content between the fruit and the ambient air have not been reached, the fruit continues its loss of water gradually. Thus the extent of desiccation will be eased by a decrease of the deliver time (the time since the produce is harvested till it arrives at the customer, neglecting the adding value time). On the way from harvest to consumption, the fruit is exposed to various handling operations that may cause damage to it. This results in inducing ethylene production and accelerating respiration, thus causes faster ripening and heat release, and subsequently a shorter shelf life. What’s more, mechanical damage disrupts the natural moisture barrier of the product, thus accelerating water loss. In addition, damaged areas are also becoming open doors for decay organisms. Although ethylene production in Lychee is low after harvest, subsequent postharvest infection and damage can increase the endogenous ethylene levels (Jevathy J. at al. 1997). It is therefore important to control the density of ethylene around the fruit so that the senescence can be slowed down. An effective way to control insect and pathogen attack is the use of heat treatment (HWB or steam) and SO2 fumigation. However, the more effective way, SO2 fumigation increasingly faces with the concern of chemical residues by consumers, especially the urban consumers. Above all, it is necessary to realise that whatever postharvest activities are carried out, the fruit quality always tends to decrease over time. Therefore postharvest quality can be improved by an increase of quality at harvest. This means a better growing technologies as well as orchard management. A proper pruning, nutrition and irrigation profile provides the trees with enough sun light, nutrition and water, as well as less room for pathogens development, which are among the most important factors for production of high quality fruits. Considering all of above, it is realised that both technology and management are to be taken into account. The proper use of management and planning can lead to a reduction of transit time and delivery time. These can be carried out by reorganizing the links as well as improving them in the Food Supply Chain. In the mean time, the technology can jump in so as to keep the product at minimum metabolic process and minimum contamination by pathological entities. Based on what discussed above, it is the purpose of the paper to develop a research perspective for further study. For easier applying, a schematic has been drawn as follows.Note that the distinction between management aspect and technology aspect is only relative and for only realizing the commitment of both aspects in the objective orientation. One in the technology side can be involved with part of management. For example, SO2 fumigation is merely a technological aspect. But in order to realise it, it is necessary to take into account of planning, organizing for applying that technology in such a way that it is in hand of the beneficiary, it can give more benefits than the former one (without application of SO2 fumigation), and of course it must be under legislation and consumer’s concern. 20

That is management can go ahead of technology and stimulate technology improvement, but can also on the other way around. Improved Suplly Chain performance

Improved Shelf life Reduced Browning

Reduced Insect & Pathogen Attack

Use of SO2 or HWB

Lower Cost

Reduced desiccation

Transaction

Reduced heat injury

Reduced ambient temperature

Reduced delivery time 1.1.1 Management

Technology

Reduced senescene effect

Reduced transit time

Reduced mechanical Damage Lower C2H4 concentration Higher Quality at harvest

Increased Nutrition

Managed Irrigation

Orchard Management

Figure 5.1. Objective Research Framework

21

Better Variety

5.3 Research perspective Technology is mainly dealt with requesting cost or labour for adding value to the fruit (i.g. sorting and grading, bagging and packaging, transporting, …). On the other hand, it tends to lengthen the delivery time and transit time as well as to increase damage (both mechanical and chemical damage due to more transit operations) in the fruit. While delivery time is mainly dealt with management aspect of which the main purpose is to smooth the food flow in a cost-effective way. Thus management tries to minimize the transit and delivery time as much as possible. This dilemma raises the idea of integration of management and technology. It means management helps technology to be fulfilled in accordance with the management boundary and on the way around. From this perspective, we can draw out a research perspective for improving performance of Lychee in the market. Management intervention and limitation

Transit Damage

Shelf-life Quality

Quality at Harvest

Preharvest Growing

Adding Value

Nutrition Orchard Irrigation Variety

Technology Intervention and limitation Figure 5.2. Research Perspective

22

CHAPTER 6 THE LYCHEE SUPPLY CHAIN PERFORMANCE IN BACGIANG 6.1 Introduction Traditionally, most of researchers have been giving focus on either technology aspect or management only. It is typical for Vietnam. The urgency of developing new technologies is to bridge the gap in technology between Vietnam and other developing countries, especially ASEAN bloc. This tendency is in a way has positive effect on knowledge extension, but in another way has little contribution to realising the Government twin aims of economic development and poverty reduction. It should be reaslised that the complication and multidisciplinary charateristics in agriculture development make it necessary considering each of its issues from a systems point of view, taking into account all actors and factors pre- and after the point to be studied, which may have great effect on the issue in an implicit way. That is why the environment of the supply chain as well as the characteristics of the actors involved were analysed in this chapter. First it examined the fruit pattern in Vietnam, with a bias on Lychee. Than it described the fresh Lychee Supply Chain before examining the characteristics of the actors involved in the Chain. After that production and postharvest patterns were described. Based on that, at the same time, critical analysis was done in order to have a profound understanding of factors affecting the performance of Fresh Lychee Chain. The results of this chapter were the basis for an analysis focus in the next chapter. 6.2 Fruits Pattern 6.2.1 Trend Over the last ten years, the fruit growing area has increased more than double since 1992. It was found from the survey by IFPRI-MARD (2002) that the growth of fruit area was 6.5% over the period, while the value growth was only 3%! This was accounted for a decrease in price and yield over the period. Especially is the growth of the three newly commercial fruits, Lychee-Longan-Rambuttan. Its growth was 37% annually. However, its output was found only 25% annually (IFPRI-MARD 2001). This means a decrease in yield. Table 6.1. Trend of Fruit Production and Value from 1990 to 1999 Years 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Area 281 272 26 296 320 346 375 426 447 496 (1000h) Value 5,029 4,828 5,026 5,325 5,415 5,578 5,688 6,132 6,091 6,193 (billion VND)

23

Source: VGSO 2002 140.0

Area (1000ha)

120.0 100.0

Citrus Banana

80.0

Mango

60.0

Pinapple Lychee+Longan+Rambuttan

40.0 20.0 0.0 1994

1995

1996

1997

1998

1999

Years

Figure 6.1. The growth of selected fruits over the period 1994 – 1999 Source: IFPRI-MARD (2002). Anyway, we can see that the economic reform process in Vietnam has stimulated the production of fruits and vegetables in three ways. By raising the production and domestic availability of rice, rural households are able to allocate part of their land to fruits and vegetables with some assurance of being able to produce or buy the rice needed for household consumption. By expanding domestic incomes, the reforms have increased the demand for fruits and vegetables as consumers seek to add diversity to their diets. The two largest cities are particularly important as sources of demand for fruits and vegetables. Because of the perishability of fruits and vegetables, the production zones to supply the city are often located relatively close to the cities. By establishing a realistic exchange rate and liberalizing exports, the reforms have created new outlets for fruit and vegetable processors. 6.2.2 Production The survey by IFPRI-MARD (2002) found more than 85% of household involved in fruits production. The perishable can give more profit and was grown more often among high income household than low ones. It is also true for Lychee, of which the growers sold 97% of their production. It was calculated that the rice revenue per hectare of rice was only 6.8 millions per season, in which the cost was 1.7 millions VND. It means 5.1 millions VND return for family labor and land. In the North, where there are two seasons, the revenue was 10.2 millions VND. It was approximately 5 times more for Lychee growing (Vandeveer 2000). However, it should be noted that Lychee growing needs more labor intensive. In addition, its perishability has limited its production. In short, the Lychee (and perishable in general) growing can give higher profit, but it needs household with more farming and postharvest skills; availability of labor; and proximity to markets. 24

6.2.3 Consumption trend The Vietnam Living Standard Survey most recently (1998) showed that the average comsumption of fruits in 1998 is 17 kg/person (equal to 50,000VND value), an increase of 31% compared to that in 1993. As the analysis in the survey, the elasticity for the fruit is 1.09. It means the growth of fruit consumption is greater than that of income. More interesting is the consumption trend in high valued fruits such as mango and orange, in which a great difference in consumption between the poorest and richest was found. Consumption in value was only 1000VND for mango and orange in the poorest. Whereas it was 20,000 and 31,000 VND respectively in the richest. The elasticities of mango and orange are 1.38 and 1.45 respectively. It means that there is a greater increase in high valued fruit consumption than an increase in income. This is a good news for Lychee growers. The fruits consumption in Vietnam is still quite regionally distributed. This might be explained by the limitation in transport and markets as well as the poor extension of the fruit’s shelf life after harvest. However, the changes is going on. The survey in 1998 showed an average consumption of 7.3 fruits and vegetables, significantly greater than that in 1993 (5.8). 6.2.4 Market orientation Last decade has undergone transformation of fruit growing to more market and export oriented. The VLSS (1998) found a tendency of increased commercial onrientation in fruits growing. Its sale has expanded from 58% to 71% over 1990’s Vietnam is producing about 3.8 million tons of fruit. Although fruit and vegetables are mainly produced for the domestic market in unprocessed forms, about 15-20% of the production is exported. The export value increased dramatically from some US$ 70 million in 1999 to US$ 330 million in 2001, but dropped sharply to only around US$ 200 in 2002 due to the drop of both volume (about 20%) and price (about 15%). Vietnam is expected to export US$ 300 million worth of vegetables and fruit in 2003 (Vinatrade).

Figure 6.2. Fruits and Vegetable Export 1995-2002 Source: Vietnam General Statistical Office, VGSO 2002

25

With more than 36 major export markets, among which China is the biggest (64%), Vietnam has ambitious objectives for fruit and vegetables exports with a view to diversifying and increasing revenues for agriculture. It is taking various initiatives to boost production and exports. These initiatives include: 1)stimulate growers shifting to fruits and vegetables (more profit than staple food such as rice), 2)disseminate information and provide soft loans to farmers; 3)upgrade the transportation system and processing and storage facilities; and 4)provide incentives to private foreign and domestic investment in fruit and vegetable production and processing for export (it is now only capable of processing 150,000 tons fruits and vegetables per annum).

