Ministry of Agriculture & Rural Development CARD Project Progress Report 037/04VIE
Developing GAP systems for dragon fruit producers
and exporters in Binh Thuan and
Tien Giang provinces MS6: Fourth Six-Monthly Progress Report April 2007

1. Institute Information
Project Name
Developing GAP systems for dragon
fruit producers and exporters in Binh
Thuan and Tien Giang provinces
Vietnamese Institution
Southern Fruit Research Institute


In Australia: Administrative contact
Name:
Mrs Leonie Osborne
Telephone:
+64 9 815 8819
Position:
PA, Bioprotection Group
Leader
Fax:
+64 9 815 4202
Organisation
HortResearch
Email: In Vietnam
Name:
Dr Nguyen Minh Chau
Telephone:
+84 73 893 129
Position:
Project Champion
Fax:
+84 73 893 122
Organisation
SOFRI
Email:
/vn


access to new high value markets in Europe and North America. Unfortunately, regulatory
requirements and recent consumer concerns over food safety and security mean that
Vietnamese growers can now only export to these high value markets if they have Good
Agricultural Practice (GAP) programmes in place. EUREPGAP is a comprehensive and
auditable GAP programme which is now the minimum fruit quality, safety and
sustainability standard required by most supermarket chains in Europe. This project will
develop the basis for EUREPGAP implementation amongst groups of dragon fruit
growers and BRC standards in a pilot packhouse in the Binh Thuan province, to enable
Vietnamese growers to export dragon fruit to high value European markets. When
implemented, the pilot will provide a model GAP system for adoption by other dragon
fruit farmers and packers in the Binh Thuan and Tien Gieng Provinces and also to other
Vietnamese fruit sectors.

3. Executive Summary
This report is the fourth progress report for the Collaboration for Agriculture and Rural
Development (CARD) project 037/04VIE and covers the period 1 September 2006 to 28
February 2007. For continuity of reporting much of the 3
rd
six-monthly report content has
been retained; this has now been updated and the achievements for the fourth six-monthly
period are included in this report.

The HortResearch project leader has made one visit to Vietnam during this reporting period as
scheduled: 18 November to 12 December 2006.

There have been no changes to project personnel during the reporting period. Mentoring of
the Vietnam project team has been ongoing. Southern Fruit Research Institute (SOFRI),
Ministry of Agriculture and Rural Development (MARD), Department of Agriculture and
Rural Development (DARD) and commercial personnel are included in the training which
covers all facets of Good Agricultural Practice (GAP) at the various levels. Enhancement of

incorporate all issues identified in the project objectives.

During the project leader’s December visit, extensive training was provided to the pilot
packhouse senior staff and farmers which involved all the physical changes to facilities,
quality systems establishment, personnel training, compliance issues and auditing
requirements as documented in the Dragon fruit Quality Manual for the Pilot to reach
compliance with BRC and EUREPGAP Standards.

High value markets are being identified and evaluated for dragon fruit to be exported from
Vietnam, both for fruit when certified and for the project-improved fruit exported during the
transition period towards certification. A financial incentive is to be paid by the packer for
qualifying fruit during the transition period.

Inputs identified in the project document for Year 1 had been purchased.

The CARD dragon fruit project continues to be well publicised in the local and national
newspapers and television during this reporting period.

4. Introduction & Background
Objective 1:
To increase small holders’ competitiveness and capacity to supply dragon fruit to high-value
international markets, introducing new concepts of food safety, environmental responsibility,
sustainability and worker safety into their production practices

Objective 2:

To provide technical support and training for Vietnamese extension/researchers to improve
their capacity in group training procedures for GAP implementation in dragon fruit

The outputs expected include adoption of new practices that are required for entry into the

dragon fruit production practices.

The benchmarking survey data were analysed at HortResearch by Dr Jim Walker and Patrick
Connolly who also prepared a PowerPoint presentation (Appendices 1 and 2 of the 3
rd

Progress Report, August 2006) for delivery during the scheduled March 2006 visit. It was
originally planned for Dr Walker to travel to Vietnam to make the PowerPoint presentations,
but this was not possible because of his other work commitments.

As a consequence, the benchmarking PowerPoint presentations were delivered by the project
leader during his March/April visit, initially to the staff of SOFRI then to DARD and some
industry personnel in Binh Thuan. The presentation has subsequently been used as a training
tool for the farmers and packers of the area. During the PowerPoint presentations, care was taken to emphasise the standards observed in
the survey and to relate those conditions to the standards required to meet the high value
customer-driven demands.

