Mekong Institute transforms the lives of coffee growers

business November 13, 2017 01:00

By Sumalee Suwannakorn
THE NATION
VIETNAM

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THAILAND-BASED Mekong Institute (MI) has taken on a mission to improve the lives of coffee growers in Vietnam and the outcome so far is encouraging.



“My family has grown coffee plants since 1985 but, after we joined the MI project, we have seen significant improvements in reducing costs and earning more profits in 2016,” said Le Duc Binh, leader of the Sa Ry farmer group in Huong Phung commune, Huong Hoa district, Quang Tri province. 

Le’s group, comprising 51 families (28 Vietnamese and 23 hill tribal people), last year sold 331 tonnes of coffee beans, pocketing 125 million dong (Bt178,572), without a middle man.

“With MI’s help, we’re able to create a network with coffee growers from nearby areas to increase our bargaining power and share costs in production and transport. As we are now gathered in numbers, the network can more easily secure loans to purchase what is needed… Our overall income increased by 30 per cent,” Le said.

The group produces 8,170 kilograms per day and, after subtracting 20 per cent for low-quality beans, still fetches 55 million dong (Bt78,571). 

After subtracting expenses, 53 million dong (Bt75,714) is left for sharing among members at 6,570 dong (Bt9.39) per kilogram, he said. This was better than before, when they earned only 3,700 dong per kilogram.

Farmer Ho La Ngan said: “Everything changed for the better when MI came; we gained knowledge via training, and are able to join in groups to share transport costs and bargain for higher prices. Before, I sold coffee beans at 5,500 dong (Bt7.85) per kilogram and, after MI’s help, I sold at 5,800 dong (Bt8.30) with lower costs to shoulder,” he added.

Vietnam, having 650,000 hectares as coffee plantations mostly in the Tay Nguyen Central Highlands, is the world’s No. 2 after Brazil in producing and exporting coffee. 

It is the world’s No. 1 producer and exporter of Robusta coffee. In 2014, Vietnamese coffee exports were worth US$3.4 billion (Bt112 billion), but there have been issues with inconsistent production, low quality beans and the lack of farmers’ access to funding. 

The project was part of the Regional and Local Economic Development – East-West Economic Corridor (RLED-EWEC) being implemented since March 2013 by MI with support from the Swiss Agency for Development and Cooperation. 

To boost trade and investment of the areas along the EWEC, the MI helped small farmers and small and medium-sized enterprises to gain access to regional and international markets. 

This boosted their competitiveness in the Asean Economic Community’s single market, which is characterised by free movement of goods, services and investments, as well as freer flow of capital and skills.

Since 2013, the MI helped coffee growers in Huong Phung commune negotiate in a larger group with the Vietnam Bank for Agriculture and Rural Development as well as with coffee processing factories and fertiliser factories. 

Three years later, farmers gathered into 17 groups with better bargaining power with buyers and good credibility to secure investment money or loans.

Coffee processing firms that buy fresh beans to unhusk and roast for sale in Hanoi, where the products are distributed worldwide, also welcomed the project. Dinh Van Tien, executive of Minh Tien Coffee Import-Export Co, used to hire people to screen coffee beans, as some farmers deliberately mixed in green ones, sand or water for more weight.

“With MI’s helps, farmers now have better knowledge to grow and harvest good quality produce and earn better prices accordingly,” he said. The company currently bought coffee beans from five farmer groups but still needed more – especially organic coffee beans that fetch higher prices.

Nguyen Quan Chinh, vice chair person of Quang Tri People’s Committee, said: “It is pity the project only has two years left. It should continue as there are many poor farmers in need of aid.”

Le Tuan Dung, director of the Quang Tri-based Binh Dien-Quang Tri Fertiliser, said thanks to the MI, farmers groups now made the factory confident enough to allow credit. They’ve established a fund worth US$1 million to deliver fertiliser in advance to farmers who can pay for it later. 

MI executive director Watcharas Leelawath said MI had an office in Dong Ha City in Quang Tri where three staff members propelled the project’s works forward. Watcharas said he was proud to see the great results and wished that the farmers and factories would continue to coordinate for mutual benefit after the MI project ends.

He said they should use the MI coffee-growing model to help other farmers. 

MI is also currently in discussions to speed up cross-border logistics for farm produce between Laos’ Savannakhet province and Quang Tri, he said.