Coffee task force (Production Sub-committee under VCCB) WEF meeting, Hanoi 8th of December 2014

MARD PUBLICPRIVATEPARTNERSHIP WASI NAEC Secretariat:

PPP Coffee Task Force Objectives By collaborating with Agri-finance WG “Make Vietnam the Recognized Reference of Robusta” BEST PRACTICES: Enhancing quality, productivity, environmental and economic sustainability, VALUE CHAIN LINKAGES: Linking farmers with input companies and coffee buying companies FINANCIAL LINKAGES: Linking farmers/value chains with financing institutions TECHNOLOGY: Enhancing farmer knowledge and choice regarding new technologies FARMER AGGREGATION: Forming farmer groups and cooperatives to harness market efficiencies 3

Content Results from the field 2015 strategy Pillar I, Pillar 2 and Pillar 3 Next steps 4 Development of farmer groups

From the field: Coffee demos from 2010 to 2014 Each PPP demo from 0.2 to 0.5h ha Each control demo also from 0.2 to 0.5 ha respectively

From the field: 75 demos platform, the ideal place for: - conduct practical trainings - sharing knowledge between experts, extensionnists & farmers - solving practical issues eg. pruning, nutrition, plant health - building the confidence of the extensionnists in the PPP programs PPP experts field visit

Sustainability: Coffee Water Footprint is included into agenda In 2014, PPP applied “reduce the coffee water footprint programs” to all farmer leaders: – “To raise awareness among smallholder coffee producers on sustainable water use; 400liter/plant/irrigation round is adequate to achieve economically viable and sustainable yields up to 4 metric ton/ha”. – Delivered this programs to all PPP farmer leaders through ToT training, Technical tours. – Suggest farmers reduce the irrigation from 1,391 liter/plant/irrigation to 470 liter/plant/irrigation as the sustainable crop husbandry practices. Result: base on the farmer books – Dak Lak: 14/15 – Dak Nong: 26/26 – Gia Lai : 10/14 – Lam Dong: 15/19 Farmer leaders applied this programs successfully and saving 30% water. (400 ~ 470 liter/plant/irrigation in the harvest )

Sustainability: Soil pH and optimum pH for nutrient uptake pH of PPP demo (Daklak) Optimum pH for coffee

From : Hanninghof R&D center, Yara International, Germany and IAS lab, HCMC,Vietnam = low = slightly below optimum = optimum = high Guidelines : LEAF ANALYSIS REPORT : Unbalanced level of nutrients in the leaves with excessive levels of Aluminium and Iron Sustainability: Monitoring balanced nutrition Leaf Analysis of Coffee demos

Sustainability: PPP demos optimize and balanced fertilization 17.9% 23.2% Fertilizer rate (kg/ha) Quantity of fertilizer applied on demos

6 demos PPP program: 304 kg N/ha 5.2 t g.b./ha Control program: 484 kg N/ha 4.8 t.g.b/ha From : Yara Research Center, Haninghof, Germany kg CO2eq/t green bean 661 1,487 Control demos PPP demos Sustainability: PPP demos reduce by 63% carbon gas emisson

PPP Progress Update: Demos are showing encouraging results Mr Nguyen Duy Thanh, Dak R’lap, Daknong Extensionnist Mr Doan Van Huan, Lam Ha, LamDong Farmer leader « less fruit drops this year » « homegenous flowering & fruit set » « bigger cherries » « Expected Yield : > 4 T/ha » « saving labour cost, no need to burry the fertilizer» « better fertilizer solubility » « greener leaves, longer branches » « expected Yield : 4,5 T/ha»

PPP Progress Update: Average Yield in PPP demo increase from 9-14% Overral yield increase: 480 kg/ha (11.4%) Net income increase: +18,252,000 vnd/ha Overral yield increase: 480 kg/ha (11.4%) Net income increase: +18,252,000 vnd/ha % % % Calculated coffee price: 38,0000 đ/kg

PPP Progress Update: Technical trainings and knowledge transfer 2ToTs for PAECs extentionists and farmer leaders  Part 1: Review PPP ToT training 24th -26th Aug,2014  Part 2: Pests Management and lesson learnt  Part 3: Nutrition management  Part 4: Update PPP COOP model 72 farm groups have conducted quarterly training for farmers  ~280 Farmer Field Schools over 4 provinces  ~10,200 training days delivered

From the field to Bean Quality… PPP demos and Control demos are under harvesting and calculating yield Under calculating of yield but visual feedback from farmers and agronomists Healthier tree and shinier green leaves More revered branches for next crop Bigger and shinier cherries

