Pepsico signs MOU to Introduce Sustainable Contract Farming Model in Vietnam

PepsiCo Foods Vietnam Company (PFVC) announced today that it has signed a first-of-its-kind Memorandum of Understanding (MOU) with the Department of Agriculture and Rural Development (DARD) and the Phivang Collaboration of Farmers in Vietnam to introduce a sustainable contract potato farming model into Vietnam. The agreement will benefit around 50 small-scale farmers in Lam Dong Province, Vietnam.

Potato farming in Lam Dong Province, Vietnam. As part of the MOU, PFVC will agree a fixed price for the purchase of potatoes from Phivang Collaboration of Farmers at the start of each growing season. This gives assurances to farmers that they have a buyer for their potatoes and at a price thatis not subject to market fluctuations. DARD will provide financial assistance to members of the co-operative to purchase seeds and other inputs for the growing season. Finally, the Phivang Collaboration of Farmers will unite farmers to negotiate a secure and stable contract with PepsiCo and provide a forum for farmers to exchange growing techniques.

In addition, PFVC will provide technical agronomy support to the farmers through sharing best practice on techniques to improve yields, save water and promote sustainable agriculture. PFVC has a proven track record of assisting farmers inVietnam to make their crop cycles more productive. Between 2011 and 2014, PFVC provided agronomy support to their farmers that enabled them to nearly double their average yields.

"PepsiCo is one of the world's largest agricultural enterprises. Annually we source more than four million tons of potatoes from thousands of local farmers across the globe, and our success depends on securing sustainable supply chains for our key raw materials," said Huy Nguyen Duc, General Manager, PepsiCo Foods Vietnam Company. "Along with our partners, DARD and the Phivang Collaboration of Farmers, we want to use our combined experience and know-how to work with potato farmers in Vietnam and to play a positive role in the success of sustainable contract farming across Vietnam."

"The Department for Agriculture and Rural Development believes that this agreement is mutually beneficial to all parties. Phivang farmers are guaranteed a fair price that isn't subject to market fluctuations for their crop and PepsiCo will receive a stable supply of potatoes," said Mr Chau, Deputy Director of the Department of Agriculture and Rural Development. "Our plan is to replicate this model throughout Lam Dong province to ensure sustainable production of potatoes, and other vegetables, and to provide security to farmers against market price fluctuations."

PepsiCo is committed to investing in a healthier future for people and our planet, including respecting, supporting and investing in the local communities where the company operates. PepsiCo calls this commitment "Performance with Purpose."

PepsiCo is an active member of the World Economic Forum's 'Grow Asia' initiative and the 'New Vision for Agriculture'. 'Grow Asia' is a multi-stakeholder initiative that promotes inclusive and sustainable agricultural growth, especially focusing on smallholder farmer development, food security, and environmental sustainability of agriculture. PFVC leads the fruit and vegetable working group of 'Grow Asia' in Vietnam. Through this group, PFVC has been able to introduce their farmers to best practices in sustainably improving crop yields and the quality of their potatoes.