VIETNAM COFFEE COORDINATING BOARD

REPORTVIETNAM COFFEE OUTLOOK AND SUSTAINABILITY FORUM 2015

Ho Chi Minh City, 2 December 2015

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Content

INTRODUCTION.............................................................................................................................................3

MINUTES AND KEY RESULTS..........................................................................................................................3

CONCLUSIONS.............................................................................................................................................21

EVALUATION...............................................................................................................................................23

SOURCE.......................................................................................................................................................26

LIST OF PARTICIPANTS.................................................................................................................................26

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INTRODUCTION

The “Vietnam Coffee Outlook and Sustainability Forum” is an annual event of the Vietnam Coffee Coordinating Board (VCCB). The objective is to discuss the current situation and future outlook with a broad range of coffee stakeholders, creating an open dialogue between the VCCB and the sector about arising problems, recommended solutions and next actions for sustainable development. The Forum is also expected to provide VCCB members with useful information and assessments for their voting for important issues and next-year plan.

The Vietnam Coffee Outlook and Sustainability Forum 2015 was held on 2nd Dec 2015 in Ho Chi Minh City, chaired by Assoc. Prof. Dr. Le Quoc Doanh, MARD Vice Minister cum VCCB Chairman. The Forum was organized by the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), and sponsored by the Sustainable Coffee Program (SCP), which is powered by IDH the Sustainable Trade Initiative, and by Agribank.

The Forum 2015 included 5 sessions: Plenary Session providing updates on the coffee sector in Vietnam and the world, and on VCCB’s performance; Coffee Production Session updating on the WEF Coffee Task Force (WEF-T) activities and discussing coffee rejuvenation as a current significant issue; Coffee Processing and Trade Session discussing the planning of coffee processing network and the orientation to raise added value in coffee processing, and other top issues on coffee processing and trade in 2015; Policy and Sustainability Session updating current sustainable coffee initiatives in Vietnam; Policy Dialogue Session reserving time for public and private stakeholders to exchange ideas on policy issues and recommendations.

MINUTES AND KEY RESULTS

1. Reception and opening remarks

Vice Minister of Agriculture and Rural Development, Mr. Le Quoc Doanh - Chairman of VCCB delivered the opening remarks. He briefed the current status of domestic and international coffee production and consumption in 2015, sustainable coffee production and coffee rejuvenation, etc. At the same time, he highlighted key challenges of the sector in 2015.

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Accordingly, MARD expressed concerns about the following issues:

(i) Coffee rejuvenation: rejuvenation area increased but at a slow pace. It was necessary to have a detailed coffee rejuvenation planning; update and improve coffee rejuvenation protocol based on scientific findings and practicality for application; improve the production and quality management of seedlings for rejuvenation; and especially accelerate disbursement of credit package for coffee rejuvenation;

(ii) Market development: Added value should be increased through improvements in processing at household level and intensive processing, expansion of export markets and stimulation of domestic demand. In particular, it was necessary to pay attention to market information and forecasts for efficient policy formulation and production and business decision-making;

(iii) Sustainable development: Continue to promote sustainable practices including water saving, improvement in coffee landscape through planting shade trees, windbreak trees, and promoting responsible use of agrochemicals in coffee production and application of climate change resilience measures given that the El Nino was getting more serious recently and in the following years.

Vice Minister Le Quoc Doanh also mentioned a series of national and international initiatives/programs that accompanied Vietnam coffee sector from 2016, noticeably the coffee rejuvenation credit package from the State Bank of Vietnam, the Sustainable Coffee Program (SCP), Initiative for Sustainable Landscapes (ISLA) in the Central Highlands (powered by IDH), the Vietnam Sustainable Agriculture Transformation Project (VNSAT) (funded by the World Bank). Thereby, he stressed that in this innovation process, the VCCB should continue to promote further its role as a hub coordinating, connecting and aligning public and private resources efficiently, cooperate closely with VICOFA, PPP Coffee Taskforce (which is now the VCCB’s Sub-Committee on Production), and Coffee Farmer Associations; to represent the sector not only domestically but also at international coffee forums.

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2. Plenary Session

2.1. Presentations

1. Presentation on "World and Vietnam Coffee 2014-2015 and Outlook 2015–2016” by Mr. Tran Cong Thang, Deputy Director of IPSARD: In 2014 – 2015, coffee area and yields increased slightly; Vietnam coffee prices fell steadily from the beginning of the year, which was opposite to the normal market rules; production cost reduced thanks to reduction in fuel prices, labor cost and fertilizer cost; Sustainable coffee production continued to rise; coffee rejuvenation continued to rise but slowly. Internationally, 2014/2015 crop yields decreased in many large coffee producing countries (Brazil, Indonesia); Arabica coffee prices in London market and Robusta coffee in NewYork market decreased continuously; 2014/2015 crop exports decreased in many large coffee exporting countries (Brazil, Indonesia); imports fell slightly in some countries (USA, Russia); domestic consumption rose slightly in some countries (Indonesia, Europe, America). In Vietnam, in 2015/2016 crop, total coffee area was forecasted to decrease by 30.5 thousand ha; Production increased by 26 thousand tons; productivity increased 1-2 quintals/ha compared to 2014/2015; inventory level would remain high and it would not observe many fluctuations with FOB prices in 2016. Internationally, as predicted by USDA, world coffee production would increase by 384 thousand tonnes (due to increased output from Indonesia, Honduras, Brazil); exports and consumption would not increase, ending inventory would reach the lowest level over the last 4 years; Arabica production in Brazil was forecasted to increase by 228 thousand tons while Robusta production to decrease by 156 thousand tons due to the impact of drought in Espirito Santo (the largest coffee growing area). For other countries like Colombia, Arabica production would increase by 30 thousand tons, production in Central America and Mexico would increase by 45 thousand tons; in Indonesia, output could reach 132 thousand tons; and in India, production would increase by 6 thousand tons.

