Coffee production in Vietnam

Arabica in Vietnam

Vietnam is the second largest producer in the world after Brazil, with Robusta coffee accounting to 97 per cent of Vietnam's total output.[7] However, coffee farmers in Vietnam have always experienced cycles of boom and bust since the 1980s, making the industry a highly volatile one. Despite the fluctuating global coffee prices, importing countries continue paying a steady price while coffee farmers from exporting countries experience the daily price range.[6]

This pattern saw the production of coffee in Vietnam at 29.3 million bags in 2017, nearly 600,000 bags lower than the USDA estimate for that year, due to losses caused by late rain.[8] The USDA Foreign Agriculture Service has correctly predicted the increase in production in 2018, as shown in a Bloomberg report and forecasted a further increase in 2019 due to better land management, higher replanting rates, more efficient storage and significant private sector involvement.[8] According to Deputy Prime Minister Vuong Dinh Hue, Vietnam expects this growth in 2018 to beat the Government's target of 6.7%, matching 2017's economic growth of 6.8%.[9] However, the extent of which the Government promotes growth at the extent of social inequalities and environmental degradation should also be looked at.

When the global price of coffee dropped in 2001, many farming households had to reduce their daily meal, changed their diets or relied on food donations from the authorities.[4] While the boom allowed children of medium to low income households to attend school and for families to purchase household good like television sets, the declining coffee prices reversed this; children were forced to quit schools and self-employed, subsistence farmers had to find wage labour work.[4]

Poor management might recall the 2013/2014 coffee boom when a bumper harvest of 29.5 million bags (from 17 million the previous year) added to the global oversupply of beans and plummeted coffee prices. This led to nearly half of the 127 local coffee export firms to cease trading due to their inability to repay loans. The amount of non-performing loans or debts in the coffee sector likely to go unpaid stands at 8 trillion dong (US$379 million), which is around 60 percent of all loans for the coffee industry in Vietnam.[10]

With businesses shutting down due to debt, smallholder coffee farmers also bear the brunt of falling prices. However, the effect is not homogeneous across the producers; exacerbating existing social inequalities.

The ethnic inequality narrative has been prevalent in literature written from 2003 to 2013 producing ethnohistorical and developmental analyses situating the coffee industry's risks at a very real, lived experience level. In a study of the household income of Kinh and the minority Ede coffee farmers, it was discovered what initially seemed counterintuitive: despite having larger farms and planting a larger share of coffee than their Kinh counterparts, the Ede farmers still had a lower household income.[11]

Data from a 2003 survey of 209 smallholder coffee farmers suggested that higher household dependencies and the use of family labour on the coffee plantations could account for the Ede's lower household income as these forms of unpaid work (usually by uneducated women and children) could translate to lower yields as a result of less technical know-how and productivity.[11] It further postulates that the Kinh, due to their smaller families are short on manpower and hire labour (usually other Kinh) who might already be familiar with coffee cultivation. The researchers caution however that this labour hiring “is as much a result of high household income as a cause of that income”[12]

In a similar study, smallholder from four communes of Ea Tul, Ea Kpal, Ea Pok and Quang Phu were surveyed from 1999 and 2003. This study went further by examining the differing household responses between the Kinh and Ede to falling coffee prices, and how this affected their income. Kinh households were more likely to borrow money or engage in off-farm work than the Ede. While the Ede, who have larger farms, were actually buffered from their reliance on coffee as they could change crops or shift cultivation.[13] However, this did not mean that the Ede would fare better and were in fact made worst by their inability to have access to short-term loans or leave their family farms for too long to seek employment elsewhere.[11] Researchers have recommended that existing macro policies should help diversify income without basing this on the diversification of crops, as the case with the Ede.

