The Government should draft a plan to replant coffee trees and subsidise the costs to ensure the sustainable development of the coffee industry, a conference heard in HCM City yesterday.

The industry has grown strongly in terms of area, output, and productivity, contributing greatly to socio-economic development in the Central Highlands region, participants agreed.

The area under the crop, for instance, has expanded from119,000ha in 1990 to 537,000 ha last year. The country produces more than one million tonnes a year and ranks second in exports.

But unplanned development threatens its sustainability, Le Ngoc Bau, head of the Tay Nguyen Agriculture and Forestry Science Institute, told the conference.

"The area under old coffee trees is increasing, and if the country does not have a programme to replant them, most coffee trees in Viet Nam will be old and stunted."

He explained old and stunted trees as being more than 20 years old and having an annual average yield of less than 1.5 tonnes per ha.

Without replanting, output and exports would plummet, he said.

The replanting task has become easy with the Government spelling out the process for this, he said.

After cutting down the old trees, farmers need to grow other crops for at least two years before planting new trees, he said.

His institute has created many high-yield and high-quality coffee strains that would help improve the competitiveness of Vietnamese coffee products, he said.

The replantation would also be a good opportunity for Viet Nam to expand the area under Arabica coffee, which fetches higher prices than Robusta coffee. Arabica accounts for just 6.3 per cent of the plantation area now.

But many farmers could not afford the replantation since the average cost per ha is around VND100 million (US$4,800), he said, adding that the Government should subsidise them like in Colombia and India.

Model contracts

Currently, most coffee export contracts were based on models proposed by buyers and in accordance with general European contract requirements.

This secures the buyers' interests but could cause risks to sellers, Nguyen Huu Chi, a member of the Viet Nam Competition Council, said.

To mitigate such risks, the Viet Nam Coffee and Cocoa Association (Vicofa) has come up with a draft of a contract for coffee exports and is seeking coffee exporters' opinions, he said.

Luong Van Tu, Vicofa chairman, said many exporters do not opt for legal advice for signing and implementing contracts or resolving disputes, and know little about international trade, leaving them at a disadvantage compared to their foreign partners.

They need to redress this situation, he said.

Pham Khanh Hiep, a commodities trader, explained about technical analysis of prices on the London and New York coffee trading floors.

Source:  VNS