MAJOR CROPS IN VIETNAM: RICE, COCOA AND PEPPER

MAJOR CROPS IN VIETNAM

Major crops and agricultural products: paddy rice, coffee, rubber, tea, pepper, soybeans, cashews, sugar cane, peanuts, bananas; poultry; fish, seafood Major crops for domestic consumption: rice, corn, sugar cane, manioc, yams, beans. Major crops for export: rice, rubber, coffee, tea, pineapple, citrus fruits,, sugar tobacco, jute

Vietnam went from being a net food importer to one of the top five suppliers of coffee, rubber, pepper and cashew nuts in two decades, as the government encouraged farmers to grow crops for export.

Vietnam is a major exporter of farm products: rice (second-largest in the world), coffee (second after Brazil), cashew nuts (second to India), pepper (world's largest), frozen food (sixth largest in the world), and tea leaves (seventh largest). [Source: Wittaya Supatanakul, Bangkok Post, September 22, 2007]

Many parts of Vietnam produce three rice crops a year. Japan gets many of its bananas from plantations in Vietnam. A US-sponsored programme known as Success Alliance is working with Cargill, ED&F Man, Olam International and other traders have taught Vietnamese farmers to grow cocoa, as well as cashew nuts and pepper, to reduce their dependence on coffee.

See Separate Article on Coffee and Tea Agriculture

Impact of the International Commodities Market on Vietnam

The world food crisis in 2008 was a boon for Vietnam in some respects as it made large profits from exporting rice. In January and February 2008 it earned $150 million more than the previous year from rice exports as rice prices rose 80 percent over what they were the previous year. Later Vietnam effectively banned rice exports which helped raise rice prices further.

But in other wats Vietnam suffered. Leo Lewis wrote in the Times of London, “Coffee, rice, pepper and other soft commodity exports on which so many Vietnamese depend have begun to fall into the same alarming spiral that has started to suck the prices of industrial metals to year-lows. People are questioning whether it was in Vietnam's interests to join the World Trade Organization last year now that the American consumer is tightening purse-strings. In some cases, soft commodity prices have collapsed so sharply that producers are losing money on what they are selling. Food industry insiders in Hanoi say that shipment defaults have already begun. [Source: Leo Lewis, Times of London, October 27, 2008 /=/]

“Vietnam's extraordinary economic success in recent years has, in effect, been a double-play on the global commodity boom and the voracious Western consumer. Just over 50 percent of Vietnam exports are commodities — from prawns to the rubber for scooter tyres in Sichuan. The problem is that the commodity boom is now on hold. China can no longer be relied upon to provide endless commodity upside: the old logic that 1.5 billion consumers would "eat the world" has, temporarily, evaporated as a market force. /=/

Suddenly, the Vietnam story looks vulnerable. Rubber sap prices have halved and the Vietnam Rubber Association has given warning that producers are operating at below breakeven levels. Stockpiles are starting to build. There is similar trouble on black pepper markets, where the price of the best quality has fallen by 75 percent since September. Even rice, at historic highs this year, has joined the downward trend. A spokesman for the Vietnam Coffee and Cocoa Association gave warning of similar trouble for coffee prices, which have plunged by more than a third in a month.

Rice and Rice Agriculture in Vietnam

Rice is an integral part of life in Vietnam. Vietnam is an agricultural country with the majority of Vietnamese living in rural areas and making their living by growing rice. Many Vietnamese people say their country looks like two rice baskets placed at two ends of a pole. Vietnam is one the leading exporters or rice in the world. Before 1988, Vietnam imported rice. Under price controls et up by the government shortages were often a problem but when the price controls were lifted in 1989 production rose dramatically.

Vietnam primarily has a rice-based agricultural economy. Rice is cultivated on 82 percent of the arable land and provides 80 percent of carbohydrate, and 40 percent of the protein intake of the average Vietnamese. Most of the rice grown in Vietnam is in two rich deltas of the north and south — Red River and Mekong, respectively. About 52 percent of Vietnam’s rice is produced in the Mekong River Delta and another 18 percent in the Red River Delta.[Source: International Rice Research Institute]

Rising from the ashes of two wars, Vietnam is not only able to achieve rice-self sufficiency, but it is also became a major rice exporter. Based on World Rice Statistics (WRS) data from FAO (2008), the harvested area of rough rice was 7,414,000 hectares; rough rice production was 38,725,000 tons; and rough rice yield was 5.22 tons per hectare.

History of Rice Agriculture in Vietnam

Chinese introduced large-scale rice agriculture to Vietnam and the Vietnamese developed a large scale dyke system to support it. The introduction of rice agriculture caused the population to expand, and new land was needed for the growing population.After the victory over the Chinese in A.D. 939, the Vietnamese expanded into present day South Vietnam.

