Developing the supply chain model acording to the approach to improve the value - Added for vegetabales and fruits in Hanoi

actors on the development of supply chain model according to the value-added approach for vegetables and fruits’ products in the studied area is shown in chapter 2 of the dissertation. 1.4. Lessons learned for developing supply chain models according to the approach to improve the value-added for vegetables and fruits’ products and lessons learned for Hanoi From studying the experience for developing some fruit and vegetable supply chains according to the approach to improve the value-added in Thailand, Malaysia, Australia and some localities in Vietnam, the author drawed some lessons learned for Hanoi as bellow: (1) To develop the retailers' fruit and vegetable supply chain model is a trend and suitable for urban areas. (2) To develop and complete the supply chain of vegetables and fruits through wholesale markets controlled by the City Food Safety Board which has a clear, strict and disciplined operation mechanism. (3) To strengthen and perfect the role of the Government and institutions and policies (4) To establish mechanisms for coordination of horizontal and vertical links, integrated in fruit and vegetable supply chain. (5) To strengthen the system of facilities - support services to develop chain. (6) To ensure quality standards aiming to meet the international standards. CHAPTER 2: CURRENT SITUATION OF SUPPLY CHAIN ​​MODEL ACCORDING TO IMPROVING THE VALUE-ADDED FOR VEGETABLES AND FRUITS’ PRODUCTS IN HANOI 2.1. General introduction about Hanoi 2.1.1. Characteristics of the Natural, economic and social conditions in Hanoi Natural conditions (geographical location, topography, hydrology, climate, surface water resources and land resources) and socio-economic conditions all create favorable conditions to develop the agricultural economics in general and fruit and vegetable supply chain in particular. 2.1.2. Characteristics of the Fruit and vegetable market in Hanoi Demand for fruits and vegetables in Hanoi Every year, the demand for vegetables and fruits is very large in Hanoi (about 1,000,000 tons of fruits as well as vegetables) (according to Hanoi People's Committee, 2018). However, quantity of products only meets about 60% of the consumers' demand for vegetable and 24% of the consumers' demand for fruits. Besides, the demand for fruit and vegetable quality of consumers is also increasing in Hanoi, such as quality, food safety, models, packaging ... Current situation of fruit and vegetable production in Hanoi Large-scale fruit and vegetable production areas are located along the Red River - which has many natural and traditional advantages. These areas are concentrated to the west of Hanoi Capital (including: Ba Vi, Quoc Oai, Chuong My and Hoai Duc). Fruit and vegetable production in Hanoi has many problems. For vegetables, the area of ​​safe vegetable is certified under 18%, the area of vegetable meeting to VietGAP standards is 1.1% or the area of organic vegetable is 0.12% in the total areas vegetable. For fruits, the area of ​​fruit trees is still modest and fragmented; Shifting the structure of major crops is still spontaneous, planting fruit trees do not follow the planning, the quality of fruit trees is not uniform, farmers' farming techniques have not met the requirements, it is not focusing on brand establisment and food safety standards... Current situation of fruit and vegetable distribution in Hanoi Figure 2. 2 Chart of vegetable production structure adopts a participatory guarantee system (PGS) Figure 2. 3 Chart of certified fruit chain structure According to the Hanoi agricultural and rural development department (2016), there were 6 main forms of distribution through: Supermarket system; Retail store system; System of restaurants, collective kitchens, ...; Collectors collect; Producers sell directly at local markets; Wholesale at wholesale markets (over 50%). The quantity of vegetables applied the Participatory Guarantee System (PGS) and the quantity of ertified fruits is currently very low (Figure 2.2 and 2.3). This makes difficults to develop a supply chain of fruits and vegetables according to the value-added approach in Hanoi. 2.1.3. Hanoi's policy on production and trading of fruit and vegetable products in the period 2014-2018 Hanoi’s policies in this period have covered some issues: (1) Strategies, planning and projects; (2) to encourage to develop agricultural production; (3) to develop and manage the market system; (4) To product and consume the safe vegetables; (5) high-tech agriculture; (6) to control food safety. Many policies have positive effects; there were also policies that have not been promoted such as developing fruit and vegetable supply chain. Practical development of supply chain has been one-step ahead, causing many difficulties for management. 