Building a national coffee cluster in Vietnam

Chairman VuOver the past few years, Trung Nguyen, which is the largest coffee roaster in Vietnam, has been collaborating with some of the world’s top experts to build a National Coffee Cluster in Vietnam.

This plan, which aims to improve the position of Vietnam’s coffee industry and increase the export value of Vietnam’s coffee industry to US$20 billion by 2030, was submitted to the Vietnamese Government in March, 2013.

The National Coffee Cluster project has been initially implemented as a four phase campaign:

1. Binding to a national eco-social development strategy.
2. Transforming agriculture.
3. Strategy for product.
4. Space planning.

Our plan will completely align Vietnam’s coffee production chain, utilising the most technologically advanced production processes available and building our reputation as a centre of global coffee supply.

Our vision encompasses all segments of the coffee value chain, from seeds through to cultivation, raw processing, finished processing, trading and distribution, and added services.

Currently, Vietnam’s coffee industry is very segmented. The challenge for Vietnam is to link up these segments and, in doing so, enable them to add value to our industry as a whole.

This means ensuring that our coffee cluster is not only horizontally but also vertically integrated. It will include fundamental support from related industries such as finance, tourism, science and technology, culture, education, and health. All of these need to be closely bound to each other in a perfect whole to benefit the indigenous coffee farming community, and in turn, the rest of the nation’s economy.

The province of Dak Lak in southern Vietnam lies at the heart of our cluster. We intend to establish this region as a global coffee capital, serving as a prototype for other coffee regions in Vietnam and abroad to follow.

We hope to make Dak Lak a destination for connecting the global coffee community on the basis of our coffee philosophy. We also intend for the National Coffee Cluster model to create 5 million to 6 million jobs in Dak Lak.

The capital of Dak Lak, Buon Ma Thuot city, is a focal point for the 150-year history of Vietnam’s coffee industry, and is the capital of our National Coffee Cluster. As such, we plan to make Buon Ma Thuot an attractive tourist destination for coffee professionals and enthusiasts from around the world.

As part of our National Coffee Cluster plan we have focused on the Ea Tul district of Dak Lak as a new model for rural development.

In Ea Tul we are working with 2027 households, of which 98 per cent are from minority ethnic groups, and 95.5 per cent derive their income mainly from agriculture. These workers use traditional farming practices that are often less efficient and environmentally friendly than modern techniques. Therefore yields are very low and most of the people are very poor and experiencing unsustainable development.

Trung Nguyen is collaborating with experts in researching and developing the best seeds, utilising hi-tech incubators, seeking balanced watering and fertilising methods and identifying appropriate botanical quarantine conditions.

To address the problem of low yields, we have applied advanced cultivation technologies such as drip-watering technology. This delivers dissolved nutritious substances to the root of coffee trees, and has increased yields by 50 to 100 per cent, as well as saving natural resources. We are also using biotechnology for seeding and re-cultivation to ensure our produce reaches international quality and value standards. This strategy will build a stable foundation, and produce a finished product of a consistently high standard.

The use of drip-watering technology has also increased output for farmers, helping save labour and investments.

Furthermore, Trung Nguyen is also purchasing coffee from farmers at higher prices, instructing them to calculate the volume of water used, apply organic fertiliser to two trial locations, and implementing an intercropping model.

These measures will generate higher yields and quality for Vietnam’s coffee, increasing income for coffee farmers and upgrading annual production capacities by 14,000 tonnes.

We are working to apply sustainable farming practices according to the Utz international standard, under guidance from some of the world’s top experts. We are also upgrading the coffee processing factory by restructuring the supply chain and introducing modern technologies. Finally, we are increasing participation from the community through activities such as developing small plantations and facilitating traditional cultural activities.

Since 2010, Trung Nguyen has mobilized 1500 famer households to cultivate Utz certified coffee, with more than 2200 hectares of certified coffee in Ea Tul. We plan to increase this by 3000 hectares in the near future, also incorporating Rainforest Alliance and Fairtrade certification standards.

The income from the Ea Tul project will be prioritised to speed up activities of social development, environmental improvement, upgrading living quality and the public’s knowledge of sustainable practices.

Trung Nguyen continues to implement our National Coffee Cluster plan, training and improving management and coffee-cultivation skills for team-leaders and other participants. Our aim is to make them the active nucleus for further training of farmers.

Trung Nguyen is striving to build the status of Vietnam in the global coffee trade. While we have already had great success with this, further progress will only come through cooperation from all levels of our nation, from politicians to business leaders, and of course the people. We call on leaders throughout the international coffee industry to engage with us in this process so that we can improve our industry not just for the sake of Vietnam, but for the sake of the trade overall. As I am very fond of saying to my partners in this project – together, nothing is impossible.

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