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The Acacia Business Case

The Acacia Business Case. Unusual Business?. This is Acacia. And this is Mr. Tam. Welcome to SNV Vietnam, NC portfolio. Opportunities for the poor. Survey on pro-poor economic opportunities in agriculture and forestry sectors in North Central Region Vietnam:

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The Acacia Business Case

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  1. The Acacia Business Case Unusual Business?

  2. This is Acacia And this is Mr. Tam Welcome to SNV Vietnam, NC portfolio

  3. Opportunities for the poor Survey on pro-poor economic opportunities in agriculture and forestry sectors in North Central Region Vietnam: • Acacia -> timber, pulp, wood chips • Rattan -> furniture and household goods • Cassava -> starch (check your tooth paste) 3 promising commodities identified by Mr. Tam and his colleagues

  4. Acacia, why promising? • The choice of local people: • Secure income • Potential for diversification • National policies • Sustainable forest management solutions • Alternative for illegal logging • International : MDG, FLEGT, Lacey Act • Private sector: • High demand but small domestic supply • Increase cost efficiency • Markets demand certified production systems

  5. Yeah yeah, another promising crop…

  6. Acacia: Ambitions Program’s Impact ambitions for 2012: • 6.000 households involved • Income increases over 100 US$ per ha per year • 250.000 labour days per year created Ford Foundation shares SNV’s view and ambitions: Diversify and Certify Acacia included in Value Chain Development programme funding

  7. Acacia value chain: collaborating actors • 6.000 Small holder producers and families • 15 Producer groups • 4 Forest plantation companies • 4 Saw mill companies • 4 Wood chip factories • Wood product trading companies • SNV and partners (WWF, WB)

  8. Small holder producer groups • Provide support their members • Relate with clients (Thanh Hoa Co, Ldt & woodchips factories) • Sell products through business contracts • Engage members in plantation management in compliance with FSC principles.

  9. Forest plantation Companies Ben Hai Forest Company, Phong Dien Forest Company, 1-5 Joint Stock Company, Phu Loc Forest Company • Develop sustainable business producer groups • Set up certified plantations • Assure market linkages through business contracts with Thanh Hoa Co, Ltd and Chip factories.

  10. Sawmills • Do business with Thanh Hoa Co, Ltd. • contracts for local semi-processing of certified timber • generate local employment and income

  11. SNV Facilitator and service provider: • Market scan and value chain analysis • Management support Saw mills and forest companies • Organising & Capacity building producers groups • Market development for business services: • Brokering and Business linkage • Enabling environment

  12. Status of the partnership • SNV and Thanh Hoa: joint establishment Acacia partnership • SNV & IUCN: International forum on “changing international markets for timber products” • SNV: Capacity building local service providers • Small holders: creation producers groups, linking to market: • Thanh Hoa company and Forest companies • All Actors: Round table dialogues • Partnership Thanh Hoa with Chip factories in development • Certification still interest of Thanh Hoa only

  13. bottlenecks, opportunitiesand success factors Opportunities: • Stable market with enough volume for certification process. • Viable economic/added value for all partners of partnership. • Increased local employment; income generation makes forestry contribute to poverty reduction. • Environmental sustainability through improved production models and cleaner industries.

  14. bottlenecks, opportunitiesand success factors Bottlenecks (1): • Rule of law: • Disrespect rules by members • Bilateral violation of contracts between producer groups and processing companies • Natural disasters: typhoon, fire • Long term strategies missing: • Chip factories: certified chips? • Forest companies: missing incentives for certification?

  15. bottlenecks, opportunitiesand success factors Bottlenecks (2): • Lacking of/no access to tailored business services • Without facilitating organisations like SNV these processes are unlikely to succeed • Funding for these processes that cover facilitator’s costs as well are difficult to find.

  16. bottlenecks, opportunitiesand success factors Key success factors: • Broad awareness need for sustainable forest management • Certification adds value to small producers’ plantations • Producer groups stable: accepted as business partner • Group certification affordable, same for auditing systems • Private sector: • Wants to secure supply chains • Invests in domestic supply market • Abandons illegal practice • Vietnam enforces of legal operations in forest sector/trade

  17. Thank you for your attention

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