2.2. Current situation of some fruit and vegetable supply chain models in Hanoi 2.2.1. Current situation of fruit and vegetable supply chain model according to the members involved in Hanoi 12,6% 22,5% Collectors Producers Wholesale at Wholesale market Businessmen Retailers Consumers 54,8% Structure of fruit and vegetable supply chain model according to the members involved in Hanoi Figure 2. 4 Structure of fruit and vegetable supply chain according to the members involved in Hanoi Currently, this chain is responsible for distributing 89,9% of Hanoi's fruit and vegetable production, equivalent to nearly 5.000 tons of vegetables and fruits every day. Operational organisation of fruit and vegetable supply chain according to the member involved in Hanoi in general and at wholesale markets in particular The members in the fruit and vegetable supply chain according to the member involved in Hanoi are not strong enough both in size and influence to be able to lead chain, the role of each member is quite independence, production and business activities are separated. The members have set up the busniness relations on the basis of purchase and sale agreement, verbal agreements, short-term, instead of long-term contracts. Currently, the wholesale markets take on the supply function over 50% output of vegetables and fruits to Hanoi’s market, but remain many problems, such as: (1) organisation is bulky and difficult to manage; (2) market facilities are weak and backward; (3) there is a pheonomenon of small businesses emply kiosks, no business, affecting to arrangement of good industry; (4) The area is too narrow to fully implement the technological solutions in arranging, preserving and storing goods and do not ensure the environmental sanitation. (5) There is no specific set of criteria for agricultural wholesale markets ... The operation of chain is messy, there is a lack of sustainable links and unstable, therefore the value-added is low. 2.2.2. Current situation of fruit and vegetable supply chain led and coordinated by retailers Producers Retailers (BigC, Coop.mart, Hapro, Tom Uncle, Sea Wolf, farm market,...) Consumers Intermediary companies (Dung Ha, Thanh Ha, Bao Ha...) 4,8% 4,0% Structure of fruit and vegetable supply chain led and coordinated by retailers Figure 2. 6 Structure of fruit and vegetable supply chain led and coordinated by retailers In this model, chain is organized to supply vegetables and fruits to consumers through one or two distribuition intermediaries: retailers or intermediary companies/retailers. The most important point in this chain is the retailers’ role in leading and coordinating. Presently, this chain supply about 8.8% total quantity of vegetables and fruits in Hanoi – equivalent to about 500 tons of all kinds of vegetables and fruits everyday. This chain has an orientation of strong growth due to the convenience, reasonable price; chain management is not too complicated. Operational organisation of fruit and vegetable supply chain led and coordinated by retailers Several retailers have been leading and coordinating the fruit and vegetable supply chain in Hanoi such as: Big C, Fivimart, Tom Uncle, Sea Wolf, Farm Market. The retailers have many advantages of direct contact with customers, market research; therefore, it will be an important bridge to help producers well meet customers' needs, which is too difficult for producers doing themselves. This is the basis for establishing commitments or long-term contracts between retailers and producers. Besides, retailers consider the certificates such as PGS or VietGap to establish partnerships that are not fully guaranteed. 2.2.3. Current situation of VinEco closed fruit and vegetable supply chain model Structure of VinEco closed fruit and vegetable supply chain Consumers VinEco Company Distribution system Vinmart and Vinmart+ Internal customers in Vingroup: Vinmec, Vinschool, Vinhomes... Vinschool, Vinhomes, Vinmec,... Custermers Horeca: restaurants, hotels, hospitals,... Figure 2. 7 Structure of VinEco closed fruit and vegetable supply chain Closed Process Labeling “VinEco” Restrick monitoring Science-technology application, Technology TẬP ĐOÀN VINGROUP VinEco (planting, preliminary processing, packaging...) VinMart, VinMart+ (Retailing vegetables and fruits to consumers...) Internal customers in Vingroup (Vinmec, Vinschool, Vinhomes Customers Horeca (planting, preliminary processing, packaging...) Production activities - Agricultural Investmen Development and Production Limited Liability Company VinEco Distribution activities - Market Join Stock Company Vinmart Transit station, preliminary processing, packaging, preservation Operational organisation of VinEco closed fruit and vegetable supply chain Figure 2. 8 Operational diagram of VinEco closed fruit and vegetable supply chain 2.2.4. Current situation of the ShareFarm supply chain model in Hat Mon – Phuc Tho Products Sharefarm SHAREFARM Limited Liability Company Consumer households 1 Consumer households n Farm Investment Distribution Production, Production managerment Consumer households 2 Consumer households 1 Consumer households n Consumer households 2 Farm owners, Investers Structure of the ShareFarm supply chain model in Hat Mon – Phuc Tho Figure 2. 