AGREED 2015 STRATEGY Disseminating PPP practice via demo  Farmer group model  Good farming practice  Value chain  72 demos Consolidating PPP Coop  PPP Coop model with satellite farmer groups  2 coops in 2015 Cooperation with Agri finance WG  Transaction model: Coop-bank-company  Micro finance solutions EXPAND THE PPP MODEL, TEST FARMERS FINANCING SOLUTIONS, MONITORING GROUP and COFFEE COORDINATING BOARD “Make Vietnam the recognized reference of Robusta”

Pillar I: Demos are showing encouraging results : Mr Nguyen Duy Thanh, Dak R’lap, Daknong Extensionnist Mr Doan Van Huan, Lam Ha, LamDong Farmer leader « less fruit drops this year » « homegenous flowering & fruit set » « bigger cherries » « Expected Yield : > 4 T/ha » « saving labour cost, no need to burry the fertilizer» « better fertilizer solubility » « greener leaves, longer branches » « expected Yield : 4,5 T/ha»

Pillar I: PPP Good farming practice TraditionalPPP VarietiesOld tree, less than 3 tons/haTR4 (yield 7.3 tons/ha), TR12 (4.3 tons/ha) IrrigationOver-irrigation (1300l/tree)Based on the tree & farm conditions ( up to 40% water saving (439l/tree) Organic fertilizerAlmost no compostPromote on-farm composting from coffee husk (1.5 tons/ha) Chemical fertilizerUnbalanced nutrition and high amounts of fertilizers Balanced nutrition based on soil & leaf analysis and more efficient fertilizers ( -15 %) CPMPesticides with doubtfull qualityUsing fungicide to avoid berry drop Carbon footprintMin. 1,8 T CO2 per ton green bean Min. 0,8 T CO2 per ton green bean (- 54%) Yield & farmers income (per Ha) 3,5 T 3360 USD 3,85 T ( + 11%) 4229 USD (+ 869 USD) Farmer groupingIndividual farmersFarmer group, TOT training. Upgrade to Coop

Pillar II: Operating Model of PPP Farmer Group Technical Group DARD/PAEC “Extensionist” Farmer Group Leader Farmer Relationship: Management support Relationship: Technical support Tech support, organization and management support 19

Pillar II: Operating Model of PPP Coop Input company Farmer Group Coffee buying company Management Board MOU Coop’s warehouse Large quantity Wholesale price List of farmers Buy input List of farmers Sell coffee MOU Large quantity Price with premium Wholesale model – From input to output Payment Delivery 20

Pillar II: PPP Coop – The flower model Satellite group CENTRAL COOP Satellite group -1 Central coop for each province (legal entity) -PPP farmer groups will play the role of satellite mini coop -Order for buying input, selling output will be sent to central coop => central Coop will achieve the volume target of companies to enjoy the wholesale price, then, share the benefit to satellite

Pillar III: Opportunity to Collaborate with Agri-Finance TF FARMER GROUPINPUT COMPANY Small loanBorrow small loans at certain crop stages Marketing & SaleSell in large quantity via bank transfer Deposit/savingOpen bank account for farmers Overdraw/loanInput investment to get higher yield COOPCOFFEE BUYING COMPANY Medium loan, risk management Farmer organization in coop Marketing & salesParticipate in farmer group/coop meetings Loan/Payment service Buying inputs, selling coffee, improve cash flow Risk managementPre-screen borrowing farmers 22

Pillar III: Coffee Crop Cycle and Financial Needs  Coffee farmer don’t need financing all the time. The need of money varies based on the development of coffee trees:  For 1ha coffee farm, farmer will need 5 mio VND in July and 8 mio in Sep. Around 70% coffee farmer will need small loans (350K out of 500K farmer household) New crop Jan March Blossom May Form cherry July Sept Develop size of bean Develop size of cherry Dec End of Crop Farmer don’t need to be financed Need to be financed 50% Need to be financed 100% 23

24 Commitment of stakeholders Alignment, listen and accept sharing among public and private sectors Value chain integration: Producers, Roasters, Intermediaries, Institutions, Farmers. Standardization or diversification Lack of resources Lesson learned and challenges for the development of PPP (and Coffee Sub-Production Committee)

04/2014 … /2014 PPP coffee taskforce Share best practices Share knowledge Demos ToTs Farmer trainings Sub-Production Committee PPP coffee taskforce Applied Crop nutrition package on demos Crop protection solutions Composting coffee husk and organic fertilizer trainings Water saving in the agenda Conduct outreach through ToTs and farmer trainings Sub- Production Committee Coops development NEXT STEPS

Disseminate good farming practice to boost the production of sustainable coffee: Need support of public sector (National Curriculum) Pilot PPP cooperatives - Connect PPP farmer groups into central coop: Need the support of public sector (Local meeting between authorities, traders, banks, coop and companies to support PPP coop model) Pilot the micro financing model with Agri-finance task force Attract more partners within the Production Sub-Committee Cooperate with Growth Asia - WEF

Thank you