Regional Biotrade Project in South East Asia

Conservation of biodiversity through sustainable trade in natural ingredients in a manner that increases the competitiveness of local exporters/ producers and the livelihoods of the rural population.

Market systems focus

Sustainable export of natural ingredients sourced from native biodiversity for foods, cosmetics, supplements and herbal medicines in Vietnam, Lao PDR and Myanmar.

Programme interventions

Vietnam

Strengthening supply chain management along selected value chains, focusing on quality control of raw materials and post-harvested processing and quantity production to meet the requirements of BioTrade markets:    

• Key partners for this intervention are Biotrade companies, including initial pilot companies and later the additional companies who will be encouraged to replicate the business model for Biotrade exports.  Because companies will need to manage these supply chain relationships in the future, the project’s facilitation will include assistance to plan and grow out supply chains that meet the quantity, quality, environmental and social standards needed for export of Ethical Biotrade products.  While the project will act primarily as facilitators, strategic investment will be made to incentive and leverage companies’ process of change, as appropriate to the specific needs of different subsectors (e.g. spices, medicinal plants, food ingredients and essential oils). In Vietnam, three established companies well known to the project will be targeted for the pilot round to develop cinnamon, star anis and Shan tea.

Improve market readiness and access for BioTrade companies and selected value chains by linking companies to strengthened local and international export promotion and matchmaking services:

• The first group of companies selected to participate in the project will be chosen partly based on their existing links to high-end markets.  Despite this, continuous support for all aspects of marketing needs are provided to ensure Biotrade companies can access the services needed for international marketing.  The proposed partner for this activity are Vietnam based marketing agencies, who bring marketing skills and have incentives to serve new types of clients.  
• The project’s facilitation will be to help these organisations learn more about the specifics of Biotrade markets through support from international consultants .  With this support, local agencies will be assisted to market their specialized services to Biotrade exporting companies, with some financial risk-sharing as an incentive from the project.  Marketing and export access will be built into the plans of pilot Biotrade export companies  from the start, with partnerships for supporting agencies developed based on these starting in the second half of 2017.

Support improvements to applied R&D services to ensure they produce results that are applicable and can be commercialised and self-financing:    

• Research institutions are poorly linked to the private sector and the research conducted is rarely relevant to companies.  The change the project will stimulate is to improve links between research organisations and companies to increase the relevance R&D. Partners in this intervention are organisations that conduct applied research, particularly research institutions connected to universities, but also private research companies.  The project will facilitate links between research institutions and companies, helping both sides to collaborate on actionable, appropriate research and development .   Selection of the appropriate R&D partners will be based on the needs of companies, and selection of specific partners will take place in late 2017 through to 2018, based on lessons learned from pilot interventions with companies and their specific R&D requirements.

Improving the availability and use of human resource and skills development needed to support successful exports by Biotrade companies:

• Many potential Biotrade exporters have inadequate technical and managerial skills and to access higher value markets they will need new types or higher levels of human resources.  Key partners are local advisors and training service providers interested to support the growth of Biotrade producer groups and companies.  Facilitation will start by linking the service providers with international Biotrade expertise as needed to fill any specialised knowledge gaps.  Additional facilitation will be to develop the market for these services by helping Biotrade companies understand their HR development needs, developing the demand for quality services from the local providers .  Selection of HR and skills development partners will happen only after lessons are learned from developing plans with pilot Biotrade export companies.

Assisting the emerging Biotrade sector and government to improve the business enabling environment through public dialogue:

• One root cause of problems in Vietnam is that Biotrade is not yet recognized as a sector, and its many issues are therefore given little attention.  Effective policy dialogue would help to change this situation, but this requires a platform that includes relevant stakeholders such as government, companies and product sector associations .  The project’s facilitation would be to bring the relevant actors together to identify policy gaps and then to set up appropriate and sustainable dialogue forums to help change policy and regulations.  Because governance changes are easiest to stimulate after successful private sector interventions (in this case, Biotrade exports), main work on governance will begin only in 2018.  The exception to this is to enter dialogue directly with the project’s government partner during 2017 to discuss possible cooperation on trade and export promotion.

Lao PDR

Introduce export-oriented Biotrade supply chain management to companies in Laos:

• This area of intervention is largely similar to Intervention 1 described for Vietnam, with similar partners and facilitation by the project .  In the case of Laos, two initial test cases are being negotiated with companies with high export capacity and interests and well developed market linkages covering multiple Biotrade products.  Therefore, further discussion is needed to finalise selection of products (The main difference is that Lao PDR will deal with quality and sustainability certification as a separate intervention area due to its lower level of development in the country). 
•  The one additional activity planned to originate in Laos is development of locally appropriate indicators for Biotrade producer groups, which will be done through cooperation between UEBT and local consulting company Agro-Forestry Consultants.  If appropriate the results will be shared within the region as part of knowledge sharing activities.

