Coffee in Vietnam

After 30 years of development, Vietnam’s coffee industry is facing severe challenges such as climate change; competition of other crops; need to replace ageing coffee trees; production costs are increasing higher while world coffee prices are at very low levels. Due to intense competition, Vietnam’s policy of coffee production has shifted to a new era with two objectives: firstly, to maintain its position as the world’s second largest producer and exporter of coffee green beans; secondly, to double the added value in coffee production by increasing productivity, quality and value addition.

Vietnam is a densely populated country located in South-East Asia sharing land borders with China (North), the Lao People’s Democratic Republic (North-West) and Cambodia (West). Sea borders include the Gulf of Thailand, the Gulf of Tonkin and the Pacific Ocean. The country covers a total area of 331,698km2 with a population of over 96 million. The climate is divided into three distinct zones, including subtropical humid climate in the North, tropical monsoon climate in Central and South-Central regions and tropical savannah in the Central and Southern region. Annual rainfall ranges from 1,200mm to 3,000mm, with annual temperature varying between 5oC from December to January and 37oC from April to May. The country is endowed with lands and climate favourable to agriculture, including rice, coffee, rubber, tea, pepper, soybeans, cashews, sugar cane, peanut, banana and many other agricultural products. Economic and political reforms undertaken in the late 1980s have led to a rapid economic development, such that Vietnam has become a lower middle-income country with annual GDP growth among the highest in the world.

Introduced by French missionaries in 1857, coffee cultivation has become entrenched in Vietnamese culture. Boosted by assistance from the government, coffee production increased from very low levels in the early 1990s to over 25 million 60-kg bags, becoming the second largest producing country in the world. The two main types of coffee (Robusta and Arabica) are produced in the country but Robusta accounts for 97% of total production. Total areas covered by coffee farming are estimated at 600,000ha, with the main coffee provinces situated in the Central Highlands, including Dak Lak (190,000 ha), Lam Dong (162,000 ha), Dak Nong (135,000 ha), Gia Lai (82,000 ha) and Kon Tum (13,500 ha). Other relatively small producing provinces are situated in the North-Western mountain, South-Eastern and North-Western regions. It should be noted that the Government has taken measures to stabilize coffee production areas at a maximum level of 600,000ha and efforts are now directed towards improving the quality of premium coffee beans. The production system is dominated by the unshaded method, although some farms include shade trees. Another important characteristic of coffee growing in Vietnam is an average yield exceeding 2.3 metric tonnes per hectare, one of the highest in the world.

The average value of coffee exports is around US$3 billion per year, accounting for over 10% of the country’s total agricultural exports, although representing only 1.2% of the total value of all commodities, goods and services exports. Vietnam’s main export destinations are Germany, Indonesia, Italy, Japan, Russian Federation, Spain and the United States of America,

Finally, one of the main challenges of the Vietnamese coffee sector is its limited domestic consumption and small processing activity. Other important challenges are climate change, which is exacerbating the spread of pests and diseases, and ageing coffee trees.

For more info.: http://www.vicofa.org.vn/country-coffee-profile-vietnam-bid385.html