In the 1960s, Vietnam imported rice due to a largely stagnant domestic production. The adoption of high-yielding rice varieties that helped increase Asia's rice production did not flourish as expected as it was interrupted by the Vietnam War. It was not until after the war in 1975, that Vietnam embarked on the road to rice self-sufficiency.

In 1981, Vietnam departed from the collective agricultural production system by introducing the group-oriented contract system of production. That was changed to individual contracts in 1986 when the Sixth Party Congress approved a broad economic reform package called "Doi Moi" policy. Since then, Vietnam became one of the fastest growing economies in the world. [Source: International Rice Research Institute /]

The institutional reform encouraged farmers to produce more rice. Moreover, trade liberalization under the Doi Moi created favorable conditions for the rice industry. Within less than two decades, after being a chronic rice importer, the country re-emerged in the world rice market as a sustainable rice supplier and it became one of the world’s largest rice exporters, with exports averaging 3–4 million tons in recent years. Rice production in Vietnam increased as a result of yield improvement and, in particular, the expansion of planted area induced by the improvement of the heavily subsidized irrigation system. /\

Despite destruction caused by natural disasters, rice production keeps increasing in Vietnam over the last 14 years, with bumper harvests recorded year-on-year. Vietnam's major breakthrough in agriculture came in 1989 when the country had a record output of 18.9 million tonnes of food in term of paddy while annual production could not exceed 17 million tonnes in the 1981-1985period. The country's agriculture, especially rice production, saw a strong and fast growth in the 1990-1999 period. From a country facing chronical food shortage, Vietnam has over the past 11 years become the world's second largest rice exporter after ensuring adequate supply for domestic consumption. Rural people's life has constantly improved. The fragrance of Vietnamese rice has actually spread across kitchens of many homes in foreign countries. /\

Rice Agriculture and Production in Vietnam

Lowland rice, known as wet rice, is the most common species in Southeast Asia which can be planted in two or three crops a year. Seedlings are raised in nursery beds and transplanted after 25-50 days to flooded fields surrounded by soil-raised border. The paddy stem is submerged in two to six inches of water and the seedlings placed in rows approximately a foot apart. When the leaves of the rice stalks start to turn yellow the paddies are drained and dried in preparation for the harvest. Vietnamese farmers reap rice by using sickles to cut the stalks. Then they tie the stalks together and dry them. [Source: Vietnam-culture.com a href="http://www.vietnam-culture.com/articles-218-34/Rice-in-Vietnam.aspx" vietnam-culture.com /a

Threshing separates the grain from the rest of the plant. Sometimes it is done mechanically and sometimes people or animals trample the sheaves. After threshing the rice is ready for milling. If the rice is not completely dry it is often spread out on communal yards or highways to dry in the sun. Rice dryers are widely usued in some regions now. Milling removes the husk from the kernel. Sometimes the process also strips off the bran layer which contains most of the nutrients. Brown rice still has its bran coat.

Rice is taken to local rice processing plants where a huge two-story machine with conveyor belts and vibrators removes the husks and other impurities, polish the rice and deposit in bags ready to cook. The best machines come from Japan. Nothing is wasted in rice processing. Rice can be turned into everything from paper to pudding. It’s steamed, puffed and flaked. It can be used to make noodles, wine, cosmetics and cooking oil. While the kernels are eaten, the stalks are made into straw and used for making sandals, hats, baskets, ropes, brooms and thatched roofs. The hulls provide fuel and fertilizer. The husks are used as pig feed.

Based on the Council for Partnership on Rice Research in Asia (CORRA) 2007 country report, the following are the challenges that need to be addressed in Vietnam: 1) Pest and diseases: brown plant hopper (BPH) and virus disease transmitted by BPH; as well as bacterial blast 2) Grain quality: improving rice quality through rice breeding and post-harvest technologies. 3) Stresses: drought, salinity, acid sulfate toxicity become more severe due to climate change

Rice is often dried in the roads because valuable farmland can't be used for sun drying. As a result, imported bags of Vietnamese rice are increasingly sullied with debris from passing trucks and motorbikes, and bird and dog droppings.

Markets in Saigon sell 27 kinds of rice. U.S. Military advisor Tom Hargrove introduced "miracle rice" to Vietnam and thus was spared by the Viet Cong.

