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  • 1. VIETNAM SUSTAINABLECOFFEE PRODUCTION Tran Thi Quynh Chi Institute of Policy and Strategy for Agriculture and Rural Development www.ipsard.gov.vn
  • 2. What is the presentation about? Vietnam coffee production – highlights and constraints Why Vietnam needs sustainable production Future for Vietnam coffee sector
  • 3. Increase in coffee production•Output of2011/2012 reach Output and cultivation area of coffee in Vietnam1,168 million in the period 2007-2011tons, harvestedarea reached 533.8thousand ha overtotal of 570.9thousand cultivatedha.•Output grew by6%/y cultivationarea grew by 3%/y.Vietnam coffee productioncost 2011: 1100 USD/tonsup 45,5% vs. 940 USD/tons2010
  • 4. Export value jumped due to high price•Vietnamexported 1.2 Vietnam’s coffee export in 2011million tons2011, earnedUS$2.7billion, rising 2%in volume and45.4% in valuecompared to2010•Export price2011: US $2172/ton, a rise of45% whiledomestic priceup by 62%.
  • 5. Focus on several traditional market Top 10 imported market of Vietnam coffee in 2011 accounted for 69% total export value
  • 6. Competitiveness of Vietnam coffeein main marketsImporters Market share in export value in 2010 (%) Brazil Vietnam Colombia Peru Indonesia HondurasUS 23% 8% 16% 4% 4% 2%Germany 32% 9% 2% 9% 3% 7%France 7% 3% 2% 1% 1% 3%Japan 28% 6% 26% 1% 8% 2%Italia 38% 11% 2% 2% 3% 3%Belgium 34% 8% 13% 9% 3% 10%Canada 8% 1% 15% 3% 1% 1%Spain 21% 21% 7% 1% 2% 2%UK 12% 7% 9% 3% 6% 5%
  • 7. Sustainable coffee andprocessing in Vietnam No one applied TCVN 4193: no compulsory and roadmap Certified coffee grows up quickly (10% of production) up to 2011 ◦ 4C :16 000 growers, 28 000 ha,1.6 million bag. ◦ Utz : 22 000 ha, 76 000 tons In the past two years, processing industry is overheated development: numberous big projects investing in the instant coffee production by both domestic and foreigner coffee productions.  increase share of final processed cofee products in Vietnam to about 20 percent in the next 5 years
  • 8. Why Vietnam needssustainable production
  • 9. Coffee – strategic commodity forexport in Vietnam Vietnam: 2nd coffee largest exporter in the world Contribute 10% of VN agricultural GDP nông nghiệp, 5% of total export value Provide 1 million jobs and create 50% of livelidhood for Central Highland people Coffee, Rice, Fisheries… become the rescue for the country in economic crisis Vietnam is restructuring the economy, mainly based on high-value added agriculture
  • 10. Aging coffee plant  1990s, coffee price surge boom in coffee plantation (area rose from 120 k ha to over 540 k ha)  40,000 ha of under-20-year-old trees: low growth, more branches without fruits, low productivity and quality.  Diff land, varieties, investment, farming method  Coffee trees suffer from weather, planted with high density, not enough shade trees   area needs replacing and transferring within 5 years: 140-160 thousand ha to keep sustainable productivity and production
  • 11. Challenges for coffee rejuvenation Initial cost of coffee rejuvenation: 60 thousand USD/ha. Low income and savings of farmers No access to formal credit  reluctance of farmers to leave land bare for 2 years bare or rotated before restarting growing. Coffee price high and stable  growers do not have incentive to rejuvenate. So, currently, total rejuvenated area: about 5000 ha
  • 12. Application of sustainablestandards Challenges for sustainability certification: ◦ High cost of application ◦ Farmer group set up not easy, not accepted as legal unit. ◦ No premium, no guarantee to consume all sustainable product ◦ Enterprises burden cost of application and premium. Example of 4C application in VN: ◦ Hard for individual grower to apply 4C: requires each produces at least 1 container (18t) coffee per year. ◦ Cost : high to small coffee growers. Each grower contribute fee (100 USD in Cooperative) to be a member, ◦ Follow complicated procedure, take notes, keep all information about inputs, financial and cost. ◦  need big farmer group (30-50 farmers)  farmers pay less fee.
