PepsiCo Foods Vietnam Co (PFVC) has signed a memorandum of understanding with the Vietnamese Department of Agriculture and Rural Development (DARD) and the Phivang Collaboration of Farmers in Vietnam to introduce a sustainable contract potato-farming model.

PFVC says the MoU is the first of its kind in Vietnam. The agreement will benefit around 50 small-scale farmers in Lam Dong province. 

As part of the MoU, PFVC will agree a fixed price for the purchase of potatoes from the Phivang Collaboration of Farmers at the start of each growing season. This gives assurances to farmers that they have a buyer for their potatoes and at a price that is not subject to market fluctuations. 

DARD will provide financial assistance to members of the cooperative to purchase seeds and other inputs for the growing season. Finally, the Phivang Collaboration will unite farmers to negotiate a secure and stable contract with PepsiCo and provide a forum for farmers to exchange growing techniques. 

In addition, PFVC will provide technical agronomy support to the farmers through sharing best practice on techniques to improve yields, save water and promote sustainable agriculture. 

Proven record 

PFVC says it has a proven track record of helping farmers in Vietnam make their crop cycles more productive. Between 2011 and 2014, the company provided agronomy support to farmers that enabled them to nearly double their average yields.

"PepsiCo is one of the world's largest agricultural enterprises. Annually we source more than 4 million tonnes of potatoes from thousands of local farmers across the globe, and our success depends on securing sustainable supply chains for our key raw materials," said Huy Nguyen Duc, general manager of PFVC. 

"Along with our partners, DARD and the Phivang Collaboration of Farmers, we want to use our combined experience and know-how to work with potato farmers in Vietnam and to play a positive role in the success of sustainable contract farming across Vietnam." 

DARD said it believed this agreement was mutually beneficial to all parties. Phivang farmers are guaranteed a fair price that is not subject to market fluctuations for their crop and PepsiCo will receive a stable supply of potatoes. 

A spokesman for the department said the plan was to replicate this model throughout Lam Dong province to ensure sustainable production of potatoes and other vegetables and to provide security to farmers.

PepsiCo is an active member of the World Economic Forum's "Grow Asia" initiative and the "New Vision for Agriculture". Grow Asia is a multi-stakeholder initiative that promotes inclusive and sustainable agricultural growth, especially focusing on smallholder farmer development, food security, and environmental sustainability of agriculture. 

PFVC leads the fruit and vegetable working group of Grow Asia in Vietnam. Through this group, PFVC says it has been able to introduce farmers to best practices in sustainably improving crop yields and the quality of their potatoes.

Originally Published: The Nation