1. VIETNAM SUSTAINABLE
COFFEE 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 of
2011/2012 reach
Output and cultivation area of coffee in Vietnam
1,168 million
in the period 2007-2011
tons, harvested
area reached 533.8
thousand ha over
total of 570.9
thousand cultivated
ha.
•Output grew by
6%/y cultivation
area grew by 3%/y.
Vietnam coffee production
cost 2011: 1100 USD/tons
up 45,5% vs. 940 USD/tons
2010

4. Export value jumped due to high price
•Vietnam
exported 1.2
Vietnam’s coffee export in 2011
million tons
2011, earned
US$2.7
billion, rising 2%
in volume and
45.4% in value
compared to
2010
•Export price
2011: US $2172
/ton, a rise of
45% while
domestic price
up 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 coffee
in main markets
Importers Market share in export value in 2010 (%)
Brazil Vietnam Colombia Peru Indonesia Honduras
US 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 and
processing 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 needs
sustainable production

9. Coffee – strategic commodity for
export 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 sustainable
standards
 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, development
donnors and stakeholder groups
in the sector to make it
sustainably developed

14. COFFEE SUSTAINABLE
DEVELOPMENT EFFORTS IN
VIETNAM

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
MARD
WASI
NAEC

19. Organization Chart (Coffee
Taskforce) Steering Board
MARD, VICOFA, IPSARD NAEC and
4 representatives of private sector
Private sector Public sector Association
Nestle, Yara, Syngenta, B Central: 4C
ayer, BASF, Cisco, EDE MARD, NAEC, IPSARD, WA Rain Forest
consulting, Dakman, Sara SI UTZ Certified
Lee, Vinacafe etc. Local: DARD, Agro dept. VICOFA
Financial institutions: of district, PAEC, People
IFC, IDH, IFAD, Agribank, committee at
Techcombank 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
group
Farmer 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 projects
Jan 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 institutions
Next
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 farmers
PPP 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
arrange
Institional/org
anization Sustainable Agricultural
production: credit -Climate
reform
program:
•Coffee board • Coffee change impact
•Farmer groups - rejuvenation (10%)
banks, credit profile
association • Sustainable orgs, donnors - Mitigation
•Trader production (community strategy
Association (25%), national based, daily
(VICOFA – WEF quality baseline lending)
taskforce)
23

24. Vietnam – a break through needed for
future 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!