COFFEE SUPPLY CHAIN

1. Overview coffee
Vietnam today ranks as the world’s second largest coffee producer. Production and
exports coffee are growing for years but value not high. Volume coffee accounting for 20%
market share, but the value is only about 2%.
Vietnam exported coffee beans to 82 countries worldwide. Main markets import green
coffee bean: Germany, USA, Spain, Italy, Japan, Korea, Russia… Coffee exports price
fluctuate 1500-2100 USD / ton. Currently, Vietnam exports mainly coffee bean: robusta and
arabica. 2014, coffee exports totaled 1.7 million tonnes and valued at USD 3.56 billion.
Vietnamese domestic consumption continues to grow (2 million bags in 2014, about 10%
of total annual coffee domestic production). The expanding coffee retail sector will contribute
to stronger coffee consumption growth.
Vietnam continues to import small, but growing, quantities of green coffee, as well as
roasted and instant coffee, from neighboring countries such as: Laos, Indonesia and China.
2014, planted coffee area is 653.000 hectares, Robusta is mostly grown in Dak Lak, Lam
Dong, Dak Nong and Gia Lai; Arabica coffee is grown in Quang Tri, Son La and Lam Dong
2. Some problems
- Replanting issue: The recommended age for replanting coffee trees in Vietnam is 25
years and according to industry experts, approximately 100,000 HA currently needs to be
replanted, and by 2020, more than half of the Vietnamese coffee trees will need replanting.
- Over 80% coffee area of the country due to farmers direct independence management
with small size (0,5-1 ha), leads to high costs investment, products made uneven and unstable.
Farmers have difficult access to the advances of science and technology, market as well as
other services such as credit and banking, which led to the branding, product quality certificate
difficult can be performed.
- Linkages and cooperation between the components of the value chain loose. There are
so many coffee buying agent but do not agree on the mode of consumption and prices.
- transportation: problems of moisture, temperature, insects or sea water intrusion due to
packaging substandard, affecting the quality of coffee
- distribution channels: Currently, VN exports coffee mostly must through wholesale and
foreign companies rather than direct access to coffee roasters world, making coffee exporters
always passive.

- Currently, Vietnam coffee industry has Vietnam Coffee Coordinating Board (VCCB)
and 2 large organization is the Association of coffee of Vietnam (Vicofa) and Group public-
private partnerships on coffee (Group PPP), coordinating and connects farmers, small traders
and enterprises domestically and internationally with the central authorities and local,
contribute to the successful implementation of programs for sustainable coffee production in
Vietnam
- The policies of government implemented ineffective. Despite the current credit policy
has more favorable terms for all actors involved produce channels, processing and consumption
as low interest rates, debt reschedule but all the elements to reach the policy are not well.
The administrative procedures of the bank not open, causing difficulties for growers, dealers
and business owners.
3. Solutions
- Reduce the area of Robusta coffee in unsuitable regions; assess the competitiveness of
Arabica coffee, defining suitable regions to expanse the area of Arabica coffee: da lat, dien
bien-son la, quang tri-nghe an.
- Increasing public investment on extension services and rural infrastructure; Increase the
credit access for different stake holders in commodity chain
- Building a system of modern consumption, adapt to process transactions in domestic and
international. Improving the system of information on the business environment, information
distribution system, current commodity prices actively applying e-commerce in the purchase,
sale, consignment and domestic coffee International.
- coffee has to be packaged in standard packaging, containers should be dry, cool,
ventilation and must be fumigated
- Speed up the process of applying new quality standard TCVN 9193 : 2001; Exporters
need to link coffee growers to construct materials for "clean" coffee production,
environmentally friendly, has certificate as 4C, UTZ Certified, Rainforest Alian, VietGAP
- VN should build coffee Fund to support industry, promote Group PPP, enhanced
activity of VCCB
- Government policies: Continuing innovation mechanisms and policies to support the
coffee industry development, improve the efficiency of production – business

Overview rubber
Viet Nam ranks third in the world in rubber production, accounts for 7.9 % of global
output, behind only Thailand (34.1 %) and Indonesia (26.9 %). Vietnam has exported to 86
countries, which led by China, Malaysia, India.
Vietnam has about 977,700 hectares of rubber plantation, mainly in binh phươc, binh
dương, tay ninh, Rubber production reached 953 700 tonnes in 2014 and yield 1.692kg / ha.
Domestic consumption of rubber product is very small. Because rubber is mainly used for
manufacturing of tires, the auto industry of our country is still underdeveloped. Rubber is used
in produced tires, medical gloves, conveyor belts, seals use in industrial
In 2014, Vietnam has to import large quantities of raw materials for processing to export.
The Government has also developed cooperation to extend rubber area in Laos and
Cambodia, planned to plant 100,000 hectares in each country.
Some problems
- The market share of rubber of Vietnam was quite small when compared to Thailand,
Indonesia and Malaysia, and still passive in the price fluctuations. Although Vietnam exports a
lot of natural rubber around the world, the proportion of exports to China is too high. Therefore,
rubber industry in Vietnam is directly effected from China.
- Although the export proportion to Taiwan, Germany, South Korea and the US is not
high, the turnover from this market is quite large, especially German. Besides, India has
became a potential market of Vietnam. The rubber industry in Viet Nam must change the
product and market structure; expand the market and continue promoting exports to the other
potential markets.
- 3 important channel in the sales process is direct export, entrusted export and domestic
consumption. Every year, businesses in this sector have to deduct part of the output for export
trustee through VRG group. The rest will be exported directly and domestic consumption.
- Method of natural rubber exporter in Vietnam, most cross-border delivery at the rate of
34.9% of total export volume. (FOB) accounts for 23.9%, (CIF) accounted 12.2%. Use latex
tank truck containers, tank containers dedicated to the rubber.
- Vietnam Rubber Association (VRA) has attempted to deploy trade promotion activities,
set out measures to respond in times of low prices; exchange information to help businesses,

rubber farmers seize the market, positive and coordinate with ministries and branches to
remove difficulties for enterprises. Currently, there are 100 rubber industry exporters, but only
has 21 businesses to contribute funds, most of which are now under the Vietnam Rubber
Group.
- The government have some tax policies to remove difficulties for organizations and
individuals such as remove export tax for some rubber items, export credit insurance to help
prevent and minimize risks export of goods, contribute to ensuring financial security for
businesses and boost exports.
Solutions
Focus on restructuring towards to enhance value and sustainable development, reduce the
dependence on raw material exports.
Restructuring product towards to intensive processing and commodity diversification
Planning for production areas and processing natural rubber.
Enhancing the quality management to enhance the competitiveness of natural rubber
Diversifying export markets to reduce excessive dependence on the Chinese market in
order to limit the risk of price fluctuations and export orders.
Attracting foreign investors have the financial capacity, brand and market share in the
processing of rubber products in Vietnam. Simultaneously, Government chaired positioning
rubber products.
Preferential import tariffs for raw materials, machinery and equipment, which not yet
produced to serve the rubber product processing.
Improving the effectiveness of Vietnam Rubber Association.