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lemons laid on a table

Food irradiation facilities

By Lauren Mancke on Unsplash

Food irradiation facilities

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).
15% - 20% (in IRR)
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.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Responsible Consumption and Production (SDG 12)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) No Poverty (SDG 1)

Business Model Description

Investment in irradiation facilities for sterilization of fruits, seafood, medical instruments, and traditional pharmaceuticals. Fruits are recommended as a major target market segment. This service may be combined with warehouse rental and cold storage services. This model is B2B, with customers being domestic exporters or overseas importers. Examples of companies active in this space are:

An Phu Irradiation is a listed Joint Stock Company. It has invested nearly USD 30m in 3 factories to provide irradiation services for seafood and fruits, with a total installed capacity of nearly 400 tons/day in the South (Binh Duong and Long An Province) and the North (Bac Ninh Province) (22)

Expected Impact

Irradiation services contribute to the export of agricultural products and directly benefit the farmers involved in the production and consumers who can enjoy enhanced product quality assurance

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: Mekong Delta Region
  • Vietnam: Eastern South Region
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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 nutrition (1) due to low labor productivity in agriculture production, i.e. 2.4 and 2.1 times less than Indonesia and Thailand respectively (2). Vietnam is also severely affected by climate change, the impact of floods alone causes a loss of 2.3% of GDP every year (3).

Policy priority
Resolution 26-NQ/TW/2008 offers strong support from the government for rural development, 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); and food safety for the population (5)

Gender and marginalization issues
26 m female labor force (in 2016) 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 is 23.7% as opposed to 6.2% in urban areas (in 2020) (7)

Investment opportunities introduction
Mass production in various crops and livestock, for example, 12.6 m tons of fruits, 22 m pigs, and 512 m poultry in 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
High post-harvest loss rate of 10-20% (7). More than 50% of farmers overuse pesticides, negatively impacting human health (11). Limited processing capacity with equipment renewal coefficient, i.e. 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).

Policy priority
GoV encourages investment in agriculture and rural areas (15), including the application of irradiation technology to increase product quality and competitiveness of the agriculture sector (Decision 775/QD-TTg/2010) (29), while also ensuring food safety by control throughout the food supply chain from production to consumption (16).

Gender and marginalization issues
post-harvest loss and overuse of chemical inputs reduces income for, and causing a negative impact on the health of, millions of households, including women, children and ethnic minorities. E.g in Binh Thuan, the income of over 35,000 households, of which women account for half of the labor force in dragon fruit plantations (21, 17), is often negatively affected by the demand drop in China.

Investment opportunities introduction
estimated USD 300m market for agri-tech solutions including the ones for distribution and retailing (19), more than 100,000 tons of pesticides are imported into Vietnam annually (18). and low fruit processing capacity, is 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 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

Food irradiation facilities

Business Model

Investment in irradiation facilities for sterilization of fruits, seafood, medical instruments, and traditional pharmaceuticals. Fruits are recommended as a major target market segment. This service may be combined with warehouse rental and cold storage services. This model is B2B, with customers being domestic exporters or overseas importers. Examples of companies active in this space are:

An Phu Irradiation is a listed Joint Stock Company. It has invested nearly USD 30m in 3 factories to provide irradiation services for seafood and fruits, with a total installed capacity of nearly 400 tons/day in the South (Binh Duong and Long An Province) and the North (Bac Ninh Province) (22)

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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.

10% - 15%

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

3% of Vietnam's fruit export of about USD 1.8 billion in 2021 can be potentially for irradiating.

The demand for the export of fruits and seafood to high-value markets is estimated to be growing by 10-15% (25). This is an important key driver for the growth of demand for irradiation services.

Vietnamese seafood has been exported to more than 105 countries with a compound growth rate of 11% from 2009 to 2018. Meanwhile, the growth of fruit and vegetable export in the period 2009 - 2018 reached 26%/year. (22)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

15% - 20%

Irradiation services have a high rate of return due to the prevailing high price of service compared to the cost. Estimated investment cost is USD 0.5 - 0.8/kg. Meanwhile, the service cost is 0.8-1 USD/kg. (34)

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)

The irradiation industry is a conditional business. It will probably take more than 12 months for the investors to complete the relevant procedures required by the authorities. The investment timeframe is estimated to be 5-10 years (34).

Ticket Size

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

> USD 10 million

Market Risks & Scale Obstacles

Market - Highly Regulated

Irradiation is a conditional business - both during plant construction and equipment operation (36). In addition, this service is subject to the regulations of the importing country.

Market - Volatile

In the early stage, domestic demand is still low, irradiation services largely depends on the capacity of enterprises to export agricultural and aquatic products to countries with irradiation requirements for imported products.
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Impact Case

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

Sustainable Development Need

Investment in processing technology, including irradiation, is needed to increase agricultural product value by satisfying the technical demand of high-value markets like the USA and reducing post-harvest losses.

Gender & Marginalisation

Investment in irradiation capacity will help farmers on fruit plantations in rural areas to improve farm outputs, and so, gain access to high-value and stable markets, contributing to sustainably increasing their incomes.

Expected Development Outcome

Increase the export volume of agricultural and aquatic products to high-value markets by applying irradiation technology for preservation.

