Progress Report and orientations for next 6 months

1. Progress Report and orientations for next 6 months Project of Thanh Hoa luong value chain development (LDP) (October 2007 – April 2008) Phase II Document for meeting No.7 of LDP’s steering committee April 18th 2008 Patrice Lamballe – GRET representative Chu Văn Sáu – LDP project coordinator

2. Component I SUPPORTING LUONG VALUE CHAIN DEVELOPMENT

3. Main content • Study and make list of luong processing workshops in Thanh Hoa province • Training for luong processing workshops: owners, managers, accountant • Support Song Ma co-operative (X5). • Produce charcoal from luong by-products • Grow mushroom on luong sawdust.

4. 1. Study and make list of enterprises in Thanh Hoa province • Objectives: update information on luong processing units in Thanh Hoa, make list and provide for production units, management agencies and donors. b. Operations and results: • Together with office of processing (Dept. of Agriculture and Rural development) make first list of 54 bamboo luong processing units in Thanh Hoa • Consultant co-operative Ha Hoa - Phu Tho (HaDeVa) conducted the next survey in 5 days with 6 people • Gather preliminary survey information and make summary table of 51 units. • Project staff monitor regularly and update new information for timely addition when changes occur

5. c. Some noticeable points Synthesis of 51 units shows: • 25/51 units are operating as enterprises, the remaining are households of individual production and business (diagram 1). • 20 units (39%) produce refined products (end products), 31 units (61%) produce rough products. • Most of the units (26/51) were established since 2006 • Processing units gather mostly in Quan Hoa district (21/51) • 4 main demands of units are: product diversification, market expansion, capital, and production of end products (diagram 2)

6. Survey results of luong processing units

7. 2. Training for workshops owners • Necessity to implement training: • Processing units are mainly spontaneous, short of experiences of management and market. • Their need of knowledge on management and business is huge. • Currently there is no training activity in the locality. • Units need to meet and exchange to seek for further cooperation opportunities (for instance: X5) =>For the development of enterprises, owners need to be provided with business management skills and cooperate with each other.

8. b. Activities and results achieved • Identified needs of processing units and local enterprises • Designed training programs and organized first session in December 27-28, 2008. • Conducted 3/ Σ6 sessions in the course, in 5 days with 52 cumulated participants • 3 topics dealt with: • Enterprise cycle and decision-making skill • Financial management and accounting works • Marketing at enterprise level.

9. c. Problems encountered and proposals • Problems encountered • Workshop owners directly arrange their production so it is difficult to manage time • Knowledge and experience of business management are different • Workshops locate in large area and often far from the training organization place • Proposals • Content should be close to reality • Participation of local concerned agencies. • Combination of connecting and supporting activities: bamboo luong cooperation group, network (small scale)

10. 3. Supporting Song Ma co-operative (X5) a. Information of Song Ma co-operative • Date of formal starting operation: 01/11/2007 • Floating capital: 500 mil – Fixed capital: 1.100 mil dong: including land, workshop, equipment, power station, machines, truck • Members: 7 people (X1; X2; X4). • Loan from OHK (through GRET) : 1.060 million dong • Direct workers: 25 people • Stable job for workers in 10 satellite workshops • Types of slat products: roughly planed slats, planed+ boiled slats.

11. b. Production and market • Raw slats bought : 1.5 million slats (3 months). • Use all raw slats of X workshops and other 7 workshops (new cooperation). • 2 output markets are TBF and Tien Dong, ensuring the consumption of all products of the co-operative • Income of 1.4 billion dong and profit of over 50 millions after 3 months. • Worker wage is from 1.1 to 1.7 million dong/month (payment by results)

12. Summary table of production and business results of co-operative (after 3 months of operation: Nov, Dec 2007 and Jan 2008)

13. c. Currentdifficulties • Poor management skill of workshop owners. • Unequal quality of input (raw slat). • Limited finance (for expanding production scale and investing in new technologies for new products). • Immediate payment of input, late payment for output (now 2 buying units owing about 350 million dong) • Unstable and limited market (long time in stock makes slats attacked by fungus).

14. d. Reasons of continuation of production • Stable income for co-operative, jobs and income for workshop laborers • Ensuring stability of 3 satellite workshops and 7 new cooperating workshops. • Stabilizing input market and maintaining prestige with customers. • Many potentials in future (key production location, many investors wanting to join). • Possible to diversify products, improve technology for next stages of flooring boards

15. 4.Producing charcoal from luong by-products a. Necessity to build charcoal kilns - Treat low value wastes and by-products for higher value • Use small luong culms not qualified to make slats and chopsticks. • Gradually replace wood charcoal made from wood trees in future - Minimize environmental pollution (using waste to make paper pulp) - Build and develop new sub-sector: bamboo luong charcoal value chain

