Vietnam: Strategically Planning for Coffee

September 18, 2008, 14:12
The Ministry of Agriculture and Rural Development (MARD) has approved a plan to increase the coffee sector’s competitive capacity through 2015 and a vision for 2020 with investment capital reaching nearly VND33,000 billion.
The plan aims to ensure that all Vietnamese coffee products are produced in line with international quality standards and traded on an equal footing in the international market.

The State budget, funds a major part of the total VND33,000 will be used to implement transport projects in central highland provinces and coffee growing areas in central and north-western regions. Investment will be poured into the building of reservoirs and canal systems to ensure that 75 percent and 100 percent of coffee growing areas will be irrigated by 2015 and by 2020, respectively.
In addition, ODA funding worth VND13,075 billion will be spent on intensive farming for 200,000 hectares of coffee in some central highlands provinces including Dak Lak, Lam Dong, Gia Lai and Dak Nong and 6,000 hectares of tea and coffee in Lam Dong, Quang Tri, Thua Thien-Hue and Son La.
Approximately VND18,585 billion from businesses and individuals will be used to purchase machines and processing equipment.
The Head of the Agro-Forestry and Aquatic Product Processing and Trade Department, Le Xuan Ly, said that by the end of last year, Vietnam’s coffee growing area reached more than 500,000 hectares, generating a total output of 1 million tonnes, while its export turnover hit more than US$2 billion.
The coffee sector is subject to its limitations, such as high production costs and poor method of cultivation and harvest as well as processing and preservation.
Around 40-45 percent of coffee processing units have failed to ensure the quality of coffee products under international standards. Therefore, Vietnamese coffee’s selling prices are far from matching their potential, due to production costs and real quality.
Therefore, one of important target is to improve the quality of coffee. Coffee cultivation areas will remain stable at 450,00-500,000ha with productivity of 2-2.5 tonnes per hectare. Old and stunted coffee will be replaced by better varieties. The sector will also apply intensive farming methods and improve sustainable production of standard coffee.
The project aims to complete a system for better delivering information about business environment, a distribution system and pricing to actively apply e-commerce in domestic and international transactions.
By 2015 Vietnam will put two coffee trading floors into operation in the Central Highlands and Ho Chi Minh City, apply modern transaction methods such as deadline transactions to prevent market fluctuation risks and put Vietnamese coffee on international trading floors.
Of the utmost concern is that the current coffee cultivation area of 520,000 ha will enable the agricultural sector to shelve its zoning plan.
Le Xuan Ly explained that the sector currently harvests coffee on 495,000 ha out of 520,000ha and will reap the remaining 25,000ha in the next three years. However, provinces should retain scheduled cultivation areas to ensure economic benefit for growers and businesses, Mr Ly added.

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