Japan 7%

Russia 4%

Korea 4%

Others 10%

Taiwan 10%

China 65%

Figure 6.3. Construction of fruit and vegetable export markets Source: VinatradeUsa (2002) www.vietnam-ustrade.org 6.3 Supply Chain Description 6.3.1 Product flow Considering with only commercial growers, the Survey by IFPRI in 20012 covered a sample of 150 growers. The survey showed the direct link between the grower and the trader (see the annex G) for the largest proportion of the fresh channel. The transformation of ownership occurs at the farm gate (70% of fresh produce), after harvesting has been done by the grower. The private transport is hired to take the produce to the trader. The fruit is then sorted, graded, disinfestated (not included if the produce is for processing later), and bagged and packaged, then it is transferred to the storage. From there, Lychee is following to retail markets, processors or exporters, accordingly. On the other hand, interested in the whole picture, Nicolas M. (1998) argued that the fresh channel mainly flows directly from the grower to the market. Obviously the latter took place 3 years before the former, so part of the difference might be explained by the rapid change in the marketing channel recently. However, there is an agreement that the direct link between the grower and the processor as well as the exporter. When the price is 26

dropped sharply due to saturation of the local market (always occurs in harvest season), a large amount of Lychee up to 60% of production is dried and preserved for exporting. China governs the dried Lychee market almost 100%. 6.3.2 No cold storage The grower is often on a passive side. They do not have cooling facilities for extending Lychee shelf life. Therefore, they are dependent on the trader. This can be explained by the fact that neither does the trader nor the wholesale markets have cooling facilities. Again they make transactions totally dependent on the instant demand. This problem raises the concern of equipping cooling facilities. However, as will be shown in the grower and trader’s profiles, cooling is far from production not for Lychee only but for all other fruits. So another way should be worked out so that all other perishables can benefit. 6.3.3 Poor links When the links between the actors involved are good, the produce flow will be faster thanks to right and rapid decisions. It means a reduction in delivery time. However, there is little link between the grower and the trader (so called vertical cooperation). Up to 97% of the producers complained lack of buyers willing to provide contracts. Among those with contracts, 81% could not choose contractors freely. From the Supply Chain Perspective, it is obvious to realise that the Supply Chain as a whole is not solid at all, neither in horizontal nor vertical integration. We can say that there was no vertical cooperation between traders and sellers (so called upstream, mostly growers in Lychee business) or buyers (downstream such as retailers, domestic traders, processors, …). It is the same in horizontal way. Only 6% of the traders were a member of an association, and all of them were exporters. The main reason for this low level for association membership was due to no relevant association available (76%). According to traders, they can benefit various services by such associations, especially services of coordination of buying and selling activities and building contacts with growers. The poor membership can be explained partly by the fact that most of traders are private ones, which are now still in unfair business position compared to state ones. In addition, the rapid shift from self-sufficient production to commercial production in rural areas has negative effect on cooperatives and thus also whatever related to cooperation. Targeting to a higher benefit, the fresh Lychee channel is always in favor for all the actors. However, due to Lychee’s characteristics of perishable, short harvest season and distance between the actors involved, it is a big challenge for all to maintain the fresh channel in such a way that the Lychee quality is satisfied at consumption and for more shares in potential markets. Looking at this channel as a whole system, we realised that there are many actors (people) and factors affecting to its performance. Therefore the following first examined the profiles of the grower and the trader/distributor as well as the retail and wholesales before entering a study on production and postharvest pattern. Based on that, in the next chapter, a discussion of feasibility to improve some points and links in the chain as well as production and postharvest patterns is to be given.

27

6.4 Characteristics of the actors in the Chain 6.4.1 Growers Characteristics 6.4.1.1 Farming Systems General characteristics The typical farm household included 5 people. The average education of the heads of household was 7 years (Vandeveer, 2000). From another perspective, IFPRI-MARD (2001) found that the level of education of heads of household was a 46.7% for male-headed households over secondary school and 57.9% for female-headed households. Labor was utilised mainly in the household. Two-thirds of households used only family labour. The cultivated land was 1.25 ha, in which 0.11 was rented. This was much larger than the average area of 0.4 ha (Vandeveer, 2000). According to the survey by IFPRI-MARD (2002), the total revenue of the commercial grower was 38 millions VND in average.

Female

Male Percentage

0% None

20% Primary school

40%

60%

Secondary school

80%

100%

High school

Figure 6.4 Education of growers by genders Source: IFPRI-MARD 2002 Asset ownership In the survey by IFPRI-MARD (2002), the asset ownership characteristics of commercial growers were examined as follows. The asset possessed by the greatest number of growers (61.3%) was pesticide sprayers, followed by pumps with 53% of growers owning them. There were very few growers with warehouse (3%). This low use of warehouses has put growers on the weak side in the harvest season. As the peak of harvest, all harvested produce has to be sold at soon as possible, no matter of price. This contributes to a big price fluctuation during the 1-month harvest season.

28

Table 6.2. Asset ownership and value by function and type of asset

Function of asset Equipment Transportation Building and storages Other Total Type of asset Pump Pesticide sprayer Generator Cart Ox Bicycle Motorcycle Ship Barn Pit House Warehouse Other

Percent of farms owning

Average value among owners (1000 VND)

Percent of total value of assets

86.l 65.9 18.6 5.7 91.4

2,083 3,087 11,226 2,409 2,503

30.1 34.2 35.1 0.6 100.0

52.9 61.3 6.0 13.4 4.6 26.1 7.0 21.9 3.3 3.3 5.5 3.1 5.3

1,288 600 2,008 470 1,837 392 14,565 2,353 6,820 3,224 24,803 4,914 10,409

12.3 6.7 2.2 1.2 1.6 1.8 18.7 9.2 4.1 1.9 25.1 2.8 12.4

Source: Survey of Commercial Growers, IFPRI-MARD 2002 Experience of commercial growing Most of the growers began their commercial production relatively recently. About one half of the respondents started growing the fruit since 1990 and two-thirds since 1986. However, these figures do not simply reflect the year the household starting farming. In most cases they grew other crops before starting to produce the fruit (F&V 2001). This suggests that economic reform (1986) along with booming of Lychee business in the last decade have facilitated the transition from subsistence production to commercial production. Saving tradition In an attempt to investigate in the lychee insurance, Vandeveer M.L. had worked out some other characteristics of the lychee grower in Lucngan, Bacgiang. Nearly all operate smallscale livestock activity (roughly two slaughter hogs), with the great majority of produce for markets. About half the households raised chickens, for their consumption mainly. The interesting thing is that there was little cash expense in livestock, which was fed mostly by crop residues and by-products and the main purpose of this animal production is for home comsumption only. This could be accounted for the concern of food security in the past and saving tradition among Vietnam households. It might explain partly why it is difficult for the grower to be convinced for investigating into new technologies unless the capital is in hand.

29

Gender issue Even though there is no significant difference in level of education between women and men, Gender issue is still a problem. The allocation of work is quite distinct between men and women. In case of selling directly to the market (30% of the produce), most often the woman was the one to take crops to the market by her bicycle. She can either sell her fruits to wholesalers or retail markets. Table 6.3 Jobs distribution in genders Predominant by male

Predominant by female

Land preparation Construction Access to the credit Access to extension service Community meetings Work hours per day: 8 Work days per year: 220

Sowing seed, transplanting crop Taking care of crops and animals Meal preparation, domestic chores Fetching water and child care Transporting, selling crops Work hours per day: 11 Work days per year: 300

By both female and male Harvest Replanting Weeding Firewood

6.4.1.2 Access to communication There was very little access to communication facilities, and only 4% of the growers have telephone. This accounted partly for the problem of product flow. Often when the price rises at one place, then the produce flows to that market. But when it arrives, the price has fell down already. Thus the produce has to be transported back or waited! This causes the longer transit time for the produce flow. Table 6.4. Access to communication and transport (percent of respondents) Has Telephone (%) 4 Access to Telephone (%) 59 Access to Fax Machine (%) 0 Use of Transportation (%) 49 Source: IFPRI-MARD (2002). It is interesting that up to 30% of respondents reported personal contacts as sources of information. However, the intimate personal communication does not advocate for a possible good cooperation. On the contrary, cooperating has never been successful in large scale yet. This might be due to the consequence of old cooperative falling down at the beginning of 80’s and the loosing face culture. 6.4.1.3 Relationship with extension services Newly crop business has grown in the last decade, thus the extension service was quite small. Especially for Lychee of which less than 1 third of growers received extension service compared to three quarters of producers of dragon, mango, cucumber… Totally the greatest number of respondents (63%) confirmed getting extension services from Extension Agents whom were scored average in quality of provided information. Research Centers were scored the highest for good quality of service, but it shared very little part in extension service. It is surprising that the Farmer’s Union played a weak position in providing service, both quantity (only 7 %) and quality (only 1.66% considered 30

as good, the rest was fair and poor). In addition, two important government organizations in extension services for growers, Department of Technology, Science and Environment, and Department of Agriculture, had almost no information for the farm, 0.06 and 0.33% respectively. Lack of partnership between organizations is realised as a critical constraint in providing service to growers. The extensionist lives in local areas, and has little access to up to date information and technology. Thus their service was average even they were close to growers. While the researchers have high qualification but they are small and may be bureaucratic and tend to be far from direct contact with growers. In addition, the ineffectiveness of Farmer’s Union and two mentioned above government departments, which were near growers, posed the question to their task and partnership in the course of agriculture development.

Figure 6.5. Quality of extension service by types of organizations Source: IFPRI-MARD (2002) 6.4.1.4 Credit Access It affects the decision to investigation in technology improvement. There was 41% of respondents borrowing loans, among which, 57% had credit satisfaction. The low credit service was accounted for credit limit regulations imposed on banks by the Government. The total credit requirement (not actual credit) for the grower was 21 million dong, while the average revenue for the region was 38 million. This indicated that those growers who accessed credit needed nearly 55% of total revenue in credit requirements. Actual credit taken out in Northeast was not known, but in average was much lower (6.5 million dong). The majority with loans obtained them from the Bank for Agriculture (64.5% of growers). The second was other credit Institutions (12% of growers). And once again, loans from Friends and Relatives (typical for informal way) plays an important role as the third rank in percent of growers with loans. 31

6.4.2 Trader Profile The section of production and growers has shown several factors affecting the quality and shelf life of Lychee after harvest. However, this performance has been affected by also many other constraints, many of which relate to the availability and reliability of markets for growers’ output. Therefore, the traders play a critical role to promote production and quality of the produce. Moreover, in fresh channel, the majority of postharvest activities is being carried out by the trader. In the context of this study, the traders do not only buy and sell the same product, but also carry out adding value activities before selling, such as: Sorting, Grading, Packaging, …That is why this section examined the traders’ profiles Table 6.5. Characteristics of trading companies Male (%) 78 Female (%) 22 Age (Years) 43 Experience (Years) 4.2 Unregistered private businesses (%) 77 Staff 47 Market Value (1000VND) 6.1 Source: IFPRI-MARD (2002). The typical manager is male (78%), 43 years, and has only about 4.2 years of experience as a trader. Trading businesses are primarily unregistered private business (77%). The market value for domestic traders is about 6.1 billion VND. The traders were quite specialized in their marketing. In general, 85% of the income comes from the marketing of the fruit. Primary School

University

0%

20%

High School

40%

Middle School

60%

80%

100%

Percent of Traders

Figure 6.6. Characteristics of the managers of trading companies Source: IFPRI-MARD (2002). The education level of business managers shown in the figure above gave clue of much longer in school by traders than by growers. Up to 75% of traders have finished their high school or university. The survey missed questioning about background of the trader, which might be important for cooperation between traders and growers. It is normally easier for the people with the same background to cooperate, because their languages are mostly the 32

same and they share the objective. In fact, the traders are normally grown up in cities. Specialised trading is not popular in rural areas yet. In terms of sources of start-up capital, among 173 respondents, up to 168 used capital from their family and friends. Only 5 used loans from commercial banks. This is consistent with the constraints in borrowing money from the official organizations for launching business in Vietnam. In addition, the interest rate of the loan is 1.5%, which is significant higher than officially (0.6 ÷ 0.8% in 2002). The gross revenue of traders is much higher than growers. The weighted average revenue of the traders is 5.105 billion VND, which is 62 times greater than that of commercial growers (refered to annex L: Farming System). Among 104 respondents, up to 28 traders have the gross revenue more than 5 billion VND. Only 6 traders answered their gross revenue less than 1 billion VND, which is already 9 times more than that of commercial growers.

120

80 60

58

40 28

10,000,000

20

16

12 7,500,000

5,000,000

2,500,000

98 Number of traders

100

0 1,000,000

Gross Revenue

Figure 6.7. Accumulated gross revenue of traders (Number of the sample: 104) Source: Survey of Fruit and Vegetable IFPRI – MARD (2002) It was realised that the difference in participation of men and women was more severe by traders than by growers. This is consistent with the fact that the female education and position at work decrease as her benefit increases. The informal way of borrowing as well as trading played the major part between traders. It is worth to note that a significant gap between growers and traders were exhibited, both in education level and revenue. All of these may have negative effect on cooperation between traders and growers. 6.4.3 Market characteristics There are few wholesale markets in Vietnam and most of them have not been organized and managed yet. Thus most of transactions are still under informal way. This brings in unfair price and indiscriminately use of pesticides or chemicals by sellers in order to improve the product appearance, and make it more attractive to consumers. The benefit fell on the sellers, but severe health problems fell on consumers.

