Vietnam has built a reputation as the world’s largest Robusta producer, and is now evolving by embracing sustainable practices and profitability over productivity.
Vo Thien Nghia’s family has been growing coffee in the Central Highlands of Vietnam since 1986, planting the crop because it was a less risky choice than other crops. However, with coffee prices remaining low for several years straight, Vo Thien has had to diversify his farm.
“The market price is a challenge. The price has not changed too much, but the labour costs are getting higher and higher. If the cost of production is high and the market price is unchanging, we must spend less on our families, food, and everything else,” Vo Thien tells Global Coffee Report. “We have had to begin intercropping. We plant more fruit trees, pepper, and other crops into the coffee farm to earn more profit from these other trees. We don’t only plant coffee and now earn more from the other crops inside the coffee farm.”
The Central Highlands is home to 94 per cent of Vietnam’s coffee production, according to government figures. When the French introduced coffee to Vietnam in the 1850s, it was first grown in French-controlled coffee plantations and focused more on Arabica than the Robusta coffee Vietnam would become known for. The Vietnam War would disrupt the nation’s coffee industry over a century later. North Vietnamese victory at the Fall of Saigon in 1975 saw, which then led to the collectivisation of the county’s agriculture, limiting enterprise and lowering production levels. It wasn’t until the Đổi mới economic reforms of 1986, allowing for the private ownership of small enterprises, that Vietnamese coffee production would rise to the levels it sees today.
Coffee is second to rice in terms of value of agricultural products exported from Vietnam, embracing the Robusta species due to the higher yields of the cash crop. According to the International Coffee Organization, Vietnam produced 29 million 60-kilogram bags of green coffee in the coffee year 2020-2021, down 4.9 per cent from 30.5 million bags in 2019-2020.
The United States Department of Agriculture Foreign Agricultural Service attributes several factors to a decline in production and exports, including COVID-19 affecting global trade, strong competition from Brazil and other Robusta producers, and adverse weather conditions.
Many of Vietnam’s coffee growing regions experienced lower rainfall and higher temperatures than average in 2020. Vo Thien says his local community lost roughly half of its crop last season to poor weather.
“We’ve seen the effects of climate change very clearly in recent years. The dry season is longer and when it rains, it rains a lot. Normally, it only rains about 100 millilitres, now it’s 200 or 300, which causes erosion and damage to the coffee tree,” Vo Thien says. However, he is more positive for the next season. “Up until now, the weather has looked good, so we expect that the coffee will grow as good as normal.”
Over the last 30 years, Vietnam has become the world’s largest producer of Robusta coffee, with the species making up about 94 per cent of coffee from the country. Laurent Bossolasco, Sustainability Manager for ECOM Asia, says this focus on Robusta has given Vietnam a ‘bitter’ reputation which might not hold up to scrutiny.
“When some people think of Vietnam, it’s as a supplier of low-quality Robusta, or soluble and instant coffee. It’s not where people think of for third wave Arabica coffee, but there is an effort to change that by promoting higher qualities, even if it’s on a smaller scale,” Bossolasco says.
What separates Vietnam from other coffee producing countries, according to Bossolasco, is not a focus on Robusta coffee but how farmers have been able to maximise their output.
“A lot of countries need and have the possibility to produce a little more coffee and income per hectare, and Vietnam is a good reference point,” he says.
“But they shouldn’t necessarily adopt all of the aspects of production in Vietnam because they come with different downsides. There’s environmental pressure, for example, or creating situations where farmers could be more profitable by being less productive.”
With Ecom Agroindustrial Corp, Bossolasco’s focus in Vietnam is helping coffee producers optimise their coffee production, rather than simply maximising it. This means less use of water, agrochemicals, and labour per each unit of coffee produced, also improving the sustainability of the coffee.
“ECOM has collaborated with IDH – the Sustainable Trade Initiative, Jacobs Douwe Egberts, local authorities, farmers, and civil society, in an effort to improve sustainability in coffee production in Vietnam,” Bossolasco says. “We established a coalition called Production, Protection and Inclusion (PPI) Compact at district level. The end goal is for farmers to be more profitable instead of just more productive. The sustainability agenda is driven by how profitable it can be for farmers and how well it connects them to exporters.”
Tran Quynh Chi, Regional Director Asia Landscape, IDH, adds, “In a bigger picture, PPI Compacts connects all actors of the coffee supply chain, from farmers to top end buyers. Sustainability can only achieved if we work together.”
An example Bossolasco gives is the willingness of some farmers to invest in automated drip irrigation, which saves water by allowing it to drip slowly to the roots of plants, although an investment barrier makes this unachievable for the majority of producers.
“We also promote community irrigration through providing certain support for farmers to build a community pond and irrigation system to water neighbouring coffee production area,” Bossolasco says. “This helps to lower the usage of underground water and save further costs for farmers.”