  • 13. Therefore, the strategy set-up to channel the investment from the government, developmentdonnors and stakeholder groups in the sector to make it sustainably developed
  • 14. COFFEE SUSTAINABLEDEVELOPMENT EFFORTS INVIETNAM
  • 15. Sustainable production Target at developing sustainable coffee production by attaining 25% of coffee produced sustainably by 2016, then, gradually scaling up 5% a year . Rejuvenation ◦ Rejuvenation plans have been set up for each producing provice ◦ Innitial implementation has started with the active role of VICOFA, Nestle, Dak Lak and Lam Dong provinces’ investment ◦ Good and new seedlings prepared by WASI to reduce preparation time, while intercropping with other crops to sustain livelihood for farmers
  • 16. Current coffee sustainable program in Vietnam World Economic Forum taskforce NSAP program International traders program: Amajaro, Luis Defreyrus, Ecom, Neumann Poverty production programs of the government for Central Highland
  • 17. WEF taskforce:Agree on a 10 years vision VN “Make Vietnam the recognized reference of Robusta” (Colombia of Robusta)Agree on the 4 key pillars:  Coffee quality  Coffee quantity  Coffee sustainability  Farmer income
  • 18. PUBLIC PRIVATE PARTNERSHIP MARDWASINAEC
  • 19. Organization Chart (CoffeeTaskforce) Steering Board MARD, VICOFA, IPSARD NAEC and 4 representatives of private sector Private sector Public sector AssociationNestle, Yara, Syngenta, B Central: 4Cayer, BASF, Cisco, EDE MARD, NAEC, IPSARD, WA Rain Forestconsulting, Dakman, Sara SI UTZ CertifiedLee, Vinacafe etc. Local: DARD, Agro dept. VICOFAFinancial institutions: of district, PAEC, PeopleIFC, IDH, IFAD, Agribank, committee atTechcombank commune, commune farmer association Task force coordinator Technical group Manage provincial projects (technical, monitoring, communication) Execution personnel of private sector, DARD, PAEC, association, WASI, IPSARD
  • 20. Organization chart (to farmer) Technical Working Commune authorities Group (province) DARD/PAEC Extensionist Leader of farmer groupFarmer Farmer Farmer Farmer Farmer Farmer
  • 21. WHERE ARE WE?Oct Nov • Aligned the PPP strategy and set up a plan to conduct pilot projects 2010 • Approval of MARD on pilot projectsJan Apr • Build technical model, farmer group model, multi-stakeholders approach 2011 • Scale up strategy: Program “Extensionist attach to demo plot”Jul Dec • Approval of MARD on the first scale up 50 demo plots/farmer groups 2011 • Result of first crop on pilot projects Apr • Combined meeting with financial institutions for micro finance model 2012 • Scale up to national level with the support of financial institutionsNext We are here!
  • 22. WEF-T strategy “Make Vietnam the recognized reference of Robusta” Scaling-up Scaling-up PPP Pilot Project Existing Project New Projects Farmer group model  PPP IFAD  PPP with NAEC KPI  $23.8 Mio.  Extensionist – Technology  30 demo plots 2011 demo plot model Value chain  1,500 farmers  20 demo 80 farmers  1000 farmersPPP Cooperation Programs: Propagation program with WASI, demo plot program with NAEC, involve in IFAD Project, cooperate with big farm, set up cooperative model
  • 23. NSAP program – IDH support Institutio Sustainabl Financial Climate nal e develop Access Change arrangeInstitional/organization Sustainable Agricultural production: credit -Climatereform program:•Coffee board • Coffee change impact•Farmer groups - rejuvenation (10%) banks, credit profileassociation • Sustainable orgs, donnors - Mitigation•Trader production (community strategyAssociation (25%), national based, daily(VICOFA – WEF quality baseline lending)taskforce) 23
  • 24. Vietnam – a break through needed forfuture development 1st break through: trade liberalization and land ownership policy in 1990s create the booming of coffee production in Vietnam 2nd break through will depend on: ◦ Institutional reform for coffee sector in Vietnam to coordinate and regulate the sector ◦ Public – private partnership investment encouragement
  • 25. Thanks for your attention!