dr. nguyen huu la. northern mountainous agriculture and forestry science institute (nomafsi),...

Dr. Nguyen Huu La. Northern Mountainous Agriculture and Forestry Science Institute (NOMAFSI), Vietnam

Policy and Policy and application of technology to achieve high of technology to achieve high yielding coffee farm in Vietnamyielding coffee farm in Vietnam1

Banda Aceh 19th – 21th November 2014

First, there are about 580 thousand hectares of coffee in Vietnam, of which more than 90% of area and yield are planted and harvested in the Central Highlands provinces, i.e. Dak Lak, Lam Dong, Gia Lai, Kon Tum and Dak Nong. In which, there is about 530 thousand hectares of robusta coffee and 50 thousand hectares of arabica coffee (almost area of arabica coffee belong to the Northern Mountainous)

Information about Vietnam’s coffee industry2

Out of the robusta coffee area, around 150 thousand hectares which was grown in 1980-1982 has turned to be old and stunted and needs liquidating for new plants. Each year, there is 10% area of old coffee trees that need liquidating.

According to investment performance in 2012, the cost incurred for a hectare of coffee after three years (one year of planting and two years of caring) is around 200 million VND (10.000USD). There is a need for a capital of 30 trillion VND for area of old coffee trees.


Second, Vietnam is processing approximately 10% of coffee yield per year, which including roasted and deeply processed products (i.e. soluble coffee). Investors in the field of deep processing industry which has established brand in Vietnam include Vinacafe and Trung Nguyen (being domestic brands) and Nescafe (as foreign brand). The roasted products with established brands in Vietnam are Thu Ha (in Gia Lai), Dak Ha (in Kon Tum), Vinacafe and Trung Nguyen, etc.


o The Vietnamese processing industry has been developing at a low level due to the requirement of a large amount of capital investment while the financial conditions of Vietnamese investors are limited.

o The build-up of markets in Vietnam and overseas remains a very initial stage. Given this, though Vietnam is the second largest coffee producing country in the world, Vietnam has yet been granted with the right brand range.


Third, the current status of purchasing and exporting coffee seems more difficult. For the period from 2005 to 2009, Vietnam exporters have exported approximately 70 to 80% yield.

Due to the difficult financial situation and high interest rates, from 2010 to date, the export volumes of domestic firms has decreased. On the other hand, FDI companies have purchased and exported more than 50% of the annual yield.


Applied policy

The Vietnamese Ministry of Finance has applied many incentives in respect of taxes, land rental, land use and extension of The Vietnamese Ministry of Finance has applied many incentives in respect of taxes, land rental, land use and extension of export credit for coffeeexport credit for coffee

For tax policy, where the commercial business establishments paying VAT under the credit method sell agricultural, forestry and aquatic products which have not been processed into other products or preliminarily processed for other businesses adopting credit method, they are not required to issue VAT invoices. Otherwise, if they sell the products to households, individuals or other organizations paying VAT under the direct method or being VAT non-taxable subjects are still subject to VAT.

Policy to achieve high yielding coffee farm in Vietnam7

With regard to the land rental policy, for land used for agricultural producing purposes (including land for planting coffee), the Government leases land and collect annual land rental or grants land with collection of land use fees.

Regulations on land rental payment, the land rental exemption incentive with the exempted period of 3 years, 7 years, 11 years, 15 years, or the whole rental period shall depend on whether such investment projects fall under the list of sectors entitled to investment incentives (encouraged investment or specially encouraged investments) or geographical areas entitled to investment incentives (with difficult socio-economic conditions or specially difficult socio-economic conditions) in accordance with the land rental regulations. Vietnam coffee plantation belonging to the two priority areas


For regulations on payment of land use fees, preferential policies for land use fees, including 20%, 30% or 50% reduction or exemption shall depend on whether the projects fall under the sectors entitled to investment incentive (encouraged investment or specially encouraged investments) and geographical areas entitled to investment incentives (with difficult socio-economic conditions or specially difficult socio-economic conditions) per the land use policy

In addition, the Government providing regulations on the policies to encourage enterprises investing in agriculture and rural development stipulates that the reduction/exemption incentive for land use shall be based on whether the projects are considered as:

(i)special encouraged agricultural investment project,

(ii)agricultural project entitled to investment incentive,

(iii)Or encouraged agricultural investment project; and agricultural projects if being one of three project categories above shall be entitled to the lowest land rental per the framework announced by the provincial-level People's Committees.