Even with a small decline in 2020, Vietnam is still firmly placed as the second largest coffee producing country in the world. Vietnamese Ministry of Agriculture and Rural Development (MARD) statistics suggest the country has an 18.2 per cent share of the global coffee market, less than half of Brazil’s 36.8 per cent, but more than twice the third placed Colombia’s 8.1 per cent. With Brazil and Vietnam together producing more than half of the world’s coffee, the two countries play a crucial role in the global coffee market. Due to this, the low commodity prices that coffee farmers have dealt with over the last few years have sometimes been attributed to overproduction form these two countries.
However, Tran Cong Thang, Vice Chairman of the Vietnam Coffee Coordination Board (VCCB), says this perception does not necessarily line up with what is actually happening in Vietnam.
“The booming of coffee in Vietnam occurred from beginning of 90s to the late 2000s. But in recent years, the coffee output and growing areas in Vietnam have not really increased that much. It’s actually quite stable, around 600 to 670 thousand hectares since 2010,” Thang says. “Rather than increasing quantity or expanding production areas, the government of Vietnam has tried to focus more on growing quality, improving the processing sector, and encouraging more sustainable methods of production.”
With the sudden rise of Vietnam’s coffee industry since the 1980s, a lack of structure or coordination presented issues ranging from social inequality to environmental degradation. MARD formed the VCCB in 2013 to bring together different stakeholders from the industry to advance sustainable, large-scale agricultural productivity, quality, and competitiveness.
“Before the establishment of the VCCB, the only industry association was VICOFA, which only represented exporters. The VCCB is a good representative of all stakeholders in Vietnam,” Thang says.
“An issue in Vietnam was that the voice of the farmer was not strong. VCCB members include representatives of farmers, cooperatives, and coffee producing provincial governments so that their voices will be heard.”
Once of the first initiatives of the VCCB, which has begun to bear fruit, was its support of replanting coffee trees through the Coffee Sustainable Strategy and Coffee Rejuvenation Strategy.
In 2011, World Bank estimated that Vietnam’s coffee production would fall by 30 to 40 per cent by the mid-2020s without the large-scale replanting of coffee trees. However, the long-term investment and short-term reduction of income made it impossible for many smallholders. One of the ways VCCB made this more practical for coffee producers was to facilitate access to finance until the new trees were able to flower. This project led to the rejuvenation of about 120,000 hectares worth of coffee farm.
“The productivity and quality of our coffee trees were starting to fall. Thanks to this program, the farmer could cut down the old trees and grows new ones, then try to follow sustainable standards with the new crop,” Thang says.
The VCCB has also served as a meeting place for businesses and the government to discuss new policies and innovations to improve the coffee sector. Greater use of standards and certifications like VGAP, 4C, Utz, Fair Trade, Organic, and Rainforest Alliance is one way the VCCB intends to add value and reassurance to its coffee.
“We want to shape the coffee sector in Vietnam for a long future, so we’ve been applying sustainable practices to overcome the language barriers we face when dealing with importing countries,” Thang says. “We want to make sure the coffee we produce is ‘clean’ so the consumer can trust the coffee.”
He adds that the VCCB will continue to encourage sustainable production and that the Board has set Vietnam on a good direction for the future.
“Farmers are also becoming more aware of their input use. They are using things like fertiliser and pesticide with more respect of sustainability,” he says. “We will also look into ways – like farms codes – to improve the traceability of coffee from Vietnam and add more value to our coffee with more in-depth processing with more value added.”
Even within the country, Thang predicts greater ties between coffee producers and cafés popping up in cities around the country.
“Data we’ve collected from the main cities shows an increase in domestic consumption, with more modern coffee shops opening up,” he says. “I think domestic consumption has a lot of room to grow in the near future. More friendly coffee shops will be open in Vietnam and it will attract more people to drink coffee.”
Instant or soluble coffee production is another way Vietnam has been able to add value to its coffee domestically. Trung Nguyên has built an export market of more than 60 countries for its Vietnam produced and processed instant coffee. Other enterprises involved in the Vietnamese coffee industry have also increased their investment in the country, creating new ways to export coffee. Green coffee trader Tin Vo Thien Group is one such business, inaugurating an instant coffee production plant in December 2018.
While the VCCB and large industry stakeholders work to improve the future for coffee in Vietnam, in the present, Vo Thien says smallholders need to brave current conditions, with hopes of better weather and prices on the horizon.
“The people and community here think that planting coffee and maintaining coffee production is very important for the future because, even though the price is low, it provides a basic income for farmers,” Vo Thien says.
“We will continue farming coffee because there’s less risk and it’s not as difficult to grow compared to other crops. We can only hope that the coffee price will go up.”