Reduce post-harvest losses for export agriculture products (fruits and veggies)

Gender & Marginalisation

Increase stable income for farmers participating in the export value chains of irradiated products

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.2 Average income of small-scale food producers, by sex and indigenous status

Current Value

Per capita income in rural areas in 2019 reached 39.5 million (7)

Target Value

Per capita income in rural areas by 2030: 90 million (7)

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.3.1 (a) Food loss index and (b) food waste index

Current Value

Post-harvest losses are still large, depending on the industry, but generally range from 10-20%: vegetables, fruits, cassava about 20-30%; group of coffee, pepper, cashew, tea about 10-15%; about 15-20% caught seafood; rice about 5-7% (7)

Target Value

Reducing the rate of post-harvest - no specific roadmap (7)

Secondary SDGs addressed

8 - Decent Work and Economic Growth
1 - No Poverty

Directly impacted stakeholders

People

Farmers who participated in the value will improve income resulting from diversified markets and reduced post-harvest losses. Consumers of irradiated products will be more assured about food safety and hygiene.

Gender inequality and/or marginalization

Women and marginalized groups with livelihoods relying on fruit plantations will benefit from secured and high-value market demand, and so have a more stable income.

Corporates

Exporters have more opportunities to expand to high-value markets while improving the business profit.

Public sector

Reduction in the pressure of finding solutions for agricultural products that are dumped and sold at cheap prices due to a drop in their demand from major and traditional markets.

Indirectly impacted stakeholders

People

The population living in the areas where the investment is made will benefit from the economic development in the region

Gender inequality and/or marginalization

Investment in irradiation processing can create a crowding-in effect that attracts more investment from the private sector in the agriculture sector, and benefits women and marginalized groups living in rural areas.

Corporates

Input production suppliers for the irradiation businesses will have the opportunity to increase sales

Public sector

The competitiveness of Vietnam's agriculture is increased, contributing to the achieving socio-economic development of the provincial governments.

Outcome Risks

After use, radioactive wastes, if not properly handled and managed in accordance with regulations, will cause harm to the environment.

Facilities using food irradiation technology, if not operated in accordance with safety regulations, will adversely affect the health of workers directly engaged in the job.

Gender inequality and/or marginalization risk: the investment benefit may not reach women and marginalized groups in areas where the investment is not happened due to under-developed infrastructure.

Impact Risks

There is not enough quality data to assess the impact of reduced harvest loss and increased income for farmers involved in the export value chain of irradiated products

Significant reduction in export capacity and/or demand resulting in a reduced impact of irradiation services on post-harvest loss reduction and increased income for farmers.

Unexpected impact risk: Radioactive leakage during operation and/or post-use radioactive handling can affect workers and the public.

Gender inequality and/or marginalization risk: the lack of technical capacity may prevent marginalized groups from supplying inputs at the required quality for the irradiation business.

Impact Classification

C—Contribute to Solutions

What

Important positive outcomes: Reduce post-harvest losses and increase farmers' income.

Risk

Possible radioactive leakage during operation and/or handling of radioactive material after use, affecting workers and the community.

Contribution

GoV commits to developing specialized cultivation areas for fruit and vegetable production to ensure the raw materials (about 5-6 million tons by 2030) for processing activities. (40)

Impact Thesis

Irradiation services contribute to the export of agricultural products and directly benefit the farmers involved in the production and consumers who can enjoy enhanced product quality assurance

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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, Decision 417/QĐ-TTg, 2021: the country’s fruit and vegetable exports will be in the Top 5 globally, reaching an export value of 8-10 billion USD of which 80% is fruit (27)

GoV, Decision 339/QĐ-TTg, 2021: Government plan for seafood exports to reach 14-16 billion USD by 2030 (33)

GoV, Decision 775/QĐ-TTG, 2010: GoV aims to have, by 2020, 9-12 industry-scaled Co-60 gamma source irradiation facilities completed to serve irradiation demand for preservation, quarantine and hygiene, and safety of agricultural and food products (29)

GoV, Directives 25/CT-TTg, 2020: Policies on the promotion of linkages in production and distribution of agricultural products, 2018 (38)

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)

A 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

The Law on Food Safety, 2010: regulations on rights and obligations of organizations and individuals in ensuring food safety (39)

GoV, 142/2020/NĐ-CP: Regulations on conditions, dossiers, orders, and procedures for granting licenses to conduct radiation/irradiation work, registration certificates for atomic energy application support services, and application support service practice certificates for atomic energy (36)

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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

An Phu Irradiation Joint Stock, Son Son Co., Ltd, Thai Son Group, Da Nang irradiation facility, Dong Nai irradiation facility, Toan Phat Irradiation Co., Ltd

Government

Local governments at provincial and district level, Ministry of Agriculture and Rural Development (MARD), Ministry of Science and Technology. Ministry of Health (MOH)

Multilaterals

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

Non-Profit

VinaFruit, Vietnam Association of Seafood Exporters and Producers (VASEP), Association of Food Transparency (AFT), Vietnam Agriculture Export Association, 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: Mekong Delta Region

Mekong Delta region in the South, including Ben Tre, Tien Giang, Can Tho, Dong Thap. This region is a fruit production hub. The major fruits in this region are pumeloes, mangos, dragon fruits, durian, coconuts, and plums.
rural

Vietnam: Eastern South Region

Three suggested provinces are Khanh Hoa, Ninh Thuan, Binh Thuan, in which Binh Thuan is highly recommended due to its dragon fruit production hub and being closed to provinces in the Eastern part of the South where the supply of fruits is abundant.
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References

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