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Cherry tomatoes on vine

Bio-pesticides production for farming

By Markus Spiske on Unsplash

Bio-pesticides production for farming

Compare IOA
Country
Vietnam
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in GPM)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
USD 50 million - USD 100 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
Investment can be through private placement (recommended) in already operating businesses. Size of investment may vary based on the target investment level.
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Industry, Innovation and Infrastructure (SDG 9)

Business Model Description

B2B model for the production of bio-pesticides for farming. The investment may also include the distribution business (B2B, and B2C). Examples of companies active in this space are:

Vietnam Fumigation produces, processes, and trades disinfectant and agro-pharmaceutical products in Vietnam. The company offers pesticides, herbicides, medication, fertilizers, and rice seeds for farmers. The PAN Group made an offer to acquire an additional 15% stake in Vietnam Fumigation for approximately USD 10m on August 31, 2020.

Expected Impact

The use of bio-pesticides will contribute to improving the working conditions for farmers, among which women account for a majority, and reduce the health risks for consumers.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Vietnam
Region
  • Vietnam: Highland
  • Vietnam: Mekong Delta Region
  • Vietnam: Red River Delta
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development needs
In 2021, The Global Food Security Index of Vietnam is ranked 65/113, indicating high food insecurity and poor food nutrition (1); very low labor productivity in agriculture production, for instance, 2.4 and 2.1 times less than Indonesia and Thailand respectively (2); Seriously affected by climate change, the impact of floods alone causes a loss of 2.3% of GDP every year (3)

Policy priority
strong support from the government for rural development (The resolution 26-NQ/TW/2008), including the activities in agricultural value chains, e.g market access, technology transfer, access to capital, human resource improvement, infrastructure investment, and business model development (4); food safety for the population (5)

Gender inequalities and marginalization issues
26 m female labor force in the agriculture sector have unstable jobs, low income, and limited access to social welfare (6); a high malnutrition ratio for under-five children in rural areas, being 23.7% as opposed to 6.2% in urban areas (7)

Investment opportunities introduction
Mass production in various crops and livestock, for example, 12.6 million tons of fruits, 22 million pigs, and 512 million poultry (2020) (8); USD 48 billion agricultural/ aquacultural export value in 2021 (9) Post-harvest processing technology - processed products with high added value accounts for only 10-40% of the farm output (10)

Key bottlenecks introduction
inefficient long supply chain, the under-developed infrastructure of the supply chain, unstandardized production processes leading to challenges in quality control, and lack of human resources.

Sub Sector

Food and Agriculture

Development needs
More than 50% of farmers overuse pesticides, negatively impacting human health (11). Limited processing capacity with equipment renewal coefficient is only 7%/year (equivalent to 1/2 - 1/3 of the minimum level of other countries), leading to a low income of USD 210 - 340/month for 1.6 m workers in the sector (12) and a high post-harvest loss rate of 10-20%. (7)

Policy priority
Decree 57/2018/ND-CP encourages investment in agriculture and rural areas (15), and Resolution 48/NQ-CP/2008 provides supports solutions to minimize post-harvest losses for key agricultural products to improve production efficiency and farmers' income (14); Ensuring food safety by supply chain control is set in the National Food Safety Strategy 2011-2020, vision for 2030 (16).

Gender inequalities and marginalization
Post-harvest loss and overuse of chemical pesticides are translated into a reduced income for, and a negative impact on the health of, millions of households, including women, children, and ethnic minorities. E.g, chemical pesticide overuse in Binh Thuan province affects over 35,000 households that are on dragon fruit plantations, among which women count as half of the laborers. (17)

Investment opportunities introduction
Estimated USD 300m market for agri-tech solutions, including distribution and retailing (19), more than 100,000 tons of pesticides are imported into Vietnam annually (18). Low fruit processing capacity, being estimated at 600,000 tons, versus total national production of more than 12m tons (20).

Key bottlenecks introduction
Access to land or land acquisition may be costly. Challenges exist in securing enough input supply at desired quality/quantity for processing factories, and in setting up distribution networks for production inputs or finished products.

Industry

Agricultural Products

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Bio-pesticides production for farming

Business Model

B2B model for the production of bio-pesticides for farming. The investment may also include the distribution business (B2B, and B2C). Examples of companies active in this space are:

Vietnam Fumigation produces, processes, and trades disinfectant and agro-pharmaceutical products in Vietnam. The company offers pesticides, herbicides, medication, fertilizers, and rice seeds for farmers. The PAN Group made an offer to acquire an additional 15% stake in Vietnam Fumigation for approximately USD 10m on August 31, 2020.

