STiR coffee and tea magazine

26 STiR coffee and tea | 2024 Issue 4 (August / September) Despite liberalization, Vietnam's government continues to heavily invest in coffee-related infrastructure and research. By fo- cusing efforts on the high-yielding robusta variety, Vietnam has become the number one robusta producer in the world. Not con- tent with just high production rates, the Vietnamese have also in- vested in local value addition. The country currently has 160 cof- fee roasting facilities, 8 instant coffee processing plants capable of processing 1.5 million tons, and 11 coffee blending facilities. Two countries that experienced massive decline after liberal- ization but sought a different solution were Kenya and Colom- bia. Neither country was able to recover pre-1989 production rates after deregulation and liberalization. In 1986, coffee ac- counted for 40% of Kenya's foreign exchange earnings. But by 2010, it was down to just 3%. A study published in the European Journal of Business Man- agement in 2013, entitled "Effects of Liberalization on Coffee Production in Kenya" surveyed coffee farmers and produc- tion managers from the New Weithaga Farmer's Co-Operative Union. The main reasons cited for the production decline were ● the mismanagement of cooperative societies ● declining farmers' earnings ● decline in application inputs ● poor farming practices ● farmers' loss of confidence in the management of coffee affairs Despite liberalization issues, the Kenyan government, through the Coffee Directorate, has ensured that the price value of Kenyan coffee remains high even if yields are low. The excep- tional quality of Kenyan coffee is recognized around the world. Kenya is currently enacting a series of economic reforms, Coffee Cherry funding, and coffee debt forgiveness programs to help smallholder farmers get back on their feet. For more information, see Kenyan Industry Reforms on page 42. Vietnam invested heavily in production methods and soon became the world's second-largest coffee producer. | Photo courtesy of Indra Wiryawan Kenyan coffee farmers want more education on innovative farming practices. | Photo courtesy Rainforest Alliance Colombia has taken a similar approach. Market liberalization and other reforms enacted after 1990 greatly reduced the value of the Colombian coffee sector. Rather than abandoning such an important industry, the Colombian government established two programs to offset the adverse effects of declining interna- tional coffee prices. The Specialty Coffee Extension program through the Nation- al Federation of Coffee Growers of Colombia (FNC) provides technical support. It helps farmers grow specialty coffee varieties that display differentiated characteristics of origin, preparation, or sustainable production. Obtaining origin designations and seals of organic or regenerative practices allows Colombian farmers to command higher prices for their unique coffees. The second program ran until December 2019 and was called the Governmental Incentive for Coffee Equity (IGEC), which protected Colombian coffee farmers by setting a domes- tic coffee reference price to help mitigate the negative impact of declining international coffee prices. Since 1997, Kenya and Colombia have been price value lead- ers in the international market and are known globally for pro- ducing high-quality coffees. India is one of the few countries where coffee producers fought for deregulation and benefited from it. Before liberaliza- tion, coffee marketing in India was entirely controlled by the Coffee Board. After harvest, growers were forced to send their coffee to curing factories licensed by the Coffee Board, where it was pooled together and sold in two separate auctions, one for the export market and the other for the domestic market. Growers received partial payment upon delivery of their coffee and the rest after auction. However, receipt of final pay- ments could take up to two years or not be paid at all. Private exporters then bought the green beans and sold them interna- tionally at higher prices. The pooling system gave the farmers no incentive to improve the quality of their beans or farming meth- ods, as there was no way to hold an individual farm accountable for the final product. Liberalization reforms were introduced gradually over four years, from 1992 to 1996. Allowing farmers to market their own coffee and introducing new organizations and value-addition in- stitutions added much-needed vigor to the Indian coffee sector.

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