IFC supports Nafoods Group to improve processing capacity and exports

Nafoods Group receives valuable support from the IFC to improve processing capacity and exports

Agriculture is fundamental to the Vietnamese economy with the total production accounting for 16 per cent of gross domestic product and 17 per cent of export revenue. Key agricultural exports such as fruits and vegetables have grown rapidly over the past five years. However, the bulk of the produce in Vietnam is still exported in fresh form and at less competitive prices due to lower quality.

IFC’s $8 million quasi-equity investment in the form of redeemable preference shares, which can be converted into ordinary shares, will fund the expansion of Nafoods Group’s processing factory in Long An province and the construction of a packing house in the Central Highlands of Vietnam. The financing will also help the company grow its new business in fruit seedlings, ensuring higher productivity and quality, as well as creating jobs and improving income opportunities for farmers in its supply chain.

Listed on the Ho Chi Minh Stock Exchange, Nafoods Group is a small, niche fruit processor and exporter in Vietnam, with a leading position in passion fruit. The company sources more than 13,300 tonnes of fresh and processed fruits annually from various regions in Vietnam including the Central Highlands, the West Northern Mountains (northwestern mountains?), and the north central coast – some of the country’s poorer regions.

“IFC’s long-term funding and technical advice could not be more timely as we are trying to develop higher value for our products by adopting safe and sustainable practices and by improving our production facilities,” said Nguyen Manh Hung, Nafoods Group chairman. “We believe an enhanced production capacity will allow us to generate better income opportunities for local farmers and meet the demands of high-value markets.”

IFC’s investment will allow Nafoods Group to increase the number of farmers along its supply chain by 11,500. Also, approximately 150 full-time jobs will be created in the company’s factories. Along with financing, IFC will advise Nafoods Group to implement a food safety management system for its cold chain system in line with the globally-recognised Food Safety System Certification 22000. This will help ensure quality and minimise wastage.

In partnership with New Zealand and the Slovak Republic, over the next 18 months, IFC will also work with the company’s fruit farmers and suppliers in Vietnam, Cambodia, and Lao PDR to help them conform to global sustainable farming standards and practices. International certifications such as Good Agricultural Practices – GLOBAL G.A.P, Rainforest Alliance, and Fair Trade will help Nafoods Group farmers grow high-quality and sustainable fruits, expanding access to new export markets.

In Vietnam, the project will be implemented as a pilot for about 1,000 farmers on 3,000 hectares of land for producing passion fruit, dragon fruit, and coconut. Subsequently, the project will be scaled up.

“As Vietnam seeks to increase economic competitiveness and access to international markets, developing a high value-added and export-oriented agribusiness sector will help unlock the industry’s full potential,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Laos. “Efforts made by agribusiness companies like Nafoods Group will further contribute to the transformation of Vietnam’s agricultural sector, creating better jobs and improving rural incomes and livelihoods.”