Viet Nam: Quality and Safety Enhancement of Agriculture Products and Biogas Development Project

Sovereign Project | 39421-013 Status: Approved


ADB is supporting Viet Nam’s drive to promote food safety in the agricultural sector. The project will help improve food regulations and quality control systems to meet both domestic and export standards. It will put up facilities to support safe food products and biogas plants to reduce health hazards from livestock waste. The project covers 16 provinces that produce fruit, vegetable, and tea.

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Project Name Quality and Safety Enhancement of Agriculture Products and Biogas Development Project
Project Number 39421-013
Country Viet Nam
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 2513-VIE: Quality and Safety Enhancement of Agriculture Products and Biogas Development Project
Asian Development Fund US$ 95.00 million
TA 7251-VIE: Strengthening Project Management and Developing Strategies and Options for Biogas Development Program Expansion
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development

Gender Equity and Mainstreaming Effective gender mainstreaming

The Project will (i) create effective regulatory institutions for state management of agro-product safety and quality systems to meet domestic and export requirements; (ii) accelerate the development of agroproduction, processing, and marketing to ensure the safety and quality of vegetable, fruit, and tea products for domestic consumption and export; and (iii) improve the quality of physical environment for quality and safety by reducing environmental pollution and greenhouse gases from livestock waste in agricultural areas through increased utilization of biogas technology. It will have four main components: (i) a regulatory framework and fully operational quality and safety system for agro-products; (ii)

infrastructure and facilities for safe, quality agro-products; (iii) improved safety and reduced health hazards from livestock waste through support for development of biogas plants by small livestock farmers; and (iv) project management support for effective and timely implementation of project interventions. The Project will cover 16 provinces in Viet Nam that have significant fruit, vegetable, and tea production.

Project Rationale and Linkage to Country/Regional Strategy

Consumers in Viet Nam's major population centers require that certain quality and safety standards be met in the fruit, vegetable and tea products they consume, but poor regulatory management, unsafe production environments, and excessive levels of agro-chemicals and fertilizers, including application of pesticides by Viet Nam's farmers, are major hindrances to achieving the required standards. This will affect the longterm growth prospects of these crops in a competitive production and trading regime. Viet Nam has one of the highest input use rates among countries in the Asia and Pacific region. In the absence of management and regulations, these high input levels are affecting product quality and safety. In addition, unsafe disposal of livestock waste in densely populated areas has contaminated soils and the water used for agricultural products. Consequently, improved livestock waste disposal and promotion of technologies for effective waste treatment and management is a prerequisite to enhancement of the quality and safety of agro-products.

These issues are not being effectively addressed due to the lack of a domestic "safe food" supply framework and/or strategy, and will have continuing negative impacts on the environment and public health if not addressed. Increasing integration of Viet Nam's agricultural production, processing and marketing with international markets makes it critical that

improvements in product quality and food safety be made, if Viet Nam is to maintain and/or increase its international market share. Improving global competitiveness will require strengthening of the capacity of concerned institutions at all levels of government to address the following issues, all of which constrain further growth in the agriculture sector: (i) numerous small and fragmented agricultural production units, (ii) low product quality and safety, (iii) inefficient marketing, and (iv) weak bargaining power. These cause inefficiencies in product marketing and input procurement, and increase the costs to the Government and the private sector of providing agricultural support services.

The Government acknowledges the urgent need to improve agricultural production and marketing quality and food safety to a level comparable with neighboring countries and trade competitors. The Government is gradually introducing measures to improve the performance of state-owned enterprises under the State-Owned Enterprise Law, but constrained access to financial and other resources remains a serious obstacle to the promotion of viable private business opportunities in Viet Nam.

The proposed Project is consistent with the ideals of the Government's strategies and policies, including the Government's Socio-Economic Development Plan (SEDP) 2006-2010, which seeks to achieve middleincome status for Viet Nam by 2010 through improvements in the quality and safety of agricultural and processed products that meet domestic and

international requirements.

