Win-win: Improving smallholder livelihoods and the environment in Central Highlands Vietnam
Part I: Coffee, environmental degradation and smallholder livelihoods
The Central or Western Highlands is the main growing area for Robusta coffee in Vietnam. It is a highland region in Central Vietnam comprised of five provinces: Dak Lak, Dak Nong, Gia Lia, Lam Dong and Kon Tum. Robusta coffee production from these five provinces together accounts for 92% of the total national production, which is currently grown on roughly 577,000 ha.[1]
Smallholder output in the Central Highlands is low quality, low volume and environmentally unsustainable
Smallholder production accounts for roughly 80-90% of Robusta coffee from the Central Highlands.[2],[3] Smallholder cultivation practices are typically intensive and costly; characterized by the high application of pesticides, fertilizers and irrigation,[4] and, while Vietnam’s coffee yields are above international norms, they have barely progressed over the past decade. Several factors account for this, including the aging of the tree stock, the spread of coffee planting onto less suitable or unsuitable land, and various episodes of drought (1999, 2005, 2013).[5] As a result, maintaining high yields has become a function of the heavy application of fertilizer and pesticides.[6] Soil testing in Vietnam is rare and subsequently, farmers often do not apply fertilizer of the optimal composition or at the optimal time. For a smallholder, the risk of a reduced yield due to under-application of fertilizer is considered less than the risk of the over-application of fertilizer.
Poor fertilizer management has led to excess fertilizer polluting into streams and groundwater. In addition, only between one-half and two-thirds of fertilizer nutrients are not taken up by crops.[7] The long-term impacts have been shown to increase soil acidification and soil hospitability to nematodes and plant diseases, which in turn reduces soil and fertility, requiring increasing levels of fertilizer to compensate for reduced productivity.[8] This leads to a negative cycle of increasing capital requirements for the purchase of greater amounts of fertilizer and other agrichemical inputs. For poor farming households, it is often difficult to generate cashflow to support these working capital requirements, but without sufficient investment in agrichemical input, the overall productivity, and quality and quantity of the coffee beans is likely to be lower and generate lower levels of income for farmers, which leads to a vicious circle where smallholders cannot generate future working capital for input and labour, and so on.
Compounding these issues, smallholders are also the most economically disadvantaged participants in the coffee value chain: due to their relatively low output they face higher transaction costs in order to sell to markets. Typically, they also have limited access to finance and legal recourse, and as a result are almost entirely dependent on decisions made by downstream participants.[9]
Smallholder livelihoods are vulnerable to changes in the price of coffee
Intensive monocrop coffee cultivation has left farmers vulnerable to changes in the market price of Robusta.[10],[11],[12] This is compounded by high volatility in the price of coffee due to relatively low levels of domestic consumption and exposure to an international market that is clustered around the production of a small group of countries - Vietnam, Brazil, and Indonesia - which together account for roughly 75% of global production,[13] meaning the coffee price is highly sensitive to changes in the weather and growing conditions in those countries.
When price expectations are low, producers from making investments to improve their production capacity or increase resilience, which contributes to greater producer insecurity; investments in substantial cultivation improvements increase both capital and operational expenditure. At times when margins are depressed due to low market prices, this impacts the economic rationale for such an investment.
This can lead to a vicious cycle for producers; lower levels of investment lead to the production of lower quality coffee and lower yields. This reduces earning expectations and increases exposure to emerging or unforeseen risks such as climate change. For smallholders this risks their livelihoods. For global supply chains, it increases the risk of destabilizing the supplier base and, for the environment it increases the risk of degradation from the threat of further expansion into forests, as smallholders seek to increase their livelihood
However, there are models that exist that can generate multiple benefits for the environment and smallholder livelihoods: Intercropping models, involving coffee interspersed with shade or fruit trees have demonstrated their potential to generate multiple benefits for intensive coffee cultivation models and smallholder livelihoods. These benefits can include:[14],[15]
Enhancing functional biodiversity and improve soil fertility
shade tree species can contribute to improving, preserving or restoring soil fertility and buffering seasonal variability of soil biological activity in intensively managed coffee farms.[16] Shade trees in agroforestry have also been found to increase functional biodiversity, carbon sequestration, and drought resistance, as well as weed and biological pest control.[17],[18] This implies that shade trees could lead to reductions in the need for agricultural chemicals, pesticides, and herbicides, which could collectively lead to reduced soil and water pollution, as well as a potential reduction in costs for smallholder producers.