16. b. Charcoal kilns built and now operating

17. c. Current difficulties • Monthly production quantity is not enough to export (at least 6 tons/month), to meet big export contracts needs • Quality norms are not high enough to meet demand of some customers of high grade activated carbon • Cost price is still high due to incomplete techniques, separate production • Processing units are not ready to invest as formal market is not visible at the moment • Customers of luong attar have not yet been found

18. d.Economic return of charcoal production(in 1 cycle using slat wastes, minislats of X6)

19. e. Potential of charcoal production • Some customer ordered 6-8 tons/month, at price of 6000d/kg in Thanh Hoa city • Yield will reach 1 container 20” (6 tons)/month after system of 4 kilns has been built and working. • Cooperation with NEAD company in technologies of activated carbon in Thanh Hoa • University of Natural Sciences HCM City (Ms My Hanh) • Research of feasibility of producing charcoal briquette/sawdust • To break the vicious circle and thus prospect of developing charcoal production – trading enterprises in Thanh Hoa

20. 5.Growing mushroom on luong sawdust • Reasons for trial activities • Huge amount of luong sawdust is currently unused • Results of growing mushroom on luong sawdust is not inferior to wood sawdust. • Local market is potential to expand. • Creating new job to increase income on the spot for farmers/new model in rural economy nông ôn.

21. b. Some activities and results up to now • 16 trainings, 167 cumulated participants. • Households growing mushroom: stage 1-10hhs, stage 2-7hhs • Types of mushroom grown: - Stage1: 3 types (linh chi, shell, wood’s ear) - Stage 2: 2 types (linh chi, wood’s ear), as shell mushroom is not suitable with hot and sunny weather. • No. of bags: stage 1: 5.170 bags, stage 2: 6.000 bags. • No. of bags up to standard: - Stage 1: wood’s ear 77%, linh chi 36%, 88% shell. - Stage 2: wood’s ear 92%, linh chi 94%

23. d. Economic return of growing mushroom(averaged on 100 bags = 1m² floor)

24. e. Conclusion on mushroom trial • Shell, wood’s ear and linh chi mushroom can be grown on luong sawdust and bring about economic effect • Wood’ear mushroom is suitable for existing technical and market condition of farmers and can be grown all year round. • Production at farm/co-operative scale is suitable to use sawdust (40-50 tons/year) and brings about investment effectiveness. • Mushroom “seeds” of second and third grade can be produced on the spot to reduce production cost. • Key model of cooperation mode among producers (co-operative/farm and farmer household)

25. Orientations of component 1 (market, processing)(1)Expanding intervention scale • Base on the list (of over 30 processing workshops in North West of province (aiming to support workshops in L.Chanh, Q.Son) • Thorough grasp of operation, support need and economic effect of workshops (1 trainee / University of Agriculture) • Organise meeting of workshop owners • Resume courses on enterprise management • Get to know vocational education more

26. Orientations of component 1 (market, processing)(2)Expanding production scale and volume • Conduct visits for potential investors (including Chinese) • Test production of charcoal / sawdust • 140 tons sawdust – 20 tons products/month • Sales $10.000 – profit of $1.500-2.000 • Consider possibility to produce activated carbon in the province ? • Improve technology of existing workshops (flooring boards, …) ? • Agree on way to use capital repaid by X5 (VND 250 millions/year) • Study on suitable credit system

27. Orientations of component 1 (market, processing)(3)Resuming intervention at medium and small scale • Improve capacity of producing charcoal from slat waste and small culms on the spot(as temporary intermediary of output) • Test slat splitting, making mat strips, sticks • Test of more effective production diversification of blind strips • Expand production of mushroom / sawdust • Production scale may reach the use of at least 100-150 tons of sawdust/year • 1 co-operative in charge of input and output • Use the mushroom substratum as organic fertilizer

28. Component II Farmers and resources (agro-forestry activity)

29. Outstanding activities - results in last 6 months 1. Expand field of activity to new areas 2. Test different intervention modes 3. Capacity building-training 4. Improve and promote effect of nursery 5. New luong plantation and establishment of « models » in spring 2008 6.Test and support intercropping on new luong plantation area 7. System of experimentation.

30. 1.Expand field of activity to new areas

31. 2. Test intervention modes

32. 3. Education, training a. Education to improve skill for collaborators and farmer group leaders • 1 class on plan-making skill for farmer groups. • 1 class on lesson plan making for 5 collaborators, 1 extension staff and 5 teams of group leaders. • 2 group leaders and 3 collaborators made lesson plan and gave lecture • 1 ToT for 18 commune extension staff of Ngoc Lac district.

33. b. Training sessions for farmers

34. 4. Improve and promote effect of nursery • Analyze strengthes, weaknesses, opportunities and challenges of nursery activities in 2006 – 2007. • Diversify types of nurseries and plants. • Develop network of 1 main nursery (Lâm -Toán), 11 satellite nurseries • Provided 24 000 luong seedlings qualified to plant in the forest. • 1 nursery to test multiplication methods, species diversification (Xuan Phu)

35. 5. New luong plantation and establishment of model in spring 2008

36. Comments – lessons learnt • Gathered model: difficult to negotiate with farmers, but more effective. • Mode of cooperation with extension staff: rapid and effective implementation • Mode of cooperation through nursery: effective, less time to monitor the field for staff. • In Ngọc Lặc, Thường xuân: difficult to do due to competition of other crops • Quan Hóa, Bá Thước are new implementation fields, not yet really adapted, leading to slow progress rate.

