1.
Coffee as driver of forest change
in the Central Highlands of Vietnam:
Unpacking market value chain and gender
issues for policy and REDD+ interventions
REDD + Businesses Side Event,
COP 21, Paris
3-4 December 2015
Delia C. Catacutan, Pham Thanh Van, Rachmat Mulia &
Do Trong Hoan
ICRAF-Vietnam

2.
Forest area
increased by
18.6% primarily
through
reforestation
during 2000-2010
But, some poor
natural forests
were also
converted to
production forests,
transforming them
into young and
poorly stocked
forests
CONTEXT: FOREST CHANGES IN VIETNAM

3.
Deforestation continues
Direct drivers
• Agricultural
expansion
• Infrastructure
development
• Unsustainable logging
• Forest fires
Indirect drivers
• Population and
migration
• Weak forest
management
• Limited funding for
forest protection
Coffee is major commodity driver of deforestation, making
Vietnam the 2nd world exporter of robusta coffee.

4.
STUDY SITE • Coffee capital
• 5 provinces
• 5.5 million people (2013
• Kinh people—dominant ethnic group
since the establishment of the NEZ in
1970s
• 12.56% poor; 6.93% near poor; the
rest are non-poor
• Coffee constitute 85-90% of hh
incomes
• The living standard has improved
significantly

5.
STUDY OBJECTIVES
• Understand the coffee market value chain as
primary driver of forest change;
• Understand how men and women participate and
benefit from coffee market value chain; and
• Draw insights for addressing commodity drivers in
the context of the REDD+ Programme

6.
METHODOLOGY
Literature
review
Land use change and drivers
Evolution of the coffee industry,
its size, output and benefits
Survey and
personal
interviews
MVC 1
MVC 2
MVC 3
NPV
analysis
(30 years)
Gender
equity
analysis
Socio-
economic
analysis

7.
MVC Actors
Total
responde
nts
No. of
Males
No. of
Females
Province
Data collection
technique
Producer-
Local
Company
Farmer/Producer 41 27 14
Dak Lak, Dak
Nong
Survey
Middle Man 5 0 5 Dak Lak
Personal
interview
Agent 6 4 2 Dak Nong
Personal
interview
An Phong Company 4 3 1 Dak Nong
Personal
interview
Producer-
National
Company
Farmer/Producer 53 18 35 Dak Lak Survey
Agent 2 1 1 Dak Lak
Personal
interview
Trung Nguyen
Company
2 1 1 Dak Lak
Personal
interview
Producer-
Multi National
Company
Farmer/Producer 65 40 25 Dak Lak Survey
Agent 2 2 0 Dak Lak
Personal
interview
Nestle Company 2 2 0 Dak Lak
Personal
interview
Total 182 98 84
STUDY PARTICIPANTS

8.
MVC
Attributes
1 2 3
Farmer
%
Middle
men %
Agent
%
Compa-
ny Rep
%
Farmer
%
Agent
%
Compa-
ny Rep
%
Farmer
%
Agent
%
Compa-
ny Rep
%
Age
Group
(Year)
<30 50 30 50 1.5
30 - 50 61 40 100 50 41.5 50 50 50.8 100 50
>50 39 60 28 50 47.7 50
Ethnic
Group
Kinh people 80.5 100 100 100 0 100 100 86 100 100
Native
ethnic
minority
15 0 0 0 100 0 0 14 0 0
Ethnic
migrant
5 0 0 0 0 0 0 0 0 0
Edu-
cation
Unschooled 5 0 0 0 24.5 0 0 0 0 0
Primary 32 40 17 0 17 0 0 25 0 0
High School 63 60 67 25 55 100 0 74 0 0
Uni 0 0 16.7 75 3.8 0 100 1.5 100 50
Post Uni 0 0 0 0 0 0 0 0 0 50
Econo-
mic
status
Poor 12.2 - - - 5.7 - - 0 - -
Near poor 9.8 - - - 20.8 - - 10.8 - -
Average 43.9 - - - 73.6 - - 69 - -
SOCIO-ECONOMIC CHARACTERISTICS

9.
RESULT 1: Central Highland’s coffee industry
• Sharp increase in coffee area
resulted in forest loss since early
1990s; >20,000 ha forestlands have
been converted in Dak Lak alone
• 650,000 ha exceeding government
target of 500,000 ha; 450,000
farmers involved
• Average production: 2.8 ton/ha;
40% of coffee produced is certified
• Industry is worth $2.7 billion in
export or 2% of the annual GDP
• Providing livelihoods to 2.6 m
people

