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Case Study Partnership for Sustainable October 2016 Case Study Partnership for Sustainable Agriculture in Vietnam Coffee Working Group Business Model Overview Grow Asia Case Study PSAV Coffee Working Group Business Model 2 Grow Asia Case Study PSAV Coffee Working Group Business Model 3 1 2 Overview Stakeholders Contents Coffee Sector Challenges Government 1 Overview 3 Accounting for some 60% of global The coffee sector faces numerous Ministry of Agriculture and Rural Robusta coffee exports, Vietnam boasts the challenges, even with farmers at peak Development 2 Stakeholders 3 world’s most competitive coffee producers. productivity. Ageing coffee tree stock, (MARD) Steadily increasing over the past three depletion of groundwater supply, Crop Production Department 3 Access 5 decades, yield ranks among the highest in diminishing soil fertility, and climate change Western Highlands Agriculture and Forestry the world. As the most efficient, low cost threaten its long-term sustainability. The Science Institute 4 Progress and Achievements 7 supplier, Vietnam coffee production derives smallholder nature of coffee farming also (WASI) almost entirely from smallholder farmers, calls for strong coordination to address Institute of Policy and Strategy for 5 Timeline 8 who account for 95% of its harvest across industry challenges. Agriculture and Rural Development the concentrated Central Highlands (in (IPSARD) the provinces of Dak Lak, Lam Dong, Dak National Agriculture Extension Centre Nong, and Gia Lai). With an average plot of Coffee Working Group Activities (NAEC) 1.5 hectares (Ha), these farmers manage Provincial Agriculture Extension Centre the majority of farming activities from family Responding to challenges in the sector, the (PAEC) labor and sell their coffee (mostly green PSAV Coffee Working Group (WG) brought Copyright beans after hulling) to local collectors for together industry players and Government eventual delivery to exporters. Coupled of Vietnam (GOV) officials with the goal of Private Grow Asia Singapore with low costs for labor and inputs, coffee reaching 20,000 smallholder farmers by Copyright © 2016 by Grow Asia. cultivation remains highly profitable for 2020 and improving outcomes in coffee Banks Vietnam’s half million smallholder farmers, quality, coffee output, coffee sustainability, Bank for Investment and Development All rights reserved. No part of this despite their lack of organization into and farmer incomes. The WG aims to of Vietnam (BIDV) publication may be reproduced, stored in a aggregated units (such as cooperatives). achieve this through activities that span Asia Commercial Bank (ACB) retrieval system, or transmitted, in any form the entire value chain and enhance farmer Agribank or by any means, electronic, mechanical, access to knowledge, inputs, information photocopying, or otherwise without the and markets. The following diagram depicts Crop Protection prior permission of Grow Asia. the core activities and structure of the WG. Bayer Syngenta Vietnam Co. Ltd. Grow Asia 74B Tras Street, Exporters Singapore 079013 Louis Dreyfus +65 6221 9528 [email protected] Fertilizer Protection www.growasia.org Bhin Dien Fertilizer BaConCo Fertilizer Yara Petrovietnam Fertilizer and Chemicals Corporation (PVFCCO) Roasters Nestlé NGOs and others EDE Consulting 4C Rainforest Alliance SNV IDH IFC Grow Asia Case Study PSAV Coffee Working Group Business Model 4 Grow Asia Case Study PSAV Coffee Working Group Business Model 5 PSAV Coffee Working Group 3 Core activities and structure Access 4C Seeds Fertilizer Crop Protection Training Government In line with the WEF’s New Vision for Access to knowledge Rainforest Alliance (RA) Common Code for Nestlé Yara Syngenta 4C MARD Agriculture, the Working Groups adopt —Participates in the Coffee WG at all Coffee Community Syngenta Nestlé an inclusive value chain approach toward Nestlé appropriate levels, shares information, WASI RA improving smallholder productivity, —Provides training on best practices experience and expertise; contributes MARD Syngenta profitability and environmental (farming, tree rejuvenation, safety and lessons learned from other coffee Vietnam Ministry of WASI sustainability. Projects are designed environment). growing regions. Agriculture and Rural as end-to-end interventions, and aim —Provides training to assess quality of —Conducts ToT workshops to increase Development to improve smallholders’ access to current and new coffee varieties to ensure local capacity for training farmers to knowledge, inputs, finance, markets and preferable and consistent quality for maintain or increase production while RA information. industry and consumers. protecting natural resources and meeting Rainforest Alliance internationally accepted standards on Yara sustainability to benefit