Developing sustainable coffee supply chain

Thursday - 18/11/2021 16:29
As November comes, Huong Phung commune (Huong Hoa district, Quang Tri province) is filled with a bustling cheerful and vibrant atmosphere. The commune is entering the busiest period of coffee harvesting season.
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Watching the ripening coffee cherries shining under the autumn sun, Ho Van So, head of the farmer group of Xary Village (HP) keeps asking:
“When will the buyer from Hoi An come to purchase the coffee?”
With most of the members being people of Van Kieu ethnic minority, Xa Ry is one of seven groups participating in contract farming as suppliers of Hoi An Roastery and a local processor (Le Ngoc Trinh household coffee processing unit). This partnership was established thanks to the support of the Medical Committee Netherlands - Vietnam (MCNV) and has been growing robustly over the years, promising a bright future for the journey toward a sustainable coffee supply chain.
Despite being consolidated throughout the years, COVID-19 has put this promising coffee supply chain at the risk of being shattered.
This challenge forces businesses to formulate an adapting strategy and look for new resources for development. Aiming to facilitate the coffee supply chain access to the Dutch Fund for Climate and Development, MCNV has initiated a project titled: “Agroforestry coffee production of Hoi An Roastery & Arabica Coffee Smallholders in Quang Tri province, Vietnam.”  
The project aims at promoting contract farming and certified coffee production to enhance the supply chain, contributing to the sustainable development of coffee production in Quang Tri.
In 2021, the project marks a significant milestone via participating in the Rainforest Alliance (RA) certification program (period 2021-2025, with a vision toward 2030).
If the program is fully implemented, it will help increase farmers’ income, enterprises’ profit margins and contribute effective solutions to tackle a number of social, environmental concerns and issues of productivity, product quality.
Before participating in the project, most farmers sold the coffee to the middlemen.
Ho Thi Nuong, a female member of Xa Ry group says, notes that: “They are the one who set the price, bargaining is impossible for us, since they are our only one buyer”.
Informal trade has been the most popular way of doing business in the locality. Farmers’ limited market access and low level of market penetration has led to uncontrolled harvesting, which negatively affects the quality of processed coffee beans and pulls down future yields.
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Farmers are trapped in a circle of concerns in terms of price, yield, fertilizers, techniques, etc. Most of them acquire fertilizer on credit and can only settle the payment once they receive cash from coffee buyers. This leads to complete reliance on middlemens, who play the role of both fertilizer supplier and coffee buyer.
“Thanks to the project, coffee cherries are now harvested in accordance with a standard guideline. The quality is improved and the price is therefore increased. All participating groups are enabled to bargain with the buyers before signing a contract. Payment for coffee sale is made in due time, facilitating the farmers to pay for the fertilizer bought on credit. Things are getting better!”
Sharing the views of Nuong, Ho Van So adds:
“In 2020, I began to remove old low-yield trees to plant around 2,000 trees per hectare. Quality is more important than quantity. Reducing the number of trees also means using less fertilizer. At the same time, we are growing other kinds of trees such as peppers to generate more income and provide shade for coffee trees.”
In October 2021, a series of workshops was organized by MCNV to give farmers an overview of the Rainforest Alliance certification, in particular the criteria that must be met.
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“At the beginning, it was difficult to get used to writing a farming diary and doing garden monitoring,” said Vo Chanh Thi from Dai Do village.
“Nonetheless, step by step, we have found out that this practice is highly beneficial. In addition to improving coffee quality and quantity, this model helps farmers feel confident since it ensures a stable and favorable price. Not only can they sell coffee at a higher price compared to the market price, they also get an extra income in accordance with a so-called “Sustainability Differential’’ policy when participating in the RA certification.
Seven groups of farmers (over 50 members) have taken part in the contract farming model of 2021, of which nearly 40% are people of ethnic minority. According to the farming contract, coffee cherries are sold to enterprises at significantly higher-than-market price.
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MCNV plays a facilitating role in this coffee supply chain by contributes supporting, consulting and monitoring an entire process, including the establishment and capacity development of farmer groups, contract negotiations and signing, coffee supply and processing, bookkeeping, quality control, and development of a monitoring and evaluation system. In addition, MCNV has connected the beneficiaries with a local bank to open individual bank accounts, ensuring the transparency and timeliness of payment.
Based on the current progress, the year 2021 is expected to be a great stepping stone for the journey toward RA certification.

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