Freeze debts for business entities: Freeze debts for business entities:

With regard to the temporary storage of coffee, the Prime Minister for allowing the temporary storage where the coffee price falls under the cost price.

At the same time, assigning the Ministry of Agriculture and Rural Development to cooperate with the Coffee Association of Vietnam for deciding the buying amount and buying method based on the principle that Business entities shall purchase coffee for temporary storage and are responsible for their own business results. The fund for buying coffee for temporary storage shall be loaned by commercial banks with reasonable interest rates as guided by the State Bank of Vietnam.


To freeze debts for the coffee trading enterprises, the Government has provided a number of specific regulations, i.e. extension of credit for coffee exports under Resolution No. 83 / NQ-CP of the Government, Decree No. 133/2013 / ND-CP, amending and supplementing some of previous decrees on investment credit and export credit by the Government. It is stipulated that "To extend the loan duration to a maximum period of 36 months for export credit from the Government for the group of export coffee beans, processed cashew nuts, vegetables and seafood if the enterprises are in a loss position in 2011& 2012 and cannot arrange fund for repayment scheme in accordance with the loan agreement signed with Vietnam Development Bank ".


Continue applying comprehensive policy:

For the cultivation of coffee: there are loan policies of the Government to re-plant the aging coffee area. Enhance the implementation of projects for sustainable coffee production and coffee production programs which are certified according to the principles of Utz, 4C, etc. to improve the knowledge and practical skills of farmers for sustainable coffee production.

For coffee processing: planning for the development of coffee processing at all levels, including nucleus coffee, roasting and processing soluble coffee, which meets the standard requirement for product quality and quality control to ensure food safety. At the same time, there are credit policies of special incentives for projects involved in the processing of soluble coffee, combined with marketing and build-up of sustainable consumer markets both domestically and abroad.


For purchasing and exporting coffee: apply a comprehensive policy, from purchase for temporary storage to the establishment of coffee exporting enterprises having advantages of finance, warehouse and experience. Not allow enterprises racing to produce coffee exports regardless of their limited conditions on human resources, finance and facilities. Temporary storage policy need to be developed and implemented on a long-term basis for enterprises involved in both temporary storage credit plan and temporary financial storage mechanisms to control the consumption volume in the year, in order for not being affected by foreign investors and enterprises. There is a need for financial fund for industry insurance to partially guide and support all processing stages, from producing, processing to export.

Large enterprises producing and trading coffee in Vietnam, i.e. Vietnam national Coffee Corporation, really need the support from the Government for dealing with existing shortcomings to stabilize, develop and become the "leading" enterprise for developing Vietnam coffee brand.


Change to other crops for the areas which are planted not in accordance with the plan, or with soil not suitable with coffee production, lack of water resources and harmed by nematodes, excepting for areas with thin layer cultivation but have rising groundwater, other areas should be converted to cocoa, macadamia or fruit trees such as avocado trees etc..

Application of technology to achieve high yielding coffee farm in Vietnam: (1) Restructuring of plant14

cacoa avocadomacadamia

Gradually replace old coffee varieties by the cloned varieties:

9 clones of robosta coffee, TR4, TR5, TR6, TR7, TR8, TR9, TR11, TR12, TR13;

1 cross-breeding of robosta coffee, TRS1

2 cross-breeding of arabica coffee, TN1, TN2

Application of new cloned varieties15

Growth: healthy plant growth, strong branching, slightly shaking branches

Tree height: the average;

