Increasing value in the coffee industry

Vietnam reached a milestone in 2012, as the world’s leading coffee exporter for the calendar year. The country exported an astounding 1.7 million tonnes of coffee, generating revenue of around US$3.6 billion for the country’s coffee industry.

Although impressive, I believe that these sales figures represent only a fraction of our potential. By adding value, Vietnam could soon be looking at a US$20 billion coffee industry. This level of income could achieve astounding success in improving the lives of coffee farmers, and the development of the Vietnamese economy as a whole.

To do so, I propose the following six goals. These goals were first presented at the Coffee Outlook 2013 conference, that took place during the 4th Coffee Festival 2013 in Buon Ma Thuot, Vietnam’s coffee capital, where 50 per cent of the country’s coffee is grown.

1. Five pillars – one goal
To add value to the coffee industry, the first goal should be the cooperation of every pillar of society. These five pillars – the state, farmers, research and technology institutions, the media, and industry – must all act with the same intention. That intention must be to increase the value of Vietnam’s coffee industry.

2. Improve cultivation
The second goal is to improve the agricultural practices of coffee farmers. This must be the foundation for developing the nation’s coffee industry. This goal must be achieved with sustainability at the forefront, to ensure that our practices leave future generations with a solid foundation.

Improved farming practices must strive to increase not just yields, but also the quality of coffee. Vietnam’s coffee cannot simply be traded on the market, but needs to be celebrated and recognised by region among specialty coffee circles. Marketing efforts should aim to single out Vietnamese coffee for its quality offerings, with specific communication strategies for dedicated coffee-growing regions.

The main objective in improving cultivation must be prosperity and environmental sustainability, within a context of preserving local identities. Advanced cultivating technologies are key in this regard. Trung Nguyen has been working with Israeli drip-irrigation technology, which helps save water while delivering fertilisers and nutrients direct to the roots of coffee trees. This helps increase yields by 50 – 100 per cent, while preserving natural resources. Advances in coffee agriculture must also look at varietal development, to increase the quality of coffee plants and attract higher-than-market prices.

The standards used in producing and importing countries must be better aligned, to help exporters increase the value of their coffee beans. Vietnam needs to implement better management and quality control procedures, to lift the quality of coffee to international standards.

3. Coffee tourism
Trung Nguyen proposes that Buon Ma Thuot to be named a ‘Global Coffee Capital’ to attract coffee tourism. This would be an opportunity to market the quality coffee available here, and help build a Buon Ma Thuot brand.

The coffee industry must develop a global communications program that helps bring coffee out of the commodities market and instead recognised by terroir. Diplomacy, education, and digital communications platforms should be used to help develop this geographical recognition. Festivals, such as the one held in Buon Ma Thuot, should be used to promote the image and brand of Vietnamese coffee.

Visiting coffee growing regions should be an eco-tourism activity. By adding tourism revenue to coffee growing regions, this will help lift local economies as a whole. This increased income must be reflected in the improvement of healthcare and education facilities, ensuring that farmers can enjoy this added value.

4. National Coffee Cluster
The next initiative we propose is to build a National Coffee Cluster in Vietnam. This cluster would bring together every segment of the coffee chain, with the combined goal of improving the quality and efficiency of coffee production. This would enable technology to be shared all along and across the production chain.

The cluster would be built to maximise the value of every segment of not only the coffee chain, but also develop an infrastructure for supplementary industries (sugar, dairy, etc.) and coffee-related industries (food, cosmetic, etc.). By increasing cooperation in technology sharing, production, finance, and so on, this would increase the value of the coffee chain.

Trung Nguyen believes that multilateral partnerships are key to developing the industry. The key principals of these partnerships must include: balancing revenue across the global coffee value chain, sustainably developing natural resources, standardising products for export, and implementing corporate social responsibility practices.

5. National coffee brand
Trung Nguyen proposes that Vietnam establishes a state-supported coffee corporation. Countries such as Colombia have been highly successful in pooling their resources in a national coffee brand and corporate structure. This helps ensure the country’s coffee industry has a competitive advantage, one that every farmer can benefit from. In Vietnam, the establishment of a state-supported coffee corporation could be used to develop appropriate macroeconomic and industrial policies.

The corporation should seek to promote Vietnamese culture as a whole. It should be ambitious, offer special strategies, high-quality products, and be supported by the whole community. Such a corporation could be a major force in adding value to coffee output, affirming its position as a powerful global corporation.

6. Powerful coffee nation
The end goal of these initiatives must be to ensure that Vietnam is a powerful coffee nation. The coffee industry must have a clear strategy, to diversify its coffee culture with programs that improve the quality of coffee. This, in turn, should help increase coffee consumption per capita in Vietnam, which is quite important in adding value to the industry.

We at Trung Nguyen hope that Vietnam will have an opportunity to realise its potential. Not only will this help improve the lives of Vietnamese farmers, but hopefully inspire other coffee growing countries around the world. 

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