Improvements to soil health, leading to better soil water storage capacity
Decades of the excessive application of agrichemicals has led to a reduction in soil quality in coffee plantations in the Central Highlands, leading to issues with disease and nematode infestation.[19] Advances in soil biodiversity will improve soil structure and moisture retention, thus reducing the need for irrigation.[20]
Turning farms from carbon sources to carbon sinks
A recent study by IDH (the sustainable trade initiative) showed that while highly diversified farmers growing non-coffee trees on their farm had higher carbon dioxide equivalent (CO2e) emissions, as a result of short-term increases in agricultural chemical application, transport, and so on, the higher rate of carbon dioxide (CO2) sequestration from accumulated biomass, combined with improved fertilizer use could reduce the climate impact of farms, turning them from net sources to net sinks.[21]
Improvements smallholder livelihoods
Finally, productive fruit and shade trees have the potential to provide an additional income for smallholders from the sale of timber, firewood or fruits, the revenue from which could improve smallholder livelihoods, as well as lessening the impact of a reduction in coffee yield or a reduction in coffee prices on smallholder livelihoods.[22],[23]
[1] International Coffee Organization (ICO), (2016), ‘Total Production, Exportable Production and Domestic Consumption’. [Available online at: http://www.ico.org/new_historical.asp?section=Statistics]
[2] International Coffee Organization, ‘Country Coffee Profile: Vietnam’. 4th March 2019.
[3] It is estimated that around 85% of total coffee areas (about 480,000ha) are cultivated by households. Of this area, 63% is comprised of small farms of less than one hectare per household. This indicates that more than 640,000 smallholdings are involved in coffee production in Vietnam.
[4] IDH, written communication, July 2018.
[5] Sara J. Scherr, Kedar Mankad, Steven Jaffee, and Christine Negra, ‘Steps Toward Green: Greening Export Agriculture in East and Southeast Asia’. World Bank, Washington. [Available online at: https://ecoagriculture.org/wp-content/uploads/2015/08/Steps-Toward-Green-Book-File-Final-for-Upload…]
[6] World Bank Development Report, (2016), ‘Transforming Vietnamese Agriculture: Gaining More From Less’. World Bank Group.
[7] Ibid.
[8] Sara J. Scherr, Kedar Mankad, Steven Jaffee, and Christine Negra, ‘Steps Toward Green: Greening Export Agriculture in East and Southeast Asia’. World Bank, Washington. [Available online at: https://ecoagriculture.org/wp-content/uploads/2015/08/Steps-Toward-Green-Book-File-Final-for-Upload…]
[9] Bui Thi Minh (2018), ‘Financing Deforestation-Free Soft Commodity Supply Chains in Central Highlands in Vietnam: Overview of Issues, Value Chain Financing Models and Instruments, and Policy Recommendations’. UNDP, unpublished.
[10] Author’s own analysis.
[11] Rice, R.A., (2008). Agricultural intensification within agroforestry: The case of coffee and wood products. Agriculture, Ecosystems & Environment. 128, 212–218.
[12] Gro-Intelligence 2017, ‘Vietnam’s Coffee High Could be in Jeopardy’, viewed 15th October 2019.[website: https://gro-intelligence.com/insights/vietnamese-coffee-production]
[13] Ibid.
[14] Jezeer, Rosalien. (2018). PhD dissertation: Shedding Light on Shade- Reconciling Livelihoods and Biodiversity in Coffee Agroforests. 10.13140/RG.2.2.28895.71844.
[15] Biazin, B., Haileslassie, A., Zewdie, T. et al. Smallholders’ avocado production systems and tree productivity in the southern highlands of Ethiopia. Agroforest Syst 92, 127–137 (2018). https://doi.org/10.1007/s10457-016-0020-2.
[16] Rigal, Clement. (2018). Impact of Shade Trees on Soil Fertility and Coffee Production in Coffee-Agroforestry Systems in Southern Yunnan Province (Unpublished doctoral dissertation).
[17] Tscharntke, T., Clough, Y., Bhagwat, S.A., Buchori, D., Faust, H., Hertel, D., Hölscher, D., Juhrbandt, J., Kessler, M., Perfecto, I., Scherber, C., Schroth, G., Veldkamp, E., Wanger, T.C., (2011). Multifunctional shade-tree management in tropical agroforestry landscapes – a review. Journal of Applied Ecology. 48, 619–629. https://doi.org/10.1111/j.1365-2664.2010.01939.x.
[18] Kellerman, J.L., Johnson, M.D., Stercho, A.M., Hackett, S.C., (2008). Ecological and economic services provided by birds on Jamaican Blue Mountain coffee farms. Conservation Biology. 22, 1177–1185.
[19] In person meeting with Dr Philippe Vaast and Dr Phillippe Girard, 10th May 2018.
[20] M. Kuit, L. Guinée, D. Jansen, C. Schlangen (2019). The Carbon Footprint of Vietnam Robusta Coffee. IDH the Sustainable Trade Initiative.
[21] M. Kuit, L. Guinée, D. Jansen, C. Schlangen (2019). The Carbon Footprint of Vietnam Robusta Coffee. IDH the Sustainable Trade Initiative.
22] McNeely, J. A., Schroth, G., (2006). Agroforestry and Biodiversity Conservation – Traditional Practices, Present Dynamics, and Lessons for the Future. Biodiversity Conservation. 15, 549–554.
[23] Rice, R.A., (2008). Agricultural intensification within agroforestry: The case of coffee and wood products. Agriculture, Ecosystems & Environment. 128, 212–218.