The PowerPoint presentation and other information contained in the benchmarking survey
database are being used by the SOFRI scientists during their research work.

5.1.2 GAP Manual Development
The Dragon fruit Quality Manual has been completed in English and is currently being
translated into Vietnamese. This manual was to be completed by the end of March 2006
(milestone #4) in the draft form but had been delayed because of time constraints and the
clarification of copyright issues. The manual has been developed specifically to meet the
needs of the quality systems of the project pilot. The manual has been developed at the
farmer level to the EUREPGAP Standard and in the packhouse to the BRC Standard and apart


During this reporting period Mr Hiep indicated that he was proposing development of a large
packhouse modelled on the pilot packhouse for future expansion; indeed, construction for
buildings to house the packing facilities was underway at the time of the project leader’s visit
in December. The Dragon fruit Quality Manual was presented to Mr Hiep in the English version and the
Vietnamese version, which was complete apart from the Position Description section.

During this reporting period the project team conducted intensive training/mentoring sessions
with the pilot’s staff holding responsible positions within the packhouse and participating
farm owners/managers. The areas of training and guidance covered included:

¾ The project scope and delivery
¾ The customer and customer demands
¾ Quality systems, their purpose, structure, establishment and management
¾ Defining the “process” on-farm through the packer to the exporter
¾ Linkages between farmer and packer and responsibilities and expectations
¾ The dragon fruit quality manual, its development, scope and application
¾ Feedback to ensure the “appropriateness/workability/fit’’ of the manual for the
intended purpose
¾ Identification, guidance and purpose for physical improvements required by the
project pilot facilities, both on-farm and at the packhouse, to comply with the dragon
fruit quality manual
¾ Identification of positions in the “process” and ensuring that responsibilities had been
correctly documented in the position descriptions within the manual
¾ Provision of training to people designated for positions of responsibility in the pilot
¾ The role of the internal audit
¾ The responsibilities of the Internal Auditor

The quality checking and documentation systems being employed in the pilot can also protect
the farmer and packer from claims for damage to product (non-compliance issues) subsequent
to the product leaving the packhouse.

The current process and status of the quality system of the pilot is:
¾ Pilot participants identified and their association with the project formalised
¾ The BRC Standard has been selected for the packhouse quality system
¾ The EUREPGAP Standard has been selected for the farmer quality system
¾ The Dragon fruit Quality Manual has been developed in English
¾ The Dragon fruit Quality Manual is being translated into Vietnamese
¾ The English and Vietnamese versions of the manual have been distributed to the
packer and relevant portions of the manual provided to the farmers of the pilot
¾ Physical changes, required by the quality system, in the packhouse and on the farm
have been initiated and in some areas completed
¾ Vietnamese project personnel have the skills to train dragon fruit industry stakeholders
in all areas of quality
¾ Intensive and targeted training has been provided to packhouse staff and farmers
¾ Quality systems are being developed in the pilot as described in the manual, under the
training and guidance of the SOFRI project team
¾ Health and Safety and Risk analysis studies have been made for the pilot and
documented as required by the standards
¾ Internal Audits have commenced to determine the quality status of the pilot with
corrective action and training process being implemented
¾ It is proposed to call for an external audit by a Certifying Body when the pilot is
operating in compliance with the standards as verified by the Internal Audits.

5.1.6 Review Compliance
The project leader negotiated with Société Générale de Surveillance (SGS Vietnam), (in
Vietnam, Regional Indonesia and New Zealand) an International Certifying agency, to
provide an estimate for certification evaluation of the project initiatives. Quotations for the

the public and the private sectors who have the capacity to be leaders of change, and quality
systems development, improvement and maintenance.

A high priority is being given to all aspects of National Capacity Building to ensure
sustainability upon project completion.

The project has tried very hard and expended a lot of project time on the identification of
small holder farmers and their subsequent quality training to fulfil the project document’s
obligations, but it still remains that the small holder farmers will not commit themselves to be
sustainable to GAP at the level required by the customer and the project. For this reason the
project accelerated the development of the pilot to demonstrate that GAP is viable at the small
holder farmer level. Farmers are being welcomed into the project training programme when
they step up to the required commitment to customer standards.

As the pilot develops towards the quality Standards of BRC and EUREPGAP, high value
markets are being identified. It is intended that product from the pilot will be, following
negotiations with the customer, exported in a form that can go directly to the high value
market and not be subject to any rework in the country of destination. It is the desire of the
project to maximise returns and reduce waste from product exported to ensure increased
revenue for the farmer and sustainable returns for the service operators such as the packer and
exporter.