37. 6. Trial, support intercropping on luong plantation a. Objectives of trial in second year • Trial of some intercrops likely to give productivity on luong plantation in first 2 years (4 crops) • Helps prevent erosion and soil improvement • Enough references to recommend to farmer. • Establish fund of intercrops at group and village scale. b. Intercrops. • 3 main crops: peanut, soybean, sesame, species to compare are maize, cassava, sugarcane; plant tephrosia on contours • Plant 3 more trials to compare forestry wooden trees

38. c. No. of households and intercrop area in spring 2008

39. 7. System of trials7.1. Trial on new luong plantation

40. 7.2.Trial of forest rehabilitation • In 8 places with total area of 6ha. • In Coi village, Xuan Phu - Quan Hoa with over 2 ha area. • 5 trial formulas (treatments). • Marking to monitor quality of 1.5 ha luong forest

41. Orientations for component 2 (agriculture)Sustainable management of forest (1) • 1. Occasional work, in short time: • Experiments of rehabilitation and restoration of luong forest • Dissemination documents of sustainable luong management • New plantation of luong in the North West (model in Q. Hoa, Ba Thuoc) • Monitor, synthesize and analyze short term crops (peanut, bean,…) • Ensure seeds availability for autumn crop through rotating fund of seeds

42. Orientations of component 2 (agriculture)Sustainable management of forest (2) • 2. Research and synthesis: • Compile synthesis document of knowledge on luong • Synthesize document from short term crop results in spring 2008 • 1 trainee research on capacity of absorbing carbon of luong culms / short term crops • Plant more in autumn crop where there is combination of budget (combined with 661, CT 147, 100)

43. Component 3: Supporting agricultural policiesCommitments of meeting no. 6 (recall) • 2 provincial seminars to promote new policies. • 2 seminars at district level • 3 leaflets introducing the project and development prospects of value chain • 2 common activities with State projects. • 2 visits conducted (to China)

44. Component 3: Supporting agricultural policiesCreate favourable environment and good conditions for policies supporting businesses and luong growers (1) • 1 provincial seminar on policy • December 14th 2007, 70 participants • Participation: representatives of provincial agencies and 10 districts of Thanh Hoa • Supporting presentations of forestry department, forest management, processing office, contributions of Ngoc Lac and Quan Hoa district • 1 proceeding book to be edited. • 1 article on LDP commitment orientations • Departement of agriculture and rural development is building policies based on the essence of that contributions

45. Component 3: Supporting agricultural policies(2) • Joining the visit to China, in November 2007 • 7 people from Thanh Hoa • 2 districts : Lin An and Ạn ji / Zhe jiang • Took: pictures, videos, products, … • Main ideas : • Timely investment of stakeholders (the government, …) • Long-term investment of the Government • Synchronous investment, combining mechanic workshop • Used over 90% of Moso bamboo • Sustainable management of forest

46. Component 3: Supporting agricultural policies (3) • 1 seminar organized at district level • Ngoc Lac district (February 2008) • District’s vice-chairman participates • 40 representatives (district, comm.) • Introduction of project, activities and clearer explanation of support mode • Discussion and agreement on support regulations and mode

47. Component 3: Supporting agricultural policies (4) • 1 preliminary seminar in Xuan Phu commune, Q. Hoa • To understand better objectives and role of project • Preliminary wrap-up 3 months of operation • Knowing more about commune’ s condition, orientations expectations • Preparing intervention plan • Measures taken:reduce competition between farming and husbandry

48. Component 3: Supporting agricultural policies (5) Common activities with Government • Research, with Nead company, to produce charcoal and activated carbon • Complete common technical leaflets (5) with forestry association, extension centre • Associate with policies of district, province (upland fields) : not in time/this spring crop • Diversify, test intervention method • Training for extension staff in Ngoc Lac

49. Orientations for component 3Creating favorable context for luong value chain • Disseminate policies on bamboo (elaborating + distributing leaflets) • 1 meeting to review progress after 2 seminars in 2007 • Continue to organize seminar at district level where important and needed • Cooperate with district, province to build model in the area • Introduce and get to know about Chinese « Neiyou » system (traceability and sustainable management)

50. Component 4 : Synthesizing–experience dissemination (1) Capacity building • Implement 3 training sessions for processing workshop owners • 1 session on basics of market and enterprise • 1 session on enterprise management and accountancy • 1 session on basic marketing • Strengthen skills in the locality • One TOT for extension staff of communes in Ngoc Lac district