33

Price (x1000VND)

25 20 15 10 5 0 1st week 2nd week 3rd week 4th week 5th week 6th week trading time

Figure 6.8. Price fluctuation during the harvest season Source: Kimbien cooperative, 2003 season (farm gate) In addition, there are no cold storage and postharvest activities in markets, thus the price depends completely on the supply. Especially for Lychee in peak season, the price dropped down to 7000VND/kg. While in the end, it went up to nearly 20,000VND. The biggest share of Lychee is in Hanoi, where is the center of business in the Northern Vietnam. There are 5 wholesales in Hanoi. But only one (Long Bien) was planned. While the other four (Caugiay, Bacqua, Ngatuso, Trunghien) crossroads developed spontaneously. They are all now located in the inner city (due to recently urban expansion), thus makes it difficult for food trucks to reach markets due to traffic jam and insufficient parking space. In order to reduce these problems, most of transactions are carried out as early in the morning as 3 O’clock. Fortunately for Lychee in Bacgiang, it takes only about 1 and a half hour for transport of Lychee to Hanoi. However, there are insufficient handling and storage facilities in these markets. Therefore, the loss of both quality and quantity is high, especially for fresh foods. Loss reached 15 ÷ 20% for fruits and vegetables (Quang, 1999). There are approximately 72 retail markets in inner Hanoi, 50 percent of which were planned and have market management boards. However, most markets have no parking facilities both for traders and customers. Consumers therefore prefer to buy foods from street hawkers. According to Quang (1999), informal street markets and hawkers shared a major part of fresh good purchases (80%). This is true for also many other Asian countries. Even Thailand and Taiwan, traditional wet markets still share up to 80% in purchases (www.dree.org). The consumer needs touching, smelling… to judge the food quality. However, due to safety concern, labeling has been made more recently. Even in street markets, many fruits with labels are becoming more attractive for consumers instead of only appearance and smelling and so on. In addition, there was a growing tendency of integrated retailers whom take fresh produce directly from the growers (such as “safe vegetables” shops). This urges labeling, packaging for all fresh foods.

34

However, the Vietnamese culture will still have great impact the way of fruits consumption. Breakfast is generally eaten in food stalls or restaurants. There is nothing to do with fruits in breakfasts, which includes mainly fast foods such as noodles with some fresh herb leaves. The important trend to fruits sale is the growing of eating out for lunch. This is because of longer commuting times which might deter workers from have their lunch at home. In addition, women are becoming more committed to industry or services and do not have much time for cooking as traditional. Consequently, there is a significant increase in catering sector (Le et al. 2000), which needs reliable origin of their supply. This brings in the growing trend of tracing and tracking for food, especially fresh produce. In short, the food marketing system is changing rapidly in Vietnam. In order to satisfy the market, there is increasingly a need of tracing and tracking for fresh food for the customer’s health concern. This is also true for Lychee, a perishable. Therefore, more attention should be paid to the fruit from production to postharvest handling, so that the fruit shelf life as well as its appearance are satisfied as reaching the consumer with both expectation quality (just at the moment of buying) and experience quality (the moment of eating). 6.5 Production Pattern 6.5.1 General Information Lychee is considered to have originated from Haiduong province, where the most important variety, Thieu Lychee, has been commercially developed. Over time Lychee has been adopted to other locations in the northern Vietnam and even to some places in the central part. Currently lychee is commercially cultivated in 3 provinces mainly: Bacgiang (about 100 km North of Hanoi); Haiduong (approximately 60 km east of Hanoi); Quangninh (nearly 200 km east of Hanoi); and some other provinces around Hanoi. Among those, Bacgiang was the most important with nearly half of production. Table 6.6 Area and production of Lychee in Vietnam Province Area (ha) Production (MT) Bacgiang 20,275 20,248 Haiduong 9,325 11,645 Quangninh 4,925 6,840 Others 15,000 Total 53,733 Source: Lychee production in Vietnam, Hai and Dung (2001). In Northern Viet Nam, the winter is short, dry and a little bit cold, while the summer is long and hot with high rainfall and humidity. This weather is very suitable for the growth of lychee. Especially, Bacgiang with favor of weather and transport has brought Lychee as the main commercial fruit in the region in less than 10 years. Especially the production in Lucngan has risen up to about 50,000 tones this year (MARD1 2003), almost equal to the total output in Vietnam in 1999 (the table above)

1

This is from MARD official information website http://www.agroviet.gov.vn/

35

6.5.2 Plant material Marcoting is predominant for Lychee propagation. Though its advantages are retaining charateristics of the mother tree and its technique is simple, there are various disadvantages of this method, especially weak root system due to shallow root system. This is excused for its low resistance to the wind and drought, resulting in part of the fluctuation as shown by Vandeveer(2000). Since 1997, grafting has been developed with participation of RIFAV and the collaboration with Quangxi Agricultural High School (Hai and Dung 2000). The rootstock varieties of healthy and straight stem are collected from local varieties so called ‘vaichua’ (sour Lychee). The scions are cut from healthy mother trees of well selected individuals which need to have been properly pruned and managed so as many new branches as possible. According to Hai and Dung (2000), grafting was applicated on a large scale since 1997 (application of grafting: 8 hectares of nurseries). However this is conflicting with the Survey of Fruits & Vegetables by IFPRI (2002), according to which dissemination of grafting has not been successful yet, marcoting still accounted for 83% of the total propagation. Overall, grafting is slowly becoming common in Lychee propagation and still weighs for a small proportion. This consequence may be resulted from the complicated technical procedure of grafting, traditional method of simple marcoting, lack of a supportive research policy. 6.5.3 Planting and Harvesting profile New plantation is done in two main seasons: Spring and Autumn, when the weather is in favor for Lychee growing with cool temperature and moderate rain fall. The main planting season is in April, with the significant standard deviation of 2.7. It means the planting was spread almost 6 months. While the weather in the Northeast is almost the same, the deviation can be accounted for little cooperation between growers and the lack of a production protocol in Lychee. However, there is no significant difference in harvesting time between growers and even between regions, of which the mean is June and the standard deviation is only 0.5 (IFPRI 2002). 6.5.4 Orchard management The planting spacing is 7x7 or 8x8m depending on the soil’s fertility and topography. The hole size is 70x70x70, filled with organic matter (farmyard manure, compost and phosphate) applied 1 month before plantation so that there is enough time for fermentation of the organic matter. For marcoted young trees, the density is 150 ÷ 200 trees/hectares. While it can be 300 ÷ 400 trees/hectares for grafted trees (Hai and Dung 2000). Pruning is increasingly becoming important by training courses and guidance by extensionists. However, there is no protocol for this yet, thus there is a huge variation in orchard management. The most stable orchard management and also higher yield is attributed for Truhuu commune (Lucngan, Bacgiang), where there are more adopters of lychee than elsewhere in the region (Vandeheer, 2001). While the topography in this commune as well as its culture is not different from the other growing areas in the district, The better yield may be accounted for the more experience in Truhuu.

36

On pests and diseases controlling, there is little attention made. However, the region experienced a dramatically decline of the fruit in 1998 already. It was accounted for brown bug, which sucks the sap of fruit causing them to fall off or shrink. With the use of fungicides in combination with proper cultivation (i.g. making the soil aerobic, pruning, fertilizing application…), the problem was solved. 6.5.5 Nutrition and irrigation There is no guildance for application of fertilizer and irrigation yet in the region. Most of growing fields are on hilly land that makes it difficult for these two activities. But the problem of lower quality has not been investigated in improvement of production pattern which may have great effect on quality at harvest. On the other hand, there is still potential for expanding growing areas and benefits compared to other crops in the region (Vandeveer 2001). Therefore, intensive farming was paid little attention, resulting in fruits of poor quality at harvest. Rain 7% Tube 2% Mech Canal 81% 4% Hand 6% Figure 6.9. Use of Irrigation equipment Source: IFPRI-MARD (2002). Among irrigation available, mechanization weighted the most (81%). There is little use of tube irrigation, which is suitable for economic watering in hilly lands. Economic watering such as tube, sprinkle,… can enhance quality of watering as well as ensuring enough water for the tree growth, but the equipment cost and technology is still far beneath the grower. 6.5.6 Cropping Patterns Table 6.7. Fruiting trend over ages First bearing Middle period Maximum yield Declined Period

Age Number (trees) 165 144 72 11

Total Average weighted Yield/tree Yield (kg/hectare)

Mean (Years) 3.7 8.6 18 23 = Ni*YI = ( Ni*YI)/ Ni = 58*150

Source: IFPRI-MARD (2002).

37

Yield Number (trees), Ni 163 144 72 11

Mean Yield(kg/tree), Yi 7.6 58 171 74 = 22716.8 = 58 = 8737

According to IFPRI-MARD (2002), with good caring, the tree can fruit at 3.7 years old in average. The maximum yield (171 kg/trees) was achieved at the age of 18. Since then the yield decreased, to about 74 kg/trees at 23 years old. However, the number of trees with maximum yield is much fewer than that of first bearing and middle period trees. It is not known yet whether the factor of age affect on the postharvest quality and shelf life.

Yield (kg/tree) 200 150 100 50 0 3.7

8.6

18

23 Age (years)

Figure 6.10. Yield vs Age Source: IFPRI-MARD (2002). 6.6 Postharvest operations 6.6.1 Drying Up to 98% of the grower involved in drying with 60% of produce. This is a contingency approach. Take the data from the survey by IFPRI (2002) for calculation. The total loss due to drying is 0.9 million VND (see annex H). But as the local market is saturated and Lychee transport to remote market is limited, drying is a reluctant option. However, almost 100% of dried Lychee is now exported to China, where the demand is high but quality requirement is low. According to Kimbien, the dried Lychee can be expected much higher price if the quality is improved. That is why VIAE and PHTI (now merged into VIAEP) have had a lot of efforts for redesigning the traditional dryer (using coal as energy) for better quality. Unfortunately, the most recent dryer (May, 2003) based on indirect drying still have not satisfied high export quality. Table 6.8. Cost of drying Lychee. Raw Material Input (tons) Loss of Raw Material (%) Drying cost (' 000 VND/ton) Postharvest revenue (' 000 VND) Average Price (' 000 VND/kg) Rate of fresh Lychee to dried produce Source: IFPRI-MARD (2002). 38

4.05 2.7 394.56 28066.73 24.8 3.58

6.6.2 Postharvest problems As small as only 2% of the grower committed to grading. According to the sample in the survey by IFPRI-MARD (2002), there are no other postharvest activities. However, since last year, it has been observed other activities such as fungicide, bagging, packaging…, even in the packing house, but only in very few big and diversified farms, where packing house can be used through the year for also other crops (through their own production and also through procurement from other farms) other than Lychee (only about one month in use). Such farms have gained a great profit by using packing house, because the fruit is handled on the spot, no transit transport is needed, thus its shelf life can be extended at maximum.