10.
Key actors of the coffee industry
COFFEE
INDUSTRY
Individual
farms
Privately
owned
companie
s
VICOFA
State
owned
company
FDIs
95% of total coffee production
85% of total export
VINACAFE

11.
Market value chain 1
• An Phong company– a local ‘purchase and process’
company
• Agents purchase coffee beans directly from farmers;
facilitate procurement and supply of farm tools and
inputs through a ‘crop loan’ scheme, with high
interest rates (usually 24%)
• Company does not have any contract, commitment, or
investment for the agent or farmer

12.
Farmer
8,000 Households
19,000 ha coffee
37 Agents at
Commnue,
District
Provincial Company
(An Phong)
24,000 ton coffee/year
12,000 ton coffee/year
Other Coffee
Import/Export or
FDI Companies
outside the
Province
12,000 ton coffee/year
12,000 ton coffee/year
Schematic
diagram of
traded coffee
in MVC 1

13.
SWOT –MVC 1
Helpful Harmful
Internal
Origin
Strength
Actors are all local, and have
good relations
Weakness
No quality control and does not
guarantee stable supply
External
Origin
Opportunities
Close proximity
between actors
Threats
Multinational companies may
expand their operations and
compete with local companies.

14.
Market value chain 2
• Formed in 1996 to ensure sustainable supply of
coffee to Trung Nguyen’s roasting factory
• Trung Nguyen has the biggest consumer base in
Vietnam
• Employs 5,000 staff and operates through 26
franchisees and 12,000 kiosks distributed across 63
provinces of Vietnam
• Owns four factories for roasting; produces instant
coffee, and exports to China

15.
Farmer
1,500 Households
4,900 ha coffee
6 Agents in
Dak Lak & Lam
Dong Province
National Company (Trung
Nguyen)
Coffee Processing Factory in
Buonmathuot City
1,800 – 3,600 ton coffee/year
1,000 ton coffee/year
Other Coffee
Import/Export or
FDI Companies
outside the
Province
800 - 2,600 ton coffee/year
Coffee Procesing
Products
Consumers in
country and abroad
Schematic diagram of traded
coffee in MVC 2

16.
SWOT – MVC 2
Helpful Harmful
Internal
Origin
Strength
Has capacity to invest in
farmers to ensure stable
supply; can offer flexible
pricing; pays agents and
farmers on time
Weakness
Currently does not have a good
procurement network
External
Origin
Opportunities
Trung Nguyen has the largest
market share in Vietnam
Threats
Agents divert the supply to other
companies

17.
Market value chain 3
• Nestle began buying coffee in Vietnam in 2011
• Applies the 4C standards (Common Code for
Community Coffee)
• Farmers are supported/trained on 4C standards
• Nestle has five factories; employs 2,000 staff
nationwide; total investment 450 million USD

18.
Farmer
18,00 Households
46,800 ha coffee
26 Agents in 4
Provinces
Nestle Coffee Processing
Factory in Dong Nai
100,000 ton coffee/year
60,000 ton coffee/year
Other Coffee
Import/Export or
FDI Companies
outside the
Province
40,000 ton coffee/year
Coffee Procesing
Products
Consumers in
Vietnam
Schematic diagram of traded
coffee in MVC 3

19.
SWOT – MVC 3
Helpful Harmful
Internal
Origin
Strength
Strong supply network
Supports farmer training
Potential to invest in sustainable
coffee
Weakness
Nestle could not work with farmers
directly
External
Origin
Opportunities
International standard
certification
Threats
Policy constraints for foreign
companies

20.
RESULT 2: Roles of women & men
Gender roles in coffee production, household and community activities
0 20 40 60 80 100 120 140
Weeding
Fertilizer
Spraying
Watering
Pruning
Harvesting
Seedling preparation
Packing, hauling
Buying farm inputs
Deciding what to invest
Deciding to sell
Land preparation
Applying loans
Drying coffee
Community activities
Marketing
Attending children’s needs
Record activities & finance
Take care of children
Cleaning the house
Washing clothes
Financial management
Cooking
Men (n=98)
Women (n=84)

21.
• Gender dynamics change with land use
• Compared to an OXFAM study conducted >10 years ago, gender
roles shifted significantly, with more shared roles, and women
involvement in the mid-upper end of the chain
• Women now make up 50% of in-country trading activities
• Still carry the burden of unpaid house work
• But have some degree of control over income
• Men and women are generally satisfied with the coffee industry,
but women were less satisfied with the income due to (1) low
bargaining power; (2) burden from house work
• Policies generally promote women’s rights to access and control
of productive resources
• Educated children are moving away from lower end of the chain-
--farm labor will be scarce and costly; older farmers, especially
women will bear the cost of labor scarcity
Gender-land use change nexus: gender equity?