While both these studies identify that human dislocation are associated with inadequate macro-level policies, it does shift the responsibility of solutioning only to the government. Ironically, while these studies focus on the micro-level impact of the coffee boom and bust, it offers little insights into the motivations or support systems between these farmers in offering alternative employments or even directing each other to sources of loans. While Kinh farmers seem to enjoy better prospects than their ethnic minority counterpart, inequalities also exist within this group.

Thus, migrant networks provide an intra-regional perspective to uncover the ways that coffee farmers draw on resources including labour power, financial capital and social support. This happens both at the destination and also back home.[14] For example, Kinh emigrants rely on family to look after their children and plots of land back home which ensures that the district authorities do not reallocate the land. Parents and spouses of migrants can sometimes also take loans using these lands to support farming investments up in the highlands. As such, these linkages between the uplands and lowlands are essential to understanding the Central Highlands especially in the context of future risk management.[14]

However, such a rosy picture of emigration should prompt critical inquiry. Historically, the post-colonial Vietnamese government had succeeded in mobilizing millions of lowland farmers into the highlands where the French had previously failed. This was however not without the initial resistance of these farmers.[15] It was only in the 1980s and 1990s that we see a shift to self and economic driven motivations when success stories of coffee farmers in the highlands became a dominant narrative. While family/village networks were a tool aiding this movement, relatives often offered help for migrants to settle in exchange for work. Even the benefits that was mentioned about familial help back home needs to be situated in what can be considered ‘negotiated reciprocity’ involving both ‘mutual aid and mutual exploitation’.[16] An alternative resource to familial networks that migrants also took advantage of were the colonial employment opportunities offered by the French during the colonial period and later by the Vietnamese state under their mobility programme.[15]

The expansion of coffee production in the Central Highlands occurred mostly in the region of Dak Lak.[17][18] In addition to the displacement of some ethnic minority communities, the continued expansion and conversion of unsuitable land for coffee production has led to considerable deforestation and loss of biodiversity.[18] The lure of coffee farming as a success story has led to an unsustainable tapping of surface and underground resources as the goal was to achieve higher economic growth, putting environmental costs and risks as a secondary consideration. The intensive use of fertiliser and a widespread mono-cropping has also led to a fall in soil fertility and rise in pest infestations.[18] In a study funded by the World Bank and the EcoAgriculturepartners, it was found that half a million smallholder farmers are now in a collective brinkmanship with the physical environment on which their livelihoods depend on; ageing tree stock, rising labour costs, climate change and competition for natural resources providing unfavourable odds for them. It might prove counterproductive for official reports to under-represent such realities where unsuitable land cultivated for coffee were often not included in the statistics.[18]

However, while environmental degradation happens, it is not homogeneous and varies by region, often a result of the socioeconomic inequality touched on earlier. Research has shown that this happens when capital-rich Kinh households acquire and convert agricultural lands to perennial crops for external markets which results in a displacement for poor ethnic minorities who rely on shifting cultivation near the forest margins.[19] It would thus be more accurate to situate the fluctuating coffee economy, social inequality and environmental degradation not as separate entities but in a relationship with each other.

This working group eventually led to the establishment of the Coffee Coordination Board (CCB) in 2013. Research and literature produced from here on shifted in the scale and ideological perspective, perhaps mirroring the greater interest and participation of the government. In the case study of Dak Lak conducted by the World Bank and EcoAgriculturepartners in 2015, such a shift is historically charted through the changing development of coffee governance from a weak structure made up of competing interests and policies, to one headed by the CCB that responds to the social, economic and environmental risks to local coffee farmers by providing resources, education and training.[18]

One such initiative was the support for coffee replanting, based on a perceived crisis of the ageing tree stock. This was based on the estimation by the World Bank in 2011 that in the absence of replanting, Vietnam's coffee production would fall by 30 to 40% by the mid-2020s.[22] However, as this is a long-term investment, smallholder farmers may experience reductions in income during the early maturing period of the trees (3 years to generate yield and another 3 years to yield fully) and as such, financing solutions were also concurrently developed by the government to mitigate the effects.[18]

