Vietnam agro-processing business goes circular for long-term competitiveness

After economic reforms in the 1980s, Vietnam transformed itself from a nation facing food shortages to a leading exporter of coffee, peanuts, and rice. Now Vietnamese companies are looking at a new transformation, embracing the circular economy to meet global demands for climate-friendly businesses.

Agriculture is now a major part of Vietnam’s economy, contributing 12.35% to the gross domestic product in 2021, and employing around 18 million people in 2020.

Vifoco Import Export Joint Stock Company was established in 2008 in Bac Giang, in Northern Vietnam. They work with cooperatives of local farmers to source fruits and vegetables, which Vifoco freezes and cans.

Their products have met ISO standards for quality management, which means they consistently meet customer and regulatory requirements. They have also obtained the Vietnam Good Agricultural Practices certificate. That required Vifoco to meet standards of production techniques, food safety, labour standards, and product origin traceability. Vietnamese shoppers strongly prefer certified products.

Going green for business growth

Now Vifoco sees ‘going green’ as the next important step for the company’s long-term growth. Vifoco aims to adopt circular business practices, particularly in its production processes, by becoming more energy efficient and reducing its carbon footprint.

Those steps will also help Vifoco meet international demand for sustainable products. The company has set out plans to integrate circularity into its business strategy as it engages with international partners and buyers.

Curtains for coolers

To meet its goals, Vifoco joined the International Trade Centre’s Resource Efficiency and Circular Production (RECP) coaching programme, implemented by the GreenToCompete Hub Vietnam. This RECP programme helps businesses optimize resources like water, energy and waste, while and identifying how to make production processes greener.

“The RECP coaching helps Vifoco not only understand their situation and the importance of circular production, but also find the most suitable and feasible solutions to help them save energy and move towards green business,” said Tran Thi Hong Thuy, the coach who worked with the company. “This coaching programme encourages the Vietnamese business community towards circular production and going green.”

In Vifoco’s case, the company worked with ITC experts to assess its water and electricity use, as well as the potential to reduce and recover waste. After completing a cost-benefit analysis, the coach suggested measures, such as:

• Monitoring and evaluation system:

Vifoco developed an energy data monitoring and evaluation system that assesses gaps and defines how to improve energy efficiency.

• Electricity:

Cold storage, frozen cellars and individual quick freezer systems are Vifoco’s most energy-heavy equipment. Tran Thi Hong Thuy suggested measures to improve their efficiency: installing insulated industrial doors that open and close automatically; installing plastic curtains on storage doors; and using a buffer room.

 In Vifoco’s case, the expert suggested installing curtains first. PVC curtains can cut energy use by up to 40% in cold storage and frozen cellars. That would save up to 200 million dong, about $8,500, a year. Vifoco can also install separate electricity meters for main equipment and machines in the factory. This is an affordable and highly effective solution.

• Biomass boiler:

Vifoco may consider investing in a biomass boiler to replace its current coal-fired one. A biomass boiler is a great alternative because it’s powered by farm waste, waste paper, metal from landfills, and manure. But the upfront investment is high, and the biomass boiler doesn’t bring immediate economic efficiency. So this measure was not recommended as an initial step.

Ongoing coaching

For now, Vifoco will focus on the energy monitoring system and the installation of insulated doors and curtains that will help reduce energy consumption. RECP provides coaching for two years, meaning the company will be closely guided by ITC’s local and international experts.

About GreenToCompete Hubs

GreenToCompete Hubs support small businesses to go green by developing their capacity and knowledge to implement smart green business practices.

With financial support from Swedish International Development Agency (SIDA), ITC partners with Vietrade in offering small businesses different programmes and tools through the GreenToCompete Hub Vietnam.