Leaf: medium size, lanceolate shape; Mature color leaf: yellow green

Fruit: reverse egg shape, orange red color

Yield: 6-7 tons/ha; Resistance to rust: high

Clone of robosta coffee: TR416

Growth: healthy plant growth, strong branching, slightly shaking branches


Leaf: medium size, lanceolate shape; Mature color leaf: dark green

Fruit: elongate shape, dark red color

Yield: 5-6 tons/ha; Resistance to rust: high


Growth: healthy plant growth, little branching, slightly oblique branches


Leaf: medium size, lanceolate shape; Mature color leaf: yellow green

Fruit: elongate shape, dark red color

Yield: 5-6 tons/ha; Resistance to rust: very high


Growth: healthy plant growth, little branching, slightly shaking branches


Leaf: medium size, lanceolate shape; Mature color leaf: green

Fruit: elongate shape, pink red color



Growth: healthy plant growth, strong branching



Fruit: light elongate shape, pink red color


Cross-breeding of robosta coffee: TRS120

Growth: healthy plant growth, oblique branches, narrow canopy


Leaf: medium size, lanceolate shape; Mature color leaf: dark green



Cross-breeding of arabica coffee: TN121

Growth: healthy plant growth, strong branching





Cross-breeding of arabica coffee: TN222

Coffee could grow well in the lighter shade, so it is necessary to plant shade trees in coffee fileds. To increase the additional income, the fruit trees can be intercropped such as durian (Durio kutejensis), avocado (Persea americana), ... There can combine many uses of shade trees such as shade trees and the stands for pepper, for example Senna siamea, Leucaena leucocephala... . A new plants can be considered to have the greatest potential for coffee in the Western highland was macadamia integrifolia, this plant is being tested as for shade trees, windbreaks for coffee and high economic value.

Planting shade trees23

Strengthening manure application and reducing chemical fertilizer. The research results showed that in many coffee fileds, potassium concentration was increased from 4-8 times higher than the initial stage of planting coffee. Overuse of chemical fertilizers are making many pests arise, particularly harmful of root nematodes. To improve the efficiency of the use of mineral fertilizers, not only to enhance organic fertilizer, but also to use apropriate dose and balanced elements of foliar fertilizer.

Strengthening manure application24

Only use pesticides when over economic damage level and only spray for the trees which have diseases, no spraying for whole field to protect the natural enemy. Avoid spraying insect control regularly. Use the right type pesticide, right dosage, right time and manner for each targeted pests and harmful diseases.

Use pesticides25

We also need to pay attention to watering the first time for coffee. If watering the coffee trees which are not in the dry period and undifferentiated stem flowers, it is not only waste but also make coffee blooming in long time, resulting to early ripen fruit and prolong time, making difficultíe and high costs for harvesting and processing. Recent researches showed that the amount of irrigation water applying for the first time about 500-550 m 3 / ha and next time after is about 450 m3 / ha with irrigation cycle from 20-25 days can be suitable to ensure growth and development of coffee and the best economic efficiency.

Watering the plants 26

Enhancing shade trees, organic fertilizer and mulching are also very important measures to save water costs for coffee. Besides watering methods traditionally, research to apply modern irrigation technologies combined with fertilizer such as drip irrigation to save water and labor costs is needed.

Saving irrigation water27

In fact over the present years Vietnam's coffee quality mostly is affected by the process of harvesting and drying. So one of the solutions to improve productivity and quality of the harvest to reach the correct ripen time.

Improving product quality coffee after harvesting28

However, harvesting in the right time requires more labor, especially in the coming years as the country has been becoming an industrialized country, the problem of labor shortages in the agricultural sector in general and in coffee in particular increasingly aggravated.

Vietname farmers Hope to harvest coffee by machines

Improving product quality coffee after harvesting29

In the current integrated world, coffee consumers require clear origined products and must have certificate of quality, so the reorganization farmer struture such as formation of cooperatives in the coffee industry is essential. Only reorganization of the new production conditions apply advanced technology, financial support, extension, improve productivity, quality and branding or certification for quality each material zone. And just reorganizing production, the linkage between "4 groups" became realistic (scientists, businessmen, managers, farmers).

Reorganizing of production30

Thank you for your attention31

Banda Aceh 19th – 21th November 2014

dr. nguyen huu la. northern mountainous agriculture and forestry science institute (nomafsi),...

Documents

hectares of coffee

coffee yield

vietnams coffee industry

largest coffee

soluble coffee

hectare of coffee

area of arabica coffee

robusta coffee area