Percent of Respondents

Postharvest problem is considerable. The harvest technique caused problem the most (reported by 26% of respondents in the sample). The harvest time is in the morning or at the pre-sunset when the climate is cool, thus limits the fruit’s respiration and transpiration. Harvest in wet condition (e.g. after rain) is avoided to prevent the fruit from bacteria growth. There is no excuse for “unable to sell” by the survey, but it might be due to saturation of the market at that moment. The shelf life is short (3 days in ambient air), so that the trader always needs considerable of his transaction.

th er O

Tr an sp or t H ar ve st Ti H m ar e ve st Te ch n. .. U na bl et o se ll

er ea th

an dl H

W

in g

t ea H

s ct In se

M

ic

ro or ga ni sm

30 25 20 15 10 5 0

Type of Problem

Figure 6.11. Postharvest problems (percentage of respondents reported) Source: IFPRI-MARD 2002 6.6.2.1 Harvest maturity This was not asked by the survey. Lychee is non-climacteric, it could not ripen after harvest. Therefore, right harvest time is a critical factor to the fruit’s quality. In addition, there is likely little attention to harvest maturity by growers. Normally the traders come to farms and decide to buy. There is only 2% of growers who has contracts with traders. This is due to unstable markets and no clear standards of maturity available and poor trust between traders and growers in quality assurance. 39

Maturity at harvest is judged by experience. The most important parameters for judging harvest maturity are size and colour, which are dependent on cultivars. For Thieu Lychee (the biggest share in Bacgiang and also in Vietnam), it should be pink red with diameter more than 2.5 to be considered as the right time for harvesting. This method is fast and convenient, but the precision depends on the grower’s perception, the environment (sunlight, weather…). In order to approach to more precise maturity judgement, Jevathy.J et al. (1997) suggested taking into account of the following parameters: days since synthesis, flatness of tubercles, smoothness of pericarp, and chemical changes. It is surprising that there is no indication of the right time for harvesting neither in reports of Hoan et al. (2000) nor Hai and Dung (2000). For the other characteristics, harvest time can be based on slightly flattened tubercles, smoother pericarp, increased activity of acid phosphotase and rapidly reduced activity of alkaline phosphotase. In addition, aiming at future commercialization of Lychee, amount of chemical constituents in matured Lychee should be measured and agreed at the optimal point (see also the annex) 6.6.2.2 Harvest Technique As mentioned in Figure above, the harvest technique was one of the main problems. Unlike many other fruits, Lychee is harvested in panicles with portion of branch and a few leaves. This is to satisfy the consumer’s perception that Lychee is only fresh with its panicles! However, harvesting in panicles contributes to longer shel flife of Lychee and at the same time has positive effect of mild pruning. Especially when the tree becomes high, the picker needs to either climb up the tree or use scatters to approach the fruits to be harvested, panicle by panicle. In addition, most of orchards in the region are hilly that makes harvesting more difficult. All of these pose challenges to careful harvesting. As a consequence, there is a considerable damage at harvest. During harvesting, pickers drop fruits freely with no use of any bags or other equipment. By this way, the harvest capacity can be as high as 70 kg/picker/hour (Hoan et al. 2000), thus the harvest time is reduced, but (latent) damage is not seen yet. Several days later, the damage due to dropping can become visible, especially when the fruits are exposed to cooling. This problem becomes more serious when the transit time is long (in case of distant markets or speculation in storage on purpose). After harvest, fruits are carried (in bamboo baskets, 700x400x400, of 40 ÷ 50 kg) to a yard in shade and away from wind in order to minimise the respiration and desiccation. In yards, fruits are loaded in piles with no quality distinction. Then other people (mainly children and women) re-pick, primarily sort and cut the stems of fruits (leaving stems of 10 ÷ 15 cm), tie in bundles, load in baskets and then to the transport vehicles without any cooling equipment. 6.6.2.3 Microorganism This problem was separated from heat problem in the survey by IFPRI, but actually microorganism is triggered by heat, mechanical damage and humidity, as well as poor transport. The way of harvest (dropping) led to the latent damage, accompanied with heat (370C) suitable for most of microorganism to develop. In addition, high heat causes high transpiration and respiration, thus lead to consequent loss of quantity and quality. 40

6.6.3 Transportation 6.6.3.1 Local Transport The harvested produce are primarily sorted at farm gate. Then the fruits are transported by cart, tractor, and motorcycle, …to a main road nearby, where a truck or van is waiting for. After unloading, the fruit is graded. Out of transaction at farm gate, the rest (30%) is transported to markets by a variety of transport types. The truck has the biggest share and is the cheapest. But may be due to poor roads that the truck could not access to farm gate, hence the more mobile but also more expensive vehicles such as carts, motorcycles, … are utilised. The cart has the smallest share of transport, and the number of shipment per year for cart is the highest, but it is the most expensive. Regardless of its disadvantage, the cart is still popular in poor and short roads where other facilities such as truck, tractor… could not fit in. So poor transport has extended the transit time (cart, motorcycle… often slower than trucks), and also caused damage due to huge vibration of the produce during transport. Table 6.9. Shipping distances, costs and duration Transport

Number of Cost per Shipments Shipping Shipping Average observation shipment per year Distance Time Speed (‘000VND) (number) (km) (days)

Truck Cart Motorcycle Tractor Other Total

12 2 6 5 8 33

981.67 3.50 24.33 34.00 248.75 427.06

2.42 33.50 5.17 11.80 7.86 7.53

196.88 0.50 8.67 6.60 66.00 90.20

1.20 0.02 0.03 0.03 0.26 0.52

164.07 25.00 289.00 220.00 253.85 173.46

Average Weight Transported (tonnes) 6.17 0.20 0.28 0.70 2.06 2.91

Number of respondents/ Rate

Source: IFPRI-MARD 2002

40 35 30 25

Number of Observations Rate (' 000VND/tons/km)

20 15 10 5 0 Truck

Cart

Motorcycle Tractor Type of Transport

Other

Figure 6.12. Types of transport used by growers and rates repectively Source: IFPRI-MARD 2002

41

Total

Cost/tonne s/kg (' 000 VND) 0.81 35.00 10.21 7.36 1.83 1.63

6.6.3.2 Remote Transport Packing in trucks or vans is done tightly side by side to avoid displacement during transport, thus mechanical damage can be minimized. However, airflow is allowed horizontally through packages for prevent from humid accumulation which may lead to fungi development

Percent of traders reported

The transport is far from meeting with the large quantity Lychee in such a short harvest season (1 and a half month), especially cold transport. According to the survey by ifpri, less than 17% of the fresh fruits and vegetable traders could use refrigerated trucks. The transport rate is high. For example, the transport cost from Lucngan to Hochiminh City is 23,000,000VND/cold truck (10 tonnes). This adds 2,300VND more to every kilogram fruit, not including transaction cost yet. Comparing to the in-season price of 12,000 VND in average, the transport rate has merely added almost 20% to the total cost. Due to price fructuation, traders exprerienced the variation in price between Hochiminh City and Hanoi less than 10% when their produce arrived at Hochiminh City. So trading to the South by cold vehicles is an adventurous business. A much cheaper alternative of Lychee is transported in packages of heatproof foam boxes plus ice. However, this method experience a gradual increase in package temperature and the fruit can not endure in this transport for more than two days. It is impossible for Hochiminh City, to where it takes two days by trucks (if lucky!) 60 50

Domestic traders

40

Exporters

30

Overall

20 10 0 Movement restrictions

police checks

Restricted by tolls

inter-provincial blocks

Type of problem s

Figure 6.13. Transport restrictions reported by traders Source: IFPRI-MARD 2002 In addition, the movement of goods is still a problem. Up to 46.3% of traders in the North reported movement restrictions, which most likely due to congestion and poor roads. Police conduct was reported an impediment to the movement of goods by 40.7%. The amazing is that, the restriction reported in the North was far lower by exporters than by domestic traders. There are many reasons behind those problems. For instance, police conduct and provincial blocks are very complicated. Here is mentioned only some subjective reasons (from the traders). Lychee has been commercialised recently when the decline of state companies (on purpose by government) and emerging of private businesses as promoted by the Government. Therefore, most of Lychee traders are private, either registered or not. Thus the high restriction may be attributed for three reasons: 42

• • •

Most of traders were young in fresh fruit business. Most business is non-registered (see also section characteristic of traders). Even registered, the private business tends to be more vulnerable than the state one. Informal procurement (no contracting) has casted more serious checks

6.6.4 Postharvest handlings for remote markets As shown in the table below, only 7.7% of the traders carried out labelling of Lychee, which was an important activity for assuring reliability of the produce. This is because the long-term business was not realised in the organization. Table 6.10. Characteristics of Postharvest activities Activities

Cost 1000VND/ton Sorting 45 Grading 37 Labeling 20 Bagging 11.3 Packaging 31.1

Number of Observations (total 13) 6 10 1 5 9

Percent (%) undertaken 46.2 76.9 7.7 38.5 69.2

Source IFPRI-MARD 2002 6.6.4.1 Grading Even grading was not indicated as a problem by growers (however, it was considered important by traders. It is noted that there is a change in market since the time of the survey. That is export to high market such as Europe. According to Kimbien Cooperative, some times it failed to get Lychee with extra quality as required by European market. The problem is that the growers have not got used to grading. The export agents such as Kimbien procure produce directly from the farmers in order to shorten the delivery time. However, the traders need unpacking, grading and pathological treatment at their place. This on the contrary lengthens the delivery time and exposes the fruits to more mechanical damage. There are three markets: local market, Chinese market and European market. The fruit with highest quality (extra quality, annex) is destined for Europe market. The one with no damage but the shape with a little bit irregular is destined for local and Chinese market. The rest, fruits for processing is the least quality. The fruit to be processed might be damaged or not fully matured yet. Normally, the proportion in Europe is small, thus only less than 1% for Europe, 50% for local market, 45% for China1. The rest is for processing. However, due to poor grading and handling for extra grade, some times there was not enough fruit with extra quality for markets.

1

Most of the data in this part were taken from Kimbien Cooperative.

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The produce for Europe or for speculation is normally cleaned, lightly dried and then disinfestated. After that, it is put in the shelves for drying for 1 ÷ 1.5 hours before packed in wooden buskets covered by plastics for transporting to the airport. In this case, the cooling transport is employed. The buskets are covered by plastics for preventing the fruit evaporation. However, this coverage tends to stimulate development of bacteria and fungi. So the busket needs some holes for ventillation. However, the optimum for packaging needs to be investigated more, not only in Vietnam but also in the world. 6.6.4.2 Bagging and labelling Bagging and labelling are least expensive but are done least among operated postharvest activities, 5 and 1 respondents respectively among the 13 respondent sample. The reason why the traders are not interested in these two jobs may be explained by two reasons: Brand has not been considered important by consumers yet in Vietnam (as discussed in consumption section). The efficiency of bagging to extending shelf life of the fruit (and actually to the costeffective) has not been clearly proven. 6.7 Concluding remarks The gap between the grower and trader is big, both in background and revenue as well Poor cooperation between the grower and the trader Poor contribution from other stakeholders such as Extension servives, research centers,… No cooperation between growers

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CHAPTER 7 INVESTIGATION ON SOME CRITICAL POINTS 7.1 At harvest As discovered in the previous chapter, the problems that most growers confronted at harvest are harvest technique, microorganism and heat effect, and transport. We examined them alternatively. 7.1.1 A systems perspective to harvest technique problem The hilly orchards with high trees are the managed problems for harvest technique, while harvesting in panicles is a managing problem (it is to satisfy customer, we can not do anything about it). The hot and sunny weather during harvest (average at 300C in the summer morning) also has great effect on the pickers’ manual operation. Due to these difficulties, the harvest capacity is low, thus the pickers tend to be careless and drop fruits directly in order to enhance his harvest capacity, without realising latent damage. Therefore, harvest technique itself is not a problem, but its consequence, mechanical damage (see Fig. below). Hot and sunny weather