2. Presentation on "4C-IDH-ICO Vision” by Mr. Ted van der Put, IDH Program Director and Member of the Executive Board. Key international organizations working on coffee, namely IDH, the 4C Platform and ICO reached a joint agreement about a vision for the sustainable development of the coffee sector to 2020 to be reached through a joint action program for both public and private sectors in order to generate a synthesized impact on challenges on a large scale to improve livelihoods and resilience capacity of

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coffee growers in particular and the entire coffee sector in general. The set objectives are (i) to improve the social and economic advancement of the sector; (ii) to ensure alignment of investments into the future of the coffee sector. The mechanism to implement the vision was agreed, including (i) farmer-centric; (ii) agenda identification on systemic issues; (iii) multi-stakeholder movement; (iv) commitment to transformation; (v) non-competitive collaboration; and (vi) based on market principles.

3. Presentation on "Vietnam Coffee Coordination Board: Updates 2015" by Mr. Nguyen Do Anh Tuan, Director General of IPSARD cum Vice Chairman of VCCB: In 2015, VCCB had some changes in personnel. Main activities continued to focus on providing policy comments and recommendations, noticeably the credit policies for coffee rejuvenation and Vietnam Coffee Development Fund; support for the development and consolidation of Coffee producer associations in Dak Lak and Lam Dong; support for the development and dissemination of the National Sustainable Curriculum (NSC) and water saving practices; some activities to support sustainable coffee processing and trade were still limited. The presentation also highlighted the constraints and suggestions for VCCB to operate more efficiently in the next years.

2.2. Key discussion points

Chaired by: Mr. Nguyen Do Anh Tuan – Director General of IPSARD - VCCB Vice Chairman

Panelists: (i) Mr. Tran Cong Thang - Deputy Director General of IPSARD; (ii) Mr. Ted van de Put – IDH Program Director, Member of Executive Board

Market information: Coffee prices continued to decline in the last 10 years, yet in Vietnam there were still no methodical market information studies or analysis to find out the causes to regulate production. Forecast information should be based on official, trustworthy and scientific-based data and information as it imposed a huge influence on business and production decision. It was recommended that MARD and other relevant organizations should consider mobilizing a regular fund for data and information collection from households and enterprises, study, analysis and dissemination of market information. VCCB should become the focal point providing official information about coffee sector.

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Unsustainable agrochemical usage: It was right to increase productivity and reduce costs, yet it was also necessary to have proper policy, mechanism, and appropriate enforcement to manage the efficient use of quality inputs, especially fertilizers and pesticides. Fertilizer was an important factor relating to production efficiency and environment. Some researches expressed concern about the unsustainable use of chemicals which made bad impacts on product quality, land and water. It was necessary to promote awareness raising, training courses and strict regulations for suppliers. Poor quality inputs needed to be removed. Strict sanctions on poor quality fertilizer supply should be imposed, and economic compensation for coffee producers’ losses, not just administrative sanctions should also be implemented.

DCP said that in order to ensure good quality fertilizers, it was critical to link farmers with reputable fertilizer companies. DCP was compiling the NSC, which included efficient fertilizer use guidelines. The Department would cooperate with related stakeholders to provide more information about fertilizers to local people. Some supplying companies already provided technical guidance to farmers. Still, it was necessary to select and recommend reputable companies. Besides, it is worthy to take into consideration the use of organic fertilizers for coffee rejuvenation.

Sustainable water usage: This was a very important issue in climate change adaptation. It could only be solved through public-private partnership. Currently, MARD was encouraging to pilot 1 PPP project in the management and use of water in the Highlands. VCCB also considered completing the guidance for water usage in the training materials. Besides, some other programs and initiatives also supported to address this issue such as the Initiative for Sustainable Landscapes in the Central Highlands by IDH, Vietnam Sustainable Agriculture Transformation Project by World Bank.

Cultivation techniques and farmer organization: Vietnamese farmers’ farming practices had been remarkably improved and the national production protocols had been developed. According to WASI, 18% of the area was irrigated with 600 liters/hole, 80% of farmers were irrigating below 400 liters/hole. Compared with rice, pesticides used for coffee was less than 1/3. The main issue was that in order to enhance farmers’ power and encourage the application of a unified process, it was critical for farmers to organize into cooperatives, not just collective groups with no legal status. To facilitate the model’s

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efficient operation, it required the engagement of enterprises, local authorities and farmers.

Inventory and reserves: Vietnam coffee production ranked second in the world with very large storage system. One of the failures of Vietnam coffee in recent years was lack of information about storage capacity and support for coffee reserves. However, it was agreed that these were very difficult issues. According to a preliminary survey of IPSARD, some farmers reserved up to 40% of their production, partly due to the fact that these are middle-income households so that they were willing to wait for prices to increase. There was little information about enterprises’ inventory. In addition, it was also recommended to develop bonded warehouses.

Domestic market: Besides exports, more attention should be paid to domestic market. In recent years, Vietnam had been encouraging to develop domestic market but not many results had been seen. Two or three years ago, domestic demand might only account for 5% of production, currently this number was estimated at 7-10%, which was expected as the highest limit because it was hard for people drinking coffee to increase their consumption from 1 to 5 cups/ day and it also took time to change drinking habits from tea to coffee.

3. Sustainable Coffee Production Session

3.1. Presentations

1. Presentation on "Updates on coffee rejuvenation: problems and recommendations" by Mr. Le Van Duc, Vice Director of Department of Crop Production: Coffee rejuvenation was being promoted in the Central Highlands, in which Lam Dong was the best performer and KonTum was the slowest. The program still faced a number of difficulties including lacking plan on rotation duration for different coffee rejuvenation area; missing a rejuvenation database; recent identified major causes for death of rejuvenated coffee plants; limited solutions to shorten rotation time; no income generated during rotation period and early development period; high risks and large capital investment associated with coffee rejuvenation; apart from their own fund, farmers’ accessibility to credits remained limited. MARD and local authorities had issued directions on planning, science and technology, production organization, and funding for coffee rejuvenation. MARD issued a Rejuvenation Action plan to 2020 with a number of solutions and implementation plans including reviewing coffee rejuvenation plans;

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establishing provincial steering committees for coffee rejuvenation; developing rejuvenation database; providing technical training for farmers; preparing seedlings for rejuvenation; disseminating credit processes, procedures and conditions.