farmers, farm- NAEC Extension —Performs field trials to monitor workers, local communities and the National Agriculture Services improvements in yield and agreed quality environment. Extension Center NAEC parameters. Trials to be based on current —Conducts local workshops to get farmer PAEC standard grower practice. and other stakeholder input into the PAEC —Provided training via demo plots to Sustainable Agriculture Network (SAN) Provincial Agriculture showcase product value and quality. standard to ensure that it is effective in Extension Center —International value chain specialist to the local conditions. Also uses these work with local partners to support value workshops to develop new farm- chain competitiveness. management guidelines to improve yield and/or quality, including through better 4C Association (Common Code crop nutrition and tree rejuvenation. for the Coffee Community) Farmer Groups —Participates in and exchanges learnings The Government of Vietnam (GOV) in Coffee Working Group under MARD through the National Agriculture for linking 4C activities with the 4C Extension Centre members, localities, and other relevant — Supports training across all Farmers Farmers Farmers Farmers Farmers stakeholders. demonstration plots set up by WG —Conducts training-of-trainer (ToT) training members. The GOV also assists in the and farmer training to improve coffee formation of farmer organizations and quality and enhance the understanding cooperatives to allow the project to reach and application of sustainable practices. farmers at scale. —Supports coffee farmers in continuously — Technical expertise provided by private improving their performance in social, sector companies are disseminated economic and environmental aspects through extension services to the through capacity building, training and cooperatives. access to tools on good agricultural practices (GAPs) and the basic 4C sustainability practices. —Facilitates working groups to adapt the 4C Indicators to the local realities. Off-takers Farmers are free to Nestlé sell coffee to any buyers, though Nestlé offers premium prices. Grow Asia Case Study PSAV Coffee Working Group Business Model 6 Grow Asia Case Study PSAV Coffee Working Group Business Model 7 4 Progress and Achievements Access to inputs Access to markets Access to enabling environment Productivity Overall — Average yield comparison between PPP — Establishment of the Vietnam Coffee Yara Nestlé GOV demos and control demos from 2011–15: Coordination Board (VCCB). —Conducted survey of the nutritional status —Supports post-harvest treatment facilities —Facilitates engagement between the WG 12% higher yields. — Supported 55 farmer leaders for over of coffee trees based on tissue and soil (tarpaulins, relevant machines, etc.) and existing farmer organizations, and — Yield comparison between PPP demos 4,378 farmers in 4 provinces. analysis (experiences in Vietnam so far —Procures green coffee (GC), providing helps to form new farmer organizations if and control demos in 2015–16: — Total of 260 demo plots over the course show that the coffee crop is particularly it meets Nestlé’s GC specifications and relevant. 17% higher yields. of 5 years, with 61 demo plots planned deficient in P, Mg, B, Cu, Zn, Mo). is in accordance with current market —Supports WG members by generating — Improved quality, with greener and for 2016/17. —Conducted survey of current conditions. procedures to grant cooperation with the healthier leaves, and larger and riper — Developed 3 cooperatives in Lam Dong, management of the coffee crop with local authorities. cherries. Dak Lak and Dak Nong, with another particular emphasis on fertilizer use, farm 4C Association —Provides farmer finance support model cooperative planned in Gia Lai. economy and environmental impacts. —Coordinates activities with partner with WG. — PPP coffee documentary film was —Derived a program for best plant nutrition organizations, joint activities, —Authorized the genetic material exchange Profitability broadcast on Dak Lak media. practice including the scope for foliar benchmarking, etc. between WASI and Nestlé for breeding — Average income comparison — Developed National Sustainability fertilizers (such as micronutrients). —Cooperated with Crop Production new varieties. between PPP demos and control demos Curriculum. —Calculated a farmer cost benefit analysis Department of MARD in drafting a from 2011–2015: for best plant nutrition practice including guidance on implementing the 4C 14% higher farm income. discussion of incentive parameters with codes in VN-localized guidance with relevant stakeholders on quality and yield. encouragement by MARD to provincial —Maps and evaluates common practice in departments. Environmental sustainability use of water / irrigation. —Supports
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