Vietnam, World’s Top Rice Producer

In 2012, Vietnam became the world’s top rice exporter not so much because of anything it did but rather because of destructive of a destructive rice-buying policy in Thailand, the former No.1. AFP reported: “Thailand has lost its decades-old status as the world's largest rice exporter. An industry group has said it's been toppled by Vietnam as a Thai government scheme for farmers continues to draw a mixed response. Thailandlost its more than three-decades-old title as the nation that logs the highest volume of rice shipments abroad, the country's Rice Exporters' Association reported on Friday. [Source: AFP, January 4, 2013]

It said Thailand exported 6.9 million tons in 2012, down 35.5 percent from the previous year's level, and not enough to beat the new champion India and follower-up Vietnam which logged deliveries abroad of 9.5 million tons and 7.6 million tons respectively. Thailand's drastic drop in exports was blamed on a government paddy pledging scheme under which rice had been bought from farmers at a fixed price of $484 (367 euros) per ton — that is for 50 percent more than the market price. The scheme had been hailed by farmers as it boosted their incomes, but hit Thailand's competitiveness abroad. Since the program was launched in October 2011, the government has stockpiled more than 10 million tons of rice. The World Bank estimated that if Thailand were to sell last year's stockpiles at today's prices, it would lose some $3.7 billion. Thai official Chookiat Ophaswongse said, "I think this year China will import less and India will continue to export, so the competition will be tough and Thailand will be left hanging."

During much of the 2000s, Vietnam was the world’s second or third leading rice exporter behind Thailand and India. From a net importer of food, Vietnam has become one of the world largest exporters of rice, firmly establishing its position as a high quality and credible supplier of rice in the region and the world. Vietnam exported 1.42 million tonnes of rice in 1989 earning US $290 million and from the 1989-1999 period the country shipped as much as 22 million tonnes of rice to the world market and a total of 45 million tonnes between 1989 and 2005. Although the market was hit by a significant drop in world rice prices in the period 1999- 2002, increasing demand from the China market and worldwide meant that by the middle of 2003 there was a sudden change in the world market price due to the shortage of supplies, leading to increase in price of rice in the international and regional markets. The price rise meant that Vietnam sold more than 3.9 million tonnes of rice in 2004 to earn US $900 million – by far its most successful year to date. [Source: Dr Nguyen Sinh Cuc, Ap-foodtechnology.com / Novis — January 06, 2005]

In 2003, The Economic Times reported: “Vietnam will probably overtake India and the US to regain position as world's second-biggest exporter of rice this year, the United Nations said. Vietnamese rice exports will probably reach 4 million metric tons in 2003, up from 3.2 million in 2002, the Food and Agriculture Organization said. The US Agriculture Department's forecast is for both Vietnam and India to export 4 million tons this year, which would tie the two in second, after Thailand's 7.75 million tons. The export figure would be the highest from Vietnam since 1999, according to US government records. As of last month, the export price of 25 percent broken-grain Vietnamese rice was $165 a ton, against Indian price of $175 a ton, according to the FAO. [Source: The Economic Times (India), October 4, 2003]

Vietnam was the world’s third leading exporter after Thailand and the United States in 1994 when it exported more than a million tons. It was forth in 1991 behind Thailand, the United States and Pakistan. Vietnam exported 2.5 million tons of rice in 1997. In 2002, it exported 3.23 million tons or rice. In the early 2000s, Iraq imported much of its rice from Vietnam. In 2002, it imported 871,800 metric tons, or about 27 percent of Vietnam’s total export. The worlds top exporters of rice are (1991): 1) Thailand, 2) the U.S., 3) Pakistan, 4) Vietnam, 5) China, 6) Australia, 7) Italy, 8) India, 9) Uruguay, 10) Spain.

Vietnam Rice Hoarding and Prices Surge in 2008

In April 2008, AFP reported: “Vietnam's government said the country has sufficient rice stocks and threatened to punish speculators who hoard rice for profit after price surges triggered a run on the staple grain. Many supermarkets and street stalls quickly ran out of rice in Ho Chi Minh City at the weekend as thousands of consumers, worried by rumours of looming shortages, queued to stock up on rice, further driving up retail prices. Prime Minister Nguyen Tan Dung in an urgent message to all cities and provinces said that Vietnam, the world's number-two rice exporter, has enough stocks to meet domestic and export demand amid record global rice prices. he premier, whose government has been battling double-digit inflation driven by food and energy prices for months, warned traders of "severe punishment" if they hoard rice and speculate on the commodity for profit. [Source: AFP, April 28, 2008 :::]

“The government "strictly forbids organizations and individuals without function to trade food from buying paddy and rice for speculation," said an official statement, following reports that investors had bought up rice stocks and refused to sell them while waiting for prices to climb even further. The warnings came after sudden price increases sent shoppers rushing to supermarkets, especially in the country's largest city, formerly called Saigon, amid what local media dubbed "rice fever." Shoppers and restaurant owners were piling large stacks of 10-kilogramme (22-pound) rice bags onto their motorcycles, while at least one supermarket chain, Saigon Co-op, limited sales to one bag per customer. :::

“The Thanh Nien daily reported that, within several hours the price of one kilogram of standard rice surged from 10,000 to 18,000 dong (63 US cents to 1.13 dollars) in many retail outlets, further fuelling the run. In other southern towns, including the Mekong delta hub of Can Tho, prices also went up fast, while some distributors stockpiling rice and turning away customers who then went to buy up noodles instead, media reports said. Dung assured officials and citizens that "rice production of your country in 2008 can completely meet domestic consumption, and part of it can be exported." :::