2. Presentation on "Credit for coffee rejuvenation: Issues and recommendations" by Mr. Vo Van Chan, Head of Department of Production Individual and Household Customer, of Vietnam Bank for Agriculture and Rural Development: Outstanding loans for rejuvenation of Agribank increased rapidly from 2013 to 2015, and highest in Lam Dong. Currently, coffee rejuvenation credit program was facing some difficulties due to coffee market volatility; lack of detailed planning as basis for loan scheme design; high rejuvenation cost; large investment required while most farmers had no collateral; limited application of science and technology in production; irrelevant rejuvenation protocol of MARD with real practices. Agribank proposed a number of measures and proposals to the State Bank of Vietnam, MARD, VCCB and VICOFA, including: For the Central Bank: (i) raise the loan limits to about 10.000 USD/ha for coffee replanting and 5000 USD/ha for coffee grafting; extend lending period to 10 years for replanting and 6 years for grafting; (ii) timely issue a Circular instructing loan refinancing and refinance for loans that Agribank has given; For MARD: (i) Modify rejuvenation protocol and technical norms; (ii) conduct rejuvenation need assessment in the next 5 years and make detailed rejuvenation planning; (iii) impose sanctions or encourage switching to other crops for diseased coffee gardens; (iv) develop policies and plans for rejuvenation seedlings and technical support; (v) improve seedling and agrochemical management; (vi) promote farming contracts and value chain linkage for coffee trading; (vii) promote awareness raising and communication; For VICOFA and VCCB: (i) guide and encourage business members to do contract farming and linkage with farmers; (ii) coordinate with the Ministry of Industry and Trade to select a number of members as key export focal point.

3. Presentation on "PPP activities in sustainable coffee production in PSAV: Issues and recommendations" by Mr. Ganesan Ampalavanar – Managing Director of Nestlé: The Coffee PPP Taskforce, which is also the Production Subcommittee of the VCCB, updated the group's activities in implementing the Strategy for Vietnam to be a reference for Robusta Coffee, including dissemination of good agricultural practices; strengthening PPP cooperatives; cooperation with agri-finance Taskforce. Some outperformance results achieved by 2015 compared to 2014 included more stable and greater yield, bigger bean size, continued operation of PPP cooperatives and discussion with AGRIBANK on piloting

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financial scheme for collective purchase of fertilizer for PPP cooperatives. The group also announced its action plans in 2016.

3.2. Key discussion points

Chaired by: Mr. Nguyen Do Anh Tuan - Director General of IPSARD - VCCB Vice Chairman.

Panellists: (i) Mr. Le Van Duc - Vice Director of DCP - Head of VCCB Production Sub-committee; (ii) Mr. Vo Van Chan - Head of Department of Production Household and Individual Customers of Vietnam Bank for Agriculture and Rural Development of Vietnam (Agribank); (iii) Mr. Ganesan Ampalavanar - Managing Director of Nestlé.

The necessity of coffee rejuvenation: Coffee rejuvenation was urgent because of low yield of old-aged coffee, at only 1.5 ton which was inefficient; unequal bean quality due to poor seedlings. Rejuvenation would bring new varieties of higher yield and better quality bean; this was the demand of farmers and businesses. Rejuvenation plans would be made for effective implementation. Rejuvenation would be implemented priorly in favorable areas.

Rejuvenation protocol: It was possible for Vietnam to refer to rejuvenation activities of some other countries to have proper protocols and determine which conditions for replanting or grafting. MARD had invited experts to develop rejuvenation protocols in 2010 and 2013 which specified that 2-year rotation was required. In 2015, research institutes had preliminarily determined that fungus and nematode were causes of death of rejuvenated plants. This result was being finalized to develop the most proper protocol, relevant to real practices in early 2016, including 1-year and 2-year rotation.

Besides, if properly implemented, coffee rejuvenation was an opportunity to adjust coffee production towards more sustainable way. Coffee rejuvenation would be implemented in areas with favourable conditions whereas unfavorable areas might switch to other crops. This might also be the right time to renovate coffee landscape such as intercropping shade trees, boundary trees to protect the environment and ensure long-term coffee quality, and at the same time diversify incomes for farmers.

However, it was necessary to evaluate and take into consideration market issues during the implementation of coffee rejuvenation program. If prices continued to go down, the program might fail as people were not interested. The critical and urgent issue was to

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improve the whole value chain, provide trade support to export businesses and cut down intermediary levels.

Rejuvenation credit: Rejuvenation credit procedures included: a written request for fund certified by local authorities, with a plan for short-term loan, and a project proposal for long-term loans; Owner equity from 10-20% of the total funding request; Collateral asset or unsecured loans. It was difficult and complicated to supervise the right use of capital. The Bank had to include this provision in the contract and organized field checking, but at a limited scale, funds were still used for wrong purposes in many cases.

The farmers really had demand for loans. However, specific information about the amount of capital required, timing, duration, etc. was limited, which made it difficult for banks to implement the program. Some companies linked to farmers such as Nestlé could coordinate with banks to identify this need and provide a list of households that need rejuvenation loans to the bank.

Participation of enterprises in Coffee PPP Taskforce and VCCB: VCCB still needed the engagement of dedicated companies and individuals for coffee sector development. VCCB was always open for companies, especially domestic companies. It was noted that VCCB members must be elected by stakeholder groups, while VCCB Subcommittees may extend their membership to all interested partners based on voluntary registration. VCCB’s meetings may invite observers to participate in discussions but not to vote.

4. Sustainable Coffee Processing and Trade Session

4.1. Presentations

1. Presentation on "Coffee processing planning and direction to raise value added in coffee processing" by Mrs. Vo Thi Ly, Representative of Department of Processing for Agroforestry- Fisheries Products and Salt Production: Vietnam coffee processing encountered some difficulties including: lack of connection between production - processing – consumption; difficulties in controlling the quality of coffee material; high losses; much lower actual capacity of coffee bean processing than designed capacity leading to wasted investment; massive and spontaneous development of ground coffee processing with low capacity and uncontrolled food quality and safety; low rate of high added value products. MARD had issued the scheme and planning to raise value-added in

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coffee processing by 2020 and towards 2030, including measures to improve the quality of coffee beans and expand commercial processing of intensively processed coffee.