Hilly orchards

High trees

Harvest Technique By hand

Mechanical Damage

No tools

Figure 7.1 Harvest technique problem fish bone The managed problems can be eased by orchard management, the use of folding scatters, the use of bags when harvesting as well as replacing old and high tree orchards with young trees at proper time. Orchard management can be done effectively by pruning, not only to give more light to the fruits and thus enhance the quality and hinder pathology development, but also to limit the scale of the tree (RAP, 2002). In addition, increasing density of the orchard (by the use of grafting) can contribute to more fruit density. Hence, the use of folding scatters in the higher density is more effective in the sense that more fruits can be picked at a certain place of the scatter. Roughly, when replacing marcoting (150 trees/ha) by grafting (300 trees/ha), the harvest efficiency increases 200%. The grafting up to more than 300 trees/ha was applied in many countries already, especialy China and Thailand where little mechanization utilised (as in Vietnam). However, if the mechanization for orchard management (including pruning, fertilization, …) is to be used in the near future (within the cycle life of the tree), it is necessary to control the density below 300 trees/hectares. This problem happened in Australia, where it is almost impossible for many growers to use mechanization for their 45

orchard management. Because the density is too high (400 trees/ha). When planting, they did not think of employing machines yet. Bags can be hanged on the place of panicles to be removed from the tree, so that the damage due to dropping is eased (Hoan et al. 2000). In addition, bags help keeping the fruit from being contaminated, thus limiting microorganism infection, which was indicated as the third problem. However, hanging bags again decreases the harvest capacity. The application of the use of this method should be experimented and evaluated so that the pickers can be convinced. With regard to replanting, the yield tends to decrease after its age of 18. There is no survey of the yield trend over the years, but it can be recognised that replanting should be done at a certain moment when the yield is too low and the quality drops. 7.1.2 Microorganism and heat effect In order to ease this problem, heat effect and humidity accumulation (due to piling, referred to 6.3 ) as well as damage and contamination (due to dropping fruits on the ground) should be avoided as much as possible. In addition, cracking before and after harvest induces all the above problems. However, the other way around can be explained that attack from bacteria and mechanical damage induce cracking (see also 4.4.3.2 Desiccation) Heat effect

Cracking

High Humidity

Micro-organism Contamination

Shorter shelf life Lower quality

Mechanical Damage

Figure 7.2 Micro-organism problem fish bone As discussion in the section above, mechanical damage and humidity have been eased by improved harvest technique. We will discuss heat effect, contamination and cracking. 7.1.2.1 Diminishment to heat effect Heat is the most important to the fruit shelf life. To diminish heat effect, for the farmers who have an intention of producing extra quality, it may be useful to use “pot in pot” cooler (Mohammed 2000). By experiments, it was shown that eggplants stayed 27 days in pot instead of 3 days in ambient air. African spinach remained edible after 12 days in this cooler instead of 1 day in normal ways. A research of this method should be done for Lychee in the region. This cooler includes two earthenware pots of different diameters. The smaller one was put inside the bigger one so as there is space between them for wet sand. The fruit is put in the inside pot (smaller one) and covered with a damp cloth. Then put it in a dry and ventilated place. This system’s operation is based on the fact of acquiring heat when changing phase. Through the outer surface of the larger pot where the humidity deficient air is circulating, 46

the water in the sand between two pots begins to evaporate. Due to evaporation process, water vapour (transformed from water in sand) takes energy from the sand and pots, thus leads to a drop in temperature of several degrees in pots and sand, hence cooling the inner container and inactivating harmful micro-organism. Moreover, the relative humidity around the fruits may be increased and hinder the rapid water loss. Consequently not only the shelf life of the fruit but also its quality is improved and its loss of weight is reduced. This technology is simple and maybe suitable, because: Vietnam is traditional in ceramics and pottery. In addition, near Bacgiang was Battrang (Hanoi) the most famous place of producing ceramics pots. The efficiency of evaporation might be high in Bacgiang, where most of Lychee growing areas are located in hilly areas with high temperature and low relative humidity (average 290C and 81% in June-harvest season) Moreover, for the second class (for local and Chinese markets), the use of evaporation can also be used. The shelves for putting fruits after harvest can be added by boundaries around each floor of the shelves so that more fruits can be put. By covering the outside of shelves with damp cloth, and put shelves in dry and ventilated place, evaporation in the surface of the cloth will occur. The efficiency of these shelves might be less than the “pot in pot”. But any way, it is an easy job by adding only a cloth. The use of this method might bring the RH up to more than 90%. This can lower the water loss by a factor of about 1.5 after a 3 day storage (referred to Figure 4.5). It means one tones of Lychee in the ambient air (80%RH) will be reduced to 900kg at the third day in ambient air storage (due to water loss mainly in pericarp), while it will be 950 in humidity control storage (with special wet cloth, >90% as estimated). This brings in 50 kg more, or a 370,000VND surplus/ton! The growers do not need to do or invest much. The material is available (the bamboo shelves are available, because 98% of growers involved in drying all have shelves). In addition, the loss of colour (Figure 4.5) up to 1.5 times in ambient air (80%RH) more than in modified climate (90%RH) must cause loss of revenue (no data available, example of calculation available at annex). 7.1.2.2 Contamination By the use of bags, contamination is diminished. However, the use of bags has increased accumulation of humidity and heat due to the fruit respiration, if no effective way of handling management. So ventilated bags should be employed. However, the grower can not invest in pathological treatment at farm now, so in case of distant marketing or purpose of longer storage by the trader, it is advised for the grower to do packaging only, not bagging. Otherwise, waste of labor occurs due to the fact that the trader needs to unbag for pathological treatment. Just after harvest, Lychee should be carried to shadow and nonwindy place. Spraying water on the fruits can help reducing water loss (RAP 2002). It may be proper to put the fruits on the shelves (which is used for drying fruits), instead of piling fruits on the ground. This will facilitate primarily sorting, because the fruits are more exposed to the sorter from the shelves than from piles on the ground. Furthermore, sanitation in shelves should be done regularly to prevent pathology development.

47

7.1.2.3 Cracking Besides variety selection, nutrition and irrigation management has been proven a great effect on the fruit cracking after harvest (Jevathy et al., 1997). An application of ZnSO4 spray at 1 and 2% levels reduced fruit cracking. In addition, during fruiting season, watering should be provided more than normal to prevent cracking (Huang et al., 2001). Especially in case of drought during flowering and development of fruits, economic and effective irrigation such as drop one, humidifier or sprinklers should be paid more attention. In addition, the cheap use of these technologies is questioning to the researchers and local officers. 7.2 Transport Transport problems

Poor roads

Toll s

Provincial blocks

Police conduct

Non-registered

No contracts

Movement restrictions

Little experience

Figure 7.3 Transport problems tree The poor road is the main problem in transport. Based on Table 6.9, We can see that the cost for transport of 13 respondents/year is 12 millions VND higher than that in an ideal case of roads access to trucks every where in rural areas. However, this problem can only be solved by the Government or it should be privatised with support from provincial Government. In the side of the users, In order to minimise the transport restriction, the traders should be active in registering their business and providing contracts to growers officially so that their relationship with local authorities can be improved, thus restriction by local police can be reduced. This is significant due to the fact that personal contacts still play an important role even in the organization’s tasks. In addition, cooperation with each other would be an important choice, which would give them opportunities to learn from each other and bridge their shortcoming of experience. What is more, partnership with other organizations involved will not only build up their knowledge but also will smooth their product flow (because many organizations involved are also related to local authorities), thus shorten the delivery time, a critical factor to Lychee.

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7.3 Partnership Ven Diagram Government’s Influence

Farmers’ Union Bank for Agriculture Extension Services Deparment

Coop. Growers Processors

Research Centers Traders

Figure 7.4 Relationship between growers and other stakeholders There are various organizations involved in commercial crop production in Vietnam. Either their tasks seems separate from each other, or they overlap on eachother, there was almost no partnership between them. It was noted that the good partnership will help overcome shortcoming and bias of each stakeholders involved. Good partnership can also contribute to better flow of produce. However, it is a pity that the survey by IFPRI did not cover the characteristics and resources of the external stakeholders involved. But from the author’s own experience in research centers, some conclusions can be drawn out, related to extension departments and research centers only. 7.3.1 Extension Departments As discovered in the last chapter, the extension department had the most access to the growers. However, there was little chance for them to get contact with advanced technology as well as newly strategy from the central organizations (MARD). The quality of their services were therefore limited (Figure 6.5). However, due to close access and more farmer’s need orientation, they are considered at the top.

49

7.3.2 Research centers On the contrary, the research centers are among the least access actors to the growers. The major part of the staff from research centers benefit education from Soviet bloc1 before its fall in 1990. Most of research centers are located in Hanoi (RIFAV, PHTI, VIAE2…). Thus their staff are well informed of the government strategy, international conference…. However, they tend to be biased to technology so as to take advantage of their specialised knowledge and advanced technology from ahead countries. This is clear because application of technology needs only specialised knowledge and skills by the reseacher’s own work. But application of management needs not only knowledge improvement but also change in thinking and methodology, especially cooperation – a weak point between various organizations and have penetrated in the people by effects of comlicated environment (economics, culture, politics, …). However, recently there has been changing. For example, the merging of VIAE and PHTI this May is a good news. I myself has benefited from this merging even during this study in terms of access to literature from also PHTI. Before, VIAE used to focus more on equipment, while PHTI paid more attension to technology. In fact, they have overlaped on storage and processing, which, could not be solved by either technology or equipment, but both plus right management. It is worth to note that this merging was influenced very much from MARD. One more important factor which affects to the working of research centers is the gap between the mature staff (mostly trained from Soviet bloc) and young staff (mostly since 90’s). Their background and interest are so different that make it difficult for them in cooperation, even in the same organization (Chien, 2002). It is a pity that there has been no interest from any organizations to invest in this subject. However, one obvious point can be found is the leadership style which should be moved to delegating rather than participating when the staff are willing and able to do the task (Rollinson 2002). 7.3.3 Possibility of partnership In short, the weaknesses of research centers are being too specialised and being not stick to the actual problem, which is fortunately the strength of extension departments. On the other way around, the weakness of extension departments is lack of information necessary for initiative, which is the research centers’ strength. This is the place for an advantage of partnership. A question is arisen that is it possible for building of this partnership? Fortunately, there are various arguments advocating for this partnership: Most of them have the same background from rural areas. They share the common objective of assisting agriculture development They are under the same management board, that is MARD. Understanding the disadvantages and advantages as above, we found that it is possible for more partnership. This should be done by agreement and independence of the interesting stakeholders with incentives from MARD. The framework for this formulation can be 1

The researchers in Vietnam are considered old (compared to their peers). The Government had to set a regulation for retired researchers to continue his work. While the youngers are not interested in research centers anymore. They prefer private organizations. 2 This is where the author works.

50

consulted as follows: 1)Division of responsibilities; 2)Assigning coordinator; 3) Monitoring and review; 4)Evaluation of the project (Ojha P.O., 2002). The detail formulation is not the interest of this research and should be done by another research.