Capacity Building
Initiate capability building of Vietnamese project collaborators
Capability building of Vietnamese project collaborators has again advanced dramatically over
this reporting period. Dr Chau has set up an environment at SOFRI that is encouraging his
staff to adopt the GAP initiative. This environment is greatly assisting the project leader to
transfer his quality skills to the project team and subsequently to farmers and packers. The
Vietnamese project collaborators have an excellent understanding of GAP, and are showing


Publicity
During this reporting period the project leader prepared a draft paper on “Quality Systems for
Good Agricultural Practice of Dragon fruit Production, Packing and Export” (Appendix 2).
The paper was prepared as part of SOFRI’s commitment to publish a document about
“Quality in the Vietnam Horticulture Industry”. It was also intended that the paper would
provide some background to the decision making process employed by this project and to
assist other quality practitioners when implementing quality initiatives in the future.

Project Management
There has been no change to the Project Management team during the reporting period. The
project team continues to work well together with excellent, friendly, transparent and honest
communication.

Equipment purchases for the project for Year 1 and Year 2 are complete. A table of
equipment purchased, the identification information, equipment location and responsible
person appeared in Appendix 5 of the August 2006 report.

6. Report on Cross-Cutting Issues
Environment
Environmental issues identified during the benchmarking survey continue to be addressed as
part of the technical transfer presentations to farmers. They include:
¾ Safe use of agrichemicals
¾ Appropriate use of fertilisers to provide good plant nutrition without damaging the
environment
¾ Disposal of human waste and grey water
¾ And other areas identified in the standards of EUREPGAP and BRC.

Gender and Social Issues
The CARD dragon fruit project implementation will systematically address gender and social
issues. For example, Good Agricultural Practices demand good working conditions,


¾ All fruit being airfreighted from the Ho Chi Minh City airport are scanned in the
individual carton state. While the integrity of the individual carton security remains
intact, a major problem occurs during the disassembly of the consignment. It has been
reported that: cartons of fruit out of coolstorage are being held on the tarmac awaiting
the scanning process; cartons are sometimes covered by tarpaulin for a period of time
where fruit heats and cartons can become water soaked; cartons from different
consignments become mixed. The loading process is determined by the availability of
plane containers.
¾ Airlines used to airfreight dragon fruit from Vietnam do not respect the perishable
nature of dragon fruit and consignments have been reported as arriving in either a
heated or a frozen condition – with no value in the market and ensuing legal battles to
get compensation.

At the market level:
¾ The high value markets, especially in Europe, require fruit that meets EUREPGAP
and BRC compliance for production and packing and handling.
¾ As project implementation advances, there will be fruit available for export that will
be close to meeting the standards but not certified. It is important that this transition
fruit is exported to a high value market that produces improved returns to the farmer.
¾ At this stage, market availability for the transition fruit and greater returns are not
guaranteed.

At the project level:
¾ While not a major constraint, improvement to the SOFRI communication systems
would be an advantage.
¾ As the CARD project is the first to implement GAP in the Vietnamese horticulture
industry, it is finding a dearth of infrastructure to support this initiative. National
infrastructure deficiencies for GAP production are being developed on a “project
specific” basis. However, it is not certain that these preparations will eventually meet

to the other project which has the responsibility to deal with supply/value chain issues in
Vietnamese horticulture. Leaders in the horticulture industry are aware of the constraints.

¾ The externally audited quality systems being implemented by the project are of such a
standard that there should be no need for cartons of dragon fruit to be disassembled
from the consignment or scanned. An exemption from scanning for these
consignments would be appropriate.
¾ Airlines airfreighting dragon fruit from Vietnam must respect the perishable nature of
the fruit and freight at the correct temperature. Airlines failing to comply should not
be used (will not be used by the project when exporting compliant fruit).

At the market level:
¾ The project has negotiated a premium to be paid by the packer for farmers’ fruit that
meets the GAP standards during the transition period.
¾ New initiatives to access high value markets are progressing and it is expected that
long-term beneficial supplier/customer relationships will materialise.

At the project level:
¾ SOFRI is currently improving its communication systems.
¾ The CARD project continues to encourage the establishment of appropriate
infrastructure to support the quality systems being developed in the dragon fruit
industry.