9 ShareFarm supply chain model in Hat Mon – Phuc Tho The objetives of Hat Mon Sharefarm: (1) To provide full continuously weekly and home delivery of food packages for 360 households (4-person households); (2) High-tech oriented technology and production techniques adopt the natural way with the motto "integrated ecology - closed circulation balance - natural agreement in a controlled environment"; (3) all agricultural products of SHAREFARM are all products of healthy organic ecosystems; (4) Closed chain model bring products from farm to household. Operational organization of the ShareFarm supply chain model Firstly, 360 households participated the model will share to involve all stages of the investment-production-consumsion process. They are producers; through Sharfarm Company and tools with the support of high-tech, they mornitor and clear every issues related to production and production quality. When there are products, 360 households are also consumers these products. Members become beneficiaries in the true sense: (1) to be enjoy the safe and fresh products; (2) to meet the needs of the familys’ weekend recreation/entertainment; (3) to practice agricultural production for familys’ members, to experience directly sevices at the farm such as: relaxing fishing, enjoying the fresh air, rural pleasure 2.2.5. Synthesizing the value-added results of fruit and vegetable supply chain model in Hanoi Analyzed and synthesysed results about the value-added of studied chains are bellow: - The members’ value-added in the fruit and vegetable supply chain model according to the members involved are all completely lower than the one’s in the other chains. - The total of value-added, producers’ and retailers’ value-added in the VinEco closed fruit and vegetable supply chain are highest. - The total of value-added, producers’ value-added in the fruit and vegetable supply chain led and coordinated by MM wholesaler are the second position; - The total of value-added, retailers’ value-added in the fruit and vegetable supply chain led and coordinated by retailers is the third positon. - The fruit and vegetable supply chain led and coordinated by retailers ensure the harmonization level in value-added allocation for members in the chain (the value-added proportion for the producers in this chain is highest – 37,51%). 2.3. General evaluation about the current situation of supply chain models according to the approach to improve the value-added for vegetables and fruits in Hanoi 2.3.1. Evaluation about the market share of supply chain models for fruit and vegetable products in Hanoi The market shares of supply chain models for fruit and vegetable products in Hanoi in 2014-2018 period are shown below. The information in 2017 was lack, because the PhD candidated could not collect data. Figue 2.12. The market shares of supply chain models for fruit and vegetable products in Hanoi in 2014-2018 period (6d appendix) 2.3.2. Evaluation about the achievements, limitations and causes of supply chain models according to the approach to improve the value-added for vegetables and fruits in Hanoi In Hanoi, each model of fruit and vegetable supply chain has its own several strengths and weaknesses. Through the evaluation of leap current situation of the exist models is also shown some results, such as: (1) fruit and vegetable supply chain according to members/ wholesale markets still meet the majority of markets; (2) new modern chain is established, such as Sharfarm; (3) the fruit and vegetable supply chain led and coordinated by retailers has a leap in the last few years. Limitations and problems: (1) ensuring the food safety is always the most obstacle of the existing chain models; (2) Limitation on farmers' financial capacity and psychological concerns prevent them from committing to VietGap or higher standards compliance. (3) There are many lacks in managing the wholesale and local markets system, which make consumers confused and scared; (5) supporting for establishment of four-home or five-home links in developing the fruit and vegetable chain is still limitation including quantity, quality and yield; (6) supporting of functional organization to confirm food safety ensurance chain, banding, trade-mark, promotional introduction to the consumers is slow; (7) diffuring and applying the electronic information system using QR code to traceability is too slow. 2.3.3. Research results about the factors influencing to develop the supply chain model according to the approach to improve the value-added for fruit and vegetable products in Hanoi Analysing the discovery factors by using the SPSS.20 solfware was chose to analys factors influencing to develop the supply chain model according to the approach