“Dung earlier capped 2008 national rice exports at 3.5 million tonnes, down from a previous target of 4.5 million tonnes, while Vietnam has honoured export contracts, including shipments to rice-deficit country like the Philippines. World grain prices have sky-rocketed, a trend blamed variously on higher energy and fertiliser costs, greater global demand, droughts, the loss of farmland to biofuel plantations, industry and cities, and on price speculation. :::

“Vietnamese consumer prices have risen by more than 17 percent in the first four months of 2008 year-on-year, fuelling popular anger and labor unrest. Jonathan Pincus, the UN Development Programme's (UNDP) chief economist in Vietnam, said the country's problem with rice was due to prices, not supplies. "Vietnam is a food exporting country, where there is no problem of supplies," Pincus told AFP. "There are problems of prices, and higher prices hurt particularly people working for wages. "It's very natural to see strikes and higher wage demands because people's money is not going as far as it used to." Pincus said he did not foresee food riots but said Vietnam's government knows "that some of the gains made in poverty reduction over the past 10 years are in jeopardy if they are not able to bring food prices into line." :::

Quality and Stability Key Issues for Vietnam Rice

In 2005, Ap-foodtechnology.com reported: “Vietnamese rice exports have earned the country nearly $10 billion in the past sixteen years, but despite this, the Vietnamese Ministry of Agriculture and Rural Development says that there is still plenty of room to further enhance both production and productivity. The Ministry says that, thanks to an improvement in processing technologies, the quality of rice exported from Vietnam has improved making the commodity more competitive in the world market. This has also allowed the market for Vietnamese rice to expand to demanding regions in the world such as the EU, North America, Australia and Korea. The Ministry also reports that many businesses were able to sign future contracts during 2003 and 2004, which enabled them to better prepare processing facilities and purchasing schedule. [Source: Dr Nguyen Sinh Cuc, Ap-foodtechnology.com / Novis — January 06, 2005 +]

“However, despite all the progress made in recent years, the Ministry says that there are still many obstacles and challenges facing rice exporting activities in Vietnam. One of the most significant obstacles is the fact that a low level of stability in farming, processing, storage and marketing of rice still exists in the sector. Sixteen years since Vietnam entered the world rice market, there is still no master plan to develop specialised rice farming areas, despite some localities in the Red River delta and the Mekong River delta having plans for rice growing and processing. +

“The government drafted a plan for one million hectares of quality rice in the 2001-2004 period yet this plan remains more on paper than in the fields, due to reasons, including poor and incomplete planning with little or no reference to actual life. There was also a lack of participation of State owned businesses in the work. Lack of processing facilities and uneven distribution of these facilities, mostly in major urban areas such as Ho Chi Minh City, Can Tho and My Tho where there is limited supply of rice hampered the effectiveness of these facilities. +

The Ministry says that major rice growing has not been cultivated in leading areas such as An Giang, Dong Thap, Soc Trang and Long An province, which in turn makes processing more expensive due to additional cost of transportation. As well as a clear blue print, the management of rice exporting activities has also shown signs of shortcomings, the Ministry says. The plan for export is often set at the beginning of the year when there is no production figure to base it on and this plan keeps changing. The plan is often not in accordance with actual production but on unrealistic prediction, leading to low feasibility. +

Although quality has vastly improved, it still remains an issue. The Vietnamese rice remained poorer compared to that of major international rivals in the world market and often below the increasingly high demands of the consumers in the world market. From these shortcomings, the Ministry says that a series of measures are recommended to improve the competitiveness of Vietnamese rice in the world market, including an overall development plan for rice growing and processing in the whole country, better distribution of profits among farmers and businesses and expansion of market for Vietnamese rice in different types of markets. +

Cocoa, Cacao and Chocolate in Vietnam

In 2012, the Viet Nam News reported: “Viet Nam hopes to become a major supplier of cocoa beans in the world market, with production of 50,000 tonnes of fermented beans by 2020. It plans to have 50,000ha under cocoa cultivation, of which 42,000ha would yield the fruit. The cocoa sector in Viet Nam is showing signs of rapid growth, according to Phan Huy Thong, director of the National Agriculture Extension Center, who spoke at a forum on sustainable cocoa development in Binh Phuoc Province. Total cultivated land is now about 20,100ha, yielding 5,100 tonnes last year. There were only 2,000ha of land planted with cocoa trees in 2005. [Source: Viet Nam News, June 18, 2012 //\]

