(VNS) Luong Van Tu, president of the Viet Nam Coffee and Cocoa Association, spoke to the newspaper Thoi bao Kinh te Viet Nam (Viet Nam Economics Times) about the challenges facing the nation's coffee industry.
What should Viet Nam do to achieve sustainable development for the coffee industry?
In 2012, Viet Nam earned US$3.5 billion from coffee exports, accounting for 5 per cent of the nation's export value and generating jobs for about a million people, particularly those living in Tay Nguyen (the Central Highlands).
At present, coffee is grown on more than 500,000ha, but in the industry's development plan the Government wants to keep less than 500,000ha.
Regarding the quality of our coffee plants, I have to say that one-third of the plants are ageing and need to be replaced. This is an urgent problem we have to address.
It is forecast that in the next 10 years about a half of our coffee plants must be replaced. So if we want to maintain our export position in the world in the next 10-15 years we have to start planting young coffee trees immediately.
The coffee industry sees the imperative need to grow young coffee plants to replace the old ones, so why is the plan still only on paper?
There are two big challenges facing the replanting plan - the investment capital and capital to help coffee-growers during the five years it takes for the young plants to bear fruit.
As a matter of fact, to replant the coffee trees requires at least VND150-170 million ($7,100-8,100) per hectare. However, if we apply the new replanting technology, the time can be shortened to three years. Yet, the cost will increase to VND 250 million per ha.
This is a big problem for Vietnamese coffee-growers as they are small coffee producers.
Does the association plan to support the farmers?
Yes, we have sent a petition to the Ministry of Agriculture and Rural Development to establish a stabilisation fund for the development of the coffee industry. The fund will come from the coffee export revenue, plus the money mobilised from the coffee-growers.
We have also asked the Government to lend the money to farmers with low interest rates.
What should we do to add more value to our coffee?
There are two ways to add value to our coffee.
Firstly, increase the value to our coffee bean exports. To do that we have to increase the volume of coffee beans meeting the 4C and UTZ standards. If our coffee beans have been certified with these two standards, we can earn $40-50 more per tonne.
Secondly, persuade the farmers not to harvest the beans before they have matured or else the yield loss will be considerable; persuade the farmers to register their coffee under the Buon Ma Thuot trade mark while investing more money in bean processing, including roasting and instant coffee.
Does the association have any plan to help farmers select the right time to sell their coffee in order to earn more money?
There is only one harvesting season for coffee beans. But the selling can take place all year around. I must say that over the last few years, with lessons learnt from the past, they know when they should sell their coffee.
In addition, the State Bank of Viet Nam has adopted a policy to lend each household credibly growing coffee VND 50 million and the loan term is longer than it was in the past. And, of course, the interest is also low.
This year, coffee plantations have been struck by drought. Do you think this will affect the yield?
Yes. The farmers have completed their coffee harvest and the bean yield is reported to have dropped by about 25 per cent compared with previous years. But by now the farmers have already sold about 60 per cent of their stock.
According to a report from Dak Lak Province, the drought this year is very severe. As a result, tens of thousands of hectares of coffee are affected. So are the coffee plantations in Lam Dong Province.
Coffee enterprises, which are members of the association, project that the yield is likely to fall by 30 per cent.
Though there are many challenges ahead for the coffee industry in its endeavour to develop sustainably, does the association have any strategy to help the industry achieve that objective?
In addition to the proposal on having policies to help farmers to replace ageing coffee plants with younger ones, our association spends about VND2 billion each year to buy coffee seeds to give to the farmers and talk to them about the importance of replacing ageing plants.
We have also asked the Government to adopt policies to support the development strategy. — VNS