Issue link: http://read.dmtmag.com/i/612330
48 STiR tea & coffee industry international / Issue 6, 2015 (December/January) Adding value Vietnamese coffee farmers operate on slim margins, as low as 15% of retail. Some- times, these dip below the cost of produc- tion, placing the farmer and his family in financial jeopardy, as access to credit is limited and often there are no alternative sources of income to fall back on. For this reason, some in the coffee in- dustry advocate converting raw green cof- fee to branded, consumer-ready products. Adding value includes post-processing of robusta to improve flavor and acidity; roasting, grinding and packaging coffee for consumer use; decaffeination; conver- sion of whole beans into soluble coffee products. The most effective convert cof- fee, a commodity, to coffee, a profitable shelf-ready retail product. In the last 10 years, there has been in- creased emphasis on growing the home market, moving into the upper levels of the supply chain, expanding retail grocery offerings, and expanding coffee shops and cafés. About 95% of Vietnam coffee is exported to the US, EU, Japan, and China. Many in Vietnam drink tea, but domestic coffee consumption has grown and per capita con- sumption now averages about 1 kg per year. An expanding, aspirational middle class is willing to spend more time and money in cafes and restaurants. Incomes are rising. In 1995, per capita income was only $250; the figure stood at $1,200 in 2000. This has stimulated investment in the retail sector, both from local venture capitalists and for- eign investors. Dong Le Nguyen Vu, c.e.o. of Trung Nguyen Coffee, Vietnam's largest domestic coffee company said it best: "The GOV [government] has issued a decree: encourage investment in agriculture, increase coffee processing to create better condi- tions for improving coffee values and elevating Vietnam's coffee brand in the world." Boosting quality Enhancing the quality of a product is more difficult than adding value, which often relies on marketing to generate sales. Several years ago, the Vietnamese government decided to direct more resources into growing arabica. Since there is a shortage of suit- able virgin land in the traditional center of coffee production, the central highlands, arabica is being planted at high elevations in the north and northwest. In some cases mature robusta trees are being removed and the area replanted with arabica seedlings or improved varieties. The conversion is slow because asking farmers to replace income-producing trees – even old ones - with seedlings that will not yield for sev- eral years is done at great risk. The best ar- abica is washed. Robusta is normally sun- dried. Arabica is generally wet-processed requiring machinery that uses as much as 15-20m³ of water per ton of cherry. This is why expansion of arabica in the north has been slow with less than 50,000 acres (15,000-20,000 ha) under coffee. Another strategy calls for improving the robusta. The Central Highlands Agri- culture and Forestry Science and Techni- cal Institute, part of the Ministry of Agri- culture and Rural Development, conducts plant research aimed at improved yields, disease and drought resistance and bet- Photos by Frank J. Miller T&T Coffee processing facility Row of Brazilian depulpers at T&T (Thuy and Thuan) coffee processing facility