Cat Barton of AFP wrote: “Cacao was likely first introduced in Vietnam by French colonialists in the late 19th century, but never took off as a cash crop. As demand for high-quality chocolate rises globally — particularly in emerging markets — while supply from traditional producers like Ivory Coast falls due to ageing tree stock and other problems, the industry is eyeing communist Vietnam as a new supplier. [Source: Cat Barton, AFP, February 9, 2014]

Current production in the communist country is just 5,000 tons per year, compared to the roughly 1.4 million tons exported by Ivory Coast, according to the International Cocoa Organisation. Major buyers including industry leader MARS are eager for Vietnam to grow more higher-quality "certified" beans — MARS has pledged to use only certified beans by 2020. "Vietnam will play a role in providing certified quality beans to Mars," which is working locally to train farmers and research new cacao strains, MARS Vietnam cocoa development manager Dinh Hai Lam told AFP. The only other country to go into cacao production in recent years is Indonesia, which focuses only on producing a high volume of low-end, unfermented beans. Cacao can be a good earner for farmers — but only if they can get a premium for their beans, and the premium is based on the quality, Safarian said.

Cocoa Cultivation in Vietnam

According to the Viet Nam News: “Viet Nam hopes to become a major supplier of cocoa beans in the world market, with production of 50,000 tonnes of fermented beans by 2020. It plans to have 50,000ha under cocoa cultivation, of which 42,000ha would yield the fruit. The cocoa sector in Viet Nam is showing signs of rapid growth, according to Phan Huy Thong, director of the National Agriculture Extension Center, who spoke at a forum on sustainable cocoa development in Binh Phuoc Province. Total cultivated land is now about 20,100ha, yielding 5,100 tonnes last year. There were only 2,000ha of land planted with cocoa trees in 2005. [Source: Viet Nam News, June 18, 2012 //\]

“Cultivation exists mainly in 10 provinces, including Ben Tre, Tien Giang, Dak Nong, Dak Lak, Binh Phuoc and Ba Ria-Vung Tau, mostly grown under the shade of other crops, including coconut palms and cashew trees. Phan Van Don, deputy director of Binh Phuoc Province's Department of Agriculture and Rural Development, said cocoa could be an attractive crop to smallholder farmers, both in intercropping and monoculture systems. //\

“Cocoa has the advantage of lower labor costs to coffee and rubber, less water requirements compared to coffee. Intercropping with cashew gardens in the province has been successful as well. Nguyen Khac Thuoc, a farmer in Bu Dang District of Binh Phuoc Province, said that intercropping with his 5ha under cashew cultivation had helped him raise his income substantially. Nguyen Van Hoa, deputy head of the Cultivation Department, said there was an increasing demand for the high-nutritive valued bean in the global and domestic markets. Cocoa supply globally was much lower than demand. //\

“The price of cocoa as well as other farm produce in the domestic market has fallen this year due to a drop in price in the world market, but compared to other agricultural products like rubber and cashew, cocoa prices have not fallen much. Despite the potential of the sector, many delegates at the forum agreed that the sector had not yet reached its potential due to poor farming practices, limited technological transfer, poor planting materials and outbreaks of pests and diseases. In addition, the planting was scattered and small-scale, causing difficulties to production and consumption, Hoa said. //\

“Since cocoa is still a relatively new tree in Viet Nam, little research has been conducted on the plant in the country. With less experience in planting cocoa compared to other trees, farmers are still hesitating about planting the tree, according to Thong. He said that, to meet the planning target, the Ministry of Agriculture and Rural Development should review zoning plans for cocoa cultivation in the country. Each locality should identify the amount of cocoa cultivation and then draw up appropriate plans. He said that scientists and agricultural research institutes should focus more on research to create new high-quality seedlings, better cultivation techniques, and measures to prevent and control pests and diseases. Delegates suggested that the Government establish standards for cocoa quality, and develop more agricultural extension programmes to provide farmers with skills and techniques in growing, harvesting and processing cocoa. They also recommended that modern technologies should be used for processing cocoa beans to achieve higher quality. //\

Vietnam Hopes to Develop Cocoa without Repeating the Mistakes made with Coffee

In 2005, Claire Leow of Bloomberg wrote: “Vietnamese farmers, who caused world coffee prices to collapse after they doubled production in five years, are now increasing cultivation of cocoa, backed by chocolate-makers like Mars. Mars and the US and Vietnamese governments are supporting a US$4.5 million, four-year programme to quadruple the country’s cocoa-growing area, said Ross Jaax, a consultant to the programme. Producer groups are concerned that cocoa expansion may repeat the mistakes made with coffee between 1998 and 2003, when a jump in output of lower quality beans slashed global prices 61 percent. "The issue is most certainly one of making sure that the development doesn’t result in mass-produced, inferior quality cocoa that the market does not need," said Judy Ganes, president of J. Ganes Consulting in Katonah, New York, and a former tropical crops analyst with Merrill Lynch. [Source: Claire Leow, International Herald Tribune, Bloomberg, August 5, 2005 ||]

