Challenges and perspectives of the Arabica and Robusta value chains in Vietnam: Research and projects in actions

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Challenges and perspectives of the Arabica and Robusta value chains in Vietnam:
Research and projects in actions
September 12th 2017

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Challenges & opportunities
Threats to the viability of coffee farming => waste, overexploitation
- Irrigation water
- Mineral fertilisers
- Mono-cropping, erosion and soil vulnerability
- Improve quality,
- Increase yield,
- Increase income for growers.
- Reduce input cost,
- Reduce the impact on the
environment.
Promote sustainable coffee cultivation
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COP HA
COP MT
Among the most productive coffee farmers in the
world, Vietnamese growers can see their
profitability increase by a more efficient use of their
resources towards the reduction of the COP and
environmental impact.

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Household & farm profiles
- Predominantly farmers are males in their early fifties who have been growing coffee
since the mid-nineties.
- 66% of farmers between 45 and 59 years old, 15% over 59 years old
- Family size is 4.3 persons on average.
- Nearly all farmers have de facto ownership of their land via the so-called red book. No
renting is observed (5% renting observed cross the 2 provinces’ survey)
- Average farm size is 3.11 ha
- Planting density is 1,080 to 1,100 coffee trees per ha
- Labor use amounts to close to 1200-1700 hours per ha. Most of the work is done by
men. Hired labor per ha makes 30% to 47% of total labor. Up to 8% of farmers hire no
labor. Up until to 2 ha in farm size, farmers can manage most of the work by
themselves, except for harvesting. Weeding, pruning and harvesting make up to 70%-
79% of total labor use. Labor costs have increased considerably over the past 10
years.
- Average productivity is 4.28 Mt/ha green bean, with an average production of 12.7
Mt green bean per farm (Acom supply chain in Lam Dong) – Average productivity is
4.13 Mt green bean in Lam Dong and 3.05 Mt green bean in Dak Lak

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Farm economics
- Farmers earn excellent returns on every Dong they invest. After factoring in the
opportunity cost of family labor, farmers need a price of 15,600 VND per kg green
bean to reach break even on their annual cash investment.
- With coffee price at 42.799 VND/kg green bean, farmers generated an average turnover
of 545 million VND or 185 million VND/ha.
- Considering farmer opportunity cost at 196,000 VND per day of 8 hours, cost increases
to 61.6 million VND/ha and net revenue is 123.5 million VND/ha or 391 million VND per
household from coffee. Benefit-Cost Ratio is 1.93, including opportunity cost (and 2.54
excluding).
- Excl. labor opportunity costs, farmers earn 30.6 million VND per Mt of green bean with
production cost at 11.7 million VND
- Fertilisers is the single largest cost item, followed by labor.

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Irrigation
- Average irrigation volume is 165 to 410 m3 per Mt and 600 to 1081 L/tree.
- Farmers use predominantly surface water and open wells for irrigation, with the first
being more prevalent in Lam Dong and the second in Dak Lak.
- Pumping water is considered cheap relative to the perceived risk of applying insufficient
water. Implementation of a water pricing scheme, which is presently being debated in
Vietnam, would need to take this into account. Up until 8.000 VND/m3, we see no
reduction in off-take.

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Fertilization
Farmers tend to apply too much fertilizers or too little, because of the absence of local
service provider for soil analysis. As a direct consequence, farm profitability suffers a
loss and soils are impoverished by the over application of chemical fertilisers:
- Nitrogen is often over-applied (47% of farmers over apply N)
- Potassium applications do not meet crop requirements (80% under apply K) – with
every additional kg of K applied, productivity goes up by 1.35 kg/ha green bean,
and yields a return of 45,000 VND per kg of K applied in our model, which is
enough to do such an investment and spend more time on the application.
- 20% of farmers could reduce their P applications
- Most farmers predominantly use NPK (those with the optimum K application levels
tend to be those who over apply N and P). Most commonly applied NPK is 16-8-16
formula priced at 16.600 VND/kg while Kali (KCL) is at 6.800 VND/kg, average
fertiliser cost is at 26.3 million VND. Just 18% of farmers apply organic matter.
More exact recommendations need to derived from soil tests. For most farmers the cost in
either savings on fertiliser or improved productivity from better matched K applications
are highly likely to more than offset the cost for soil tests.
* Carbon emissions average 1.43 Mt per Mt green bean. Fertilisers contribute 60% of the emissions, and
energy for irrigation and transport contribute 40%. Average emissions per farmer is 3.77 mt per ha and we
assume 625.000 ha of coffee in Vietnam, then coffee contributes for 1.6% of Vietnam’s 152 million Mt total
emissions while contributing an estimated to 3% of the GDP.

