FEEDBACK ON COMMENTS OF THE PROJECT

1.

No. of survey sheets The target group is not clear enough. More clarification on how many groups in the survey such as number of household scale farmers, small scale farmers, big scale farmers.. etc because different groups have different concepts, opinion as well as, demand, requirement for the products. The targeted population was chosen randomly, including all types: small scale, large scale, different type of crop, The main idea is to find out buyers opinions and the demand in general. During the visit, we tried to approach as much different type of buyers as possible. It is indeed correct that no statistical approach was used to calculate the number of interviews. A much larger study would increase the confidence level of the results. However, we do believe that this small study was appropriate for the current feasibility study.

2. The consultant realized some reasons for this Your realisations are very arbitrary, not systematically obtained, for you seem to pick a couple of reasons, without doing more research on what other reasons could exist. As mentioned above, the approach is not a statistical study design, but rather an attempt to try to understand the market by having direct interviews with a reasonable number of producers and buyers. You can indeed state that the consultants make their own interpretation of the findings. This interpretation is based on the results of the interviews and the consultants knowledge of the agribusiness and distribution sector in Vietnam. We do not think that the time and budget allowed to do much more research than what was undertaken by our team.

3. Second, in both cases of Lam Dong and Nhon Phu, Binh Dinh, they are monopoly, no other suppliers show up yet in the market. And they can define the price It is possible from your above explanation that in Viet Tri they produce compost without separation that makes the compost cheap and not attractive to the farmers, together with other reasons such little marketing and promotion. But here I think it is not really correct to say that Lam Dong and Nhon Phu are monopolies and they can define the price as they wish. I assume that in Nhon Phu and in Lam Dong they should have other compost that compete with their products. Moreover, the price in Lam Dong and Nhon Phu depends on many other factors such as the competion from other alternative fertilizer or the need to have at least a break-even result of the business. If they set a high price, customers might shift to use other alternative products. We cannot say that the farmers find the compost from Viet Tri not attractive because so source separation was done. Buyers do not know how the compost is made. Furthermore, Thuy Phuong also doesnt separate at source. In reality, there is no direct competition at the moment in Lam Dong and Nhon Phu. But it is indeed not the only reason that determines the price. Just for more information: In Lam Dong, they set the price in comparison with other manure fertilizer, such as goat and chicken manure, which bring quite the same quality as their product. They

never set the price based on the investment because they get subsidy. Without subsidy, the price would go up a lot and they never can sell and they confirm to stop without subsidy. In Nhon Phu, they also set the price in comparison with chemical fertilizer. They did realize that their quality was not as good as chemical fertilizer, so the price must be reasonably low. But why 700-800d/kg, they have no idea, just give the price that they think the farmers can afford to buy.

4. The consultant sees two crucial factors that give a big effect on the product price: transportation cost and distribution cost What about the quality of the products, technology, machines and equipment? For example the quality of the compost does affect the price as you confirmed above that the case of Viet Tri, it produced compost from waste without separation and Viet Tri just sells 300d/kg. The two reasons above are factors that have a large effect of the increase of the price post factory. It is correct that the quality is the main factor to determine the ex-factory price. The report has been changed.

5. Let assume that the transportation cost take 1,400d/kg (Normally, it takes about 1,200d/kg to 1,600d/kg, depending on the transporters and on the volume) Here it is very weak and ambiguous to have this statement. The price of transportation is very different depending on the distance. Here you said from from Viet Tri to the south? But where is the south? To Quang Binh province, or Binh Dinh, or Ho Chi Minh city. The price of transportation also much depends on the means of transportation: such as airplane, truck, bus, ship or train. Here I do not know what kind of transportation you base on to come to 1.400 d/kg. I just called my friend working in the fertilizer business sector. He said that if you transport by ship (requiring big quantities of over 1.000 tons) from Sai Gon port to Qui Nhon, it costs around 190 d/kg. From Hai Phong port to Qui Nhon port, it costs 230 d/kg. And if you transport by train, it has similar price. In our example we considered transport by truck to Binh Dinh. It is true that transport by boat and train might be cheaper, however, this kind of products is currently most transported by truck. However, here, we dont try to compare the transportation cost itself, but the impact of the transportation cost on product with a different initial value. This will apply for any means of transport. What we want to say here is: the transport takes how much percentage in the product price. And when comparing different products, we see how much transportation cost affects on low-price product. This is the point that future entrepreneurs should take into account.

6. Find a few big customers nearby Very few big customers nearby This depends on how far you consider nearby.

There are 2 famous and big fertilizer companies in Quang Binh & Lam Dong: Song Gianh and Binh Dien fertilizer. These 2 might cover all compost produced in Binh Dinh. But this is indeed not really nearby. The trees and plant company can be considered a big buyer. For a relatively small plant, one large coffee plantation can also be a large buyers. Or or group or cooperative of farmers.

7. Page 1: Please justify the choice of the provinces selected for the survey; The choice has been explained in the Proposal on market study for phrase 4 which was sent to PMU before our trip. We only make some small changes during the trip since some suppliers were not willing to provide their customers list. - Location: The study was handled in different locations in the whole country: Hanoi and HCMC are two big cities, Lam Dong, Gia Lai are two famous provinces of agriculture around Binh Dinh, Binh Dinh is target province. - Crop type: Lam Dong is famous with vegetable, flowers and coffee, especially organic vegetable which has special request on fertilizer. Gia Lai is famous with rubber, coffee and pepper. Binh Dinh is the target area which has rice, and small part of fruit and vegetable. - Scale: we study on different scale, from small holder farm to large scale enterprise, from homemade to industrial production. This will help in figuring out the product value chain. This factor was chosen randomly. - Type of buyers/potential buyers: Main target is farmers Tree and plant companies are considered as big customers.

8. Page 1: Imported organic fertilizer: expensive but high and sustainable quality. Please specify brand name and products; Specifically in this report, we mention 2 brand names which are found during the interviews with farmers in Dalat (vegetable farmers): Dynamic lifter, origin: Australia Realstrong, origin: Malaysia

Exact names are corrected in the report.

9. Page 5: Please confirm that the price of vermicompost in Lam Dong (tell us more precisely which place) is 10,000 VND/kg; This info will be confirmed later since the consultant couldnt contact the interviewee yet.

10. Page 11: Disadvantages. Please confirm if the farmers do not add the notion that using compost gives only low productivity; It is not correct to say that using compost gives lower production. The farmers do realize that using compost doesnt give as quick result as chemical fertilizer but not low productivity. However, I dont think we should put it as a drawback of compost and the farmers who state it

dont think so as well. When I ask in detail, they say at first, they think its a disadvantage but later on, when better results show up, they dont think its a disadvantage any more. An important point is that compost and chemical fertilizers are two different kind of products.

11. Page 13: Please confirm that the Trees and Plants Company of Quy Nhon, Binh Dinh have 26,000 ha of grass and flowers and that every year they use 10-15 tons of compost produced from Nhon Phu Cooperative, buy about 20 tons of Song Gianh organic fertilizer and hundred tons of compost self-produced; The surface of grass and flower is changed to 250.000m2. Other info is correct.