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Tea growing in Phu Tho province
Project overview and objectives
Tea is the main industrial crop in Phu Tho province and covers around 9% of cultivated land. The
total planted area was estimated at 8,400 ha in 2001, (7,200 ha in 1997), with an annual production of
31,000 tons of fresh tea (7,000 tons of dry tea). From 1998-2001 there was an annual rise of 8% due to the
increase in area and yield. Over 15,000 families were involved in tea production at the time of the feasibility
study.
The public sector manages 30% of areas and average yields are relatively high. However, the
remaining 70% concerns individual farmers’ small plantations where average yields are low (0.7 tons of dry
tea/ha). This means that technical and financial support is needed in order to improve productivity.
The AFD financed project comprises a tea production development program for villages in eight of
the province’s districts. It aims to contribute to the economic development of rural populations in Phu Tho
province and improve their living conditions. More specifically, 3,000 ha of new plantations will be created
and existing plantations will be redensified.
The program is in line with the economic development plan for the province which plans to create 5,400 ha
of new plantations and intensify existing plantations in order to scale up production, improve yields and
increase income for planters.
Project Components
The project will be based on five components in order to meet these objectives:
Agricultural credit: Agricultural credit finances input, services and outside labour. Work carried out by the
planter corresponds to his personal contribution (i.e. for new plantations 721 man-days spread out over the
whole immature phase).
Road rehabilitation: The project will rehabilitate 115 km of existing routes for the passage of the 5-ton
trucks used by tea-leaf collectors to supply factories and private workshops. The dirt track roads are 3.5 m
wide and the platform is 5 m wide. They must be raised and equipped with roadside gutters and culverts.
The average cost per kilometre is estimated at VND 464 million, i.e. €29,000. The cost is relatively high but
stems from the fact that the project is located in a mountainous area.
Training, control and popularization comprises (i) pedological control of the new plantations, (ii) training of
nurserymen, control and certification of nurseries, (iii) training of agricultural service executives, and (iv)
training of farmers and implementation of demonstration plots.
Technical assistance concerns (i) short-term assistance by international experts for technical problems
and quality control, (ii) training abroad, and (iii) local support for monitoring-evaluation.
Support for the management unit (financing vehicles and office equipment).
Resources and impacts
The project feasibility study concluded that up to 750 ha of new plantations should be implemented every
year and 625 ha of existing plantations should be intensified every year. This program has been active
since 2004.
The investment cost for the implementation of one hectare of a village plantation, spread out over a threeyear period from preparing the land to the first crop of “green leaves”, amounts to VND 36 million, i.e.
€1,800 (excluding interim financial fees). It is financed by an agricultural credit up to VND 29 million, i.e.
€1 500, the balance is made up by the planters’ contribution in terms of family work on their plantation.
The investment cost for the intensification of one hectare for an existing plantation implemented in
one year amounts to VND 7 million, i.e. €360. It is 100% financed by a loan for the corresponding amount
as available family labour is taken up by the cultivation of the tea plot where the cost amounts to over VND
5 million, i.e. €270.
Cuttings are produced by the tea research institute (TRI). Seedlings are produced over a 10 to 11-month
period, 50% is provided by the TRI and 50% by private nurserymen.
Project context: tea in Vietnam
Tea cultivation in Vietnam dates back to ancient times and has developed considerably in recent
years. However, the economic and social weight of the sector remains modest. In terms of employment, in
2004 over 200,000 families were employed in leaf production alone. Additional workers were employed in
processing and downstream activities.
Yet the industry has seen quite considerable development in North Vietnam’s medium and high
altitude regions, such as Phu Tho province, where poverty levels are higher than in the rest of the
country. In these provinces the percentage of poor households (below US$ 6 per person per month)
stands at between 20 and 90%. This indicator for this part of Vietnam shows the extent to which tea
cultivation is important and how it contributes to reducing poverty.
Review: At the time of project preparation (2002) tea cultivation in Vietnam covered 110,000 hectares,
annual production was estimated at 100,000 tons of dry tea, tea consumption stood at 20,000 tons a year
and 80,000 tons went for export. 200,000 families were involved in tea production.
The tea industry has huge potential for development. Natural conditions (soil and climate) are
favourable and comparable to other tea producing regions such as Assam in India. Vietnam also has
a comparative advantage in terms of other major producing countries as it benefits from low production
costs thanks to cheap labour.
Drawbacks: Improvements are required in order to develop tea cultivation and the tea industry in Vietnam
and enhance quality, especially for exports. Equipment for agricultural production and processing is, indeed,
often dilapidated. Compliance with international standards in terms of insecticide residue, in particular
European standards, must be a specific focus.
Contribution to Vietnam’s development targets
The Vietnamese Government’s development strategy for the period 2001/10 sets a main target of
catching up with other countries in the region and improving the competitiveness of its economy. It
hopes to double its GDP, increase exports fourfold and strengthen the socialist market economy.
In terms of the agricultural sector its aim is to speed up industrialization and modernization,
strengthen its technological potential and dissemination and readjust the development of the various
sectors according to markets and quality targets.
In the North provinces the priority is, more specifically, to improve living conditions which means, inter alia,
developing and modernizing agro-industrial cultivation, including tea cultivation.