Coffee task force (Production Sub-committee under VCCB) WEF meeting, Hanoi April 14 th, 2015.

Coffee task force (Production

Sub-committee under VCCB)

WEF meeting, Hanoi

April 14th, 2015

MARD

PUBLIC PRIVATE PARTNERSHIP

WASI

NAEC

Secretariat:

WHERE WE ARE WHERE WE ARE

Disseminating good farming

practices Farmer group

model NSC Value chain 51 demos in

2015/16

Consolidating PPP Coop

PPP Coop model with satellite farmer groups

3 Coops in 2015 Trading 3.000 tons of

coffee Trading 600 tons of the

input agricultural materials

Cooperation with Agri finance WG

Transaction model: Coop-bank-company

Micro finance solutions

“Make Vietnam the recognized reference of Robusta”

AGREED 2015 STRATEGY AGREED 2015 STRATEGY

Pillar I: PPP & Control demos grow by yearsPillar I: PPP & Control demos grow by years

Pillar I: Steady Higher Yield by YearsPillar I: Steady Higher Yield by Years

+5%

+11%

+11%

+13%

Average yield of 4 years: +10% higher

Pillar I: Good Practice with Better bean sizePillar I: Good Practice with Better bean size

Summary of 71 demos in 4 Provinces

Improve ripenning and bean size

Summary of 71 demos in 4 Provinces(Dak Lak, Dak Nong, Gia Lai, Lâm Đồng)

Category PPP Control Difference

Yield (ton/ha) 4.4 3.9 + 0.5 (13%)

Profit (USD) 6,621 5,813 +809 (14%)

CFP(kgCO2eq/ton green bean) 661 1,481 - 824 (- 55%)

Pillar I: Pillar I: Not only Good farming practice with Better Profitability …Not only Good farming practice with Better Profitability …

* Unit area: Ha

* Increased profit: + 809 USD/ha ( + 14 %)

…But also significant reduce the amount of chemical fertilizer usage:

PPP: 1.850 kg/ha

Control: 2,240kg/ ha

Pillar I : Reduced 55% of gas emission follow Yara fertilizer application

6 demos

PPP program: 304 kg N/ha5.2 t g.b./ha

Control program:484 kg N/ha4.8 t.g.b/ha

From : Yara Research Center, Haninghof, Germany

kg C

O2e

q/t

gree

n be

an

661

1,487

Pillar I: Demos are showing encouraging results Mr Nguyen Duy Thanh, Dak R’lap, DaknongExtensionnist

Mr Doan Van Huan, Lam Ha, LamDongFarmer leader

« less fruit drops this year »

« homegenous flowering & fruit set »

« bigger cherries »

« Expected Yield : > 4 T/ha »

« saving labour cost, no need to burry the

fertilizer»

« better fertilizer solubility »

« greener leaves, longer branches »

« expected Yield : 4,5 T/ha»

Pillar I: PPP Good farming practiceTraditional PPP PIC/Investment

Varieties Old tree, less than 3 tons/ha

TR4 (yield 7.3 tons/ha), TR12 (4.3 tons/ha)

Nestle – WASI Cooperation

Irrigation Over-irrigation (1300l/tree)

Based on the tree & farm conditions ( up to 40% water saving (439l/tree)

Sponsor by Nestle - IWMI – SDC

Organic fertilizer

Almost no compost Promote on-farm composting from coffee husk (1.5 tons/ha)

Nestle recommendationIDH/NSC curriculum

Chemical fertilizer

Unbalanced nutrition and high amounts of fertilizers

Balanced nutrition based on soil & leaf analysis and more efficient fertilizers ( -15 %)

Yara recommendation

CPM Pesticides with doubtfull quality

Using fungicide to avoid berry drop

Syngenta recommendation

Carbon footprint

Min. 1,5 T CO2 per ton green bean

Min. 0,7 T CO2 per ton green bean(- 55%)

Yara research

Yield & farmers profit(per Ha)

3.9 T5,813 USD

4.4 T ( + 13%)6,621 USD (+ 809 USD)

Nestle – Yara – Syngenta – IDH and partners

Farmer grouping

Individual farmers Farmer group, TOT training. Upgrade to Coop

Nestle – Yara – Syngenta – IDH and partners

Pillar II: Operating Model of PPP Farmer Group

Technical Group DARD/PAEC

“Extensionist”Farmer Group

Leader

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Relationship: Management

supportRelationship: Technical support

Tech support, organization and

management support

12

Pillar II: Operating Model of PPP Coop

Input company

Farmer

Group

Farmer

Group

Farmer

Group

Farmer

Group

Farmer

Group

Farmer

Group

Coffee buying

companyManagement Board

MOU

Coop’s warehouse

Large quantity

Wholesale price

List of farmersBuy input

List of farmers Sell coffee

MOU

Large quantity

Price with premium

Wholesale model – From input to output

Payment Delivery

13

Pillar II: PPP Coop – The flower model

Sat

ellit

e g

roup

CENTRAL COOP

Satell

ite g

roup

Satellite group

Satellite groupSatell

ite g

roup

Satellite group

Satellite group

Sat

ellit

e gr

oup

- 1 Central coop for each province (legal entity)

- PPP farmer groups will playthe role of satellite mini coop

- Order for buying input, selling output will be sent to central coop => central Coop will achieve the volume target of companies to enjoy the wholesaleprice, then, share the benefit to satellite

Pillar III: Opportunity to Collaborate with Agri-Finance TF

FARMER GROUP INPUT COMPANY

Small loan Borrow small loans at certain crop stages

Marketing & Sale Sell in large quantity via bank transfer

Deposit/saving Open bank account for farmers

Overdraw/loan Input investment to get higher yield

COOP COFFEE BUYING COMPANY

Medium loan, risk management

Farmer organization in coop

Marketing & sales Participate in farmer group/coop meetings

Loan/Payment service

Buying inputs, selling coffee, improve cash flow

Risk management Pre-screen borrowing farmers

15

Pillar III: Coffee Crop Cycle and Financial Needs

Coffee farmer don’t need financing all the time. The need of money varies based on the development of coffee trees:

For 1ha coffee farm, farmer will need 5 mio VND in July and 8 mio in Sep. Around 70% coffee farmer will need small loans (350K out of 500K farmer household)

New crop

Jan March

Blossom

May

Form cherry

July Sept

Develop sizeof bean

Develop size of cherry

Dec

End of Crop

Farmer don’t need to be financed

Need to be financed 50%

Need to be financed 100%

16

Pillar III: Tri-Parties Meeting

17

- Tri- parties meeting between BIDV – IFC – Coffee Task Force on April 14

- Discuss to build a pilot finance solution for PPP farmer group, PPP coop and the link for whole value chain of 6 stakeholders (nha nuoc – nha nong – nha bang – nha doanh nghiep – nha khoa hoc – nha chung nhan) (government – farmer – bank – company – researcher – certify organization)

NEXT STEPS

• Disseminate good farming practice to boost the production of sustainable coffee: Need support and alignment from public sector (National Curriculum & NAEC)

• Pilot PPP cooperatives - Connect PPP farmer groups into central coop: Need the support of public sector (Local meeting between authorities, traders, banks, coop and companies to support PPP coop model)

• Pilot the micro financing model with Agri-finance task force

• Cooperate with Growth Asia – WEF.

Thank you