Improve export marketing and linkages and related supporting services

• While the two pilot companies selected in Lao PDR already have useful linkages to high-end developed country markets, marketing, market development and export readiness remain a huge challenge for most other companies and affordable, appropriate support services are needed. In addition to Biotrade exporting companies, key partners in this intervention area are private companies working in marketing, export brokering and consultancy which can provide specialised services to Biotrade exporters.  Facilitation will be to link local or regional service providers with international consultants to build their understanding of Biotrade marketing and exporting, and to help these companies and organizations  to supply new supporting services needed by Biotrade exporting companies.

Encourage adoption of appropriate quality and sustainability processes and certification systems:

• The change sought by the project is to improve management and certification of product quality, safety and sustainability, especially for Biotrade products which are now traded informally.  This intervention, which is closely linked to Interventions 1 and 3, will partner with public and private sector certifiers and consultants who advise companies to develop and deliver the services needed by Biotrade companies.  Project facilitation will include support from international consultants to advise local and regional certification service providers on the issues specific of Biotrade, and to assist these service providers to support Biotrade export companies.  Where appropriate, financial incentives will be used to stimulate use of the new services.

Ensure access to finance through smart, inclusive business planning:

• Supply of financing for companies from public and private institutions is reasonably available in Lao PDR, but access can be difficult due to cronyism and poor financial literacy of companies.  By contrast, access to finance by producers and collectors of Biotrade products remains difficult, with informal sources of finance remaining important.  Through improved business planning will assist both (producers and collectors) to improve access to finance and financial management.  Key partners will be banks and other financial institutions and the Biotrade companies themselves.
• For companies with poor financial literacy, project facilitation will start with business planning advice, helping them become more prepared to access commercial finance, in cooperation with interested financial institutions.  The project will also collaborate with all partner companies to create appropriate financial models to assist their networks of producers and collectors to access appropriate forms of finance.

Improve the supporting environment for Biotrade through more effective consultative processes:

• In Lao PDR, Biotrade exporters face a number of challenges related to resource and land rights, trade monopolies, illegal trading, conservation and other policies which can only be dealt with in collaboration with government.  To solve these problems, the key change required is creation of effective consultative processes dealing with Biotrade issues at the level where they are most relevant. 
• The partners for this intervention are Biotrade companies and producer groups, interested non-commercial organisations  and district and provincial governments.  The project’s facilitation will be to encourage locally appropriate consultation processes discussing key issues identified by Biotrade producers and collectors or companies, while harvesting and spreading best practices and policies for widespread adoption.

Myanmar

Strengthening supply chain management along selected value chains according to Biotrade principles, aiming to produce higher quality and sufficient quantity of Biotrade products for export:

• This area of intervention is essentially the same as described in Vietnam and Lao PDR. As mentioned previously, the Myanmar team plans to begin this work with an association of thanaka (cosmetic paste made from ground bark) producers and a related company, and in collaboration with the Swiss company Kundig on areca palm leaf.
• A supporting activity under this intervention is research on access and benefit sharing conducted in cooperation with the School of Agricultural, Forest and Food Sciences at Bern University (HAFL), which will build experience with the topic and feed into knowledge management activities in 2018.

Improve market readiness and export capacities of Biotrade companies:

• The key change anticipated in this intervention is that companies have access to and are using marketing and export facilitation services needed to successfully export Biotrade products to high value markets.  The key partners in this intervention are local and regional public and private sector providers of marketing, trade promotion and export facilitation services.  
• The project’s facilitation plan starts with identification of service providers with the interest and incentives to provide these services to Biotrade companies, and supporting these service providers to tailor their offer to the specialised needs of Biotrade exporters with advice and coaching from international consultants. Later, the project will also help link these service providers to companies interested in Biotrade exports, and provide targeted incentives to help trigger use of the new services.

Improve the awareness of and application of Biotrade-related standards and certifications:

• The key change stimulated by this intervention is that Biotrade export companies will achieve certification by using new and more relevant standards and compliance training, advice and certification services.  The key partners in this intervention are local or regional organisation(s) that are interested to provide training and advice on standards and certification relevant to Biotrade companies.  
• The project’s facilitation begins with selection and capacity building for two private or public service providers, including advice and coaching by international consultants.  The service providers will also be linked with companies developing Biotrade export businesses, and use of limited financial incentives to encourage Biotrade companies to use the new services.

Facilitate multi-stakeholder dialogue to encourage advocacy for and implementation of Biotrade-friendly policies:

• They key change promoted under this intervention is that government, companies, industry associations and civil society will recognise and discuss sustainable use of biodiversity and implement policies to support it.  The key partner for this intervention has not been identified but could be new or existing sector association interested in sustainable trade in biodiversity products.
• The plan for facilitation in this intervention includes capacity building on lobbying and advocacy for companies and organisations interested in sustainable use of biodiversity, publicising the “business case for Biotrade” using Myanmar and regional examples and providing information about international best practices that can be adapted to Myanmar.