1. The Vietnamese Coffee Sector Author: Dr. Dave A. D’haeze Date:14 February, 2015 Event:African Fine Coffee Conference Location: Nairobi, Kenya

2. The Vietnamese Coffee Sector Author: Dr. Dave A. D’haeze Date:14 February, 2015 Event:African Fine Coffee Conference Location: Nairobi, Kenya

3. The Vietnamese Coffee Sector Author: Dr. Dave A. D’haeze Date:14 February, 2015 Event:African Fine Coffee Conference Location: Nairobi, Kenya

4. The Vietnamese Coffee Sector Copy and Paste? Author: Dr. Dave A. D’haeze Date:14 February, 2015 Event:African Fine Coffee Conference Location: Nairobi, Kenya

5. Overview Challenge - Coffee Supply Endangered Vulnerability of the (African) Coffee Sector The Vietnamese Coffee Experience Opportunities for the African Coffee Sector The Road Ahead - Suggestions

6. Challenge – Coffee Supply Endangered Supply Demand 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 30 mio. bags/year more by 2020.... and this in times of global climate change.... and increasing competition for natural resources.... and inappropriate support services

7. Vulnerability of the (African) Coffee Sector Core Sector Problems (not only in Africa) Limited new production areas (land scarcity & competition for other crops) Low smallholder productivity (20-50% of the potential yield) Poor livelihood conditions for coffee producers Natural resources degradation (soil erosion, water scarcity,…) Ageing coffee farmers and ageing coffee trees Next generation’s interest in coffee farming is low (due to better education) Lack of economies of scale in producing countries Access to finance is limited Climate Change may lead to supply & price shocks & insecure incomes Support services limited; programs are not delivering impact

8. The Vietnamese Coffee Experience History 1857: French missionaries brought coffee to Vietnam 1920’s:Suitable coffee areas discovered in Central Highlands 1940:Area increase to 10,000 ha 1954: North Vietnamese took over French plantations and transformed to 24 state cooperatives 1980: Production doubled to 12,000 Mt (circa 1 Mt/ha) 2014:Circa 500,000 ha; 500,000 coffee farming families or 2 mio. people Productivity 2.3 Mt/ha (ICO); new varieties up to 6-8 Mt/ha.. Gia Lai Dak Lak Son La Quang Tri Ha Noi Lam Dong Ho Chi Minh

9. The Vietnamese Coffee Experience Demographic engineering 1943:80,000 inhabitants, 95 % minority in Dak Lak province 1975: Through resettlement policy 586,000 people migrated to 225 New Economic Zones (61 % Kinh) Late 1980’s:350,000 spontaneous migrants; driven by high profitability of coffee production  economic growth rate of 12% in Dak Lak 2003:> 2 mio. inhabitants (Dak Lak) 2012:> 5 mio. Inhabitants (CH)

10. The Vietnamese Coffee Experience Agricultural Policy Engineering Before 1981:Farmers worked for state coops; no private landownership 1981: Coop production contracts; 3 ha; production over quota for private sales 1986:“Doi Moi” or economic reforms  centrally planned to market-based economy Tribal lands = state property, available for redistribution Slash and burn culture forbidden Collective landownership banned 1988: Complete land exploitation = private landownership; 3 ha; 15 y 1993:Transfer of land 3 ha annuals, 20 y No limit for perennials, 50 y No land tax for perennials during first 4 years

11. The Vietnamese Coffee Experience Research & Development 1990’s:Establishment of a long-term coffee breeding program Establishment of an extension network at commune, district and provincial level 2004:Opening for private sector investment and start of PPP projects after coffee crisis (e.g. Nestle, DEMB, MDLZ,…) 2005: Strenthening of the extension methods & Approach  participatory & adult oriented  practical & demonstration oriented 2009:Design of a national sector program in cooperation between public and private sector stakeholders 2013: Establischment of the Vietnam Coffee Coordinating Board

12. The Vietnamese Coffee Experience Achievements Source: ICO 2014

13. The Downside 1998 2003 The Vietnamese Coffee Experience Source: GSO 2000

14. Monoculture  risk for pests & diseases Excessive irrigation  water scarcity The Vietnamese Coffee Experience More rains during harvest because of changing land use pattern  product quality decrease Increased erosion The Downside

15. Opportunities for the African Coffee Sector Comprehensive value chain interventions Farmer organizations (formation & strengthening; improved management, administration, operations, governance) Post-harvest (quality, infrastructure, outturn ratios, sustainable processing) Cross-cutting and Complementary interventions (gender equity, natural resource conservation; climate change adaptation, youth, food security) Production (yields, production costs, rehabilitation, soil fertility, inputs, IPM, sustainable agriculture, farm management) Access to financial services (financial management, credit access, linkages to service providers) Commercialization & market access (operations, marketing, relationships, value addition) Tangible Impacts Production increase Income Increase Quality improvement Climate Change resilience Production efficiency increase

16. Strategic Dialogue & Up-Scaling Individual stakeholders cannot address the challenges facing the sector by themselves Programs should thus be designed to spur further action, investment and effectiveness: Engagement with key stakeholders Projects as models for coffee sector and rural development Significant impact and high Return on Investment (ROI) Projects as catalysts that generate widespread attention and investment that bring about major sector-wide change Opportunities for the African Coffee Sector

17. Potential Impact – Increased Yields + 7 %

18. Opportunities for the African Coffee Sector Potential Impact – Improved Fertilizer Management

19. Potential Impact – Return on Investment Opportunities for the African Coffee Sector

20. The Road Ahead - Suggestions Africa can fill the global coffee supply gap Attract Public and Private investors Focus on a Generic and Pragmatic approach 2-year intensive farmer training program Simple techniques can double yields e.g. pruning, fertilization,… Simple techniques can double incomes Create favorable conditions for coffee growers and their children in Africa. E.g. economies of scale E.g. access to finance E.g. access to land

21. Let’s Close the “GAP” together Thank You

22. www.hrnstiftung.org dave.dhaeze@ede-consulting.com