What problems did Vietnam coffee production expose after 2001?
Vietnam coffee production grew roughly 100-fold in 25 years, making the country the world's second-largest producer, and annual Robusta supply now holds at 12 to 14 million 60-kg bags. The 2001 to 2005 oversupply crisis exposed the cost: planted area broke government plans and Robusta spread across 500,000 hectares of red basalt soil in the Central Highlands and Southeast.
The expansion displaced rubber, pepper, cocoa, and cashew plans and strained land and water. Vietnam's response, in seven reform strategies, covers shifting the balance of Robusta and Arabica, better technology, higher quality, stronger domestic demand, social equity, and cooperative organization, alongside work through the International Coffee Organization.
Vietnam, as the world's second-largest coffee producer, is renowned for its Robusta coffee, but it suffered a severe blow during the global coffee market oversupply crisis from 2001 to 2005. This article examines the ecological and market problems exposed behind the surge in Vietnam's coffee production, and elaborates in detail on its seven improvement measures, including adjusting the structure of Robusta and Arabica, improving key technologies, enhancing quality, promoting domestic demand, paying attention to social equity, and establishing cooperative organizations. It also introduces Vietnam's efforts to promote sustainable development by participating in International Coffee Organization activities. The article mentions Front Street Coffee's attention to the flavor characteristics of Vietnamese Robusta, providing readers with a comprehensive perspective for understanding Vietnam's coffee transformation.
Between 2001 and 2005, the global coffee market fluctuated violently, and the crisis of oversupply severely hit the incomes of coffee growers and related practitioners. In recent years, Vietnam's annual supply of Robusta coffee has remained at 12 to 14 million bags (each bag 60 kg). During this crisis, although Vietnam's coffee industry faced many challenges, it also accumulated experience and clarified its future development direction.
(1) Problems Highlighted in Vietnam During the World Coffee Crisis
Vietnam's coffee production began as early as the 20th century, but real development has been concentrated only in the last 25 years, with both planted area and production capacity achieving substantial growth. During these 25 years, Vietnam's coffee output increased 100-fold, making it the world's second-largest coffee producer. From 1994 to 1998, due to high market prices and substantial profits, many growers expanded coffee cultivation on a large scale, causing output to exceed the government's control range and planted area to exceed plans. This not only disrupted balance with other crops but also triggered abuse of land and water resources. In a short period, the planted area of Robusta coffee doubled and redoubled, with coffee plantations covering 500,000 hectares of fertile red basalt soil in the Central Highlands and the Southeast region, disrupting development plans for crops such as rubber, pepper, cocoa, and cashew. Another consequence of overplanting was that irrigating coffee in the dry season consumed large amounts of groundwater. In the 2004 dry season, some provinces in Vietnam were forced to abandon thousands of hectares of rice in order to save water to rescue thousands of hectares of coffee. These are all shortcomings in Vietnam's coffee industry. In addition, Vietnam supplies 1 million tons of Robusta green coffee beans to the market each year, greatly affecting the balance of supply and demand and international market prices, not only plunging nearly 1 million coffee growers in the country into difficulty but also implicating 25 million coffee producers worldwide. Too-low coffee prices led to declining incomes for growers, leaving them unable to meet living needs and reinvest. Because coffee could only be sold at low prices, sometimes even below production costs, growers gradually lost interest and became negligent in management or switched to other crops. This was a common negative phenomenon in Vietnam's coffee industry in the years after coffee prices peaked, and it was also the reason output began to decline after reaching its peak.
In the annual winter-spring season, severe drought in the Central Highlands (Vietnam's main coffee-producing region) caused coffee output to fall to its lowest point, with only 10 to 10.5 million bags expected in 2005/2006. Vietnam's coffee industry players drew useful lessons from this crisis, namely that they must benefit together with the world coffee industry. Facing difficulties, industry players have reflected on the lessons and, according to market changes, determined the correct coffee development strategy and embarked on a rational development track.
