Subject category:
Strategy and General Management
Published by:
Singapore Management University
Version: 2024-08-15
Length: 18 pages
Data source: Field research
Abstract
Could rice become as crucial as petrol in the fight against climate change? In 2023, Nguyen Duy Thuan, General Director of Loc Troi Group (Loc Troi) Vietnam, was sceptical. His company, the largest rice producer in the country, faced a pivotal moment in its journey. Following a successful pilot program involving 1,000 farmers, the company had started scaling sustainable rice production (SRP). Sustainable rice had much lower emissions and used fewer resources than traditional rice production, which accounted for 12% of global methane emissions and significantly threatened the climate. The pilot had reduced pesticide use by 12%, water use by 25%, greenhouse gas emissions by a third, and flooding and straw burning by using organic treatments. It had also lowered production costs and increased profit margins by 18%. But despite such demonstrable benefits, Loc Troi continued to struggle to convince farmers to grow sustainable rice, which constituted only 5% of its total export volume, due to the time-consuming and costly new practices. Scaling sustainable rice required large investments and without government grants, could be financially draining for the company. Loc Troi's other businesses, like vegetable seeds and fertilisers, were also profitable, so over-investing in rice could hinder their growth. Thuan pondered on how to scale sustainable rice and tap into future demand with Loc Troi's expertise.
Time period
The events covered by this case took place in 2023.Geographical setting
Country:
Vietnam
About
Abstract
Could rice become as crucial as petrol in the fight against climate change? In 2023, Nguyen Duy Thuan, General Director of Loc Troi Group (Loc Troi) Vietnam, was sceptical. His company, the largest rice producer in the country, faced a pivotal moment in its journey. Following a successful pilot program involving 1,000 farmers, the company had started scaling sustainable rice production (SRP). Sustainable rice had much lower emissions and used fewer resources than traditional rice production, which accounted for 12% of global methane emissions and significantly threatened the climate. The pilot had reduced pesticide use by 12%, water use by 25%, greenhouse gas emissions by a third, and flooding and straw burning by using organic treatments. It had also lowered production costs and increased profit margins by 18%. But despite such demonstrable benefits, Loc Troi continued to struggle to convince farmers to grow sustainable rice, which constituted only 5% of its total export volume, due to the time-consuming and costly new practices. Scaling sustainable rice required large investments and without government grants, could be financially draining for the company. Loc Troi's other businesses, like vegetable seeds and fertilisers, were also profitable, so over-investing in rice could hinder their growth. Thuan pondered on how to scale sustainable rice and tap into future demand with Loc Troi's expertise.
Settings
Time period
The events covered by this case took place in 2023.Geographical setting
Country:
Vietnam