“Candy makers are looking for new sources of cocoa as civil unrest reduces crops in Ivory Coast, which supplies 40 percent of the chocolate ingredient. Vietnamese farmers are trying alternative crops after the coffee glut caused their incomes to slump."They do not wish to repeat that performance with cocoa," said James Emanuele, head of the coffee and cocoa business at Noble Group, the biggest exporter of Vietnamese coffee.Noble, based in Hong Kong, is following developments in Vietnam and would consider investing in the cocoa industry there "should the right opportunity present itself," Emanuele said. ||

“In 1997, Vietnam set a target of 100,000 hectares, or 247,100 acres, of cocoa plantations by the end of this decade. In March, that goal was trimmed to just 10,000 hectares that would yield about 10,000 tonnes of beans, Jaax said. A further 10,000 hectares will be set aside for future development, he said. The country has about 2,700 hectares of cocoa trees already in production, mostly in Dak Lak, the province that provides more than half of Vietnam’s coffee.In comparison, Ivory Coast’s 1.3 million tonnes of cocoa are harvested from 1.8 million hectares of trees. The second-biggest supplier, Ghana, has about 1.5 million hectares of trees. "Vietnam has good land to develop cocoa trees, but it is impossible to do so right away," said Bui Tat Tiep, deputy director of planning investment with the Ministry of Agriculture and Rural Development. "It is our policy to develop land for cocoa in Vietnam to 13,000 hectares only after 2010," Tiep said. "Between now and then, trees should be planted on a limited area." ||

"Quality is the name of the game," said Marc Donaldson, managing director of the Asia-Pacific unit of Barry Callebaut, the world’s largest supplier of bulk chocolate. "From what we have seen, Vietnam’s cocoa quality is good."Part of the cocoa programme in Vietnam is to help farmers produce fermented cocoa beans that fetch higher prices because they have lower acidity and improved flavor, said Jaax, the consultant. Indonesia exports unfermented beans.Concentrating on high-quality production may help avoid a repetition of Vietnam’s coffee glut, which flooded markets with lower-quality Robusta beans, a type roasters bought to use in instant coffee blends. "What’s key is whether they can apply these same lessons to cocoa," said Mai Bateman, a director of Vietnam Business Services, which advises the Vietnamese government and Mars. "The buyer wants more choice and better quality. If the quality is good, they stay. If Vietnam turns out to be another Indonesia, they go elsewhere." ||

Cocoa in Vietnam: A Success Story

Cocoa businessman Chow Boi Yee made the following posting in December 2, 2008: I have been working in the cocoa and confectionery industry for many years. Over the last three days, I was in Vietnam touring some of the sustainable cocoa program sites. It was a very pleasant experience for me, after having last been to Vietnam cocoa fields some three years ago. I could not believe what I saw, practically all the projections – hectareage, volume, quality — are all falling into place. I saw pods all over the collecting stations and the fermented boxes were full of beans.

The beans on the drying yards were clean and practically no wastes. All the best practices are being implemented. The previously new planting areas are coming into production, and production is up by leaps and bound, with the latest number touching 1,200 tonnes beans by year end. I heard that some of the production is being used as high quality, fully fermented beans to produce liquor. We also visited the Success Alliance office where Lam and Hyuen briefed us with confidence on the work in Dak Lak. Looks like more happenings to happen. Great stuff!!

So I want to congratulate World Cocoa Foundation and Mars for having the vision, the courage, and the patience to do origin development work in Vietnam 13 year ago, despite all odds. This is a great story. Looking back, I think the success comes about because all the vital ingredients are in place: the leaders (World Cocoa Foundation and Mars) and the technical experts (David Lim, Smilja Lambert), the local committed personnel (Dr Phuoc, Lam, provincial government), the right technology (Best practice cocoa from agronomy, genetics to fermentation), the funding (World Cocoa Foundation, USAID, USDA), the scaling up enabler (Success Alliance), the traders to provide price discovery and logistics support (Cargill, Armajaro, Olam) and last but not least — the entrepreneurial farmers. If anyone of those ingredients had been missing, I dare say we would not see today's success. The other fortunate aspect is the relatively low volatility of cocoa prices — compared to coffee, fruits, cashews, and pepper. Many farmers are happy that cocoa helps to mitigate the lower prices of other commodities.

