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Policy and application of technology to achieve high
yielding coffee farm in Vietnam
Dr. Nguyen Huu La.
Northern Mountainous Agriculture and Forestry Science Institute (NOMAFSI), Vietnam
Banda Aceh 19th – 21th November 2014
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Information about Vietnam’s coffee industry
First, there are about 580 thousand hectares of coffee in Vietnam, of which more than
90% of area and yield are planted and harvested in the Central Highlands provinces, i.e.
Dak Lak, Lam Dong, Gia Lai, Kon Tum and Dak Nong. In which, there is about 530
thousand hectares of robusta coffee and 50 thousand hectares of arabica coffee (almost
area of arabica coffee belong to the Northern Mountainous)
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Information about Vietnam’s coffee industry
Out of the robusta coffee area, around 150 thousand hectares which was grown in 1980-1982
has turned to be old and stunted and needs liquidating for new plants. Each year, there is 10%
area of old coffee trees that need liquidating.
According to investment performance in 2012, the cost incurred for a hectare of coffee after
three years (one year of planting and two years of caring) is around 200 million VND
(10.000USD). There is a need for a capital of 30 trillion VND for area of old coffee trees.
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Information about Vietnam’s coffee industry
Second, Vietnam is processing approximately 10% of coffee yield per year, which
including roasted and deeply processed products (i.e. soluble coffee). Investors in the
field of deep processing industry which has established brand in Vietnam include
Vinacafe and Trung Nguyen (being domestic brands) and Nescafe (as foreign brand). The
roasted products with established brands in Vietnam are Thu Ha (in Gia Lai), Dak Ha (in
Kon Tum), Vinacafe and Trung Nguyen, etc.
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Information about Vietnam’s coffee industry
o
The Vietnamese processing industry has been developing at a low level due to the
requirement of a large amount of capital investment while the financial conditions of
Vietnamese investors are limited.
o
The build-up of markets in Vietnam and overseas remains a very initial stage. Given this,
though Vietnam is the second largest coffee producing country in the world, Vietnam has yet
been granted with the right brand range.
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Information about Vietnam’s coffee industry
Third, the current status of purchasing and exporting coffee seems more difficult. For
the period from 2005 to 2009, Vietnam exporters have exported approximately 70 to 80%
yield.
Due to the difficult financial situation and high interest rates, from 2010 to date, the
export volumes of domestic firms has decreased. On the other hand, FDI companies
have purchased and exported more than 50% of the annual yield.
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Policy to achieve high yielding coffee farm in Vietnam
Applied policy
The Vietnamese Ministry of Finance has applied many incentives in respect of taxes,
land rental, land use and extension of export credit for coffee
For tax policy, where the commercial business establishments paying VAT under the
credit method sell agricultural, forestry and aquatic products which have not been
processed into other products or preliminarily processed for other businesses
adopting credit method, they are not required to issue VAT invoices. Otherwise, if they
sell the products to households, individuals or other organizations paying VAT under
the direct method or being VAT non-taxable subjects are still subject to VAT.
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Policy to achieve high yielding coffee farm in Vietnam
With regard to the land rental policy, for land used for agricultural producing purposes
(including land for planting coffee), the Government leases land and collect annual
land rental or grants land with collection of land use fees.
Regulations on land rental payment, the land rental exemption incentive with the
exempted period of 3 years, 7 years, 11 years, 15 years, or the whole rental period
shall depend on whether such investment projects fall under the list of sectors
entitled to investment incentives (encouraged investment or specially encouraged
investments) or geographical areas entitled to investment incentives (with difficult
socio-economic conditions or specially difficult socio-economic conditions) in
accordance with the land rental regulations. Vietnam coffee plantation belonging to
the two priority areas
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Policy to achieve high yielding coffee farm in Vietnam
For regulations on payment of land use fees, preferential policies for land use fees,
including 20%, 30% or 50% reduction or exemption shall depend on whether the
projects fall under the sectors entitled to investment incentive (encouraged
investment or specially encouraged investments) and geographical areas entitled to
investment incentives (with difficult socio-economic conditions or specially difficult
socio-economic conditions) per the land use policy
In addition, the Government providing regulations on the policies to encourage
enterprises investing in agriculture and rural development stipulates that the
reduction/exemption incentive for land use shall be based on whether the projects are
considered as:
(i)
special encouraged agricultural investment project,
(ii)
agricultural project entitled to investment incentive,
(iii)
Or encouraged agricultural investment project; and agricultural projects if being
one of three project categories above shall be entitled to the lowest land rental per
the framework announced by the provincial-level People's Committees.
