Laos’ coffee industry has enjoyed a renaissance in recent years, with the volume of Arabica cultivated in the South-East Asian nation climbing sharply since 2009. In 2012, Laos exported 25,000 tonnes of coffee, worth US$80 million, a 25 per cent increase on 2011’s 20,000 tonnes, which brought in US$65 million. Arabica currently accounts for 10,000 tonnes of that, up from just 200 tonnes in 1997. Domestic consumption accounts for just 5 per cent of the harvest. According to the World Bank, Laos’ gross domestic product reached US$9.29 billion in 2012 and the coffee industry is one of the top 10 revenue generators in the economy. According to General Manager of local coffee company Sinouk Pathana Sekong (SPS), Sinouk Sisombat, about 90 per cent of Laos’ coffee is grown organically, but only 5 per cent of that is certified. Among this 5 per cent are the beans from his modest 35-hectare plantation, which are a mix of Robusta and Arabica, though he plans to solely grow an assortment of Robusta varietals in the coming years. “Certification shows I am different,” says Sisombat, who is also and President of the Lao Coffee Board (LCB). “It’s not that my coffee is any better. But the certification raises the sellable value of my coffee, and opens up new markets.” Certification for Organic and Fairtrade practices is touted by some local non-government organisations (NGOs) as a key selling point in European markets, where Laos’ main export destinations are Poland, Germany, Belgium, and Switzerland. Other producers, however, do not see the value in the extra expense for the various certifications for several reasons. First, Europe is not their main market. Asia is where they do the bulk of their business, and their purchasers know from personal inspections the quality of Laos’ coffee and its process. Laos’ coffee industry seems to have come full circle since French colonials first harvested Arabica in the south of the country in the 1930s, with annual yields approaching 5000 tonnes. They found the fertile volcanic soil on the 250,000-hectare Bolaven Plateau, sitting between 800 and 1300 metres above sea level, perfect for growing the prized cherries. Plantation owners in Laos’ southernmost Champasak province, the Bolaven heartland, focused on the Bourbon Typica variety, but rust disease decimated most crops just before World War II. The turbulent revolutionary decades from the 1950s to 1975 halted Laos’ coffee production, but the ensuing peace found state-owned plantations cropping up, with Cuban and East German experts reintroducing Catuai, Catura, and small amounts of Liberica Arabica varieties. However, in the early 1990s, the government embarked on a land redistribution program, giving small farmers ownership. Until the mid-1990s, most coffee farmers in Laos grew Robusta. The majority belonged to cooperatives, while others sold directly to coffee traders. Meanwhile, Sisombat, who had been living in France for more than 30 years, found that in 1992 scientists had discovered Catimor, a new rust disease resistant variety of Arabica. In 1995, he took these beans to his childhood home in southern Laos, with a vision to make coffee a flagship product. By 1997, Sisombat had established a modest Arabica plantation with top quality equipment. At that time, Laos’ national Arabica output stood at around 200 tonnes. According to the 2007 Groupe de Travail Café report, Participative analysis of the coffee supply chain in Laos Peoples’ Democratic Republic, while throughout the 1990s and into the new millennium annual yields and prices were quite erratic, overall the price of the predominant Robusta rose. Then came the Arabica rush of 2009. As Sisombat explains, local farmers watched the Arabica price more than double from US$3000 to US$6580 that year. “People went crazy. They wanted to plant,” Sisombat says. “They began cutting down and uprooting trees to cash in on Arabica.” Sisombat says many farmers did not fully comprehend that traders at London’s commodity exchange set the global price for Robusta, while their New York counterparts set Arabica’s rate. In fact, he does not feel that speculators have a fine-tuned calculator for setting a realistic coffee price. “What’s their math? They have none. Beans grown organically in Laos or fertilised in Columbia aren’t factors. The tonne price is the same, and speculation governs the rate. Bottom line, will more people consume coffee? This leads to a volatile playing field,” Sisombat says. “Forecasting coffee prices is like predicting the weather. You may come close, but nothing is certain. Speculation amplifies everything. If the price starts moving up, it rises too high, and a slight downturn can trigger a plummet.” As for the Arabica rush, farmers now face uncertainty. Those expanding the growing area and planting Arabica seedlings in 2009, expect to start seeing more cash during the 2013 harvest season after waiting three years for the plants to produce beans. However, Arabica export prices sank 60 per cent from US$6800 per tonne in 2011 to June 2013’s US$2800. Add in Arabica’s harvest time (October and November), and futures trading into the equation, Sisombat says, and pricing strategies turn into a dice toss. He adds that although traders set the global price, retailers, restaurants, and cafes are making the money. “The [end] consumer price…is steady. When was the last time you paid less for a cup of coffee? Yet the trade price is falling. On the other side are local producers, whose situation is quite unstable.” Among Laos’ non-certified producers is the Dao-Heuang Group’s Dao Coffee division, which farms some 250 hectares in southern Laos’ Champasak Province. The company reports its average annual harvest yields at about 500 tonnes, which brings in at least US$1.1 million per year. Singapore-based Olam international, one of the largest coffee traders in the world, incorporated Outspan Bolavens Limited (OBL) as the group’s Lao coffee production subsidiary in 2009, the first year of the Arabica Rush. Of its 3000 hectares sitting at 1250 metres above sea level on the Bolaven Plateau, the company has planted 1857 hectares, while the remaining land will be sown in phases. Certification doesn’t seem to appear on the cards, probably because there’s no need as Olam exports certified coffee from other sources to Western countries. In 2011, Sawan Muthanna, Olam’s Plantation Manager of the Bolaven Plateau farm, told the press that with 12 years of managing plantations under his belt, the growth he saw after two years was phenomenal. “[The coffee] you see here, at this level, I don’t think I’ve seen anywhere else,” says Sawan, who expects more big-scale corporate plantations plan to open on the plateau in coming years. This has attracted criticism from some rural development organisations and NGOs, which often target specific villages or community clusters for micro-sustainability projects that create boutique brands for sale locally and overseas. Environmentalists also voice their concerns, as does the government. Established in 1994, Lao Farmers Products (LFP), which guarantees organic origins and fair trade practices for growers, is among the more outspoken. The LFP believes monoculture businesses such as coffee are too risky. They have encouraged some 200 farming communities to work with aid groups and social enterprises to export their jams, honey, juices, and herbal teas. Lao Mountain Coffee in the Bolaven Plateau took another path. Established in 2001 by Master Roaster Steve Feldschneider, Lao Mountain Coffee runs as a mix between a retail and wholesale business, roasting and selling high-grade coffee grown by farmers certified by the World Fair Trade Organisation and Fairtrade Lao. “We work directly with farmers and agriculture groups to insure the beans are processed according to specialty coffee standards: ripe, fresh cherries, disciplined processing, and professional grading and sorting. We sample all of our beans before we buy them to assure quality and consistency, and for the best beans, we pay the highest prices in Laos,” Feldschneider says. Rather than peddle the standard 60-kilogram sacks filled with beans, Lao Mountain Coffee packages its roasted products for the shelf with 200-gram gift packs and 1-kilogram bags, or wholesale orders of more than 500 kilograms. Their selection includes 20 distinct beans and a choice of unique blends targeted for Europe. Seeing the varying industry perspectives, SPS’s Sisombat took the lead in forming the Lao Coffee Association, which morphed into the LCB in 2010. The 40-odd members include a range of stakeholders: growers, national and local authorities, distributors, processors, and exporters. According to Sisombat, the LCB is playing a pivotal role in prompting the government to embark on a three-point national strategy for the corporate sector. The cornerstone of this three-prong approach is to simply produce more coffee. The plan calls for an increase in the volume of higher-yielding Robusta production, while expanding the amount of land to be earmarked for Arabica. Sisombat says Arabica production volume is closing in on Robusta, and the aim is to continue placing more weight on the milder, more sought-after beans. Of course higher production assumes an equal rise in exports. As such, the second pillar is ensuring the quality of Lao Arabica continues to climb, making it more attractive on the global stage. This leads to promotion, with the aim of pointing the world’s spotlight on Laos’ quality organic coffee. The circle now returns to certification, the gateway to Western markets. However, Sisombat says the steep cost of certification acts as a significant deterrent. Meanwhile, the single-digit percentage of Lao coffee sold in Europe continues to shrink. According to LCB, the vast majority of non-certified Lao Arabica and Robusta beans simply cross the border to known trading partners in Vietnam, while a growing volume is heading to Japan. Sisombat adds that Laos is currently eyeing the Chinese and Korean markets, where certification plays a lesser role. “I still firmly believe in certification and promotion to tap deeper into the more discerning European market,” says Sisombat. “It adds value to the Lao brand…almost like a bonus.” However, expanding to nearby Asian markets without the need for certification appears to be the more promising route in the short-term. Should global market demand pull Lao coffee to Europe, Sisombat wins. But as long as regional demand stays high, regardless of any upscale marketing spin in the near future, the majority of Laos’ coffee farmers will keep their eyes firmly set on Asia.