Impact The expected impact is sustainable and equitable growth of the agriculture sector through increased livelihood opportunities and improved human health.
Project Outcome
Description of Outcome The expected outcome is quality and safety improvements in Viet Nam's agricultural outputs, which thereby meet domestic and international requirements.
Progress Toward Outcome

The Project has achieved good progress toward an establishment of a comprehensive regulatory framework that was a high priority under the action plan for food safety, 2008-2012. Regulatory framework for tea, fruits and vegetables are harmonized and institutional responsibilities for certification, monitoring, inspection and enforcement have been clarified. Water and soil testing capacity of the 6 laboratories have been strengthened. The project provinces are effectively implementing the CFSMS and provincial food safety index to ensure benefits are realized.

A total of 178,780 ha of SAZ schemes have been identified for safe agricultural production for tea, fruit and vegetables for the period 2010-2020 in the 16 project provinces. Significant infrastructure investment support is needed to implement SAZ models. As the regulatory and institutional framework for safe agriculture production is in place, continued and additional investment support beyond what can be provisioned under the Project to expand SAZ models is needed as it would generate significant positive economic, social and environmental impacts. Initial proposals for additional financing have been brought to the attention of ADB, who expressed willingness to explore the possibility of additional financing. In addition to health benefits, the SAZ models are expected to generate significant other benefits such as increased production of tea, fruits and vegetables (20-60% increase in productivity on average) due to land consolidation and improved infrastructure, reduced post-harvest losses, increased value of agriculture production due to even quality and food hygiene and safety, and increased employment opportunities for unskilled labors. However, the impact of project interventions is constrained by limited resources, which are distributed over so many provinces. Targeting fewer provinces will focus project resources to generate greater impacts and achieve more significant coverage of identified needs.

The Project currently finances the cost of VietGAP certification for beneficiary farmers. To ensure the sustainability of SAZ models, products generated from these areas need to be certified under VietGAP. Benefits of these certifications need to be communicated and realized to motivate farmers to absorb this additional cost. Demand for certification will depend on the level of fees, market opportunities (e.g., steady buyers), level of consumer knowledge on safe food production. Continued support in these areas is also needed.

The biogas development support under the Project has generated important lessons learned for the biogas development activities funded by ADB. These include the compatibility of the size of the digester to the heads of pigs/cattle in stock, so that all the animal manure can be treated by the biogas digester. Close monitoring of livestock population fluctuations will be needed to mitigate the risks associated with potential unmanaged surplus biogas (small size digester compared to the numbers of heads), which could harm the environment. The utilization of bio-slurry is influenced by the conditions of each household's set up; where households having agriculturally productive plots adjacent to their houses are able to more effectively utilize bio-slurry as organic fertilizer. For households who do not have large plots near their house, constructing additional facilities for bio-slurry storage (or compost pits) attached to the digester is necessary to avoid overflow of bio-slurry in the surrounding areas and/or discharging to the water body.

Implementation Progress
Description of Project Outputs

1. Improved regulatory framework and fully operational quality and safety system for agroproducts.

2. Infrastructure and facilities for quality and safety of agroproducts.

3. Biogas development for clean energy, improved agroproduct safety and reduced health hazards from livestock wastes

4. Effective project management support established at central and provincial levels.

Status of Implementation Progress (Outputs, Activities, and Issues)

Output 1: Regulatory Framework

Most of the targets are achieved. The IPMU, with the assistance of the loan implementation consultants, has reviewed twenty four (24) key legal documents related to agricultural food safety selected and issued (10) revised legal regulations. The remaining 14 documents legal documents are expected to be issued within 2014. Those updated 24 key legal documents provide clarity in the institutional responsibilities within MARD and between MARD and provinces, technical standards for GAP, certification, monitoring, inspection and enforcement, food safety conditions at the production, trading, and wholesale market levels, which allows producers, processors and traders to easily conform with these regulations and with international food quality and safety standards. The project provinces have already initiated implementation of decisions and circulars already issued.