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

USD 50 million - USD 100 million

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

15% - 20%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Annual import of pesticides in Vietnam: 100,000 - 120,000 tons (15% is bio-pesticides) (23)

In 2019, Vietnam imported more than 16,100 tons of biological pesticides (about 50.8 million USD), accounting for 17% of the volume of imported pesticides (24)

Globally, the average annual growth rate of biological pesticides was 24% between 2014 to 2017. In 2017, biological pesticides were valued at 3.36 billion USD, forecasted to reach 6.42 billion USD in 2023 and 10.19 billion USD in 2025 (24)

Indicative Return

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

20% - 25%

The pesticide market is in a saturated phase, with an ROE of less than 5%. The strong trend of organic agriculture creates opportunities for sustainable farming, which is in turn translated into increasing demand for bio-pesticides. The average gross margin generated by pesticide businesses in Vietnam is 25% (25)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Decided based on the mode of entry & the products. If the investment is in a business with an already established distribution network, the breakeven can be achieved within less than 36 months.

In the face of strong competition from current chemical products, significant time will be consumed in establishing commercial brands of products in the market.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

Investment can be through private placement (recommended) in already operating businesses. Size of investment may vary based on the target investment level.

Market Risks & Scale Obstacles

Market - High Level of Competition

Bio-pesticides have to compete with several other chemical products in the market.
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

The use of bio-pesticides will contribute to reducing the chemical input amount for agricultural production, hence decreasing the proportion of degraded land and improving the area of productive and sustainable agriculture.

The use of bio-pesticides reduces farmers' exposure to chemical pesticides that would be applied otherwise, and so, improving farmers' health via improved production conditions on the field.

Gender & Marginalisation

Reduce the magnitude of health risks associated with the use of chemical pesticides that many women are exposed to during the production of various crops. Such risks are pulmonary dysfunction, severe liver damage, birth defects, suppression of the immune system, and other acute toxicity (34)

Expected Development Outcome

Reduce environmental degradation resulting from the usage of chemical inputs in agriculture production; adapt to climate change, and promote "green growth".

Improve living conditions for the local communities that are exposed to chemical pesticides

Improve food safety for consumers of agricultural products.

Gender & Marginalisation

Improve working conditions for women in agricultural areas. Women account for 64.3% of the labor force and play dominant roles in the production of several crops. For example, women are the main source of labor in the tea value chain, with 120,000 ha plantations in Vietnam.

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

Current Value

By 2020, out of 14.4 m ha of the plantation, less than 0.3% of this (170.000 ha of plantation) has been certified for VietGAP, which is currently considered a sustainability standard; In aquaculture, only 6.363 ha out of 1.1m ha in total is VietGAP (7)

Target Value

The sustainable agricultural land increases by 10-15% annually (7)

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.4.1 CO2 emission per unit of value added

Current Value

0.169 tons of CO2eq/1000 USD GDP - 2020 (33)

Target Value

Vietnam's NDC has committed a reduction of 9% carbon emission by 2030 in the case of the normal scenario of carbon emission with domestic resources and up to 27% with international support (21); 0.160 tons of CO2 eq/1000 USD GDP 2030 (33)

Directly impacted stakeholders

People

Farmers who use pesticides input for crop plantations will have less exposure to harmful chemical pesticides, and consumers of agricultural outputs will have safer products cultivated using bio-inputs.

Gender inequality and/or marginalization

Reduce urban and rural disparities in terms of working conditions by eliminating women's exposure to chemical toxic in agriculture activities.

Planet

Reduced degraded land area, improved quality of water (affected by over-use of chemicals on fields), and reduced carbon footprint help in environment conservation.

Corporates

Companies and businesses in the supply chain enjoy better quality products, and higher productivity

Public sector

Reduce the government's budget allocated for addressing environmental issues caused by over-use of chemical inputs in agriculture (e.g. water source and land pollution)

Indirectly impacted stakeholders

People

Local communities will benefit from the improved environment which could be polluted by the use of chemical agriculture inputs (e.g. water source or air pollution)

Gender inequality and/or marginalization

Reduce urban and rural disparities in terms of working conditions by eliminating women's exposure to chemical toxic in agriculture activities.