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Policy to achieve high yielding coffee farm in Vietnam
Freeze debts for business entities:
With regard to the temporary storage of coffee, the Prime Minister for allowing the
temporary storage where the coffee price falls under the cost price.
At the same time, assigning the Ministry of Agriculture and Rural Development to
cooperate with the Coffee Association of Vietnam for deciding the buying amount and
buying method based on the principle that Business entities shall purchase coffee for
temporary storage and are responsible for their own business results. The fund for
buying coffee for temporary storage shall be loaned by commercial banks with
reasonable interest rates as guided by the State Bank of Vietnam.
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Policy to achieve high yielding coffee farm in Vietnam
To freeze debts for the coffee trading enterprises, the Government has provided a
number of specific regulations, i.e. extension of credit for coffee exports under
Resolution No. 83 / NQ-CP of the Government, Decree No. 133/2013 / ND-CP, amending
and supplementing some of previous decrees on investment credit and export credit
by the Government. It is stipulated that "To extend the loan duration to a maximum
period of 36 months for export credit from the Government for the group of export
coffee beans, processed cashew nuts, vegetables and seafood if the enterprises are in
a loss position in 2011& 2012 and cannot arrange fund for repayment scheme in
accordance with the loan agreement signed with Vietnam Development Bank ".
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Policy to achieve high yielding coffee farm in Vietnam
Continue applying comprehensive policy:
For the cultivation of coffee: there are loan policies of the Government to re-plant the
aging coffee area. Enhance the implementation of projects for sustainable coffee
production and coffee production programs which are certified according to the
principles of Utz, 4C, etc. to improve the knowledge and practical skills of farmers for
sustainable coffee production.
For coffee processing: planning for the development of coffee processing at all levels,
including nucleus coffee, roasting and processing soluble coffee, which meets the
standard requirement for product quality and quality control to ensure food safety. At
the same time, there are credit policies of special incentives for projects involved in
the processing of soluble coffee, combined with marketing and build-up of
sustainable consumer markets both domestically and abroad.
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Policy to achieve high yielding coffee farm in Vietnam
For purchasing and exporting coffee: apply a comprehensive policy, from purchase
for temporary storage to the establishment of coffee exporting enterprises having
advantages of finance, warehouse and experience. Not allow enterprises racing to
produce coffee exports regardless of their limited conditions on human resources,
finance and facilities. Temporary storage policy need to be developed and
implemented on a long-term basis for enterprises involved in both temporary storage
credit plan and temporary financial storage mechanisms to control the consumption
volume in the year, in order for not being affected by foreign investors and
enterprises. There is a need for financial fund for industry insurance to partially guide
and support all processing stages, from producing, processing to export.
Large enterprises producing and trading coffee in Vietnam, i.e. Vietnam national
Coffee Corporation, really need the support from the Government for dealing with
existing shortcomings to stabilize, develop and become the "leading" enterprise for
developing Vietnam coffee brand.
cacoa
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macadamia
avocado
Application of technology to achieve high yielding coffee
farm in Vietnam: (1) Restructuring of plant
Change to other crops for the areas which are planted not in accordance with the plan,
or with soil not suitable with coffee production, lack of water resources and harmed by
nematodes, excepting for areas with thin layer cultivation but have rising groundwater,
other areas should be converted to cocoa, macadamia or fruit trees such as avocado
trees etc..
