VIETNAM COFFEE SECTOR

REVIEW AND PERSPECTIVE

Institute of Policy and Strategy for
Agriculture and Rural Development -
Vietnam

Truong Hong Kim

1 14 November 2012
 CONTENT
• PERFORMANCE OF THE VIETNAM’S
COFFEE SECTOR

• CURRENT ISSUES OF VIETNAM COFFEE

INDUSTRY

• STRATEGY FOR COFFEE SECTOR IN

VIETNAM
Growth is largely driven by acreage increase
600 3

500 2.5

400 2

Yield (Ton/Ha)
Acerage (HA)

300 1.5

200 1

100 0.5

0 0
85 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20

Average yield (Ton/ha) Total area (000 HA) Productive area (000 HA)
Volume and value of exports
1,400,000 2,500.00

1,200,000
2,000.00
1,000,000

1,500.00
800,000

Million (USD)
Tons

600,000
1,000.00

400,000
500.00
200,000

- -
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Export Value
(tons) (milion USD)
 Main markets
US
15%
Others
31%

Germany
13%

China
2% Belgium
10%
Nether-
land
3%
Italia
Korea 8%
3%
England
3%
Japan
6% Spain
6%
 Constrains of future growth

Small-scale production Instability

Low return on investment
Difficulties in technology
Fragmented
application
organization Limited mechanization
Low-tech processing
No planning

Lack of materials
Instability
Low return on investment Outdated technology
Difficulties in technology
application Weakness of trading
Limited mechanization and marketing
Low-tech processing

Low quality Low added value

Low competitiveness
Constraints of future growth

0-4 year > 20 years

8% 11%
5-9
years
2%

10-15 years
34%
15-20 years
45%

Aging tree Small-scale production

Constrains of future growth

Under developed No recognized brand,

technology low added value
Fragmented organization

Trading
Farmers Small Traders Consumers
Company

Dislinkage, no feedback

Ministry of Agriculture

Not demand oriented

Policy Technical National

research research Weak
Extension
linkage
 Main solutions

Restructuring Institutional Sustainable Improving

the coffee reform growth competitive
production ness

Restructure Institution Market

of: al links Sustainabl oriented:
e criteria:
Cooperatives
Information,
and production
 Traceability; analysis
 Rejuvenation associations  Stockpiles
 Variety Processing  Social
 Exchanges
structure association responsibility
 Material ones
Product Trade Technology
 Industry-
structure association Certification
agriculture
colony
 Rejuvenation
Coffee Production Projections 1990-2030 (3 scenarios of rejuvenation)

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

-
1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030
Production Projected production Projected production
(Current) (No replacement) ( 3 yr gestation period)
Projected production
(5 yr gestation period)
Restructure of area and products
Increasing Arabica area to ¼ Increasing the export of high
total coffee area value added products

Arabica area
25%

R
o
b
us
ta
ar
e
a
7
5
%
Recommendation for institutional arrangement

Small Traders Trading Consumers

Farmer Asso
Asso Comp Asso Asso

Coffee board

Rep of Policy Technical National

ministries research research Extension
 Public Private Partnership in Coffee
1. Background: Based on the initiative of World Economic Forum in Ho Chi
Minh City

2. Goal: Promote sustainable coffee agricultural practice, new technology &

seed, involve farmer to the value chain

3. Strategy: Multi-stakeholders to support farmer across the value chain

4. Partners:
Public sector: Crop Production Dept. of MARD (co-chair), NAEC, IPSARD,
WASI, Dak Lak and Lam Dong DARDs/LAEC, local authorities
Private sector: Nestle Vietnam (co-chair), Yara, Syngenta, BASF, Bayer, EDE
Consulting, Cisco
Association: 4C, Rain Forest, UTZ Certified, VICOFA.
Financial Institute: IFAD, IDH, IFC

5. Actions: Conducted 5 meetings. In 5th meeting, members agreed to the

scaling-up strategy, charter of farmer group. Technical group agreed on
KPIs, technical process and training materials. Nominated local
coordinator. Established farmer group. Registration of farmer group to be
completed by the end of September.

A new model: multi-stakeholders to support across the value chain

 Organization Chart of Coffee Taskforce
Steering Board
MARD, VICOFA, IPSARD and
4 representatives of private sector

Private sector Public sector Association

Nestle, Yara, Syngenta, Central: MARD, NAEC, 4C
Cisco, EDE consulting, IPSARD, WASI Rain Forest
Dakman etc. UTZ Certified
Local: DARD, Agro dept. of
district, LAEC, People VICOFA
To be invited: BASF, Bayer committee at commune,
Financial institutions commune farmer association

Technical group
Manage 2 pilot projects (strategy, technical, monitoring, communication)
Execution personnel of private sector, DARD, LAEC, association, WASI,
IPSARD
Public Private Partnership in Coffee

“Make Vietnam the recognized

reference of Robusta”

Agree on the 4 key pillars:

 Coffee quality
 Coffee quantity
 Coffee sustainability
 Farmer income
A pilot model in Daklak province

Produ Proce
ction ssing
Institutio
Technology nal rules
Busines
s

Organic

Added value is accepted in the markets

Thank you