The Project is improving the institutional capacity to implement VietGAP. The Standing Committee on Viet Nam Good Agricultural Practices (VietGAP) headed by a Vice Minister of MARD with Secretariat at DCP was established. The IPMU is coordinating the application of VietGAP in crops, livestock and fisheries production as is stipulated in the Prime Minister's decision issued in January 2012. A total of 15 training courses were provided to 498 DARD staff and 13 VietGAP certification bodies have been accredited by the IPMU. VietGAP have also been updated to simplify requirements for better compliance of farmers and to adjust several technical requirements (e.g., soil and water conditions, pesticide use) that have not been found to be feasible in actual practice. The updated VietGAP (version 2) addresses these issues while keeping within standards widely accepted internationally (i.e., GlobalGAP).

Institutional responsibilities related to agricultural food safety was clarified and strengthened within MARD through (i) establishment of Food Safety Monitoring Division at NAFIQAD for overall crop food safety monitoring, communication and information; and (ii) creation of new staff positions for Food Safety Specialists at DCP, Department of Plant Protection within MARD, Department of Agriculture and Rural Development (DARD) in the project provinces, and at district and commune level.

Pilot testing of a crop food safety management system (CFSMS) has started in 13 out of the 16 project provinces. The establishment of a provincial food safety index is underway with the consultancy engagement for the design and supervision of the PFSI mobilized in October 2013.

Output 2: Infrastructure and Facilities for Quality and Safe Agro-Products

The Safe Agricultural Zone (SAZ) planning schemes identified under the Project cover a total area of 215,967 hectares (ha) across all 16 participating provinces, accounting for 63% of the total agriculture area for tea, fruits and vegetables being targeted by the Project (i.e., 340,856 ha). The SAZ areas are approved by the Provincial People's Committees for the period of 2010-2020 with consistent procedures, standards and regulations applied across all provinces. A total of 68 SAZ models have been identified based on the soil and water quality testing to suit the crop production requirements. All civil works contracts to carry out these investments are expected to be awarded within Q4 of 2013. Additional investments for nine models are being identified to utilize unallocated loan proceeds and increase project intervention against the identified SAZ schemes, which is likely to cover an additional 300 ha. These project investments are scheduled to be completed by Q3 of 2014.

All SAZ models being supported by the Project generally have market linkages but in varying degrees. Incentives for adopting VietGAP are higher for those SAZ models which have contracts with supermarkets and processing companies for export. The EA was reminded of the importance to create linkages between the established SAZ models and potential steady and profitable buyers (e.g., restaurants, collectors, canteens, supermarkets) in order to have incentives for certified farmers to continue applying GAP standards in their production and post harvest process. The EA agreed to work with provinces and relevant departments to help farmers working within the SAZ models to develop business/marketing plans.

As of the October 2013, 4,864 courses covering topics related to farm food safety production standards and GAP have been conducted with a total of 200,298 participants; 34% of whom are women. Following these training programs and under the supervision and monitoring of provincial authorities and certification bodies, a total of 6,703 ha of vegetable, fruits, and tea production areas with crop yields estimated at 91,819 tons have been certified as safe. 12,239 household-based producers benefitted from the certification services provided under the Project.

The Project also assisted farmers in replacing old, low-quality and disease-susceptible tea and fruit plants with better varieties. This project intervention was carried out in 10 of the 16 project provinces that produced tea and fruit; and has so far covered a combined area of 10,398 ha (9,002 ha of tea and 1,396 ha of fruits). The variety replacement is expected to increase crop yields by 50% to 150%. Pesticide use is also expected to be decreased given the improved resistance of the new varieties to pest and diseases.

