PepsiCo Vietnam expands potato cultivating area, together with farmers for quality

After more than 10 years since the first hectares of experimental potatoes were tested in Lam Dong Province, PepsiCo Vietnam has officially expanded its potato-cultivating project to other provinces of the Central Highlands and provinces in the north of Vietnam, with a focus on securing the domestic supply chain and quality for the Vietnamese market. 

This supplied photo shows PepsiCo Vietnam’s potato field.

“The COVID-19 pandemic is disrupting both production and distribution in the food industry, leading to a system-wide bottleneck on the whole food supply chain,” according to a joint statement made at the   International Support Group Conference (ISG) 2020 held by the Ministry of Agriculture and Rural Development in Hanoi on December 11.

Since 2006, when PepsiCo first entered the Vietnamese market as a beverage manufacturer, a securable domestic supply chain and sustainable agriculture development have been the company’s strategic focus.

In 2008, determined to develop its material area to supply potatoes to factories across the country, PepsiCo Vietnam chose Da Lat City in Lam Dong Province as the ideal location due to its fertile basalt soil and suitable climate.

Following numerous experimental potato fields and countless technical difficulties in introducing potato seeds developed in U.S. laboratories to a new climate, as well as the challenge of establishing a totally new partner-farmer model, the company has turned the situation around from having to import potatoes for production to being 75 percent self-sufficient.

This is an achievement 10 years in the making.    

Pioneer in expanding industrial potato-cultivating area

The year 2020 could be an important milestone for PepsiCo Vietnam as its potato-cultivating project expands to Dak Lak and Gia Lai Provinces, both of which have suitable climate and soil for the potato crop.

This is another solid step for the company as it has a firm grasp of the production technique, process, and knowledge of the area. 

Dak Lak and Gia Lai are the two provinces of the Central Highlands with an altitude of 500-900 meters above sea level, while their temperature ranges from 20 to 27 degrees Celsius.

The two places share many similarities with Da Lat, where the project first started.

These are large land sectors that also fit cultivation and agricultural mechanization.

“On inspection, this area can supply over 200,000 metric tons a year,” said Nguyen Phuc Trai, agronomy director of PepsiCo Foods Vietnam.

Phase one of the expanding program is expected to produce 5,000-6,000 metric tons. By 2023, production will have doubled.

In addition to signing offtake contracts with farmers, PepsiCo Vietnam also provides them with technical support and co-invests in cultivars as well as fertilizers at an estimated cost of 40 percent per hectare, with farmers covering the remaining 60 percent via land lease, agricultural medicine, labor, electricity, and water.

Net profit in the dry season is VND95-100 million (US$4,100-4,300).

With an average yield of 26 metric tons per hectare, the profit after production cost is expected to be around VND95-100 million for four months of cultivation.

It can be said that this is one of the most profitable crops with fast cash flows and high margins.

“As a member of the Partnership for Sustainable Agriculture in Vietnam (PSAV) by the Ministry of Agriculture and Rural Development, PepsiCo's overall development strategy is to develop sustainable agriculture in association with farmers and other partners to create a value chain for agricultural products that can not only ensure the domestic material supply source but also the livelihood of the farmers on their land,” said Trai, the agronomy director who has been with the company’s potato program since its very beginning.

“Our commitment to cultivating and developing the material supply source with the farmers of Da Lat over the last 12 years, and now Dak Lak and Gia Lai, is our answer to that determination.”

Domestic development to meet international standards

Vietnam‘s tropical climate limits potato cultivation to the dry season in the Central Highlands and winter in the north.

Therefore, the difficult research for potato types suitable for the country‘s climate is PepsiCo’s top priority. 

Since the Alantic cultivar for the first crops, PepsiCo has continued to research and invest in two more varieties, FL2215 and FL2027, which result in high yields of up to 56.7 metric tons per hectare under tropical farming conditions unfavorable to potatoes.

The FL2215 cultivar has good resistance during the rainy season of the Central Highlands, solving the company and farmer’s material problem.

PepsiCo's work has been recognized and approved for production by the Ministry of Agriculture and Rural Development.

Its relentless endeavors and efforts are to bring the highest quality potatoes to Vietnamese consumers.