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Vietnam coffee belt to expand after price rise

Farmers in the Central Highland coffee belt are expanding their farming areas to take advantage of rising coffee bean prices despite concerns about the environment.

Coffee bean prices reached a 13-year high of VND40,000 (US$2.50) per kilo earlier this year, as major exporting countries experienced a drop in production.

As a result, the 434,000 hectares of coffee plantations in the Central Highlands, which produces 80 percent of Vietnam’s coffee output, is forecast to expand by more than 22,000 hectares this year.

The last peak, when the beans were priced at VND35,000 ($2.19) per kilo in 1995, also led to a boom in coffee farming in the Central Highlands.

But a surplus of coffee sent prices to a record low of VND4,000 ($0.25) per kilo four years later.

This past lesson does not seem to scare local farmers, including Ama Thai from Krong Pach District.

“Coffee farming is much more profitable than farming corn, beans or watermelons,” Thai said.Prices would not drop as much as in 1999 “because we joined the World Trade Organization,” he said with confidence.

Farmers like Ama Thai have rushed to buy seeds and seedlings while waiting for the rains, which usually come this month or next.

The Central Highlands Agriculture and Forestry Science and Technology Institution (AFSTI) said it had sold 10 tons of seeds in the first quarter of this year.

It sold only five tons last year.

Another major provider, Duc Anh Company, said it had sold 170,000 coffee seedlings this year, more than four times the amount last year.Company director Le Duc Tien said he “has never seen people rushing to buy seedling so early [in the season] since the company was set up in 2002.”

But expansion of coffee farming was threatening forests in the area, he warned.

“Wherever coffee was grown, forests have disappeared,” said Tien, who used to be an agricultural engineer.

Meanwhile, AFSTI Deputy Director Le Ngoc Bau warned that many providers were selling low-quality seeds and seedlings, which will lead to low and poor-quality coffee yields.

Sustainable farming

After the tragic drop in prices in the last decade, authorities and coffee traders have agreed to keep coffee farming area at about 500,000 hectares to ensure sustainable development.

Besides a potential surplus and poor quality yields, the expansion of coffee farming could also create water shortages, they said.

Agriculturists have said coffee bean yield and quality depend mostly on watering.

Coffee farming demands three or four times the volume of water of other crops – and the Central Highlands has experienced many droughts in recent years.

Local agricultural agencies have encouraged local people to stop expanding the coffee farming area and instead grow other drought-resistant crops.

Their efforts have so far been in vain.

AFSTI Director Hoang Thanh Tiem said it was hard to prevent the expansion of coffee farming if the government “only gave a general guideline without a specific assistance policy.”

In a pilot project seven years ago, people of Tung village in Dak Lak Province stopped planting coffee trees in a 70 hectare area and grew cocoa trees instead.

The project failed later due to the lack of funding and buyers.

Nguyen Hoai Linh, chairman of Dak Lak Province’s Ea Ral Commune, where the coffee area expanded by 93 hectares last year, said the authorities could warn but “it’s up to the people to listen or not.”

“The people have planted more coffee because they think it makes a good profit. No authorities can tell them to grow a certain kind of plant,” Linh said.

MORE ABOUT THE INDUSTRY

■ Vietnam is the world’s biggest exporter of robusta coffee bean, which is used in instant coffee and espresso.

■ Coffee exports earned US$1.5 billion last year.

The Vietnam Coffee Association expects annual export revenue to average US$1.5 billion to $1.6 billion between 2008 and 2010.

■ Dak Lak and Lam Dong are Vietnam’s top coffee-growing provinces, accounting for half the nation’s output.

Along with three other provinces in the Central Highlands, they produce 80 percent of the country’s coffee.

■ Robusta coffee accounts for nearly 90 percent of the total 500,000 hectares of coffee planted. Arabica coffee area makes up about 10 percent and excelsa coffee a small percentage.

Reported by Tran Ngoc Quyen

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