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Pesticides
- 44% to 71% of farmers spray biocides, of those 14% use biocides not allowed by
UTZ, 4C (active ingredients: carbosulfan, benomyl, methidathion, etc. in below table)
- Average cost for biocides is 2.1 million VND/ha
- No nematicides have been used – which is surprising as nematodes are
increasingly considered to be a problem in Vietnam.

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Diversification of monocrops
- Contrary to 10 years ago, farmers are much more diversified, mostly with pepper
and avocado. Durian and avocado are gaining traction, not widespread as pepper. In
spite of this, farmers continue to rely primarily on coffee for their income (level of
intercropping slightly higher in Dak Lak than Lam Dong province)
- Farmers with less than 15% of non-coffee trees fall under the ‘mono-cop coffee
class’, farmers with 15% to 30% of non-coffee trees are considered ‘medium
diversified’ and farmers with more than 30% ‘highly diversified’.
- No significant difference in coffee planting density between the Agro-forestry classes
which indicates that contrary to expectation non-coffee crops do not necessarily
compete for space with coffee on the farm.
- Durian and avocado are traditionally spaced at 70 to 160 trees per ha in monocrop
production systems, we suspect optimal densities if intercropped with coffee at 30 to
50 trees per ha.
- Some trading and export companies have expressed concerns about coffee being
replaced by competing crops resulting in reduced supply. The average productivity
per ha and per tree among highly diversified farmers is not significantly different from
monocrop production systems. A more diversified farming system is in the interest of
coffee traders. Supply availability is not affected, while farmers resilience to price
shocks is improved.

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Certification
Training
Research
Projects
Community Services
Traceability – SMS Farm Module
Certification
Training
SMS – Ecom extension services

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Old
coffee
plot
Farmer Training Centre

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Located in Loc Nga commune, 15 minutes from Bao Loc city, Farmer
Training Center has an area of 3.4 hectare spreading along Dai Binh creek.
Farmer Training Centre

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Nursery inside FTC produces new coffee varieties: TR4, TR5, TR6, TR7,
TR8, TR9, TR11, TR13, TS and shade tree as Cassia Siamea, etc. which can
be provided to farmers for free or with small charge.
Farmer Training Centre

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FTC encourages coffee farmers to adopt sustainable production with
supports from its extension field team to:
• Promoting best practices on demonstration plots (at FTC and other
selected sites);
• Organizing experience-sharing workshops;
Farmer Training Centre

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Field schools

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Digs slots for applying
compost and stuff organic
residue
First Add box begins
appearing in farmer
house
Make compost of coffee
husk and cow dung
Pruning Weeding manually for
fertilizer application
Weeding mechanically
Apply compost and stuff
organic residue
Farmer takes care of
pepper intercropped in
coffee farm.
Good land cover in
sloping farm
Collection of inorganic
wastes
Classification of wastes Coffee stored at farmer
house
Field schools

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Audit internal management
system
Audit at farmer’s house -
checking field book keeping.
Audit coffee farm Audit agent for traceable
documents
Internal verification
Audit at coffee farm for code
of conduct conformity
Audit services

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New robusta coffee varieties
promise good crop
Harvesting robusta coffee.
Wet processing mill for arabica
coffee
Up to 70% robusta coffee
harvested is ripped
Arabica coffee is drying in the
sunlight after processing
Select ripped arabica
cherries for wet processing.
Processing & quality generation

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