Nguyen Dan Hau Giang Co., Ltd: Efforts to Bring Organic Food to Consumers

9:34:06 AM | 13/10/2020

In the past four years, Nguyen Dan Hau Giang Co. Ltd has always strived to bring organic food to consumers in Hau Giang and neighboring provinces.

Modern production lines

At that time, he was a real estate trader in Ho Chi Minh City. When the property market was somewhat lackluster, he decided to seek a new business and Hau Giang was the land of his choice. He learned that Hau Giang province was attracting investment inflows, particularly for potential fields like processing agricultural products and foodstuffs, he visited the websites of the Department of Planning and Investment and the Department of Agriculture and Rural Development to find further information. Also stemming from his concerns about food hygiene and safety, he decided to invest in a pig slaughterhouse and established Nguyen Dan Hau Giang Co., Ltd.

Starting this plan in 2016, he contacted local authorities and people, established business projects, bought land and started investment steps quite favorably. Project establishment, licensing procedures and site clearance were all prompt. As soon as the business was deployed, however, Vu faced a lot of difficulties: This was the first large-scale centralized slaughtering project, but there were no specific regulations and standards on investment incentives; the project was not located in the industrial zone or planned in advance; a business license granted by district authorities required only 5,000 square meters to build a slaughterhouse but the area of 10,000 square meters was required for this by the Department of Natural Resources and Environment.

After a nearly 3-year effort for change and adjustment, the centralized slaughterhouse was completed and put into operation from January 1, 2019 in Lang Ham C Village, Thanh Xuan Commune, Chau Thanh A District. Costing over VND10 billion, the slaughterhouse, covering 12,000 square meters, is capable of processing 400 pigs a day in the first phase. The water is boiled by solar electricity. 50% of production lines are automated. The slaughtering time of a hog is only 2 minutes 42 seconds. Waste is treated in an anaerobic medium in five serial biogas tunnels to keep the surroundings protected. The project was certified by the Hau Giang Department of Animal Health and Livestock Production for food safety and rated the most modern of its kind in the province. The facility has met cattle slaughtering demand in the east of Chau Thanh A district, Phung Hiep district and a part of Chau Thanh district.

As soon as its expectations had just been heightened, Nguyen Dan Hau Giang Co., Ltd faced operational challenges. According to initial commitments, the local government would put an end to manned and smuggled slaughterhouses, but this process was, in fact, carried out quite slowly due to conflicting opinions (the province and district wanted to stop operating manned slaughterhouses near centralized ones. However, authorities in some communes said that this action would hurt small merchants. As a result, the facility could buy only 100 hogs a day, just meeting 20% of the designed capacity and causing damage to the company and waste to society. To compensate for this shortfall, the company had to sign a contract with CP Vietnam Company to buy pigs from other provinces for the facility and then supply products to customers in Can Tho City, Dong Thap, Vinh Long, resulting in lower-than-expected earnings.

Director Nguyen Dan Vu said, as of mid-2020, the company invested VND21 billion in grounds, factories, machinery and equipment, but it could not work effectively given the above difficulties. Soon defining these difficulties, he never gave up the business because it importantly met urgent local demand and brought organic food to local people. That was also the reason why the company installed the second production line to expand the capacity to 800 units a day in order to better serve growing consumer demand in late 2020 and early 2021.

Stabilizing prices and ensuring organic foodstuff supply

African swine fever epidemic, which broke out in late 2019, resulted in supply shortages that inflated hog prices. Adopting pork price stabilization measures, in mid-June 2020, Nguyen Dan Hau Giang Co., Ltd proposed and agreed to coordinate with the Department of Industry and Trade and other relevant bodies to open price-fixed pork selling places in the province (the selling price was 10-20% lower than the market rate). This right policy drew positive response from local people and close engagement by all levels of government. After conducting a survey, the company agreed to open 18 selling points in markets in all eight districts and towns of Hau Giang province.

After more than two months of implementation, in September 2020, the company completed investing VND300 million in the first store in Nga Bay City, planned to be opened from October 2020. Stepping into this field in the early stages is completely not for profit but for branding. More importantly, this move will provide consumers with organic fresh meat with clear origin and reasonable price. However, the opening of other selling stalls was slower because of different opinions about locations. Director Nguyen Dan Vu said, a not-for-profit store cannot survive if it is not located in a good place. The company also plans to bring this model to industrial zones in Hau Giang province, but it cannot find good locations for investment.

Director Nguyen Dan Vu added, the company was recently approved by the Hau Giang Provincial People’s Committee to invest VND15 billion in Nguyen Dan Hau Giang 2 centralized cattle and poultry slaughterhouse on an area of 12,000 square meters in Vi Thanh City. The facility has a processing capacity of 900 hogs, 100 cattle and 2,000 fowls a day. It will fully apply environmental protection measures. All waste is collected and treated; regulations on fire prevention, food safety, disease control and environmental incident response are strictly obeyed. Kicked off in early 2020, the project will bring more organic food to consumers in Vi Thanh City.

Source: Vietnam Business Forum