To effectively monitor, analyze, and certify agriculture products, the Project upgraded key regional laboratories with new laboratory equipment. Six laboratories were re-equipped and included those under the Department of Crop Production (1), Department of Plant Protection (1), and the National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD) (3); which are spread across Viet Nam's northern, central and southern regions.

In March 2013, MARD issued a decision selecting 19 research topics covering new crop variety development and post-harvest equipment innovations. The recruitment of eligible consultants to carry out these research activities has already been initiated. Five consulting contracts are expected to be awarded within Q2 of 2014.

Output 3: Biogas Development

The Project through 16 PPMUs has constructed 26,037 biogas digesters. Of these households, only 21,638 households have (so far) been technically accepted and granted financial assistance. On 24 July 2013, ADB issued its endorsement to reallocated unutilized loan provisions under Component 3 to augment allocations for household biogas digester construction in the participating provinces. This reallocation is endorsed on the condition that should the 4,399 households be technically accepted, the release of financial assistance benefits to these households (approximately VND5,278,800,000 or US$250,000) will be prioritized. The BPMU has conducted random inspections of 986 works and found them all to have been built in conformity with designs and are operating to specifications.

To date, the BPMU and PPMUs have conducted 1,711 various training courses for 48,065 participants, among who include managers, technicians, builders, and biogas works users. Female and ethnic minority participants accounted for 24% and 6.3%, respectively. Households trained on the safe construction, operation, and maintenance of biogas digesters have reached 30,000.

The CPMU reported that 11,199 households received loans from VBARD and CCF (now COOPBANK) 3,777 households (VND76.3 billion) and 7,422 households (VND220.1 billion), respectively. A total of VND296 billion has been disbursed.

Geographical Location Bac Giang, Ben Tre, Binh Thuan, Da Nang, Ha Noi, including Ha Tay, Hai Duong, Hai Phong, Ho Chi Minh City, Lam Dong, Ninh Thuan, Phu Tho, Son La, Thai Nguyen, Tien Giang, Vinh Phuc, and Yen Bai
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples B
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Eleven consultation meetings were held, attended by a total of 81 people, or an average of 7 or 8 people per meeting. About 41% of the participants were women. Five of these meetings were conducted among ethnic minorities. One meeting was conducted among women.
During Project Implementation
Business Opportunities
Consulting Services tbd
Procurement tbd
Responsible ADB Officer Charles David Salter
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, SERD
Executing Agencies
Ministry of Agriculture & Rural Development (MARD)
Pham Quang Toan
Agricultural Projects Management Board
3rd Floor, Agricultural Exhibition Ctr
No.2,Hoang Quoc Vie Str.,Cau Giay Dist
Central People's Credit Fund
Implementing Agency
1 F Thai Ha, Dong Da
Ha Noi, Viet Nam
Viet Nam Bank for Agriculture and Rural Dev't.
Implementing Agency
No. 2 Lang Ha Street
Ba Dinh District, Ha Noi, Viet Nam
Concept Clearance 26 Sep 2008
Fact Finding 08 Sep 2008 to 19 Sep 2008
MRM 11 Nov 2008
Approval 18 Mar 2009
Last Review Mission -
PDS Creation Date 29 Oct 2008
Last PDS Update 25 Sep 2015

Loan 2513-VIE

Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Mar 2009 30 Jun 2009 26 Aug 2009 31 Dec 2015 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 109.04 Cumulative Contract Awards
ADB 95.00 18 Mar 2009 83.59 0.00 89%
Counterpart 14.04 Cumulative Disbursements
Cofinancing 0.00 18 Mar 2009 78.22 0.00 83%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

TA 7251-VIE

Approval Signing Date Effectivity Date Closing
Original Revised Actual
18 Mar 2009 15 Oct 2009 15 Oct 2009 30 Jun 2010 31 Dec 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 300,000.00 0.00 0.00 0.00 1,800,000.00 18 Mar 2009 1,488,186.75
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Safeguard Documents

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