Planet

Contribute to overall biodiversity and natural resources conservation.

Corporates

Create opportunities for developing new products (bio-pesticides) for companies with a focus on innovation.

Public sector

Reduce the burden on the local government's budget to deal with the negative impact of chemical pesticide use on the environment.

Outcome Risks

The bio-pesticides cannot justify their economic benefits (benefits outweigh the cost), and are thus, less attractive for farmers.

The manufacturer of the products may not be capable of or have sufficient resources for marketing the products to end-users.

Gender inequality and/or marginalization risk: limited perception of the bio-pesticides values in terms of health and environment can limit the use of bio-pesticides by women and marginalized groups.

Impact Risks

Induced by tradition or habit, or due to low awareness about bio-products, farmers continue to use chemical products, making the agricultural practice unsustainable.

The time for the products to establish solid market positions can be prolonged, slowing down the business scaleup

Impact Classification

A—Act to Avoid Harm

What

Bio-pesticides reduce the use/over-use of chemical pesticides which are harmful for farmers and consumers of agri-products

Risk

Farmers may resist switching to bio-pesticides due to high cost factor or lack of knowledge about the benefits of bio-pesticides

Contribution

GoV has committed to agricultural bio-industrial development to 2030, of which the budget will be derived from the State and various sources, including private sectors (35)

Impact Thesis

The use of bio-pesticides will contribute to improving the working conditions for farmers, among which women account for a majority, and reduce the health risks for consumers.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

National Strategy for sustainable agriculture and rural development: set out strategies for agriculture and rural development to increase productivity, reduce poverty, apply green technology, and develop new rural communities (30)

GoV, Decree 109/2018/NĐ-CP: Encourage the organic agriculture development in Vietnam, set out standards for organic production practices, organic product certification, and quality control of organic products

The Ministry of Agriculture and Rural Development has set a goal by 2025 to increase the number of registered biological pesticides to 30%, and the rate of actual use of biological pesticides to reach 20% (31)

Financial Environment

GoV, Decree 57/2018/NĐ-CP: incentives for businesses to invest in agriculture and rural areas, including support for access to land/ water surface, reduced income taxes, research and technology transfer, human resource development, processing facilities, and so on (28)

Financial incentives: Financial package of 4,37b USD is offered by the State Bank & other banks for hi-tech business (26) If the newly established enterprise in an area with difficult or extremely difficult socio-economic conditions is entitled to the reduced corporate income tax rate (32)

Regulatory Environment

Law on plant protection and quarantine, 2013: provide legal information on the state management of plant protection and pesticides (29)

GoV, Circular 21/2015/TT-BNNPTNT: Regulation on the state management of plant protection products, including pesticides, specifies the products that are allowed or not allowed in Vietnam (27)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Agricultural production input suppliers/manufacturers - Loc Troi, Vipesco, Saigon Pesticides, Dong Duoc HAI, TSC Can Tho, Central Plant Protection Company 1, Vietnam Fumigation JSC Company, Golden Rice Agro-Chemical Company, Beyer.

Government

Local governments (at the district and commune level) play an important role (e.g connecting to users, supporting training and marketing of new products), Plant Protection Division (PPD) - under the Ministry of Agriculture and Rural Development (MARD)

Multilaterals

European Union (EU, Development Programme (UNDP), World Health Organization (WHO), World Bank (WB), The Food and Agriculture Organization (FAO)

Non-Profit

Vietnam Organic Association, Vietnam Pesticides Association, Association of Food Transparency (AFT), Vietnam Consumer Protection Association (VICOPRO), Farmers Union (FU), Women Union (WU)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Vietnam: Highland

There are areas in the highland region where high-value agricultural production concentrates. In such areas, the demand for bio-pesticides is of high potential. The production facilities can be in areas close to the target market and have infrastructure suitable to the business conditions.
rural

Vietnam: Mekong Delta Region

There are areas in the highland region where high-value agricultural production concentrates. In such areas, the demand for bio-pesticides is of high potential. The production facilities can be in areas close to the target market and have infrastructure suitable to the business conditions.
rural

Vietnam: Red River Delta

There are areas in the highland region where high-value agricultural production concentrates. In such areas, the demand for bio-pesticides is of high potential. The production facilities can be in areas close to the target market and have infrastructure suitable to the business conditions.
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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