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7.4 Chain cooperation 7.4.1 Is the cooperative feasible? In the process of renovation, the farmer becomes independent in farming and also he had been liberated out of the cooperative. Since then, the cooperation between farmers (so called horizontal cooperation) has become looser as ever seen. Most of cooperatives were dissolved and cooperative economy was replaced by household economy in the course of economics transition. Recently, under Decree Number 03/2000/NQ-CP* (2th February 2000) of Farm Economy by the Government (MARD 2000), the allotment of farms has been increasing and this has promoted rural areas’ transformation to commercial scales. However, the new farms are still separated. Even they are bigger and more commercial, their farm and capacity still small compared to traders. The cooperation between farmers may therefore be advised to bring in more powerful bargaining for them. Unfortunately, there are various constraints that have hampered the cooperative development over more than 15 years, since the renovation year 1986. These constraints are as follows: •

• •

The high level of specialisation in Lychee growing accompanied with a short harvest season brings in a short working rush hour for any postharvest equipment (for example cooling). Thus there is no advantage of sharing in investment any more, which is one of the main factors that advocates for cooperative establishment. The negative effect of former cooperative forms’ fall: in the period of 1954 to 1986 is the emerging of Collective Cooperative which was proved existable under the war time, but failed to survive after the war (1975). The close culture in Vietnam is recognised as a constraint to cooperative development: as described in the previous chapter (characteristics of actors in the chain) personal contacts represent a typical form in life, but it tends to focus on sentiment rather than business.

7.4.2 Contracting between traders and growers Contracting can provide a mutual benefit of both the grower and trader: • The farmer will pay more attention to their produce, which leads to improved quality at harvest and after harvest. • The trader’s planning will be more organised, thus the produce flow will be smoother. Thus the delivery time as well as the transit time may be reduced. The question is then why is the contracting not practiced yet? There are various constraints to a successful contracting between traders and growers. Two main inherent constraints against contracting can be 1)poor and unstable wholesale and retail markets and 2)lack of rules and regulations. However, beside those constraints, it should be realised that little trust between growers and traders has significantly hampered the contracting, and specifically sharing tasks. Different background, big gap in social and business position (see also in 6.4.1 6.4.2 ), … are attributed for this poor trust. Contracting-Trust-Delegation *

This Decree promotes larger farms (more than 1 hectare) for commercial commodities. The Party members can own these farms and hire labours.

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of tasks are actually related and have effect on each other. The traders and growers should know the great benefit by contracting, thus can develop closer cooperation in order to improve their business. 7.4.2.1 Building trust and delegating of postharvest activities To overcome the above constraints, it is important to build the trust first. One way to promote the trust is by sharing tasks together. Fortunately, it is convincing by delegation of sorting and grading from the trader to the grower. These activities should be done by farmers, so that the traders will benefit by the folowing facts: • Remove the cost of transport of more than 30% waste (Hoan et al. 2000). The reduction of this cost per tone is up to 44,000 VND/ton (referred to Table 6.9). • Remove the time of unpacking for sorting and grading and then packing again. • Avoid sensitivity to mechanical damage as well as contamination due to unpacking Neglect the cost for labour and possible mechanical damage, an increase of transit time has contributed to water loss. Assuming the unpacking time and packing time is 1 hour/tone, the loss of weight and quality can be up to 80,000 VND/ton (referred to 4.4.3 )! In total, the trader will benefit more by having the grower sort and grade the produce, and pays the grower at the new price: Pa=Pb*100/70 + 124,000 VND. Obviously, the grower will be happy with this suggestion by having more 124,000 plus 82,000 VND/ton of the wage for sorting and grading. 7.4.2.2 Criteria for contracting When both sides realise the benefits of delegation to be drawn out, it is not practical yet. More important is to get agreement on the criteria such as the grades of produce to be delivered, the amount, the quality. The three grades for three different markets (see 6.6.4.1 ) should be elaborated in accordance to international standards (annex A) and approved by Government. When these steps are finished, contracting can work successfully. Moreover, to promote the contracting, the cooperation between all stakeholders, especially the three legs: extension departments – growers - traders, are necessary. 7.4.2.3 Farmers as contractors In addition, the farmers can be contractors themselves (Perry et al., 1997). For example, a grower contracts with other growers to assemble produce as harvest seasons come. By this way, the cooperation of labour can be done by the grower as a contractor. This can help reduce the harvest time. 7.4.2.4 Production contracts Production is risky, especially for sensitive trees such as Lychee. Therefore it is advised to use production contracts so that both sides sharing the risk of both production and markets. In addition, when sharing also risk of production, the grower and trader tend to be closer, thus help develop their commitments to the business for mutual benefits. Production contracts in this case are special feasible due to benefits to both sides:

53

• •

Farmers benefit by 1)having a guaranteed market and price; 2)access to wider range of production inputs and technological advances; thus 3)more concentration on production, possiblly resulting in better yield and quality. Contractors benefit by 1)more uniformity of their produce to consumers’needs; 2)reduction in postharvest activities and even avoid recurrence of packaging as discussed above, thus a slight increase in shelf life.

7.4.3 Building cold storage and wholesales 7.4.3.1 Why and who should build cold storage and wholesales From a system perspective, all solutions discussed above to diminish heat effect are only practical at small scales and could not extend Lychee shelf life strategically for prosperous markets, normally far from local growing areas. Cold storage is still a vital issue. Unfortunately, it is almost impossible for any actors to build cold stores. Even for an export agent such as Kimbien Cooperative, there is no cold stores. The traders mostly procure commodities directly from farmers with no contracts. It means their outlet is unstable, thus neither is their inlet. As discussed in Chapter 4 , the most effective way for Lychee storage is by use of cold storage of 1 – 50C immediately after harvest accompanied with controlled atmosphere. However, it is impossible for this ideal practice. The harvest season is too short (about 1.5 months), so investment for cold storage with working rate of 1.5 months per year is almost impossible. So where would it be feasible to invest in cold storage? With the view that cold storage should be operated at maximum capacity in order to return its expensive cost as soon as possible, we see that it can be relevant at a wholesale market or as a public warehouse. Bacgiang is diversified in perishable growing, a cold store in the wholesale market can work through the year. So building a central cold storage is a vital point (discussed later) Not only for Lychee, but for the whole fresh food, wholesale and retail markets are critical points to the success of perishables. The organizing and availability of necessary facilities (storage, cooling, parking …) will assure the good flow and shelf life of the perishables. Especially, whenever the markets are well organized, it is potential for direct link between growers to the market. This chain is emerging in many countries and worth for Vietnam to learn. Especially, China has recently been successful in establishing the Lychee marketing system including only: growers – wholesalers - retail sellers and consumers (Rap, 2002) In short, we can say that even cold storage was a vital aspect to extend the Lychee shelf life, no actors involved can be convinced to invest. The main problem was derived from the short harvest season and short shelf life that would make the cold storage too low capacity. This poses the question of integrating all the commercial fruits and vegetables in the province. So a public warehouse alone or accompanied with a wholesale market might be a good choice that will help the growers and traders to store their products and stabilise the markets. Government intervention is a key factor in creating a suitable working environment for wholesale markets. After a research visiting to wholesale markets around developed and developing countries, Cadilhon (2002) found various advocates for this. For example, French national government and local authorities have established proactive regulations to 54

protect the activity of the fresh food wholesale markets in the country. Likewise, the Taiwanese government and local city authorities have also played an important role in building a network of wholesale markets to ensure a fair price to producers and consumers. They have also invested money and persuaded producers to assemble into marketing cooperatives and associations so as to improve the post-harvest handling and marketing of fresh food. Especially in Vietnam, where the wholesale markets are governed by the People Committee and lagged behind, the assisting of Government would promote other actors in development of wholesale markets. However, the cold storage can be built before building wholesale markets. This is proven well in practice in the Philippines, where the local Agriculture Department runs the cold store. In Vietnam, the first international cold storage was built in Hochiminh City in 1998. There is a great economic benefit for an investment in cold storage as shown below. 7.4.3.2 Relevance of cold storage in economics The thesis is not interested in detail computation of cold stores. Therefore, the author had a cold storage company calculated the price for building with the requirement of 1000 tons in working volume (detail in annex J). The annual cost was added by the cost of land (data from the provincial website) and postharvest activities1 (data from IFPRI-MARD, 2002), as well as transport cost (after minimized as the result of section below). The detail of calculation was presented in the annex. This simple computation shown that the cold store would be benefit whenever the following condition is satisfied: S>=(B*5600+111835)/53202 (see annex). This condition is potential. For example, the average price with no storage at the peak season was B=308.6$US/ton (5000VND/kg). We can easily find the benefit price S>5603VND/kg3. In case of Lychee, there would be much more benefit due to the high price off season, almost 20,000VND, double more than that at peak season (referred to Figure 6.8). However, there are still assumptions in this calculation. So it needs more investigation for real data. Substitution of different prices would be very easy thanks to Excel. 7.4.3.3 Where to build cold storage With the view that the cold store is to limit the negative impact of bulk harvest in a short harvest season for all the fresh produce in the region, this part demonstrated optimisation of the location of cold storage by the iterative approach (detail computation in annex). The purpose of this work is to minimize the transport cost. The 5 main supply areas were estimated. In addition, after computation, the result should be put in the context for considering other factors that could not be included in the computation formulation such as: transport availability, topography, electricity availability, labour force,… Briefly, Even cold storage is a big investment, its efficiency in both economics and society is large and worth for all stakeholders, especially the local Government and large traders. 1

This is because of lack of data. In fact, it might be better to include also postharvest activities under the store management. 2 B is the weighted average price at the peak harvest (procurement for storage) S is the weighted average price at the end of the storage period 3 The exchange rate is 16200VND=1$US

55

CHAPTER 8 CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions The thesis has three main contributions to 1)theoretical aspects in Lychee and technomanagerial approach; 2)findings of critical factors on the Lychee Supply Chain; 3)some possible improvements to the Supply Chain. 8.1.1 Lychee knowledge and application of techno-managerial approach By a critical review of Lychee literature, the author found the following: • The main problems in Lychee after harvest are browning and rapid water loss, which occurs mostly in its pericarp with the rate of about 10% per day. This problem does not affect much on the fruit quality at some first days, but causes browning and a little loss of weight, thus causes loss of revenue (4.4 Physio - Chemical Changes before and after harvest) •

Lychee needs careful treatment and storage to extend its shelf life more than 1 month and maitain its color as well as minimize water loss. However, there were some disagreements of the treatment and storage regimes that poses the question for little research on Lychee (4.5 Treatment and Storage Condition)

•

With the use of Lychee postharvest behavior and the techno-managerial approach, the main problems in Lychee can be explained by a preliminary framework and a research perspective towards problems solving (Chapter 5 ).

8.1.2 Important findings in the Supply Chain •

There is a prospect for growth in production and trading for Lychee due to 1)it is newly commercialised, nearly half of the orchards just begun flowering, and the major of its markets are still locally; 2)a trend of rapid increase in fruit consumption (31%), especially more for highly valued fruits; 3)economic reform process and high benefits from Lychee cultivation compared to rice (5 times more) has promoted Lychee business; 4)promising export markets ahead as Vietnam involvement more in international trade (Chapter 6 )

•

The Supply Chain is represented by the direct link between commercial growers and traders (70% of produce by this transaction). However, the cooperation along the Chain is weak. Package was done two times. Only 2% of growers have contracts with traders. No cold storage along the Chain except rarely done at transport (Chapter 6 ).

•

The personal contacts and informal transaction play an important role in the business. Only 4% of grower have telephone. Only 2.9% of traders use official loan.

56

•

There is a significant gap between stakeholders involved in terms of background, revenue, ... The cooperation and partnership between them is low. The poor infrastructure can also be explained for the unstable markets for Lychee (Chapter 6 ).