However, despite this greater effort, the policies and initiatives were at times prescriptive with weak enforcement and poor information dissemination. For example, while the government have offered cash incentives to farmers who adopt newer farming practices to lower water pollution, most were reluctant or slow at adopting these measures seeing as there were no penalties.[18] Improvements have to be made to address the social and ethical motivations to convince a more ground-up solution to the issue. There is evidence that the CCB and the government have taken into consideration policy recommendations made by researchers over the past decade such as prioritizing crop diversification and ecological farming practices.[13][19] However, this seemingly blanketing of current macro-level responses ignores the fact that access to the CCB's programmes are still unequal, often favouring the Kinh majority over the ethnic minorities in the Highlands.

Perhaps an alternative to the top-down approach sanctioned by the CCB would be to look at how international fair trade certifications such as Nestle's 4C, UTZ, and Rainforest Alliance could play a part in helping producers directly, as is Rainforest Alliance's concept of “from farm to cup”.[23] Fair Trade is the most commonly recognized certification across many major consumers such as the United States, Europe, Japan and South Korea.[24]

In Vietnam, certification schemes represent the height of market capitalist investments strengthening the state's desire of projecting Vietnam's identity in the global market while maintain its stream of coffee export revenues.[24]

Fair trade coffee has been critiqued as being an imagined construct with international consumers participating in this ideology believing that “the social and ecological conditions of production and trade are said to be the outcome of decisions made by consumers through their ‘consumer power’”.[25] In the case of Vietnam, the agent shaping this fair-trade discourse is still the Vietnamese government, engaging in coffee statecraft.[26] This is done as a two-pronged approach: Defending coffee as a means for providing rural employment and source of state revenue at home and foreign exchange at the international level, as well as promoting coffee as an export commodity to encourage private or semi-private landholders’ buy-in into the wider strategy to integrate Vietnam into the global market.[26] While these efforts helped expand the coffee industry, its negative social and ecological impacts cannot be ignored. Even then, one should not underestimate the value of productivity and economic efficiency in reducing poverty, even if they go contrary to the ecologically sustainable methods.[26]

The main critique of fair-trade rhetoric is that it reproduces images of poverty and primitivity which then feeds onto the illusion that consumers play the most important role in helping these poor farmers out of poverty and towards modernity.[26] That is not to say that international consumers have no part to play in contributing to ethical and ecological practices. It would take a collective action at the global level to address climate change rather than a disproportionate “dumping” of the responsibility on the Vietnamese farmers (and global South in general) to participate in sustainable agriculture.[26]

While it is acknowledged that fair trade is a concern and expectation of people in the post-colonial world; an attempt to be socially conscious of the commodities produced by ‘developing’ countries like Vietnam, for these coffee farmers, certification may actually enable them to shape the discourses relating to coffee bean quality, ideas of fair trade and the future of Vietnamese coffee as an autonomous brand.[24] Furthermore, certifications also produce a recognition of the quality of Vietnamese coffee; the Robusta variety often stigmatized as being inferior to Arabica beans.

This is often done through audits to provide accountability and transparency for consumers and investors, a relatively new, post- Doi Moi initiative that Vietnamese farmers have to also grapple with to maximise their potential earnings.[24] The question that many Vietnamese ask is not “how can we improve Vietnamese coffee quality” but rather, “when will Vietnamese coffee quality be recognized?” [27] Through their desire to develop loyal patronage, local coffee producers and café entrepreneurs have sought to change discourses on the quality of Vietnamese coffee; establishing new origin stories by allowing people to (informally) trace the product back to its source location through the use of packaging. Trung Nguyên, one of Vietnam's leading domestic coffee brand, markets its instant coffee as being made from “the choicest coffee beans from Vietnam’s legendary basaltic region”[28][29] So legendary that domestic tourists have been flocking to Dak Lak on official coffee tours to visit the Trung Nguyên coffee village and world coffee museum.[24]