robusta proDuction areas in Viet nam
Viet Nam can be divided into roughly two different regions separated by the Hai Van mountain
range. This natural border splits Viet Nam into two climatic areas of north and south. The
south goes from the Mekong Delta and lowlands to upland basaltic areas in the Central
Highlands that have a moderate tropical climate. The north is characterized by limestone
mountainous areas which are subject to major climatic effects from central Asia and have a
much greater range of temperatures. The Viet Nam coffee industry encompasses a wide range
of people, ranging from transmigrants from rice production areas who have experience with
high yield and high performance rice systems to ethnic hill tribe minority groups who use low
input, subsistence agricultural systems. (Marsh and Minh 2002).
The Central Highlands of Southern Viet Nam are the main Robusta coffee producing areas
ranging from 300 m upwards and including some small areas up to 1500 m. The main Robusta
coffee growing areas are at approximately 300 m to 500 m altitude. The area has a warm
tropical climate, influenced by the south Asian monsoon with distinct dry and rainy seasons.
The following map shows the main agro-ecological regions of Viet Nam.Figure 5. Agro-ecological regions of Viet Nam
Source: Jones & Minot (2002)
8 Viet Nam coffee industryDiversification by smallholder farmers: Viet Nam Robusta Coffee 9
History of coffee in Viet nam
Coffee was first planted in Viet Nam in 1857. However, the coffee area remained less than
10 000 ha until the late 1970s. From the late 1970s to the early 1980s government structures
were created to increase the coffee production and conduct trade with other communist block
countries. Areas planted with coffee increased to 30 000 ha by the mid 1980s, but it was only
in the early 1990s that production increased dramatically.
After reunification of Viet Nam in 1975, Viet Nam began to rebuild its economy along the
communist collective models common to the eastern block countries of that era. Coffee was
used as a barter trade commodity to these countries. A gradual liberalization of the communist
collective policies saw the productive power of the Vietnamese people unleashed from the mid
1980s to the mid 1990s, enabling Viet Nam to become a major exporter of not only coffee, but
also a range of other crops. For example in 2003, Viet Nam had become the second largest
exporter of rice and pepper and the third largest exporter of cashews and straw mushrooms
(World Bank 2004) along with a range of other agricultural products in the top ten exports in
the world.
Table 4 shows a range of Viet Nam coffee industry data for the years 1979 to 2006. Key points
to note are the price spikes in the period from 1993/94 to 1998/99 and the very low price in
2001/02. The stabilizing of planted areas and production since 2000 is also evident. The Viet
Nam ‘coffee year’ is from 1 October (the start of the new crop harvest) to 30 September the
following year.
Robusta coffee production is concentrated in 5 key provinces of Dak Lak, Dong Noi, Gai Lai,
Kun Tom and Lam Dong. These 5 provinces account for over 96 percent of the coffee area
in Viet Nam (VICOFA 2004). Dak Lak province alone accounts for 46 percent of the coffee
area in Viet Nam. The Viet Nam agricultural census of 2001 concluded that 79 percent of all
coffee farmers were in these 5 provinces and 45 percent of rural households in the Central
Highlands are involved in coffee. Two-thirds of the coffee farms are smaller than 1 ha and only
3 percent are larger than 3 ha. (Jones 2002). The coffee industry of Viet Nam is dominated by
small holders with 85 percent of all farms in Viet Nam being under 1 ha and only 1 percent
are larger than 5 ha. (World Bank 2004). Table 4. Viet Nam coffee production and export data
0 Viet Nam coffee industryDiversification by smallholder farmers: Viet Nam Robusta Coffee
The following map was produced by the Viet Nam Coffee and Cocoa Association (VICOFA)
and shows the approximate locations of coffee production areas and amounts in Viet Nam.
Figure 6. Map of coffee production areas in Viet Nam
Arabica
RobustaViet nam coffee inDustry structure
The production base of coffee in Viet Nam is now approximately 95 percent private run farms
with the remaining 5 percent being state farms, which are also being gradually redistributed to
small farmers. However, many of the collection, processing and export roles are still performed
by State Owned Enterprises (SOEs). There are a number of key stakeholders in the Viet Nam
coffee industry. A brief description of these are provided below;
• MARD: Ministry for Agricultural and Rural Development is the key ministry for coffee.
There are a number of research and development institutions under MARD such as:
- IPSARD: Institute of Policy and Strategy for Agriculture and Rural Development,
- Dak Lak agricultural extension centre.
- WASI: Western Agroforestry and Scientific Institute in Dak Lak.
- BRC: Bavi Research Centre, specifically set up for Arabica research in North Viet
Nam.
• VINACAFE: The Viet Nam Coffee Corporation is the SOE umbrella company under
MARD that manages 59 SOEs that cover a range of industries including 40 state farms
totaling 27 000 ha of coffee. These state farms work with 27 SOEs, including processors,
traders, and service providers providing credit, fertilizer, irrigation, research and roasting.
VINACAFE took over the supervision of the SOEs from MARD in 1995. It is now in
a process of liberalizing and privatizing these enterprises. At present the government
controls only 5 percent of the coffee production area in Viet Nam in the form of state
farms.
• VBARD: The Vietnamese Bank of Agriculture and Rural Development is the main form
of credit for coffee farmers, which is a government institution and has 1 600 branches in
rural areas. VBARD estimates that it has 75 percent share of the credit market for coffee
growers. In 2002 this market exceeded USD270 million.
• VICOFA: The Viet Nam Coffee and Cocoa Association (110 members which include 90
SOEs, 18 private companies and 2 scientific institutes). It was formed in the late 1980s
to help organize the coffee sector and help government develop coffee policy. It is
presented as an independent business association, but is in reality more of a government
affiliated organization representing Viet Nam in overseas forums and is financed through
its members and by government.
• Processors and Exporters: Viet Nam has over 100 registered coffee exporters, including
a number of joint-venture processing and export operations with international partners.
Most of the large multinational coffee businesses are directly represented in Viet Nam
through direct investments or joint venture companies.
• Private Business: A growing range of private businesses focusing on local coffee trading,
fertilizer importation, resale and general farm supplies.
• Private coffee farms. The majority of private coffee farms are smallholders which
make up the bulk of the producers in the Viet Nam coffee industry. It is estimated that
2 Viet Nam coffee industryDiversification by smallholder farmers: Viet Nam Robusta Coffee 3
85 percent of the 480 000 ha of coffee are small farms of 1 ha of less. This indicates
that more than 450 000 small farming families are involved in coffee production in Viet
Nam.
Viet nam coffee exports
Viet Nam exports coffee to over 50 countries. The United States and Germany are the major
markets with 10 percent to 15 percent going to each country annually. In the year 2004/2005,
Germany and the United States remained the top importers of Vietnamese coffee with Italy,
Spain and the Republic of Korea, completing the list of the top five buyer countries.
Table 5. Viet Nam’s top coffee buyers in 2004/2005