An agricultural training program supported by IFC has helped 500 farmers of Thanh Hoa, one of the poorest provinces in Vietnam, to use sustainable farming practices to increase their revenue and enter the supply chain of international companies.
Thanh Hoa is one of the poorest provinces in Vietnam where 85% of the population live in rural areas and have an annual per capita income of around $176. Thanh Hoa is largely dependent on agricultural production and approximately 15% of the population belong to ethnic minorities.
A Vietnam-based company manufacturing bamboo flooring for IKEA provides a market for local bamboo growers. These farmers have traditionally raised bamboo for sale, but to meet the factory’s demand for a large supply of eco-friendly bamboo, farmers need to learn new techniques for planting, growing and harvesting bamboo.
IFC, through its Social Responsibility program (formerly the Corporate Citizenship Facility) and Mekong Private Sector Development Facility (MPDF), have partnered with the Asian Development Bank and GRET, a French NGO, to deliver training on those new techniques for raising bamboo. Already, 80% of the 500 farmers trained are applying these sustainable practices which are important to ensure participation in the supply chain of multinationals like IKEA.
By providing information on pricing and its relation to the factory's quality requirements as well as organizing farmer groups, IFC-MPDF and its partners have strengthened the farmers’ bargaining power. This, coupled with rising demand, has resulted in a 50% increase in the price the farmers earn for the bamboo. With the factory's annual demand now at 1.2 million culms (trunks) and set to increase, this has added $105,000 per annum to total farmer incomes. Village level pre-processing is currently being piloted, and early indications are that this will increase incomes even further.
To demonstrate appropriate farming techniques, IFC and its partners identified 500 hectares of degraded land that could be used as a new area for bamboo cultivation, and 300 households have already planted as many hectares. In the spring of 2006, the remaining 200 hectares will be planted by about 200 additional households. These families will benefit from an increase in their income when the bamboo matures in 5 or 6 years. In the meantime, intercropping provides some income. The environment will benefit as well since bamboo is an excellent alternative to slower growing timber and has good counter erosion properties.
IFC estimates at the moment that 1,600 women, men and children living in rural and mountainous districts will be able to improve their incomes as a result of this project. The potential for replication is also very high and towards this, feasibility studies are currently being conducted in Lao PDR, Vietnam and Cambodia jointly by IFC-MPDF and Oxfam Hong Kong.