** Doan Trieu Nhan, a senior specialist of the Vietnam Coffee and Cocoa Association: businesses and farmers need closer connection.

Interviewer: Many people think the price of coffee has decreased because foreign importers have cornered the coffee market. Do you think this is true?

Doan Trieu Nhan: We have had a bumper coffee crop this year. Coffee was sold at about US$1,500 per tonne at the beginning of the season, then prices fell to US$1,400 per tonne in June. Domestic prices have dropped from VND25 million to VND23 million, even to VND21 million per tonne. It is supposed that speculation is the reason for the decrease in coffee prices. This is quite possible as there are now 12 foreign coffee importers in Vietnam and they buy coffee directly from the planters.

Coffee prices depend on supply and demand. Vietnam has had a bumper crop this year while coffee production in Columbia, the biggest coffee-exporting country, has been poor. At the beginning of the season, importers had to look for high-quality coffee in Vietnam and this raised the prices. When they had enough for their reserve, they began speculation.

Interviewer: There are 146 domestic coffee businesses that purchase coffee, while the number of foreign importers is 12. Is it true that they can corner the market because Vietnamese businesses are not properly connected?

Doan Trieu Nhan: 126 of the146 domestic businesses are small businesses who are financially incompetent and inexperienced. The other 20 businesses don’t share information. This is one of the reasons why well-connected foreign businesses can control the market.

Interviewer: Most coffee buying agents only sort out coffee after buying it up. Do you think this has a negative impact on the quality of coffee?

Doan Trieu Nhan: Coffee planters usually harvest coffee even when it is unripe because they are afraid their coffee may be stolen; buying agents have to buy all the coffee and reprocess it before exporting, and this explains the low-quality of our coffee. It is time we changed the way we do business to improve our coffee quality.

Interviewer: What, in your opinion, should we do to reduce the risk for coffee planters?

Doan Tri Nhan: There are several ways for us to minimize the risk. Businesses and planters should be well linked. Businesses can support farmers with capital, seeds, and technology. Farmers sell their products to businesses. They can also buy insurance for their coffee.

Interviewer: What can we do to strengthen the coffee business in Vietnam?

Doan Tri Nhan: There should be a better connection between farmers, between businesses and between businesses and farmers. Businesses lose opportunities because they don’t want share information. They don’t want to share their big contracts with other businesses even when they can’t fulfill them. The Coffee and Cocoa Association established a Club for leading businesses decades ago but the Club doesn’t function well. Recently we have set up a new club for the 20 leading coffee exporters in order to improve the capacity of domestic business. In addition, we are working with the Department of Farming to establish an alliance between businesses and farmers.

** Nguyen Minh Tri, Head of the Department for Co-operatives: We need to create better conditions for the development of co-operatives.

Vietnam’s climate and soil are very good for coffee planting, especially in the Central Highlands and the Southeastern region. But, high-quality coffee makes up only a small amount because 90 percent of the coffee producers are small family businesses, each of which owns only 1-2 hectares of coffee. The coffee business, with 2 million labourers, contributes 3 percent of the nation’s GDP and this will improve once there is better co-operation in the industry.

The Department for Co-operatives is now helping the Ministry of Agricultural and Rural Development work with other ministries and localities to establish a new model of Co-operatives. Once a legal frame is completed, the co-operatives will function more effectively.

** Dave’haeze, the chief representative of Asia-Pacific in Hanoi: The model of farmer co-operation is the most effective management.

In our study in the Central Highland provinces of Dak Lak, Gia Lai and Lam Dong, we found that in addition to damage by cicadas, most of the coffee planted before 1975 has deteriorated, leading to the poor productivity. Because of a lack of capital, households usually have to sell their coffee prematurely to pay off their debt. This is another reason for the low-quality of coffee.

The best long-term model is co-operation between farmers. Risk can be partly controlled when farmers are co-operating in an organization. Businesses can buy coffee in bulk, while farmers can get assistance from the buyers.