Sustainability
Sustainability is being addressed by the project through:
¾ Development of the national capacity. This reporting period has seen a great increase
in national capability and understanding of horticultural quality systems. The
improvement has been particularly noted in the SOFRI project team in their
understanding of “quality”, their willingness to train others and enthusiasm for the
project delivery. Every effort is being made to transfer the knowledge gained by Mr

8. Next Critical Steps
The next critical steps are continuation of the project directive, which involves:
¾ Mentoring of Vietnamese project personnel
¾ Completion of the translation of quality manuals based on EUREPGAP/BRC
Standards, for the farmers and packer. The manuals include Codes of Practices,
Protocols and Position Descriptions for specific functions, Grade Standards for fruit
maturity and quality, identification of Certified Service Providers, etc.
¾ Establishment of the documented quality systems on the pilot farms and packhouse to
reflect the documented quality system
¾ Training of farmers and packhouse operators to ensure their operations “match” the
intent of the quality manual
¾ Conducting internal auditing to confirm compliance is being met and appropriate
corrective actions are being implemented.
¾ Arrange for SGS Vietnam, as the appropriate Certification Body, to audit the
farmer/packer pilot when the pilot has been operating in compliance for a period that
demonstrates competence. Fine tuning of the pilot structure for certifying purposes
requires some negotiation with SGS to ensure the ongoing inspection and certification
costs to farmers and the packer are kept to a minimum.
¾ Identifying high value markets to which to export certified EUREPGAP/BRC fruit.
Testing those markets with transition fruit to determine “Client needs” and an early
indication of higher profits (if any) to encourage farmers to make the change to GAP.

Constraints within the project scope:
There has been no change in constraints for farmers to embrace GAP fully at a level to meet
the EUREPGAP Standards. The project-negotiated increase in dragon fruit price per kilo from
the packer for fruit from GAP transition farmers has helped to increase farmer interest.

¾ Farmers need demonstration that their energy to produce GAP fruit will indeed
materialise in higher returns.
¾ Farmers require access to development and seasonal finance at an economical rate.

It has also been noted that airlines freighting dragon fruit from Vietnam do not respect the
product and there have been reports of cooked and frozen fruit arriving in the market place.

Mitigation:
These two issues were brought to the notice of the project team at the end of the July/August
visit to Vietnam. Both issues have the potential to destroy all the project efforts to develop
safe, legal and high quality dragon fruit from the farm through the packer and exporter to the
customer. The project leader is attempting to overcome these potential problems by:
¾ Legislation/standards search for airport handling of perishable fruit and vegetables
¾ Legislation/standards search for airline carriage of perishable fruit and vegetables
¾ Creating awareness of the potential problem with the Vietnamese Institution for them
to lobby Government for a resolution of the problem
¾ Bring the problem to the notice of other projects in the area – particularly in the area
of identifying and resolving constraints to the value chain. The quality system being applied to the dragon fruit industry will have the capability to
determine where problems occur in the delivery chain, but airlines will still contest any claim
made on them for malpractice.

Opportunity:
Refer to the briefing document for the CARD Study Tour to Australia and New Zealand in
Appendix 3.

The success of the current changes proposed for the Vietnam agricultural research sector will
be dependent on that sector’s ability to be appropriate to industry needs and to generate
revenue from its research and extension. The ability to identify industry agronomic, pest,
disease, harvest and postharvest problems of economic significance and to generate
sustainable revenue from problem solving and extension will be very dependent on the
strength of the agricultural/horticultural industries it serves.

This reporting period saw an increase in commitment by the identified packer to the project
pilot and a significant increase to the national capability in quality system management,
understanding and training. The identified project dragon fruit pilot packer has become
customer driven and is providing the necessary resources required to implement changes. The

packer is preparing/has started construction of expansion to his operations for new packing,
coolstore and storage facilities modelled on the Project pilot. The pilot development has
enabled the quality manual to be completed, BRC Standards to be initiated in the packhouse
to complement EUREPGAP Standards developed on the farm, quality systems to be installed
and staff trained in identified position responsibilities.

The major highlights during this reporting period have been the enthusiasm, reception to
training and delivery by the pilot personnel and the Internal Auditing Course as presented to
SOFRI staff.

No major constraints to project implementation have been encountered at this stage. Some
critical issues outside the project scope have been identified and are being addressed
separately. The project is on track.
10. Statutory Declaration
The CARD contract is a lump sum outputs based contract. CARD does not require
institutions to submit receipts (although they need to be retained by institutions for accounting
and taxation purposes). CARD does need to be assured that the inputs detailed in the
Contract Schedules have been delivered. The statutory declaration below is to be used to
provide this assurance.