•

Even the markets are characterised by informal transaction and lack of planning and management, there is a significant increase in highly valued and safety food consumption

•

The main problems confronted after harvest including: 1)harvesting in difficult condition, 2)transport with poor infrastructure, 3)poor cooperation and partnership in dealing with Lychee performance (Chapter 6 ).

•

Due to limitation in capital as well as specialisation in commercial growing of short harvest season fruit such as Lychee and negative effect of former cooperatives, new cooperatives are hard to develop. It is also impossible for the growers to invest any expensive facilities such as cold storage or packinghouse. Only sorting and grading by hand are proven benefit to be carried out by growers (Chapter 7 )

8.1.3 Some possible interventions Chapter 7 investigated in some critical points and concluded as follows: • Good orchard management by grafting to increase density and by pruning to control the tree canopy as well as its height can have a great effect not only the quality after harvest but also help diminish harvest technique problem and reduce pathogen sensitivity. •

Use of cheap facilities to improve relative humidity around the fruits, such as “pot in pot” or wet cloth covering the fruit shelves is feasible. It helps reduce loss of both water and color, two most problems in Lychee.

•

There is a potential to improve Lychee performance by contracting and delegating some postharvest activities from traders to growers. These improvements are proven to bring benefit to both growers and traders. At least it saves 200,000 VND per ton of fresh Lychee. In addition, this delegates more jobs to growers who are in unfavour conditions.

•

The partnership between stakeholders involved in the Chain is prosperous and can bring in better promotion to the Lychee growth.

•

It is promising to invest in public cold storage which was proven to bring in benefits as long as the set condition was satisfied (7.4.3.2 ). For Lychee, the benefit is much more than expected due to its expensive cost and great fluctuation in price.

8.2 Recommendations •

Pre-harvest practices (application of nutrition, irrigation, ZnSO4…) can have a great effect on postharvest quality and shelf life, especially postharvest cracking in Lychee.

57

So it needs more investigation in pre harvest practices to compensate for poor postharvest technology. •

There is a need for further research in Lychee postharvest in Bacgiang for its specific characteristics.

•

To consider Supply Chain as a whole is a new thinking and difficult to apply in developing countries, thus needs more focus for the coming projects with cooperations between various subjects.

•

Due to the characteristics of specialisation and newly business in Lychee growing, it might be useful to formulate Lychee association for sharing cultivation and postharvest experience between each other and sharing trading experience with older agriculture business (such as rice, tea, …). In addition, the related organizations should pay more research on these newly commercial growing, so that experiences from other context can be employed for both pragmatic planning and technology in the growing region.

•

The actors in Lychee business are young and needs more mutual learning and cooperation to fill in the gap of trading knowledge. In addition, the potential of partnership between researchers and extensionist are high and can bring in lots of benefits. It is recommended to learn more of this link.

•

Registering and contracting should be given more incentives for stimulating traders. In addition, the trader can be aware of the importance of these issues.

•

There should be a thorough research in drying characteristics of Lychee in the region in order to produce qualified driers.

•

A further survey about other commercial fruits and vegetables production in Bacgiang should be investigated to justify more precise the relevance of cold storage. This work can then be cooperated with the project of wholesale markets that Cardilhon is carrying out. Based on the results of what achieved above, decision of building cold storage and wholesale markets can be made and hopefully will bring in the new face for the perishables Supply Chain.

•

After the previous step has been done, I recommend to formulate a multidisciplinary team use this research as a basis for forming a pilot project of the whole perishables in the Bacgiang and then careful evaluation in order to multiply to a large extent in production.

58

References •

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Amnon lichter et al. 2000. Hot water brushing: an alternative method to SO2 fumigation for color retention of lychee fruits, Postharvest Biology and Technology 18, 235-244.

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Ghosh, S.P. 2001. World Trade in lychee: past, present and future, Acta Hort. 558.

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Hoan, N.C. et al. 2000. Study on a Postharvest Handling System for Lychee, ACIAR Proceedings 100.

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Holcroft, D.M. and Mitcham, E.J. 1996. Postharvest physiology and handling of Lychee, Postharvest biology and technology 9, 265-281.

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Huang, X., Li, J., Wang, H., Huang, H. and Gao, F. 2001. The relationship between fruit cracking and calcium in litchi pericarp. Acta Horticulturae 558, 209-11.

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IFPRI-MARD. 2002. Survey of Fruits and Vegetables in Vietnam. Agriculture development program between IFPRI and MARD.

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the nutritional status in urban Vietnam, Feeding Asian cities, Proceeding of the regional seminar, Gisele Yasmeen (Ed.) Bangkok: FAO. •

Luning, P.A., Marcelis, W.J., Jongen, W.M.F. 2002. Food quality management, Wagenigen University.

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MARD. 2000. New strategies and directions towards agriculture and rural development. Agriculture public house, Hanoi.

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MARD. 2001. Some issues on industrialisation – modernisation in agriculture development and rural economy of 2001-2020, Agriculture public house.

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Marita, C. 2002. Optimal conditions for fresh produce, Postharvest technology of horticulture crops, Kader, A.A (edited).

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Mohammed, B.A. 2000. Pot in pot cooler keeps food fresher and longer, Appropriate technology international agricultural development, Volume 27, No. 4

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Nicholas, M. 1998.Competitiveness of Food Processing in Vietnam, Medium-Term Industrial Strategy Project. UNIDO.

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Perry, J., Morehart, M., Banker, D. and Johnson, J. 1997. Contracting-a business option for many farmers, Agriculture Outlook.

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Qadir, A. and Hashinaga, F. 2001. Inhibition of post-harvest decay of fruits with nitrous oxide. Post-harvest Biology and Technology 22, 279-83.

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Quang, N.D. 1999. Pre-case study of food supply and distribution to Hanoi, Food supply and distribution to Hanoi workshop. Hanoi: FAO.

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RAP .2002. The Lychee Crop in Asia and the Pacific, Food and Agriculture Organization of The United Nations Regional Office For Asia And The Pacific, Bangkok, Thailand.

•

Revathy, J. and Narasimham, P. 1997. Litchi Fruit: Influence of Pre- and Post-harvest Factors on Storage Life and Quality for Export Trade –A Critical Appraisal, Food Sci.Technol, Vol 34, No.1, 1-19

•

Robert E.P., Maria Eloisa, Q.R., Marcelino, U.R. 1998. Sulfite residues on litchi fruit treated with sulfur dioxide. Postharvest Biology and technology 14, 229-233.

•

Rollinson, D. 2002. Organisational behaviour and analysis, 2nd edition, Prentice Hall.

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Shi, J., Wang, C., An, X, Li, J. and Zhao, M. 2001. Postharvest physiology, storage and transportation of litchi fruits-a review. Acta Horticulturae 558.

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Underhill, S. J. R. and Critchley, C. 1993. Physiological, biochemical and anatomical changes in lychee (Litchi chinensis Sonn.) pericarp during storage. Journal of Horticultural Science 68, 327-35. 60

•

Underhill, S. J. R. and Simons, D. H. 1993. Lychee (Litchi chinensis Sonn.) pericarp desiccation and the importance of post-harvest micro-cracking. Scientia Horticulturae 54, 287-94.

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Vandeveer, M.L. (2001). Demand for area crop insurance among lychee producers in northern vietnam, Agriculture economics 26, 173-184

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VGSO. 2002. Statistical yearbook, Vietnam.

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Vietnam Living Standard Survey (VLSS). 1998. VGSO publications

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Vietnam Living Standard Survey (VLSS). 1993. VGSO publications

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Wang, C.X. 2001. A general framework of supply chain contract models, Supply Chain Management: An International Journal. Volume 7. Number 5. 302-310

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Wills, R., Mc Glasson, B., Graham, D. and Joyce, D. 1998. An introduction to the physiology & handling of fruit, vegetables & ornametals. University of New South Wales Press Ltd., Austraylia.

•

Zhang, Z., Suequn Pang, Zuoliang Ji and Yueming Jiang. 2001. Role of anthocyanin degradation in litchi pericarp browning, Food chemistry 75, 217-221.

Website references • http://www.adb.org/documents/books/ado/2003/ado2003.pdf •

http://www.fao.org/DOCREP/005/AC681E/AC681E00.HTM

•

http://www.bacgiangdpi.gov.vn/

•

http://postharvest.ucdavis.edu/

•

http://www.agroviet.gov.vn/

•

http://www.supply-chain.org/

•

http://www.marketag.com/

•

http://www.ifpri.org/

•

http://www.gdnet.org/pdf/2002awardsmedalswinners/educationknowledgetechnology/g ana-ojha-paper.pdf

•

www.vietnam-ustrade.org

•

http://www.searefico.com

61

Annex Annex A: Quality standards for export (FAO/WHO), CODEX Standard (adapted from Jevathy J. 1997) Definition of produce: This standard applies to commercial Lychee varieties so called Litchi Chinesis Sonn of the Sapindaceae family, to be supplied fresh to the consumer after preparation and packaging. Minimum requirements In all classes, subject to the special provision for each class and to the tolerance allowed, the lychee must be whole, sound excluding produce affected by rotting or deterioration that renders it unfit for consumption. Clean, being practically free from pest and damage caused by pests; Free from damage or abrasion; Practically free from browning; Free from abnormal external moisture (except for condensation following removal from cold storage) Free of foreign smell or taste (this provision allows smell caused by a conservation agent used in compliance with corresponding regulations) The Lychee must be carefully picked and sufficiently developed and mature (the total solids to acid ratio should be not less than 35 with the specified method of determination of TSS and Acidity). The development and state of Lychee must be such that it can withstand transportation and handling and arrive at their destination in satisfactory condition. The colouring of Lychee may vary from pink to red in the case of untreated Lychee and from pale yellow to pink for Lychee that have been fumigated with sulfur dioxide. Classification There are three classes Extra class Lychee in this class must be of superior quality. Its shape, development and colouring must be typical of the variety or varietal type. The minimum size is 33 mm. Free of defects, with the exception very slight superficial defects, provided that these do not affect the general appearance of the produce, the quality, the keeping quality and presentation in the package. Allowing 5% by number or weight of Lychee not satisfying the requirements of this class, but meeting those of class 1 or exceptionally coming within the tolerances of that class. Class I Lychee in this class must be of good quality and characteristic of the variety or varietal type. However, the following slightly defects are admissible, provided they do not affect the general appearance of the produce, its quality, the keeping quality or presentation in the package; slightly misshaping; a sight colour defect; slight skin defects; provided these do not exceed a total area of 0.25 cm2. Ten percent by number or weight of Lychee not satisfying the requirements of this class, but meeting those of class II as following. 62

Class II: Class II is 20 mm in its equatoria diameter. This class includes Lychee, which do not qualify for the higher classes, but satisfy the minimum requirements listed as following: defects in shape; defects in colour; skin blemishes on condition that their total area does not exceed 0.5 cm2, provided that the Lychee retains its essential characteristics as regards quality, conservation and presentation. 10% by number or weight of Lychee satisfying neither the requirements, with the exception of produce affected by rotting or any other deteroration it unfit for consumption. Provisions concerning presentation Uniformity The contents of each package must be uniform and only contain Lychee of the same origin, variety or varietal type, quality, size and also color in the case of extra class. The visible part of the contents of the package must be representative of the entire contents. Packaging Lychee must be packed in such a way that the product is protected properly. The materials used inside the packages must be new, clean and of a quality so as to avoid, causing any external or internal damage to the produce. The use of materials, particularly of paper or stamps bearing trade specifications, is allowed, provided the printing or labeling has been done with nontoxic ink or glue. Lychee shall be packed in each container in compliance with the Code of Practice for the Packaging and Transport of Tropical Fresh Fruits and Vegetables. However, the presence of a limited number of fresh leaves is permitted, where Lychee is presented in bunches. Description of containers The containers should meet the quality, hygiene, ventilation and resistance characteristics to ensure suitable handling, shipping and preserving of the Lychee. Packages (or lot if the produce is presented in bulk) must be free of all-foreign matter and smell. Presentation The Lychee must be presented either individually or in bunches. In the former case, the pedicel must be cut at the first knot and the maximum length of the stalk must not extend more than 2 mm beyond the top of the fruit. When presented in bunches, each bunch must include more than 3 attached and well-formed Lychee. Th branch must not exceed 15 cm in length. In the case of other requirements such as marking and labeling (containers destined for the final consumer, non-retail containers), contaminants (heavy metals, pesticide residues) and hygiene are followed as in the case of other fruits specified in FAO/WHO Standards (1994).