Vietnam's Luxury Chocolate Pioneers

Cat Barton of AFP wrote: “Deep in the Mekong Delta, two Frenchmen have their heads buried in a sack of cacao beans. The pair — co-founders of Vietnam's first artisan chocolate maker — resurface, murmuring appreciatively. The sweet-toothed entrepreneurs — who quit their day jobs to set up award-winning chocolate company Marou — buy three out of four of 64-year-old farmer Vo Thanh Phuoc's sacks of dried, fermented cacao, paying a premium on the market price for the better-than-average beans. "When we started, the farmers thought we were crazy," Marou's co-founder Vincent Mourou told AFP as he nibbled on a cacao nib. Every sack of beans is individually checked as the smell, colour, texture and taste give a good indication of the chocolate to come. "Now, they try the beans too." [Source: Cat Barton, AFP, February 9, 2014]

Gricha Safarian, managing director of Puratos Grand-Place, a Belgium joint venture produces the majority of chocolate used locally in Vietnam — by hotels, bakeries and ice cream companies — and exports high-quality chocolate and cacao beans. "Vietnam has a place to take as a medium size producer of quality beans," said Safarian, who has worked in Vietnam's nascent cacao industry for two decades. "Year by year the market is going to be more rewarding for quality beans because of this coming shortage" as demand for quality chocolate rises, especially in Asia, he said. Vietnam's chocolate has "a different flavour profile — the Vietnamese beans are rather different from the African bean," which makes it stand out in the market, he said.

"The cacao sector in Vietnam is really at a crossroads — it could go for quality or quantity," said Vien Kim Cuong, program manager for Swiss NGO Helvetas, which works with cacao farmers on certification. Marou and Puratos Grand-Place want the government to take a different, more upmarket route with the cacao sector — they are trying to add value locally and build a reputation for Vietnamese luxury chocolate."We transform an agricultural product, the cacao bean plus sugar, into a high-quality chocolate that we position as a premium product on the export market," said Safarian — whose Made in Vietnam chocolate is found in top restaurants from Paris to Tokyo.

For Marou co-founder Samuel Maruta, setting up an artisan chocolate company in Vietnam — not known for cacao, chocolate or even high-quality export goods — was a risk. But the pair have successfully positioned their Vietnamese single-origin chocolate as part of a growing bean-to-bar revolution, a rebellion against homogeneity in an industry dominated by major players like Kraft and Italy's Ferrero.

Mass-produced chocolate can be "incredibly soulless," said Maruta, a world apart from the rich, fruity, spicy notes found in a bar of the company's 78 percent dark chocolate. From their Ho Chi Minh City-based factory, they're now exporting close to two tons of chocolate a month, to some 15 countries. The pair want Vietnam "to push quality cacao, so that Vietnamese cacao is known for quality and not quantity," Maruta said Officials at state department VinaCacao said they aimed to increase cacao production some five-fold by 2020, but declined to provide further details.

Ironically, the people who are the most difficult to convince about the quality of Vietnamese chocolate are... Vietnamese. "The Vietnamese consumer does not trust the product of his own country yet," Safarian said, referring to consumers' preference for imported goods which are perceived as higher quality. "This will change," he said. "You cannot approach the chocolate market in Vietnam as you approach it in France or Belgium," he said, adding that while there is not likely to be much of a market for praline, the emerging middle class is already developing a taste for chocolate. "Being in this business for 30 years, I have still never met anyone who doesn't like chocolate at first bite."

Vietnam and Spices Such as Cinnamon and Ginger

In 1999, Reuters reported: “The pungent aroma of pepper and cinnamon is starting to waft from warehouses in Vietnam as the country eyes a niche in the world spice trade. Already a top grower and exporter of rice and robusta coffee, Vietnam has burst onto the pepper market in recent years and is now moving into cinnamon, star anise, ginger, turmeric and herbs, foreign traders said. [Source: Reuters, June 21, 1999 =]

“David Marchington, director of brokers Chambers and Knight Ltd in London, predicted Vietnam would make further inroads into the pepper trade. "Vietnam is a very serious force in the world pepper market,'' Marchington said by telephone. "If you look at black pepper particularly, in the space of five years, Vietnam has joined the world's major producers and is highly rated. "In the short term, Vietnam will produce more because prices are high and that gives every encouragement for farmers to grow as much as they can,'' Marchington said. He added that pepper from Vietnam compared favorably on quality with similar grades found elsewhere. =

“But it is the more exotic spices in Vietnam such as cinnamon, star anise and ginger that excited Mark Barnett, director of Pacific Basin Partnership.Barnett's company has a cooperation contract with the Vietnam National General Export-Import Corporation 1 to process cinnamon for export to world markets. He said the venture, which operates a processing factory near Hanoi, was the key player shipping cinnamon from Vietnam. =

"Vietnam hasn't yet realized its niche market potential in cinnamon,'' Barnett said. "But several major American companies have begun using Vietnamese cinnamon in recent years.''He added that Vietnam's cinnamon exports were currently around 2,000 tons a year worth $3.5 million of annual world trade of 45,000 tons and that figure would rise.He expected Vietnam's cinnamon exports to grow 50 percent within three to four years, with key destinations to Europe and the United States. =