to improve the value-added for fruit and vegetable products in Hanoi. There are 3 steps to implement: (1) Inspection of the system of scales; (2) Factor analysis; (3) Multivariate regression analysis and testing regression models. The importance and order of influence of the researched factors to develop the model of fruit and vegetable supply chain in Hanoi according to the approach to improve the value-added are: 1 – State and quality standard; 2- Entersprise; 3- Chain’s link; 4- Support and production; 5- Association; 6 – Technology; 7- Chain’s infrastructure; Retrieval results of studied models are completely suitable that help the author to propose some proposed solutions to develop the supply chain models to enhance the value-added for the members as well as the whole fruit and vegetable supply chain in Hanoi CHAPTER 3: PROPOSING MODELS AND DEVELOPMENT SOLUTIONS FOR SUPPLY CHAIN ACCORDING TO THE APPROACH TO IMPROVE THE VALUE-ADDED FOR FRUIT AND VEGETABLE PRODUCTS IN HANOI SWOT analysys for each supply chain model for fruit and vegetable products in Hanoi The PhD candidate detail analysysed the strengths, weaknesses, oppotunities and threats for each supply chain model by SWOT matrix. These were important fundamentals to propose optimized model for supply chain development in Hanoi. Bases for proposing models of supply chain according to the approach to improve the value-added for fruit and vegetable products in Hanoi Forcasting the fruit and vegetable market in Hanoi Fruit and vegetable supply system for Hanoi market Presently, market demand for fruit and vegetable is about 1,000,000 tons for each type per year. While the supply capacity of producers in Hanoi area only meets about 60% of vegetabe demand and nearly 20% of fruit demand, the remainder is imported from other provinces in the north-east area and the Red River Delta, and imported form other countries (according to Hanoi Department of Agriculture and Rural Development, 2018). Therefore, in the future, satisfaction and dominance of suppliers located in Hanoi will be more difficult. Fruit and vegetable distribution network in Hanoi market Existing fruit and vegetable distribution network in Hanoi market are: (1) Wholesale, traditional and local market system; (2) modern distribution system (mega supermarket, supermarket chain and convenience store and (3) Logistics system supports distribution. On June 26, 2015, the Ministry of Industry and Trade approved the master plan for market network development nationwide until 2025, vision to 2035 in Decision No. 6481 / QD-BCT. Accordingly, the Hanoi market network was planned complehensively and synchrounously. End of 2017, Hanoi People’s Committee, Hanoi Department of Agriculture and Rural Development has put into operation an electronic information system for safe agricultural product traceability. Therefore, the technical infrastructure is very convenient for chain development. Policies of production development - trading fruits and vegetables of Hanoi city to 2020, vision to 2030 Resolution of the city (1) Resolution 25/2013/NQ-HDND dated December 4, 2013 of Hanoi People's Council on policies to encourage the development of specialized agricultural production concentrated areas in Hanoi in the period of 2014-2020. (2) Resolution 03/2015/NQ-HDND dated July 8, 2015 of Hanoi People's Council on several policies to implement the program of agricultural development applied high-tech in Hanoi in the period of 2016-2020. Socio-economic development strategy (1) Decision No. 1081/QD-TTg dated July 6, 2011 of the Prime Minister approving the socio-economic development master plan for Hanoi to 2020 and vision to 2030.  (2) Decision No. 6481/QD-BCT dated June 26, 2015 approving the master plan for market nationwide network development until 2025, vision to 2035. Rural and agricultural development strategy (1) Decision No. 17/2012/QD-UBND dated July 9, 2012 of Hanoi People's Committee on approving the Agriculture Development Plan for Hanoi to 2020 and orientation to 2030. (2) Decision No. 575/2015/QD-TTg dated May 4, 2015 of the Prime Minister on approving the master plan for agricultural zones and areas applying high technology to 2020, orientations to 2030. Opinions and objective to develop the supply chain model according to the approach to improve the value-added for vegetable and fruit products in Hanoi Unifying viewpoints and objectives towards development the supply chain model according to the approach to improve the value-added are: (1) to complete the mechanism and policies, basing for effective organization operating of fruit and vegetable chains in Hanoi; (2) to establish successfully close, sustainable and development cooperation; (3) to ensure sustainable, long-term and stable livelihood for all members participating in the chain; (4) to ensure equaly, fairness, risk and benefit sharing mechanism between members involving in the chain (5) to build brand, quality control