Updated : 3:30 PM, 26/05/2008

Coffee prices rise, farmers cut down forest

Over the past two years, especially in the first months of this year, coffee prices in the Central Highlands have soared, reaching VND42,000 per kilo. This has encouraged farmers to clear forest for coffee growing land despite the warnings from the local authorities and experts.

From late 2007 until now, as the export price of coffee in the world market has increased remarkably, the purchasing price of coffee in the country has also risen, from VND30,000 to VND40,000 per kilo (even to VND42,000 per kilo in many places on March 5). Currently, it stays at VND31,000 -VND32,000.


In recent times, the fluctuations in coffee prices have made farmers in the Central Highlands think that there will be a huge demand for coffee on the world market. Therefore, many families chopped down cashew and fruit trees and destroyed subsidiary crops to plant coffee trees. Nguyen Thi Van from La Der commune, La Grai district, Gia Lai province said that her family had only 2ha of land to grow subsidiary crops, but on the advice of officials from the district Economic Department, her family decided to plant rubber trees. However, this year as many farmers in her district have shifted to growing coffee, she also spent VND10 million buying seedlings to grow coffee instead of rubber trees on her land.


Nguyen Quang Vinh, director of a branch of the Bank for Agriculture and Rural Development in Dak Lak province said that to implement the province’s decision not to expand the coffee acreage, the bank has only provided short-term loans for farmers to tend the existing coffee trees. However, in the past two years, the coffee acreage has still expanded.


Bui Cong Sy from Ea H’iao commune, EaH’leo district also said he has 6ha of coffee trees. This year, he sold more than 20 tonnes in early March at the price of VND38,000 per kilo despite a low-yield crop. In the previous crops, he spent only VND10-12 million planting one hectare of coffee trees. But for this crop, it has cost him around VND40-50 million. If coffee prices remain at VND35,000 per kilo, he will make a profit but if the price is lower, he will make a loss. He added that due to fluctuations in coffee prices on the world market, it is rather risky to invest in growing coffee.


Coffee growers in the Central Highlands said that it is necessary to expand into remote areas. This means deforestation. Therefore, the higher the coffee price is, the more serious the damage is to forests.


According to the Dak Nong provincial Department for Agriculture and Rural Development, in March 2008 alone, as many as 116 cases of deforestation were discovered in the province, damaging more than 50 hectares of forest. Since April 2008, hundreds of households in Chu Prong district have destroyed Chu Boi forest in the two communes of Thang Hung and Binh Giao. As a result, the deforested areas could reach hundreds of hectares.


At present, Vietnam has about 500,000 hectares of coffee, in which Central Highland provinces account for approximately 90 percent. Luong Van Tu, President of the Coffee and Cacao Association, said that his association has asked the Government to maintain the current coffee growing area and has requested provinces, especially those in the Central Highlands, not to expand their coffee growing area but to focus on intensive cultivation in order to increase the quality and export value of the product.


It’s worth noting that there have been no effective measures to prevent the displacement of coffee crops. At a recent seminar entitled “Market prospects, quality and the structure of Vietnam’s coffee industry in 2008”, experts warned that without proper adjustment, Vietnam’s coffee production will lead to a surplus as a result of supply exceeding demand. The crux of the matter is how to prevent local farmers from expanding their coffee growing acreage.

If the coffee growing area is expanded, supply will exceed demand. It’s just a matter of time. As experts forecast, in the next five to seven years, there would be a fall in coffee prices to force local farmers to sell cheap, and the coffee sector will again find itself in the same situation as in previous years. Excess supplies of coffee would lead to dirt-cheap sales and the cutting down of coffee trees. This was the “tragedy” in 1999, when supply exceeded demand and coffee was even cheaper than eggplants (about VND4,000/kg), said Luong Van Tu.



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