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When Nguyen Minh Kha opened his poultry farm in 2009, he knew its products needed to meet Japanese export standards for the business to be successful. As the 50-year-old farmer built his brand, his ambitions grew, too, and he looked into how to gain access to other regional and international markets and to boost local sales as demand grows for safe food.

One of Kha’s first steps was to apply for certification from the GLOBAL G.A.P. program. G.A.P. stands for “Good Agricultural Practices,” and the initiative recognizes farm standards that follow industry-wide best practices. His farm was certified five months ago. Today, it offers better benefits that attract and retain employees who can help guarantee stable and reliable production. Kha is confident that improved hygiene and biosecurity, reduced use of antibiotics, and the monitoring of production procedures—a few of the GLOBAL G.A.P. program’s requirements—will help him produce safe and affordable poultry products.

Some results are already clear: production loss and chicken death ratios are lower, which has led to a total increase of chicken meat by about 5 percent compared to a non-GLOBAL G.A.P certified batch. “I believe that the certification, acknowledged by international players, will help me enter difficult markets such as Europe as well as attract local consumers, who are now more aware of certified food,” he says. “Meanwhile, the increased productivity will help compensate any additional operating costs.”

Kha plans to establish a new broiler farm of 10 GLOBAL G.A.P.-certified poultry houses in 2019. When that happens, he’ll be able to hire 30 more employees.

Increased productivity is expected to cover additional operating costs with certification.

Safe food, new markets

Kha’s farm is one of two poultry farms in Vietnam to acquire GLOBAL G.A.P. certification with guidance from IFC. Both farms source breeding chickens from Bel Gà JSC, a leading poultry breeding firm. By establishing a system that focuses on hygiene and biosecurity, antibiotic reduction, and traceability, these two farms have been able to supply about 3 million GLOBAL G.A.P.-certified broiler chickens—equivalent to 6 million kilograms of chicken meat—to the domestic and Japanese markets in the last year alone.

Quality standards like those guaranteed by the GLOBAL G.A.P. program are important for citizens’ health as well as corporate and economic health. As a new World Bank report reveals, unsafe food sickens 600 million people and costs over $100 billion annually in lost productivity and health care in emerging markets. In Vietnam, while food consumption accounts for 35 percent of a household’s monthly expenses, the average annual growth rate of the food sector is 15 percent, among the top growing markets in Asia. Inadequate safety standards threaten the sector’s growth potential, jeopardize consumer health, and inhibit local food companies’ ability to increase their revenues.

Since Vietnam has set a target of $40 billion agriproduct export in 2018 and beyond, improving food safety standards that enable access to new markets is key.

The certification process includes the adoption of hygiene measures, reduction in antibiotic use, and traceability.

Investing in a corporate future

For Kha, who pays an annual fee of $2,500 for the GLOBAL G.A.P. certification and some other expenses for related arrangements, the investment is worth it because it can help his farm reach its business goals.

Others also see participation in the program as an investment in their corporate future. “Investing in food safety standards is in many cases still considered as a company cost,” said Fred Devis, managing director at Bel Gà JSC. “But food safety actually makes a business case as market opportunities and substantial return on investment over the longer term will pay off the costs of applying high food safety standards.”

IFC has been helping raise awareness as well as build capacity in food safety for Vietnamese agribusinesses since 2017. Over the next three years, in partnership with New Zealand and the Slovak Republic, IFC will work with agribusiness lead firms and their supply chains to improve food safety and achieve internationally recognized certifications. By installing modern food safety management systems, the project can expect a total sales increase of $30 million from up to five participating firms. Additionally, the financing that these firms can source is likely to increase by $25 million within a year after project completion.

IFC also leverages the entire World Bank Group’s thought leadership in the area in industry conferences like the 7th annual international food safety forum that will take place on November 28 and 29 in Ho Chi Minh City.

Join the conversation: #IFCimpact

Published in November 2018