Food irradiation facilities




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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Country & Regions
- Vietnam: Mekong Delta Region
- Vietnam: Eastern South Region
Sector Classification
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.
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.
Agricultural Products
Pipeline Opportunity
Food irradiation facilities
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)
Business Case
Market Size and Environment
USD 50 million - USD 100 million
10% - 15%
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
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
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
> USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Volatile
Impact Case
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

2.3.2 Average income of small-scale food producers, by sex and indigenous status
Per capita income in rural areas in 2019 reached 39.5 million (7)
Per capita income in rural areas by 2030: 90 million (7)

12.3.1 (a) Food loss index and (b) food waste index
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)
Reducing the rate of post-harvest - no specific roadmap (7)
Secondary SDGs addressed


Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
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
What
Important positive outcomes: Reduce post-harvest losses and increase farmers' income.
Who
Underserved: Rural farmers participating in the export value chain of irradiated products have the opportunity to increase their 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)
How Much
This IOA will contribute to achieving 2 million tons of processing capacity by 2030 for the fruits and veggies sector in Vietnam (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
Enabling Environment
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)
Marketplace Participants
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)
Target Locations

Vietnam: Mekong Delta Region
Vietnam: Eastern South Region
References
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