In Viet Nam’s Highlands, Flowers Nurture New Prosperity

Project Result / Case Study | 11 November 2019

Da Lat, Viet Nam—  Each time Nguyen Quoc Son drops a batch of his chrysanthemums at Dalat Hasfarm, a flower growing company based in this provincial capital in the Central Highlands of Viet Nam, he moves a step closer to securing a better life for his children.

“As a farmer, I have to make every dong count,” says Nguyen, referring to his country’s currency. “If our business continues to do well with Dalat Hasfarm I’m sure that we can afford to send our children to school.”

"If our business continues to do well with Dalat Hasfarm I’m sure that we can afford to send our children to school." -Nguyen Quoc Son, contract farmer, Dalat Hasfarm

His weekly visits to Hasfarm’s sprawling greenhouses and processing center in Viet Nam’s mountainous central highlands provide an income that is making his family more prosperous. At a broader level, they show how a healthy private sector can lift communities out of poverty by creating jobs and boosting household budgets.

Agriculture employs up to half of all workers in Asia, so successful companies like Hasfarm can be powerful force-multipliers for developing countries as they strive to meet Sustainable Development Goals (SDGs). In Viet Nam, small farm sizes prevent farmers from achieving economies of scale. Farmers have lacked the finance and infrastructure needed to shift from subsistence farming to high-value cash crops like cut flowers. 

“Successful companies like Hasfarm can have huge development impacts across the SDGs,” explains Martin Lemoine, who leads the agribusiness unit of ADB’s private sector operations department. “Farmers are lifted sustainably from poverty which satisfies SDG 1 to eliminate poverty. Women are now two-thirds of the Hasfarm workforce, supporting the fifth SDG for gender equality.

“Targets for climate resilient agriculture, access to technology, and increased developing country exports also get a big boost when companies grow and hire more people.”

A blossoming business

Dalat Hasfarm is a subsidiary of Hasfarm Holdings Limited, Southeast Asia’s largest flower-growing and exporting company.  In 2016, it received a $20 million loan from the Asian Development Bank (ADB) to support its expansion in Viet Nam as well as into the nascent markets of the People’s Republic of China and Indonesia.

“We’re trying to double the size of our business,” says Charles Target, the Chairman of Hasfarm Holdings Limited. “We’re expanding in China, and we’re trying to expand in Indonesia as well. Another expansion is into vegetables.”

In fact, vegetables were the company’s first foray into high-value horticulture when it started out in the early 1990s. Da Lat’s cooler highland climate makes it ideal for certain crops. Greenhouses, where climate-controlled growing can triple yields, now stretch into the horizon in some parts of the city. Hasfarm was one of the first growers to set up there at a spot near the city center.

"Successful companies like Hasfarm can have huge development impacts across the SDGs." -Martin Lemoine, Head, ADB's Agribusiness Unit

The company soon shifted from vegetables to more profitable flowers—starting out with a patch no bigger than a tennis court. Now it produces many flower varieties in three markets—Viet Nam, the People’s Republic of China (PRC) and Indonesia—with a distribution arm in Japan handling exports to that lucrative market.

Viet Nam remains the company’s biggest growing operation with three farms covering hundreds of hectares. They produce temperate flowers like chrysanthemums, carnations and roses for export markets, and potted plants for the growing domestic market. Hasfarm now employs more than 3,000 people, most of them in Da Lat, making it one of the area’s largest employers.

“You could say we’ve been growing exponentially,” says Mr. Target. “We’re in a very capital-intensive business. So to continue expanding our business we have to invest every year, lots of money.”

Cultivating development dividends

ADB’s assistance is supporting Hasfarm’s expansion. As part of the loan, Hasfarm supplemented its existing environmental and social safeguards to maximize development impact. A gender action plan helped to create more jobs for women, who now make up nearly two-thirds of all Hasfarm’s workers. Water, soil and air pollution is being reduced through new and upgraded waste treatment and storage systems at production facilities at Da Lat and a bigger greenhouse facility at nearby Daron.

"It’s been phenomenal watching it all develop. Whether we‘ve had a big part in that I don’t know—I’d like to think we have." -Charles Target, Founder, Hasfarm Holdings

The support has reinforced Hasfarm’s commitment to advanced technology, such as precision irrigation systems at its greenhouses which save water and promote climate resilience in a country acutely challenged by climate change. Working with ADB also complements Hasfarm’s long-standing efforts to support more than 150 contract farmers like Mr. Son, who earn much more income from high-value cash crops like cut flowers than they did as subsistence farmers.

Hasfarm provides its contract farmers with price guarantees and offers them loans and technical assistance to help lift product quality to export standard. This provides life-changing income stability for once-poor farmers, while easing Hasfarm’s ongoing expansion into new markets.

These dynamics are helping to drive prosperity in the area. As the private sector is a major creator of jobs and growth around Asia and the Pacific, supporting an enabling environment for private sector firms is a key focus of ADB’s work in Viet Nam.

“Creating jobs especially in rural areas like the central highlands will help to deliver inclusive and sustainable prosperity in Viet Nam,” says Country Director of ADB’s Viet Nam Resident Mission Mr. Eric Sidgwick. “Support for companies like Dalat Hasfarm can create these jobs, particularly for women, while making farmers more competitive and productive.”

Charles Target recalls how houses that he drove past on his way to work 30 years ago first replaced their thatched roofs with tin, then graduated to tiles, and then were entirely rebuilt.

“It’s been phenomenal watching it all develop,” he says. “Whether we‘ve had a big part in that I don’t know—I’d like to think we have.”

Mr. Son, the farmer, recently bought a car to cut the cost of taking his crop to Hasfarm’s collection center in Da Lat. Even if his children get the education he wants, he thinks they might enter the business that is transforming the family’s fortunes.

“Who knows, one day they might come back and run the farm, working with Hasfarm like me.”