63

Annex B: Fruit appearance

Source: RAP, 2002 Annex C: Quotient of metabolism The rate of respiration (considered as the main metabolism) may be mathematically described by the temperature quotient Q10. Van’t Hoff, determined this relationship as follows: 10

R (t2 −t1 ) Q10 = 2 (Source: Wills et al. 1998) R1 Whereas, R1 and R2 are the respiratory rates at the respective temperatures t1 and t2 (Wills et al. 1998). Average temperature (0C) and rate of respiration (ml CO2/kg-h) Temperature R

5 6.5

10 12.5

20 32.5

64

Annex D. List of lychee cultivars cultivated in Viet Nam No Cultivars Original area (Province) No Cultivars 1. Duongphen Hatay 18. Thieuthanhha 2. Hoahong Hatay 19. Thieu 3. Banhtroi Hatay 20. Laithanhha 4. Dua Hatay 21. Hunglong 5. Vanganh Hatay 22. Phudong 6. Vatkhan Hatay 23. Laihungyen 7. Longvang Hatay 24. Laibinhkhe 8. Luc Hatay 25. Phuchoa 9. Ongthieu Hatay 26. Laihuongson 10. Moidai Hatay 27. Lailienson 11. Nhonoi Hatay 28. Moga 12. Bieuquan Hatay 29. Phi Tu Tieu 13. Bop Hanam 30. Sau Yue hong 14. Chintrang Hanam 31. Pai thang ing 15. Laithuyxuyen Hanam 16. Laingocson

Hanam

17. Thachbinh

Hanam

Source: Hai and Dung, 2001

65

Original area (Province) Haiduong Haiduong Haiduong Phutho Phutho Quangninh Quangninh Bacgiang Hoabinh Hoabinh From China From China From China From China

Annex E: Morphological characteristics of promising cultivars of lychee grown in Viet Nam Cultivars Fruit weight Percentage of Colour of Fruit Characters of pulp (g) edible part peel shape Duongphe 23.61 65.35 bright red heart light sweet, good flavour, n shaped soft Hoahong 24.54 65.48 dark red heart light sweet, soft shaped Hunglong 23.47 73.01 dark red heart Sweet, firm and good shaped flavour Phudien 36.60 71.68 dark red heart Sweet, soft and good flavour shaped with sharp bottom Phuchoa 23.08 71.88 pink oblong Sweet and good flavour Laihungy 30.10 73.18 yellowish heart Sweet and good flavour en red shaped with flat bottom Laibinhkh 33.47 71.46 dark red ovate Sweet, soft e Thieuthan 20.70 75.48 bright red sphere Sweet, good taste and hha (round) flavour, firm Annex F Characteristics of fruits of promising lychee cultivars. Cultivars Brix (%) TSS (%) VtC (mg%) Total acidity (%) Duongphen 15.80 12.00 31.50 0.36 Hoahong 17.70 15.08 44.00 0.54 Hunglong 16.80 12.96 10.60 0.20 Phudien 17.50 12.31 12.50 0.17 Phuchoa 16.50 13.40 9.80 0.26 Laihungyen 17.50 13.75 17.09 0.57 Laibinhkhe 17.40 15.36 16.27 0.21 Thieuthanhha 20.50 16.24 24.00 0.28

Source: Hai and Dung, 2001

66

Dry matter 14.40 18.72 15.82 16.20 15.10 14.50 16.06 18.20

Annex G

Current Lychee Supply Chain Bacgiang, Vietnam

Growing

Commercial Grower

Harvesting

50%

Drying

50% Sorting and packaging Transport Agents

Transport

Sorting and Grading Fumigation & Disinfestation

Distributor/ Trader/

Bagging and Packaging Wholesales Storage Retailer

Consumer

Retail market

Consumption

Processor

Processing

Exporter 67

Export

Annex H: loss by drying The price of fresh Lychee in the survey (with no postharvest activities) is 7,380 VND/kg. So the revenue for fresh Lychee is 7.4 millions VND/tones. While the revenue for dried Lychee after subtracting the drying cost is only 28066.73/4.05 – 394.56 = 6.5 millions VND/tones. The loss when drying is 7.4 – 6.5 = 0.9 million VND/tones. It means a loss of 3.6 millions VND in average per commercial grower. This is more than 9% of the total revenue (38 millions VND) or more than a half of the per capita income (6.2 millions VND). The loss indicated that fresh channel creates more benefit per one unit of produce. However there are various constraints that engage the grower in drying. Annex I Prediction of water loss in Lychee according to ambient air Climate condition 20C, 20C, 29C, 80% 90% 81% Humidity ratio, 0.0117 0.0132 0.0206 W, kg water/kg dry air Atmospheric pressure, 0.1010 0.1010 0.1010 Pa, Mpa Vapor pressure, =w*Pa/0.622= 0.0019 0.0021 0.0033 Vp, Mpa Vapor in the fruit Humidity ratio, Wf (kg water/kg dry air) Atmospheric pressure, Paf, Mpa Vapor pressure, =Wf*Paf/0.622= Vpf, Mpa

29C, 90% 0.0229 0.1010 0.0037

0.0147 0.0147 0.0256

0.0256

0.1010 0.1010 0.1010

0.1010

0.0024 0.0024 0.0042

0.0042

Transpiration 475.4 coefficient, Kc, mg/kg.sec.Mpa Moisture loss rate, =Kc*(Vpf-Vp)= 0.2316 0.1158 0.3860 Lm, mg/kg.sec Moisture loss rate, =Kc*(Vpf-Vp)*24*3.6= 20 10 33 L, kg/ton.day

0.2084

Notes: Input data was looked up from Sychrometrics.

68

18

Annex J Economics of Cold store1 Technical specifications Cold store capacity (tones) Cold store volume (m3) Storage temperature (celcius degrees) Input produce temperature Type of produce

1000 2000 5 30 Fruits/Veg.

Cost of building cold store plus its facilities, C

80000

Type of cost

Volume/formulae

Land use (rent) Depreciation (10 years) Bank interest (yearly), r Investment tax Maintanance Annual fixed cost Total operating cost2 (8 work months). Postharvest cost Transport cost Total added cost Water Loss after storage Mass after storage Gross revenue after storage Gross revenue in case no storage Condition for benefit

C/10 C*0.5*r (20*12+10*5)/20 (%) 0.3*(C/10)

Rate 2000

0.18 8%

240

105.60

5600

8.89

49778 11153 107435 0.05 280 5320 S*5320 B*5600

S*5320 - 107435>=B*5600 Or S>=(B*5600+107435)/5320

Note: B is the weighted average price at the peak harvest (procurement for storage) S is the weighted average price at the end of the storage period

1

The data for this calculation was from Cong ty Co phan ky nghe lanh (www.searefico.com), 135B Tran Binh Trong, Q5, TP HCM, Vietnam 2 This included cost of daily operations such as: electricity, wage for 2 operators plus 3 workers…

69

360 8000 3200 7200 2400 21160 25344

Annex K The optimal location in terms of transport cost x1 , x2 , x3 , x4 , x5 , y1, y2, y3, y4, y5, are coordinates of supply areas: Lucngan, Lucnam, Yenthe, Sondong, Langiang x, y are coordinate of the optimal place for cold store. The supply volumes are v1, v2, v3, v4, v5 respectively. The transport rate is r (‘000VND)/ton.km (assuming that it was the same in the whole region). The optimal place is the one with the minimal transport cost. That is we need to find the minimum of the function of cost: C = r*( di*vi) (1) Whereas

d i = ( x − xi ) 2 + ( y − y i ) 2

The necessary conditions for C to get its minimal value are that its specific diferenciations all get zero:

dC ∂x dC ∂y

= 0 = 0

r*

vi *

r*

vi *

⇔

( x − xi ) ( x − xi ) 2 + ( y − y i ) 2 ( y − yi ) ( x − xi ) 2 + ( y − y i ) 2

=0

=0

Precisely solving this couple of equations is complicated. Therefore we use the approximate method. First, by replacing di in the above couple of equations, they can be shown in a much simpler way: vi *

( x − xi ) =0 di

( y − yi ) vi * =0 di

⇔

(vi * x / d i − vi * xi / d i ) = 0 (vi * y / d i − vi * yi / d i ) = 0

x=

vi * xi / d i vi / d i

y=

vi * y i / d i vi / d i

⇔

In order to calculate values of x and y, we first omit di, then we get the x and y approximately. Iteratively do this, we are approaching to the optimal value. A demonstration of calculation was produced in the next pages. Data of production were estimated. Map was approximately measured.

70

Map of Locations, ratio 1:1000000 Production areas: Lucngan, Lucnam, Yenthe, Sondong and Tanyen 1

2

3

4

5

11 10 9 8 7 6 5 4 3 2 1

6

7

8

9 10 11 12 13 14 15 16 17 18 11 10 9 8 7 6 5 4 3 2 1 9 10 11 12 13 14 15 16 17 18 19

Ideal location

1

2

3

4

5

6

7

8

Next page is computation table

71

Larenstein, Deventer, the Netherlands

Table: Data calculation Note: Excel calculation Location optimization Iterative approach

First time Second time Third time Vi Xi Yi Vi*Xi Vi*Yi di Vi*Xi/di Vi*Yi/di Vi/di di Vi*Xi/di Vi*Yi/di Vi/di di Total cost Lucngan 2200 76 22 167200 48400 11.4 14608.2 4228.7 192.2 9.8 17083.9 4945.4 224.8 9 1989 Lucnam 1400 60 19 84000 26600 7.0 12043.7 3813.8 200.7 6.7 12489.7 3955.1 208.2 7 1037 Yenthe 300 25 44 7500 13200 44.4 168.7 297.0 6.7 46.9 159.8 281.2 6.4 48 1429 Tanyen 1000 29 30 29000 30000 36.2 800.4 828.0 27.6 38.2 759.7 785.9 26.2 39 3891 Sondong 700 107 24 74900 16800 42.3 1772.8 397.6 16.6 40.9 1833.5 411.3 17.1 40 2807 Total 5600 362600 135000 29393.7 9565.1 443.9 32326.7 10378.9 482.7 11153 First time X Y

Second time Third time 64.8 66.2 67.0 24.1 21.5 21.5

1

Larenstein, Deventer, the Netherlands

Mean Temperature

35 30 24.3

25 20

18.6

27.2

29

29.3

28.7

28.5

26.1 21.3

21.3

17.8

17.5

15 10 5

Au gu st Se pt em be r O ct ob er N ov em be r D ec em be r

Ju ly

Ju ne

M ay

Ap ril

M ar ch

0 Ja nu ar y Fe br ua ry

Temperature (Celcius degree)

Mean temperature during the year

Months

2

Larenstein, Deventer, the Netherlands

1