2. Presentation on "Buon Ma Thuot coffee Geographical Indication - results and direction for development in the future" by Mr.Trinh Duc Minh, Chairman of Buon Ma Thuot Coffee Association: Geographical indication of Buon Ma Thuot coffee was registered for protection in 17 countries and territories and was administered by the Buon Ma Thuot Coffee Association. BMT GI helped increase exports and create added value for Vietnam’s coffee. However, currently there were still difficulties in the GI management and utilization due to too large geographic area, unclear product differentiation, insufficient funding for certification and assessment, low customer awareness, ineffective advertising and trade promotion both domestically and internationally, and limited resources for Association activities. There should be more support for the development of the GI.

3. Presentation on "Issues of coffee processing, trade and value chain linkage" by Mr. Do Ha Nam - General Director of Intimex: Performance of the Vietnam coffee sector in 2014/2015 was not very bright. Area and yields fell sharply due to the fact that 26% of coffee area was old and stunt of over 20 years while rejuvenation progress was still slow. Coffee yield was adversely affected by extreme weather, severe drought in mature stage and early rains during harvest. Exports fell 21% due to hard and high VN/exchange rate while Brazil and Indonesia exchange rate devalued. Many farmers chose to stock up on coffee awaiting higher prices. Coffee prices in London and local prices fell sharply. Inventory of the exporters and farmers was now estimated about 300 000 tonnes including 200 000 tonnes from the 2013/2014 crop. 5 out of 10 largest exporters are Vietnamese enterprises, and Nestlé recently climbed up to rank the 4th. Domestic consumption of Vietnam increased by over 10% in 2015, with bright prospects for instant coffee market. Most instant coffee factories of the largest instant coffee companies in Vietnam were running at full capacity.

It was forecasted that for 2015/2016, global markets would lack 8 million bags; inventories in Brazil would reduce while Brazil and Indonesia would continue to be affected by El Nino and drought. It was forecasted that until 4/2016, Vietnam would be the only coffee supplier to world markets. It was highly potential for the prices to increase, but only when the coffee was sold out. If people continued to stock up on

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coffee inventory, it should pose risks for exporters too, especially when many exporters had raised domestic prices despite sharp fall in international prices. World coffee demand continued to increase, especially in the developing countries. In Vietnam, production was forecasted to continue to decline due to aging coffee plants, coffee farmers switching to other crops, and continued build-up of coffee inventory by coffee farmers. Therefore, it was assessed that 2015/2016 would not much brighter for coffee sector.

4.2. Key discussion points

Chaired by: Mr. Nguyen Do Anh Tuan - Director General of IPSARD - VCCB Vice Chairman.

Panellists: (i) Mr. Vo Thanh Do - Deputy Director of Department of Processing for Agroforestry - Fisheries Products and Salt Production - Head of VCCB Processing and Trade Sub-committee; (ii) Mr. Do Ha Nam - General Director of Intimex; (iii) Mr. Tran Cong Thang, Deputy Director General of IPSARD

Coffee quality: Farmers still tended to continue harvesting green beans as there has been no price differentiation between green and ripe beans in decades. Every country had the standards for coffee beans and ground coffee. Vietnam’s standards had been developed since 1993 but had not been fully complied. Vietnam still exported raw coffee which did not follow any standard at the same price.Coffee processing: There was no support for farmers for coffee wet processing. It was recommended that VCCB and MARD had solutions to this issue.Coffee trading: Vietnam was still competing on price which was not sustainable. The added value of Vietnam's coffee was very low. It was critical to identify the supply chain, supply chain stakeholders and synchronize the whole supply chain. For example, the banks needed to accompany the businesses through both favorable and difficult time while in Vietnam it was not the case. It was necessary to support agents selling directly to roasters. Participation in international organizations and forums: Vietnam was paying an annual member fee to the International Coffee Organization of 6-7 billion VND/year but did not utilize its benefits and advantages as an ICO membership. This fee was expected to rise to US$500,000. There must be solutions to connect more effectively with ICO as well as other international organizations.

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5. Coffee Policies and Sustainability Session

5.1. Presentations

1. Presentation on "Current programs and Initiatives for sustainable coffee development" by Mr. Flavio Corsin, Country Director of IDH Vietnam: Currently there were many initiatives to support sustainable coffee development in Vietnam. The Sustainable Coffee Program (SCP) was the largest pre-competitive global initiative in transition to sustainable coffee production with the goal to have 25% of global commercial coffee certified/verified; 40% of global coffee production certified/verified through public - private partnership and had been implemented from 2012 to 2020. The Initiative for Sustainable Landscape (ISLA) convened public-private partnership to altogether co-invest in sustainable land and water resources management in the Central Highlands. The Coffee Climate Care project in period 2013 - 2016 helped people understand about climate change and its negative impacts on coffee cultivation and cultivation methods to limit the risks posed by climate change. Besides, there were also some other initiatives, such as Coffee & Climate Initiative, Nestlé/EDE/SDC, Nescafé plan, etc. These initiatives were very useful and should be integrated and coordinated towards the general goal of sustainable development of the coffee sector.

2. Presentation on “World Bank’s support for Vietnam’s coffee sector" by Mr. Chris Jackson, Lead Rural Development Specialist - World Bank. The World Bank was supporting the Vietnam Sustainable Agriculture Transformation Project (vnSAT) until 2020. Development objectives of the project include "Improving farming practices and value chain in project area, increasing governmental capacity to support the Agriculture Restructuring Plan efficiently". One of the components of the project was to support sustainable coffee development and rejuvenation with solutions such as: improving sectoral planning; improving sustainable farming practices; supporting rejuvenation through high quality seedlings and financial support; supporting coffee trade. Besides, the project would also support VCCB to implement its 2016 plan, organizational development, and technical assistance for policy issues in long term.

