Vietnam plans big investments in coffee expects to see rise in coffee output

Vietnam is the world’s second largest producer coffee producer after Brazil and is the biggest producer of the robusta variety. Even though Vietnam is the second-largest coffee exporter in the world, the country suffers a reputation for poor quality. According to Jenny Scharrer, a development expert who has researched Vietnam’s coffee industry, the small size of Vietnamese plantations is also a barrier to improvement, reported the Vietnam News agency.

According to the newspaper, in March 2009, Vietnam has revised its preliminary forecast of its 2009-10 coffee crop, saying output could rise 4.2% to around one million tonnes or 16.67 million bags, according to a senior industry official in March 2009. Vietnam exported 728,000 tonnes of coffee to earn $1.5 billion in the first eight months of 2008, down 22.4% in terms of volume but up 9.2% in terms of value. In the coffee industry's annual meeting in the Central Highlands coffee belt in Dalat (the Capital of Lam Dong province) recently, Vietnam Coffee Association chairman Luong Van Tu said production in the Central Highlands, which accounts for about 80% of Vietnam’s total output, has been stable, while part of the coffee plantations in the smaller producing province of Dong Nai had been lost to industrial zone developers. Daklak is Vietnam’s largest coffee growing province and is seen turning out 400,000 tonnes a year, said Van Thanh Huy, chief executive of Daklak-based export firm Inexim. This is followed by Lam Dong with 300,000 tonnes and Gia Lai with 100,000 tonnes.

The industry officers explained that Vietnam’s coffee crop year lasts between October and September, starting with a four-month harvest. The partial dryness and unseasonal rains during the harvesting time have affected the quality of beans, with the size shrinking and the number of black beans rising, which are both defects leading to export rejection. Rains have been falling across the coffee region and this has helped ease part of farmers’ difficulties but real problems still endure. The quality of Vietnamese coffee is not very competitive, mainly due to the less productive coffee strains and the poor farming techniques,’’ said Luong Van Tu, Chairman of the Vietnam Coffee and Cocoa Association. ‘‘There are too many farmers who all have different ways of farming, harvesting, drying and storing the coffee beans, leading to an uneven quality of product.’ Tu said that about 70% of Vietnamese farms are smallholders, less than one hectare, and the amount of mechanisation they can do is limited. Also, Vietnam has a limited number of generally low-quality coffee strains, compared with other crops. Doan Trieu Nhan, a senior adviser to the Vietnam Coffee and Cocoa Association told Vietnam News that Vietnam needed better coffee strains, both robusta and arabica, with higher yields; larger, simultaneously ripening beans, better immunity to pests; and Vietnamese coffee firms needed to cease using poor processing techniques.

Scharrer said Vietnam could find it hard to keep up with countries such as Brazil, where most coffee is grown on large plantations. Brazilian plantations are investing in mechanised harvesters and in new strains of plants whose beans all ripen at the same time, leading to better productivity and quality.

Investment in Coffee Industry is needed:

Vietnam needs to spend nearly $2 billion by 2020 to shore up its coffee industry and compete on the international market, a government official told the newspaper in early 2009. The Ministry of Agriculture and Rural Development in February 2009 approved a plan to enhance the competitiveness of Vietnamese coffee by improving coffee strains, farming techniques and processing technologies, Deputy Minister Diep Kinh Tan said.

‘‘It’s important to raise the quality of Vietnamese coffee,’’ Tan said. He said the country would not necessarily increase the quantity of coffee it grows. The plan requires investments totalling 32.8 trillion Vietnamese dong ($1.97 billion) with 50% expected to come from processing firms and coffee growers, 48% from foreign aid and the remaining 2% from the state budget.