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Dakado (agrobusiness – avocado, macadamia intercropping, income model)

Dakado Group initial consists of 3 households start working since 1991 in Dak Lak province.

Dak Lak Province has an excellent climate for cultivating avocados. Currently an estimated 50,000 smallholders are growing about 250,000 avocado in Dak Lak. The annual traded volume of avocado is at least 25,000 tons.
Until now farmers have propagated most trees by seed, resulting in a lot of heterogeneity. To address this issue the Provincial Department of Science and Technology (DOST) has invested in an avocado variety testing program. Since 2002 about 50 different varieties are tested both on station at the Western Agriculture Research Institute (WASI) and on farm. Several varieties are showing promising results, especially the Booth variety is doing well. The coming years the DAKADO project will assist in the introduction of good quality avocado seedlings to assure a homogenous avocado.

Its products meet the quality standards of HACCP, Vietgap, Global Gap (for avocado, macadamia), and Rainforest (for pepper). Avocado is sold mostly in domestic market and traded through to China and Cambodia, pepper is 100% exported, and macadamia will be sold to mostly domestic market and partially to official export market.



The social impact: From 300 households in 2016, Dakado Group is now working with around 1000 households (300 intercropping avocado and pepper, 500 avocadoes, and 200 macadamia). 60-70% of the farmers are women, and 90% are poor and low income. Especially the macadamia farmers are very poor ethnic minorities in Eakar and Eahleo district of Dak Lak province. By working with the company and applying intercropping of avocado and pepper, the farmers could increase their income within 3 years by 8-10%. Income increase in pepper is 6%, and for avocado it is 20% for Dakado avocado and 5% for normal avocado. For inter-cropping, each ha of land will produce 2-3 tons of pepper at a price of VND 50,000 per kg of which 40-60% are inputs costs, and 15 tons of avocado at a price of VND 15-20,000/kg with 30% inputs costs. This results in a net income of around VND 180-270 million per year per hectare. Each household has 0.5-1 ha of land on average which are intercropped with avocado (50% of land area) and pepper (50% of land area). So on average each household earned $400-800 per month, depending on the land area available.
For pepper, the company pays the farmers around 6-8% higher than the market if the products have no excess of plant protection input and meet safety standard (85-90% of total products get this extra payment). For avocado, the company pays 20% higher than the market if meeting the quality standard: VND25-27,000 versus VND 20-22,000 per kg. For macadamia, the price will be 5% higher than market rate due to good quality seeds. However, the production is only starting.
Innovations for the BoP: The company provided the farmers with seeds, fertilizers, demonstration farm, and technical training on safe production (proper use of plant protection and fertilizer inputs). Under a program financed by the World Bank, the company subsidized 40% of inputs costs for the farmers. Furthermore, the company made innovation in processing and packaging technology e.g. drying instead of freezing, automatic packaging, developed new products e.g. frozen avocado, roasted macadamia, roasted cashew nuts and is trying to produce avocado oil, avocado powder, energy bar, nuts milk... It follows environmental standards to meet clean production standard, training farmers on proper use of plant protection inputs and fertilizers.



Because of the growing domestic market and increasing prices, local farmers are investing in small avocado orchards of about half to 1 hectare. These more specialised farmers use grafted avocado seedlings for their orchards.
The growing avocado sector in Dak Lak provides interesting investment opportunities, for avocado production, trade and avocado processing. The availability of large volumes of cheap avocados might be an interesting option to produce avocado oil. Another idea might be to process the avocados into frozen avocado chunks (IQF) which can be easily traded in the region.
Whatever your ideas are, the DAKADO project team is interested to meet you and assist you in investing into the Dak Lak avocado sector.