3. Presentation on "National Sustainability Curriculum, TOTs, TOFs promotion" by Mrs. Le Thi Ha Lien – Vice Director of the Information Center for Agriculture and Rural development – IPSARD. Currently, there were many different materials about sustainable coffee cultivation of agricultural extension centers, vocational training schools,

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companies, non-governmental organizations, etc. which led to insufficient and inconsistent knowledge and understanding of coffee sustainable cultivation. Thus SCP had the initiative to develop a National Sustainable Curriculum (NSC) for sustainable coffee production which attracted the support and participation of many public and private partners. Currently the NSC, TOT and TOF were in the final stage of completion for publication. This would be the common property of the sector, universal, neutral and harmonious with all current standards/sustainable farming techniques. In 2016, VCCB would take over NSC, TOT, TOF and promote dissemination. Specific activities might include: information dissemination and communication (in collaboration with the National Agricultural Extension Centre); exploring the possibility of development and application of an accreditation mechanism for NSC alignment and NSC training; integrating and coordinating training programs; going on updating the NSC, TOT and TOF based on scientific and technological advances, natural conditions/climate change, farmers’ conditions and feedback from users, ... In the long term, VCCB expected to unify training/education materials for the whole sector, for both public and private systems.

5.2. Key discussion points

Chaired by: Mr. Nguyen Do Anh Tuan - Director General of IPSARD-VCCB Vice Chairman.

Panellists: (i) Mr. Le Ngoc Bau - WASI Director; (ii) Mr. Flavio Corsin - Director IDH Vietnam; (iii) Mr. Chris Jackson – Lead Rural Development Specialist - World Bank.

Sustainable cultivation training: The training for a large number of farmers required huge amount of investment and effective approaches. Mass media communication was a solution. Currently, SCP was cooperating with the National Agricultural Extension Centre to make video clips and asking for coordination of television stations for broadcast. Besides, currently there were many organizations providing training for farmers on the same content resulting in duplication and waste of resources. There should be a mechanism to coordinate training activities and resources most effectively.

Sustainable resources usage and management: EDE had completed its survey of water resources in Dak Lak and would push up the dissemination of water saving. ISLA was also aiming at development of a mechanism to collect and share water information regularly in the Central Highlands and downstream provinces (Binh Thuan, Ninh Thuan, etc.) and at the same time, looking for technical, economic and institutional solutions to mobilize public and private stakeholders to join the efficient and sustainable management and

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allocation of water. The initiative was also willing to coordinate with other interested organizations such as EDE to disseminate water saving irrigation practices.

VNSAT management and Implementation mechanism: Key feature of the VNSAT Program is that it mobilized organizations under MARD and private sectors to connect and work directly with the provinces. Each province had a Project Management Unit, which played as the focal point for provincial coordination. Currently, Lam Dong had a model of public-private steering committee for ISLA program which was worth considering for alignment and expansion to other provinces. The program was designed in very detail but still flexible enough for the provincial and central government to utilize resources. The program did not provide financing for agricultural extension officers but assistance to all related parties. VCCB and MARD would decide this to mobilize the participation of all stakeholders, including the private sector. This was a loan to the government of Vietnam which required repayment. Therefore MARD/Government would take stronger action. The private sector ought to convince and had good reason to be able to receive fund from this program. The project welcomed the participation of not only companies but also NGOs and research institutes.

Suggestions for VCCB activities: There were plenty international experiences about the operation of a sector coordination board. Regarding activities, in the long term, the stakeholders expected VCCB to have more active role in consultation, development and monitoring of sectorial policies and intervening decisions of the Government. Also, VCCB could perform many more roles such as: value chain development, producers’ organization promotion, commercial development adapting to climate change, stabilized prices stabilization and risk management, research and development, agricultural extension, input and lending management, infrastructure development; capacity building; quality and value added improvement; ... VCCB could manage coffee development fund to manage and supervise the allocation of resources. VCCB could be upgraded to a higher-level organization and report directly to the Prime Minister. In order to fulfil the above mentioned roles, VCCB should consider its current capacity and make plan to enhance its capacity, raise its legal position and legitimacy in decision-making and steering actions.

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6. Policy dialogue session:

Chaired by: Mr. Nguyen Do Anh Tuan - Director General of IPSARD - VCCB Vice Chairman

Panellists: (i) Mr. Le Van Duc - Vice Director of DCP; (ii) Le Ngoc Bau – Director of WASI; (iii) Nguyen Van Son - Vice Director of Department of Lam Dong Province Department of Agriculture and Rural Development; (iv) Mr. Ted van der Put – IDH Program Director, Member of Executive Board; (v) Mr. Vo Thanh Do - Vice Director of Department of Processing for Agroforestry- Fisheries Products and Salt Production.

This Policy dialogue session created a platform for discussion among participants and policy-makers, focusing on the following issues:

Comments Feedbacks

In order to implement the coffee rejuvenation credit program, it was critical to have a detailed rejuvenation plan to each commune and adjusted the current rejuvenation protocol and consistent with the real practices.

Feedback from DCP:

Local authorities already made plan to district level and many places had implanted this plan to the communal level. The current procedures had been adjusted, so instead of the Provincial Department, the Commune could certify appropriate rejuvenation households for loans.

DCP agreed with the idea that rejuvenation should be done on a rollover basis. Rejuvenation would be done only in planned area. Rejuvenation protocol would be modified accordingly based on scientific basis to determine the area and specific conditions for 1-year or 2-year rotation or immediate rejuvenation. WASI was supporting this work, and it was expected that in 2016, the research results were completed to modify the protocol.

Experience sharing from Lam Dong:

Coffee accounted for 60% of agricultural land area in Lam Dong. The province determined to rejuvenate 6-7% of the coffee cultivation

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area/year and perform a number of activities including:

Reviewing the coffee area, including area for rejuvenation

Organizing a conference to sign an agreement with Agribank on the 3,000 billion VND support package.

Developing a simplified lending procedure within a month and lending norm of 180 million VND / ha.

Allowing for flexible application of MARD’s rejuvenation protocol, not necessarily to rotate for 2-years.

Supporting partial funding for rejuvenation seedlings (2014: 17 billion VND, 2015: 12 billion VND), with priority to poor households, ethnic minorities;

Closely coordinating between PPC-DARD-local government and Agribank during implementation process.