(2) Seven Improvement Measures
1 Research and Establish a Reasonable Industrial Structure for Robusta and Arabica Coffee
First, it is necessary to discuss the reasonable proportional composition of Robusta and Arabica coffee. Vietnam began developing Arabica coffee cultivation in 2005, mainly planting the Catimor variety with fewer leaves (a hybrid of Caturra and Timor). Therefore, it is necessary to carefully study the proportional composition of Arabica and Robusta. Vietnam's climatic conditions allow Robusta and Arabica coffee to be planted in different regions. Vietnam's land extends along meridians above 15° north latitude, providing a favorable environment for growing Robusta and Arabica coffee: Robusta coffee can be planted in the hot and humid southern region, while Arabica coffee can be planted in the mild northern mountainous areas or in southern areas above 800 to 900 meters in altitude. In fact, over many years it has been proven that Robusta coffee can develop stably in Vietnam. The high temperatures and heavy rainfall in the Central Highlands can make Robusta coffee trees grow quickly, and if irrigation is carried out in the dry season and during flowering and fruit setting, high yields can be ensured. The production potential of Robusta coffee on fertile red basalt soil has been fully tapped. Although Vietnam also has a large labor force and a hot and humid tropical climate that can fully develop Robusta production, it is necessary to consider the relationship between Robusta coffee planted area and irrigation capacity. There are still many undeveloped areas in Vietnam's highlands, especially in the north and northwest, which are very suitable for planting Arabica coffee. After years of investigation, several Arabica planting areas with good development prospects have been delineated, namely: the northwestern region, mainly in Dien Bien and Son La; the central region, mainly in PhuQuy in Nghe An province, Khe Sanh in Quang Tri province, and A Luoi in ThuaThien Hue province; and the southern region, mainly in ia Lai, M'Drak, Dak Nong, Lam Dong, and DaLat city. Bourbon coffee has excellent quality and is welcomed by consumers, and its aromatic flavor can rival the mild coffees of Central America. From this investigation, it can be seen that it is necessary to reduce low-efficiency Robusta coffee planting and expand Arabica coffee planting in areas with suitable ecological conditions. The key strategy for Vietnam's coffee industry is to reduce coffee planted area and output. Vietnam's coffee industry only needs to supply an appropriate amount of high-quality green coffee beans to the market each year to meet consumer demand; this is the correct direction for guiding Vietnam's coffee industry into the international coffee market.
2 Improve Key Technologies
In order to overcome the aforementioned shortcomings, Vietnam's coffee industry has focused on environmentally friendly production and biodiversity production. Coffee producers no longer use chemical fertilizers in pursuit of high yields, nor do they irrigate heavily in the dry season or cut down shade trees; at the same time, they also take into account environmental protection and food processing hygiene issues. The following measures are adopted for improvement: (1) plan and design coffee plantations to avoid soil erosion; (2) consider the relationship between coffee shade trees and production diversification; (3) use organic fertilizers instead of chemical fertilizers and link livestock raising with crop growth (there are suitable conditions in coffee plantations for raising dairy cows, which can in turn provide manure for the plantations); (4) use scientific methods to prune coffee trees; (5) increase cover crop planting in the dry season to preserve soil and moisture, and adopt moderate and effective irrigation; (6) pick coffee cherries when they reach appropriate ripeness, and do not pick unripe, overripe, dried, or fallen fruit; (7) minimize the environmental harm of wastewater from coffee processing; (8) actively publicize and promote advanced cultivation techniques to growers. The coffee industry has proposed "3 reductions, 3 increases, and 1 prohibition." The 3 reductions are: reducing costs, reducing pesticide use, and reducing the amount of water used for coffee irrigation; the 3 increases are: increasing shade trees, increasing organic fertilizers, and increasing pruning; the 1 prohibition is: prohibiting the picking or gathering of unripe, overripe, or dried fallen fruit. In addition, it is also necessary to register for the licenses and certificates required by consumers and issued by the UtzKapeh certification body (the Rainforest Alliance, which certifies organic coffee); and to participate in fair trade coffee.
3 Improve Coffee Quality and Produce Products with High Added Value
This is a weak point in Vietnam's coffee industry pointed out by World Bank experts in a report on Vietnam's coffee industry that needs improvement. It is necessary to strengthen the production of and investment in coffee products with high added value. The World Bank also believes that Vietnam should produce blended coffee products. Therefore, the production cost of coffee can be reduced and consumer needs can be met. If only green coffee beans and low-added-value coffee products are produced to supply the market, then Vietnamese coffee will lose competitiveness in the market.
4 Producing High-Quality Coffee Is an Inevitable Choice for Vietnam's Coffee Industry
Because the main coffee product is Robusta coffee, Vietnam will imitate the development programs funded by the ICO for African countries such as Côte d'Ivoire and Ghana, focusing on developing high-quality Robusta coffee production. The most important thing is to improve coffee processing technology and improve and stabilize coffee quality in order to attract consumers.