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Application of new cloned varieties
Gradually replace old coffee varieties by the cloned varieties:

9 clones of robosta coffee, TR4, TR5, TR6, TR7, TR8, TR9, TR11, TR12, TR13;

1 cross-breeding of robosta coffee, TRS1

2 cross-breeding of arabica coffee, TN1, TN2
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Clone of robosta coffee: TR4
Growth: healthy plant growth, strong branching, slightly shaking branches
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: yellow green
Fruit: reverse egg shape, orange red color
Yield: 6-7 tons/ha; Resistance to rust: high
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Clone of robosta coffee: TR9
Growth: healthy plant growth, strong branching, slightly shaking branches
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: dark green
Fruit: elongate shape, dark red color
Yield: 5-6 tons/ha; Resistance to rust: high
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Clone of robosta coffee: TR11
Growth: healthy plant growth, little branching, slightly oblique branches
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: yellow green
Fruit: elongate shape, dark red color
Yield: 5-6 tons/ha; Resistance to rust: very high
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Clone of robosta coffee: TR12
Growth: healthy plant growth, little branching, slightly shaking branches
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: green
Fruit: elongate shape, pink red color
Yield: 5-6 tons/ha; Resistance to rust: very high
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Cross-breeding of robosta coffee: TRS1
Growth: healthy plant growth, strong branching
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: green
Fruit: light elongate shape, pink red color
Yield: 5-7 tons/ha; Resistance to rust: very high
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Cross-breeding of arabica coffee: TN1
Growth: healthy plant growth, oblique branches, narrow canopy
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: dark green
Fruit: light elongate shape, pink red color
Yield: 5-6 tons/ha; Resistance to rust: very high
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Cross-breeding of arabica coffee: TN2
Growth: healthy plant growth, strong branching
Tree height: the average;
Leaf: medium size, lanceolate shape; Mature color leaf: green
Fruit: light elongate shape, pink red color
Yield: 5-6 tons/ha; Resistance to rust: very high
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Planting shade trees
Coffee could grow well in the lighter shade, so it is necessary to plant shade trees in
coffee fileds. To increase the additional income, the fruit trees can be intercropped such
as durian (Durio kutejensis), avocado (Persea americana), ... There can combine many uses
of shade trees such as shade trees and the stands for pepper, for example Senna
siamea, Leucaena leucocephala... . A new plants can be considered to have the greatest
potential for coffee in the Western highland was macadamia integrifolia, this plant is
being tested as for shade trees, windbreaks for coffee and high economic value.
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Strengthening manure application
Strengthening manure application and reducing chemical fertilizer. The research results
showed that in many coffee fileds, potassium concentration was increased from 4-8
times higher than the initial stage of planting coffee. Overuse of chemical fertilizers are
making many pests arise, particularly harmful of root nematodes. To improve the
efficiency of the use of mineral fertilizers, not only to enhance organic fertilizer, but also
to use apropriate dose and balanced elements of foliar fertilizer.
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Use pesticides
Only use pesticides when over economic damage level and only spray for the trees
which have diseases, no spraying for whole field to protect the natural enemy. Avoid
spraying insect control regularly. Use the right type pesticide, right dosage, right time
and manner for each targeted pests and harmful diseases.
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Watering the plants
We also need to pay attention to watering the first time for coffee. If watering the coffee trees
which are not in the dry period and undifferentiated stem flowers, it is not only waste but also
make coffee blooming in long time, resulting to early ripen fruit and prolong time, making
difficultíe and high costs for harvesting and processing. Recent researches showed that the
amount of irrigation water applying for the first time about 500-550 m3 / ha and next time after is
about 450 m3 / ha with irrigation cycle from 20-25 days can be suitable to ensure growth and
development of coffee and the best economic efficiency.
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Saving irrigation water
Enhancing shade trees, organic fertilizer and mulching are also very important measures
to save water costs for coffee. Besides watering methods traditionally, research to apply
modern irrigation technologies combined with fertilizer such as drip irrigation to save
water and labor costs is needed.
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Improving product quality coffee after harvesting
In fact over the present years Vietnam's coffee quality mostly is affected by the process
of harvesting and drying. So one of the solutions to improve productivity and quality of
the harvest to reach the correct ripen time.
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Improving product quality coffee after harvesting
However, harvesting in the right time requires more labor, especially in the coming years
as the country has been becoming an industrialized country, the problem of labor
shortages in the agricultural sector in general and in coffee in particular increasingly
aggravated.
Vietname farmers Hope to harvest coffee by machines
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Reorganizing of production
In the current integrated world, coffee consumers require clear origined products and must
have certificate of quality, so the reorganization farmer struture such as formation of
cooperatives in the coffee industry is essential. Only reorganization of the new production
conditions apply advanced technology, financial support, extension, improve productivity,
quality and branding or certification for quality each material zone. And just reorganizing
production, the linkage between "4 groups" became realistic (scientists, businessmen,
managers, farmers).
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Thank you for your attention
Banda Aceh 19th – 21th November 2014