Solutions to help increase the amount of processed coffee to 25% and solutions in the future

Feedback from Processing Department:

The achievement in the increase of processed coffee could be thanks to both market and policy factors. As long as the businesses saw a market with profit, they would be motivated to develop processed products with higher added value. In addition, the Government and MARD had many policies to support intensive processing such as Decision No. 69/2007/QD-TTg of the Prime Minister approving Development Scheme for processing industry of agro-forestry products in industrialization and modernization of agricultural and rural development until 2010 and orientations towards 2020; Decision No. 5499 / QD-BNN-CB approving the Planning of

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coffee processing and preservation system associated with coffee production and export to 2020 and orientation to 2030. There were also other policies to encourage enterprises to invest in rural agriculture, especially the high added value stages.

Impacts of international integration to Vietnam coffee sector

Feedback from IPSARD:

TPP is not the key market for Vietnam’s coffee and most of tax rates had been kept flat at 0%, so it was forecasted not to bring many strong impacts on the coffee sector. In addition, Vietnam also participated in many other trade agreements such as the VN-EU, ASEAN,… so it was necessary to look for opportunities and challenges for the coffee sector when joining post WTO trade agreements, in particular, focusing on the issues of standards and technical barriers (sanitary food safety, SPS, ISO, ...)

Coffee trade promotion activities should be prioritized and innovated, from general tasks such as developing a national coffee brand to specific tasks such as participating in trade promotion fairs. It was necessary to have a national strategy on trade promotion.

Feedback from Processing Department:

It was advised to start from company brand development, and then based on that developing national brand. Therefore, companies themselves needed to pay attention to branding for their products not just focus on trade. Currently only rice sector was developing national branding according to the direction of the Prime Minister.

Recent trade promotion activities of Vietnam were not good, with budget of only about 100 billion VND/ year for national trade promotion for all commodities. Therefore, more attention and investment should be put to this activity.

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Companies played a very important role and VCCB should not fix membership but expand further.

Feedback from VCCB:

VCCB membership was not fixed but would change by election every 2 year to ensure adequate representation of all stakeholders. The Subcommittees of VCCB were open and welcome the participation of all interested parties in the coffee sector.

Other recorded comments Proposals to WB/VNSAT to decrease lending rate for rejuvenation to 5% instead of 7%.

It was necessary to have a water usage monitoring system.

It was not necessary to establish national standards for coffee but follow the framework of London, New York and other large coffee roasters.

It was worthy to re-consider the rational development of wet/dry coffee processing and ensure balance with demand. Wet processing was usually applicable to small niche markets.

Pay attention to learn more about mutual recognition terms between countries for geographical indications to facilitate Vietnam coffee trade.

Develop coffee value chain

Raise awareness of people in harvesting and preserving to ensure the quality.

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CONCLUSIONS

The forum took place in one day with a lot of information and fruitful discussions from representatives, and concluded as follows:

1. Sustainable coffee production:

- Adjust the rejuvenation protocol based on scientific basis and relevant with real practices.

- Coordinate with Agribank, VNSAT project, local authorities and other public-private stakeholders to share experiences, solve problems concerning coffee rejuvenation credit program.

- Finalize and disseminate the NSC, TOT, and TOF. Consider to coordinate training programs and training materials of public and private stakeholders in a unified manner.

- Continue to raise awareness and improve sustainable farming practices for farmers from production, harvesting and primary processing.

- Support the organization and development of coffee farmer organizations/associations; promote value chain linkage.

2. Sustainable coffee processing and trade:

- Promote research, analysis and provision of timely and quality market information for stakeholders to serve the policy formulation and decision-making for production and trade.

- Do post-harvest loss assessment and support policies review

- Continue to promote measures to improve the quality and value added of Vietnam coffee

- Promote trade promotion activities, develop coffee brand, for which enterprises play a key role.

- Continue to support the development of the domestic coffee market

3. Policy and Sustainability:

- Coordinate and align sustainability initiatives in the coffee sector.

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- Improve the sustainable and efficient management and use of resources, including

efficient management and use of water and agrochemicals.

- Further strengthen the role and the legal position and capacity of VCCB as a focal point for policy consultation and recommendations; provision of sectoral information; sector representation in national and international coffee forum/organizations; coordination of coffee development resources. Encourage business partners and banks, etc to participate in VCCB Subcommittees.

- Continue to promote public-private partnership in coffee sustainable development.

The above mentioned conclusions and other comments proposed in the forum would be noted and discussed further by VCCB in its meeting on 03rd December 2015 to finalize 2016 plan of VCCB.

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EVALUATION

The Forum content

89% of feedbacks rated “Excellent” or

“Good” for all criteria

Logistics

92% of feedbacks rated “Excellent” or

“Good” for all criteria

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97% feedbacks showed interest to attend the Forum

2016 and recommend for

others

Which topics or aspects of the forum did you find the most interesting and useful?

World and Vietnam Coffee 2014-2015 and Outlook 2015-2016

Market information

Rejuvenation problems and rejuvenation credit program

Coffee vision 2020

Sustainable coffee cultivation

Initiatives to support coffee industry development

Public-private partnership projects

Policy and Sustainability

Buon Ma Thuot coffee geographical indication.

Coffee production session

Presentations of Intimex and Nestlé, IPSARD, WB, IDH

Long and informative Q&A sessions

How do you think the Forum could have been made more effective?

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Contents Facilitation Logistics

Good agenda with long time for discussion and dialogue

Presentations focusing more on evidences and experiences, not on plans and targets; cut down theoretical information, put more practical contents.

More and better quality information, especially forecast information

More attention to climate change adaptation in sustainable coffee development.

Speakers having deeper understanding and knowledge about presented issues.

More participation and voice of farmers and businesses

More specific solutions for each recommendations

More time for discussion and interaction

Better time control in the Q&A sessions.

Better time control and coordination to focus and go straight to key points to avoid lengthy comments and reserve more chances for more voices.

More focused and sharp answers.

Excellent logistics and interpretation.

Diversified groups of stakeholders

Consideration of organizing displays of products and scientific and technical advances.