5 Promote Domestic Coffee Consumption
Domestic consumption of Vietnamese coffee should be advocated and given attention. From the experience of Brazil, Colombia, Indonesia, and India, it can be seen that it is necessary to formulate plans to promote coffee consumption within Vietnam, mainly to encourage and promote consumption by domestic consumers, so that annual domestic coffee consumption exceeds 1 million bags. The relationship between coffee and health should be introduced through organizing conferences, exhibitions, publishing books, papers, and newspapers; and domestic people should be encouraged to drink more coffee, etc.
6 Pay Attention to Society and Promote the Development of Coffee Production
Data from Vietnam's General Statistics Office in 2003 showed that Vietnam had 561,000 coffee-growing households, of which 46% were poor households and 30% were ethnic minorities (75% of whom were poor households). In the past few years, the coffee industry brought comfortable lives to many families, but today's crisis has left their lives in difficulty. Therefore, ethnic minorities in some areas began to switch to crops such as upland rice, corn, and beans to increase income. Coffee is no longer regarded as a tree species that can change poverty, nor is it a tree species that poor people can grow. Now only relatively better-off farming households can invest in large-scale coffee planting. At present, the issue that coffee industry decision-makers need to consider is how to create job opportunities and increase poor farmers' profits from coffee, which also helps eliminate hunger and reduce poverty.
The government should invest in building warehouses for growers to store coffee; when planting begins, the government should provide advance payments to growers at reasonable prices and purchase at high prices. When coffee prices are low, coffee growers will not sell all their coffee, which requires providing an information and quotation system for coffee trading in the main coffee-producing areas.
7 Establish Cooperative Organizations
At present, it is an appropriate time to establish specialized coffee cooperative organizations. These specialized cooperative organizations can be used to help growers input and output their products, jointly develop coffee processing products, and cooperate in developing coffee production. Profit cannot be obtained from these cooperative organizations; rather, profit is obtained from collaborative cooperation. Cooperation among specialized organizations also helps promote the establishment of a civil network for agricultural development and provides favorable conditions for spreading advanced production technologies. This is a new type of cooperative organization that helps growers understand the market, integrate into the market, and come into contact with relevant experts.
To establish such cooperative organizations, the government must necessarily sponsor funds and projects, combining specialized cooperation with the application of new technologies. Therefore, to overcome the disadvantages of individual growers, the coffee industry must link participants with the market and improve the competitiveness of Vietnamese coffee.
(3) Sustainable Development of Vietnam's Coffee Industry
Because Vietnam's coffee industry started late compared with other coffee-producing countries and was severely hit in this crisis, Vietnam strives to revive its coffee industry by participating in many activities of the following international coffee organizations: (1) Propose national coffee standards as the basis for market transactions. To date, Vietnam has issued nearly 30 national coffee standards. From 1986 to 2005, Vietnam's production technical regulation TCVN4193 was inspected, revised, and supplemented three times. The Vietnam Coffee-Cocoa Association actively participates in the activities of the ICO's Coffee Quality Committee (CQC) and jointly participated in formulating ICO Article 407; (2) With the help of the FAO, it has begun implementing a program on "improving coffee quality and preventing the formation of sooty mold and ochratoxin A contamination of coffee," and has also organized TOT (training of trainers) and TOF (training of farmers) courses. Technical backbones have been sent to various places for training and study, and laboratory instruments have been updated and upgraded, etc. The purpose of the above-mentioned activities is to protect the environment and ensure food hygiene; (3) With the help of E.D.E and foreign organizations from Germany, the Netherlands, Switzerland, and other countries, it has begun implementing PPP programs (public-private partnership schemes) that contribute to the sustainable development of the coffee industry. These three models of coffee production have been promoted in QuangTri, Son La, and Daklak; (4) Conduct targeted research on registered licenses and certificates recognized by Utz Kapeh. Vietnam has also specifically cooperated with international consumer organizations to jointly study the above content and contribute to the sustainable development of the coffee industry. In addition, Vietnam's coffee industry has also participated in the United Nations Environment Programme (UNEP) and the 4C program (aimed at promoting the sustainable development of the coffee industry and increasing growers' incomes). These activities all show that although Vietnam's coffee industry has many problems, it still wants to do its best to integrate into the world coffee family and hopes to obtain help from international coffee organizations and the world coffee family to promote the sustainable development of Vietnam's coffee industry.
Source: Institute of Scientific and Technical Information, Chinese Academy of Tropical Agricultural Sciences
The above content is compiled by CoffeeHunters, a coffee news website.