and traceablility of production origin. Demands for development of supply chain model according to the approach to improve the value-added for fruit and vegetable products in Hanoi: Every chain requires a close and sustainable connection of members via contracts It is imperative to have chain leader. Chain development has to synchronously and unified implement from urban to rural areas. Development of supply chain model according to the approach to improve the value-added for fruit and vegetable products in Hanoi basically meets maximum demands of the market. Members of chain completely keep the quality product and maintenance, food safety, branch, kind, packing for fruit and vegetable product. Policy Synchronizes and unifies whole process of chain development. Strengthening the multilateral monitor mechanism Strengthening the technical and information technology application in every stage. Progosing models and development solutions for supply chain according to the approach to improve the value-added for fruit and vegetable products in Hanoi Developing the fruit and vegetable supply chain led and coordinated by retailers Principals of chain buiding and operating: Based on legality, organization and efficiency Legality: Mechanism of chain operation adopts contract signed by members. Chain operates under the the patronage and supervision of the synchronous policy system, departments and localities. Fruit and vegetable traceability is a mandatory requirement. All violations will be punished strictly. Organization: This chain is organized throughout all stages. Its structure is built tightly, members connect consentaneously, sharing both risks and benefits, monitoring and market research mechanisms. Efficiency: Clear and effectiveness of chain proposed by showing the lower costs, higher incomes, less risk sharing than chains having many intermediaries. Producers Prestigiuos retailers Consumers Restaurants, hotels, collective kitchens, schools, hospitals Contract Contract Social and market demands Diverse products – Quality – Safe – Convinience – Resonable cost Techical Environment – Production Level – Management and Operation Capacity Fresh vegetable, preliminary processing, packaging Preservation, use, market information provide Labeling, packaging, storage, preservation, shipping and delivery Agricultural encouragment Station, Plant Protection Station, Rural Development Department Bank, Technology, logistics United Cooperation, Cooprative Alliance, Fruit and Vegetable Association Fruit and Vegetable Research Institute, Business Association. Firuge 3. 1 Proposing the fruit and vegetable supply chain model led and coordinated by retailers Mornitor system of chain This system is extremely important to ensure fruits and vegetables having good quality and achive food safety and hygiene, including a series of barriers: Internal monitoring system; Cross-monitoring system in united cooperations, cooperative alliances and fruit and vegetable associations in localities; Monitor system of local organizations and departments; Retailers’ independent monitor system. This monitor barrier system ensures that fruits and vegetables come to customers with good quality and safety. In addition to mornitor barriers, chain development needs to establish tightly including horizontal, vertical and multilateral links (four-home or five-home) Developing supply chain model through wholesale markets controlled by specialized agencies. Agricultural encouragment Station, Plant Protection Station, Rural Development Bank, Technology, logistics United Cooperation, Cooprative Alliance, Fruit and Vegetable Association Fruit and Vegetable Research Institute, Business Association. Techical Environment – Production Level – Management and Operation Capacity Diverse Products – Quality – Safety– Convenience – Logical Expenditure Wholesalers at wholesale market Retailers at markets/ chợ/street-shops Consumers Farmers, cooperation, teams, production groups Management Board unifies the food safety in the whole Hanoi Collectors Social and market demands Fresh fruits and vegetable, preliminary processing, Use, Provide market information Preservation, Transport Colection, Transport Preservation, consumtio, marketing Fruit and vegetable testing center Testing standards Testing Prosess Testing Equitpment Personel Test Testing Methods Testing system at Wholesale Market Through Food Safety Mangagement teams, Market Management Boards, District Health Departments, Industry and commerce Department) Figure 3. 2 Proposing the fruit and vegetable supply chain model through wholesale markets controlled by specialized agencies Regulations on activities of Hanoi food safety management board Hanoi food safety management board will be a ageny belonging Hanoi People’s Committee and has the duty to organze the enforcement of food safety and hygiene laws in Hanoi. Establishing and strengthening the inspection system, testing technical barriers as wel