Consideration of setting up consulting tables supporting value chain connection.

SOURCE

For download of presentations, please visit Vietnam Coffee Outlook and Sustainability Forum

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LIST OF PARTICIPANTS

No. Company/Office Representative Position

Ministry of Agriculture and Rural Development (MARD)

1 DCP (Southern) Mr. Nguyen Van Hoa Vice Director

2 DPT for Agroforestry-Fisheries Products and Salt Production Mrs. Vo Thi Ly Specialist

3 APMB Mr. Dang Minh Cuong Specialist

4Department of Science Technology and Environment (DSTE)

Mr. Pham Dong Quang Vice Head of Department

5 IPSARD Mr. Tran Cong Thang Deputy Director General

6 IPSARD Mrs. Le Thi Ha Lien Acting Director of Agroinfo

7 IPSARD Mr. Nguyen Trung Kien Head of Division

8 IPSARD (Southern) Mr. Nguyen Van Giap Director of SCAP

VCCB

Members

9 MARD Mr. Le Quoc Doanh Vice Minister/Chairman

10 IPSARD Mr. Nguyen Do Tuan Anh

Director General/Vice Chairman

11 DPT for Agroforestry-Fisheries Products and Salt Production Mr. Vo Thanh Do Vice Director/Member

12 ICD Mr. Dinh Pham Hien Specialist/Member

13 VICOFA Mr. Nguyen Nam Hai Vice Chairman/Member

14 DARD Lam Dong Mr. Nguyen Van Son Deputy Director/Member

15 IDH Vietnam Mr. Flavio Corsin Country Director/Member

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16 Acom (Director SMS Viet Nam) Mr. Serge Mantienne Director/Member

17 Intimex Co. Mr. Do Ha Nam General Director/Member

18 Coffee production farmers in Dak Lak Mr. Nguyen Khac Hiep Member

19 Coffee production farmers in Lam Dong Mr. Nguyen Tan Trung Member

20 DCP Mr. Le Van Duc Vice Head/Chief of VCCB office

Processing and Trade Sub-Committee

21 Agency for Industrial Promotion – MOIT

Mrs. Duong Phuong Thao

Deputy Director General/Vice Head

22 Vinacafe Mr. Dong Van Quang Deputy General Director/Vice Head

Policy and Sustainability Sub-Committee

23 SNV Mr. Le Anh TuanSenior Expert – Sustainable market program

24 SNV Mr. Nguyen Chi Hieu Value Chain Expert

25 Worldbank Mr. Chris JacksonLead Rural Development Specialist

26 JACOBS DOUWE EGBERTS (JDE) Mr. Do Ngoc Sy Source Manager

27 EDE Mr. Dave D'Haeze General Director

28 EDE Mr. Do Thanh Chung National Director

Production Sub-Committee

29 Nestlé Vietnam Mr. Ganesan Ampalavanar General Director

30 Nestlé Vietnam Mr. Wouter De Smet Vietnam Manager

31 Nestlé Vietnam Mr. Nguyen Ba Hung Corporate Affairs Department

32 Yara Vietnam Mr. Nguyen Quang Ngan Value Chain Manager

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33 Syngenta Mr. Kumardev Datta General Director

34 Ned Coffee Mr. Pham Ngoc TungManager of Sustainability Department

35 LouisDreyfus Mr. Nguyen Tan DuocManager of Sustainability Department

36 IFC Mrs. Dang Thu Hong Representative of HCM office

37 Rainforest Alliance Mrs. Pham Tuong Vinh National Coordinator

38 4C Mr. Luu Van Hoang Manager in 4C Vietnam

39 Agricultural Extension – Lam Dong Mr. Nguyen Truc Bong Son Director

40 Agricultural Extension – Dak Nong Mr. Nguyen Quang Tuan Director

41 Agricultural Extension – Dak Nong Mr. Dinh Van Dung Specialist

42 Agricultural Extension – Gia Lai Mr. Trinh Quoc Viet Director

43 WASI Mr. Le Ngoc Bau Director General

44 BaConCo Mrs. Tran Thi Xuan Loan Officer

45 PVFCCO Mr. Tran Nghi Vice Head of R&D Department

46 PVFCCO Mrs. Do Thi Thanh Huong R&D Specialist

47 PVFCCO Mr. Nguyen Vu Hien Vice Chairman of BD

Rejuvenation Steering Committee

48 DARD - Gia Lai Mr. Nguyen Son Deputy Director

49 Central Highlands Steering Committee Mr. Tran Duc Thanh

Deputy Director General – Economics Department

Ministry of Science and Technology

50 National Office of Intellectual Mrs. Nguyen Thi Hoai Specialist28

Property Thuong

51 National Office of Intellectual Property Mr. Tran Giang Khue Specialist

Banks

52 Agribank Mr. Vo Van Chan

Head of Department of Customers, Production Households and Individuals

53 Agribank Mr. Le Thuc Specialist

54 Agribank Mr. Nguyen Trung Dung

Head of Department of Marketing and Communications

55 Agribank Mr. Thai Thanh Thuy Specialist

56 Agribank Mr. Trinh Van Tung Specialist

57 Agribank – Middle region of Vietnam Mr. Le Truc

Deputy Director of Agribank – Middle region of Vietnam

58 Agribank Gia Lai Mr. Phan Tien Thu Director – Gia Lai Branch

59 BIDV Mrs. Nguyen Ha Lan Phuong Specialist

60 BIDV Mr. Tu Khac Tuan Specialist

61 Ea Kiet Fair Agriculture Cooperative Mr. Nguyen Van Phuc Manager

62 People Committee - Cu Mgar district Mr. Truong Van Chi

President/Head of Coffee Association Campaign in Cu Mgar

63 DARD – Cu Mgar district Mr. Pham Quang Muoi

Director General of Division/Vice Head of Coffee Association Campaign in Cu Mgar

64 People Committee - Krong Nang district Mr. Nguyen Ky

Vice President/Head of Coffee Association Campaign in Krong Nang

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65 DARD - Krong Nang district Mr. Le Re

