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Coffee growers seek bigger piece of the pie
04 | 07 | 2007
Coffee industry representatives meeting at a two-day seminar this week in the Central Highlands (Tay Nguyen) province of Dak Lak said better planning and modern processing technology would increase exports and improve bean quality.

The industry needed to decrease cultivation areas and ensure there would be no oversupply, industry leaders said during the meeting. In the past few years, oversupply has led to a drop in the world market price.

The growth of the industry has been spectacular in the last decade. The number of coffee trees increased from a mere 19,000 hectares in 1975 to 434,700 hectares in 2005, according to the Agriculture Extension Department.

With average productivity last year of 800,000 tonnes per ha and coffee exports accounting for over 15 per cent of the world’s total, Viet Nam climbed to the second highest coffee exporter, after Brazil.

Between now and 2010, several measures will be taken by the Agriculture and Rural Development Ministry to improve the industry.

Under the plan, the country’s coffee cultivation area will comprise 450,000 ha, down from the current 500,000 ha. Ninety per cent of the total will be used for growing robusta and the rest for arabica beans.

The ministry wants some plantations to shift from growing coffee to another crop and others to shift from growing robusta to arabica since the latter has higher economic value. It has also urged growers to use more organic fertilisers and modern processing technology.

Building a better brand name and creating new promotion programmes will also be done to enhance the prestige of Vietnamese coffee worldwide.

Doan Trieu Nhan, an expert from the Viet Nam Coffee and Cacao Association, said the industry would have to get rid of old coffee gardens and build new ones with advanced hybrids and seriously apply national management standards to raise quality.

"The industry will also organise training courses for coffee growers to help them develop and process their beans according to common technical standards to ensure equal product quality."

"We have planned to further expand the domestic market by launching promotional programmes to encourage domestic consumers to use Vietnamese coffee so we do not have to depend on the overseas market too much," Nhan said.

At whim of the weather

Coffee has also become one of Viet Nam’s key crops, along with rice, corn and rubber. But the industry faces uneven development because of problems including processing and pricing.

Nearly 75 per cent of the country’s coffee trees are planted in the Tay Nguyen region, which is often plagued by drought.

Many coffee-growers are still using outdated equipment to water their fields, resulting in a serious depletion of underground water sources.

The overuse of fertilisers and other chemicals has not only increased production costs but also influenced the quality of coffee and the environment.

The farmers’ habit of harvesting unripe coffee beans and use of crude processing techniques, as well as the lack of international standards were factors contributing to the low quality of Vietnamese coffee, department experts said.

Because of these limitations, the export price of Vietnamese coffee was often much lower than coffee products exported by countries in the Southeast Asian region. This difference was often between US$50 and $70, even $100 per tonne, they said.

Top robusta exporter

Tran Duc Tung, a former expert with the Ministry of Agriculture and Rural Development’s Planning Department, said Viet Nam was the world’s biggest exporter of robusta coffee beans.

In the 2005-2006 crop, Viet Nam exported over 900,000 tonnes, earning $1.2 billion, making coffee the country’s key export items.

"The rapid development of the coffee industry over the last three decades has made important contributions to the country’s socio-economic development," Tung said. "It has helped transform the country’s agricultural production structure in favour of producing commodities for exports."

"This change has significantly improved the living standards of farmers, particularly in coffee-growing localities such as Tay Nguyen and southeastern provinces."

However, most farmers involved in coffee cultivation have not followed the Government’s plan for the industry and have planted too many trees. The result was oversupply on the world market, which drove down global prices.

Between 2000 and 2005, the world coffee price was only $600 to 700 per tonne, sometimes falling to $400, which was less than production costs.

Other consequences of uncontrolled cultivation included the denuding of dozens of ha of forests cut down for coffee tree planting, which led to increased drought, flood and depletion of water sources.

Thousands of companies and households involved in the coffee growing and trading have suffered serious financial losses since the price drop on the world market.

"The plantations produce low quality coffee beans because of the unprofessional way of planting," said Dr. Le Ngoc Bau, deputy director of the Tay Nguyen Forest and Agriculture Science and Technology Institute.

"These products have no common quality standards in place, as they are all produced by unregulated small-farming households," Bau said. "According to the General Statistics Office, up to 85 per cent of coffee trees are planted at farms with fewer than two hectares, which employ 561,000 households."

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