22.
Price is mainly
dictated by the
global market
Price difference at
farm level is 200–
300 VnD/kg
Export price
difference is up to
1,000 VnD/kg
20,500 21,700
33,200
23,600
37,000
50,000
38,500
43,000
40,000
0
10,000
20,000
30,000
40,000
50,000
60,000
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010-2011
2011–2012
2012-2013
2013–2014
Robusta coffee bean price (VND/kg)
RESULT 3: NPV analysis

23.
Production(tonha-1)
Cumulative cost (480m VnD/ha), yield (40 tons/ha) and income
(980 mil VnD/ha=== 46,700 USD or 1,600 US/ha/yr) in 30 years

24.
Major issues in coffee production
• Too much focus on quantity of produce than quality via
heavy use of fertilizer, pesticides, insecticides—nematode
is major problem and unsustainable irrigation techniques
• Water scarcity
• Poor soil quality
• Old coffee trees need rejuvenation or replanting
• All of the above are costly to address!!
Threat to REDD+ : convert forest to avoid costly repair of
damage!

25.
Conclusion
• Coffee is major driver of forest change and provide net
positive returns to investment
• Gender roles shifted with more women involved in the
chain; but low bargaining power and dual roles
(productive and reproductive) may have caused
dissatisfaction in income
• Positive gender relations at household level is reinforced
by pro-women policies that enable women to access
benefits
• BUT, (1) water scarcity is challenging coffee production
associated with overuse of ground water and
deforestation; (2) costly rejuvenation and repair of
environmental damage may lead to forest conversion; and
(3) women may suffer more from future labor scarcity in
the coffee sector
• Concerted actions are needed from policy makers,
business sector and REDD + programme

26.
In Vietnam, major commodities such as coffee,
rubber and macadamia may expand further.
Government decisions favoring these commodities
could not be changed, as it aims to be a world
leader in export commodities.
But is also committed to REDD+ and is trying to: (1)
protect the forest; (2) reforest poor forest and bare
lands with emphasis on commercial timber tree
species; (3) convert natural forest to production
forest; and (4) promote industrial tree plantations
(rubber, coffee, macadamia, etc.)
INDC includes sustainable coffee production

27.
Recommendations
Policy makers
• Carefully target coffee area through land use planning and
crop zoning; regulate and monitor expansion in forest lands
and strictly enforce land use policies
• Use decision- making tools or research-based information to
understand trade offs between forest conversion and
commodity expansion; commission foresight studies
• Provide incentives for sustainable coffee/commodity
production both to farmers and responsible companies (e.g.
co-investment in up-front costs, tax cuts/holidays, rewards
and recognition); and
• Develop gender-specific safeguards to cushion from market
shocks (e.g. insurance; price guarantee; training women on
price negotiation, forming women cooperatives, etc.)

28.
Recommendations
REDD+ programme
• Conduct a study on the process and benefits of reconciling land
sparing and sharing approaches
• Cover whole landscapes that are sustainably managed; account
trees outside forests
• Analyse (1) cost-benefit/tradeoff of REDD+ and agricultural
commodities; (2) contribution of commodities to D&D; (3)
value of forest ES to support REDD+ negotiation
• Clarify the impact of converting natural forests into production
forests (mostly exotic timber species) and provide policy
advice on dealing this issue in the context of REDD+
• Use preventive systems approach to REDD+-----look beyond
the forest!

29.
Recommendations
Business Sector
• Internalize environmental costs (externalities) and adopt
sustainable practices
• Improve relationships with actors along the supply chains
and ensure better practices
• Influence consumer behaviours to no longer purchase
products produced via deforestation
• Support farmers to certify deforestation-free products
• Adhere to good practices to align with enlightened policies
in areas such as climate change and REDD+
• Make business operations compatible with REDD+
objectives

30.
Contact:
Dr. Delia Catacutan – ICRAF VIETNAM Country Representative
Tel/Fax: +84 4 37834644/45 (24) / D.C.CATACUTAN@CGIAR.ORG
http://worldagroforestry.org/regions/southeast_asia/vietnam