Director General of Division/Vice Head of Coffee Association Campaign in Cu Mgar

Lam Dong Province

66 Provincial Farmers’ Union Mr. Tran Duy Viet President

67 Provincial Farmers’ Union Mrs. Nguyen Tuong Vi Vice President

University/College/Institute

68 National Institute of Agricultural Planning and Projection

Mr. Nguyen Trong Uyen Specialist

69 Nong Lam University – Ho Chi Minh City

Mr. Nguyen Duc Xuan Chung Lecturer

70 Open University – Ho Chi Minh City

Mrs. Pham Thi Ngoc Suong Lecturer

71 Open University – Ho Chi Minh City Mrs. To Thi Kim Hong Lecturer

International Organizations

72 IDH Netherlands Mr. Ted van der Put Program Director

73 IDH Vietnam Ms. Vu Thi Giang Program Officer

74 Massachusetts Institute of Technology Ms. Laura Chirot PhD Candidate

75 Helvetas Mrs. Le Thu Hien Program Officer

Businesses

76 Netafim Mr. Vu Kien Trung Director

77 Community Development Center Mr. Bach Thanh Tuan Director

78 UTZ Mr. Nguyen Van Thiet Head Representative

79 OLAM Vietnam Mr. Le Tran Anh Dung Director in Dak Lak

80 Volcafe Mrs. Nguyen Hoai Tam Anh Officer

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81 Volcafe Mr. Doan Nhu Nguyen Officer

82 Noble Resource S.A Mrs. Nguyen Vu Thuong Thuong Sales Executive

83 Noble Resource S.A Mrs. Nguyen Thi Thu Sales Executive

84 Itochu Corp Mrs. Tran Thi Vinh Phuc

Representative in Ho Chi Minh city

85 Bureau Veritas Viet Nam Mrs. Ta Thi Thuy Lien Sales Manager

86 Atlantic Mrs. Le Kim Dung Head Representative

87 Sucafina/Vinacof Mr. Luong Ngoc Duy Officer

88 Intimex Co. Mr. Do Ha PhuongHead of International Relationship Department

89 Hoang Quyen Trading Ltd. Mrs. Doan Uyen Thao Deputy Director

90 Agrexport Mrs. Nguyen Phi Khanh Deputy General Director

91 Haprosimex Mr. Doan Van Ha Specialist

92 CaféControl Mr. Nguyen Van Hai Specialist

93 GAP JSC Mrs. Le Thi Tu Anh General Director

94 Minh Toan Loi Cooperative Mr. Vu Duc Quan Manager

95 Thanh Phat Trade and Construction Ltd. Mr. Pham Hoai Nam Director

96 Thanh Phat Trade and Construction Ltd.

Mrs. Pham Hoai Nguyen Anh Deputy Director

97 Me Trang café Mr. Luong The Hung General Director

98 Nam Phuong Co., Ltd. Mr. Nguyen Van Phap Specialist

99 VinaNhaTrang Mr. Nguyen Van Hoang General Director

100 Vinh Hiep Ltd. Mr. Thai Nhu Hiep Director

101 Vinh Hiep Ltd. Mrs. Luong Thi Ngoc Nu Sales Manager

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102 Café Control Mr. Nguyen Van Hai Director

103 Chanh Tinh Anh Coffee Co. Mr. Nguyen Quang Binh Director

104 Minh Huy Trading Co. Mr. Nguyen The Minh Director

105 AZ Company Mrs. Phan Thi My Hanh Representative

106 AZ Company Mrs. Nguyen Thi Quynh Deputy Director

107 Lan Huong Enterprise Mr. Ho Bai Lam Specialist

108 Lan Huong Enterprise Mr. Nguyen Ngoc Thu Specialist

109 ICONA café Mr. Robert Andrew Lazaski

110 Smucker International Inc Mr. Le Dinh Nghia Director

111 Center For Development And Integration

Mrs. Nguyen Thi Mai Hoa

Manager of Develop department

112 BCCE Mr. Tran Thanh Hai Director

113 DPD Investment and Construction Ltd. Mr. Nguyen Van Hoang

Media

114 Sai Gon Liberty Mr. Nguyen Duc Trung Reporter

115 Vietnamnet Mr. Thuan Hai Reporter

116 Today Agriculture Mr. Minh Quang Reporter

117 Agricultural Economy Mr. Nguyen Hai Reporter

118 The labour Mr. Thanh Tan Reporter

119 The bank Ms. My Y Reporter

120 Enternews Mr. Ngoc Hung Southern Representative

121 Saigontimes Ms. Thu Hien Reporter

122 The Customs Mrs. Nguyen Huyen Reporter

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123 VnEconomy Mrs. Do Thi Kim Oanh Reporter

157 VnEconomy Ms. Minh Phuong Reporter

125 Entrepreneur Magazine Mr. Nguyen Le Reporter

126 The new Hanoi Mrs. Thuc VY Reporter

127 The Natural Resource and Environment Mr. Quoc Dinh Reporter

128 The great solidarity Ms. Lai Thi Hoa Reporter

129 The Consumer Mr Quang Huy Reporter

130 The Phapluattp Mr. Tran Thanh Son Reporter

131 Vietnamese Agriculture Ms. Pham Thi Hong Nhung Reporter

132 Vnews Mrs. Hua Thi Chung Specialized Reporter

133 Vnews Mr. Tran Manh Reporter

134 The Youth Mr. Pham Hoang Nam Reporter

135 VietnamNews Mr. Ngoc Thien Reporter

136 Magazine of Labour & Social Affairs Mr. Truong Giang Reporter

137 LE COURRIER Mrs Duy Ly Reporter

138 VTV9 Mr. Trinh Son Reporter

139 VTC16 Mr. Nguyen Cuong Reporter

140 VITV Mrs. Hong Phuc Reporter

141 HTV9 Mr. Nguyen Nhu Quan Reporter

142 VTC10 Mrs. Da Giang Reporter

143 FBNC Mr. Truong Duy Reporter

144 VOH Radio Ms. Le Huong Rural Editorial Bureau

145 NhandanTV Mr. Nguyen Cuong Reporter

146 CaFebiz Mr. Dinh Quang Duy Reporter

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