Barnett said decades of war in Vietnam and a lack of processing facilities had left farmers unable to utilize a prime climate and fertile soil in which to grow cinnamon. In addition, a weak rupiah currency in the past two years had helped Indonesian growers fortify market share. Barnett said cinnamon was grown in central and northern areas of Vietnam on some 37,000 acres of land. Meanwhile, several thousand tons of star anise — a spice often used in Chinese cooking — were being exported. Barnett said ginger and turmeric were grown in abundance, with several companies from Hong Kong and Taiwan making regular purchases. He added that there was also potential for chilipeppers and paprika. =

Vietnam: the World’s Main Pepper Producer

Vietnam is the world's top pepper exporter with a market share of about 33 percent, followed by Brazil with 15 percent and Indonesia with 13 percent (2006). Chief exporters in 2002: 1) Vietnam; 2) India; 3) Brazil; 4) Indonesia; and 5) Malaysia. As it has done with coffee, Vietnam has entered the pepper market relatively late. Chief producers in 1970s: 1) India (38 percent); 2) Indonesia (26 percent); 3) Sarawak in Malaysia (12 percent); 4) Sri Lanka (10 percent); 5) Other (12 percent).

In 2003, Reuters reported: “Vietnam is set to ramp up its pepper production to 80,000 tonne this year, overtaking India as the world's largest producer of the spice in an already oversupplied market, industry sources said. Vietnam, already blamed for a glut in global coffee supplies, was initially expected to produce 63,000 tonne of black pepper in 2003, up 3,000 tonne from last year. But sources with the International Pepper Community (IPC) said they had revised up the estimates. "Vietnam's pepper exports accounted for 60 percent of global trade in April-May. The crop is out and Vietnam is very aggressive," said one source with the Jakarta-based IPC. "Our latest estimates indicate Vietnam is going to produce 80,000 tonne of pepper. It overtakes India as the world's largest producer," said the source. "People are blaming Vietnam. Buyers keep saying Vietnam is selling pepper cheaply. I also learnt it plans to produce white pepper, said a trader in Malaysia, referring to the higher quality variety.[Source: Reuters, July 7, 2003]

Spizes.com reported: “Vietnam's a country that used to grow only 15,000 hectares of pepper in 1999, has more than tripled its hectarage to more than 45,000 hectares in 2003, with its yield reaching 75,000 – 80,000 tonnes. Vietnam's pepper currently makes up one-third of the world' s total output and its black pepper export volume accounts for nearly 50 percent of the international market share. [Source: Spizes.com, October 04, 2003 ==]

What has caused this sudden surge in pepper production in Vietnam? The surge in pepper production in Vietnam over the past years has been attributed to the profit received by growing pepper vines, which was 32.8 times more profitable than that of coffee, 16 times more profitable than that of rubber and 14 times more profitable than that of cashews. The farmers of the Southern Binh Phuoc province had taken this cue on the profits and now the province has the largest pepper growing area, followed by the central highlands Dac Lac province, then by southern Ba Ria-Vung Tau province and then by southern Dong Nai province. ==

In 2007, AFP reported: “Indonesia and Vietnam, two of the world's top pepper producers, are to cooperate in the marketing of the black spice, an Indonesian industry executive said. Producers in the two nations plan to establish a joint committee focusing on marketing, improving quality standards and compiling statistics, said Mustakim Wijaya, vice chairman of the Indonesian Pepper Exporters' Association. "The Vietnamese side wants the joint committee to be formed before the end of the year and we are working on this," he told AFP. Together the two countries produce more than 45 percent of the world's pepper supply. Wijaya said the committee would meet annually to discuss the international market. [Source: Agence France Presse, July 11, 2007]

Vietnamese Pepper Farmers

Reuters reported: “Farmers on southern Vietnam's Phu Quoc Island are turning to pepper to spice up their lives, but many fear the business may have a dark side, despite a booming export market. Vietnam has become one of the world's top suppliers of black pepper, and local islanders have rushed to cash in on export windfalls. But for folk more used to smalltime farming or fishing in a remote corner of the Communist-ruled country, world markets are a huge mystery. Some worry they may not be getting the best deal from savvy traders in Ho Chi Minh City."When talking about farming on Phu Quoc we can only talk about pepper as it is the only crop with value,'' says Le Minh Mau, 60, a typical smallholder. "But we have no sources of information on world prices,'' he says. "Maybe when the agents come here they lie about the export prices.'' [Source: Reuters, August 7, 1999 ~]

“Mau grows pepper in a plot of around one hectare (2.5 acres) in size on the island, located 47 kilometers (29 miles) off the coast of southern Vietnam on the maritime boundary with Cambodia. His last harvest was completed in June and yielded around five tonnes of black pepper which sold for 50,000 dong per kilogram ($3.6). Earlier this month Vietnamese pepper was selling for around $4,000 per tonne FOB Saigon Port. ~

“Small pepper plantations with their distinctive crowded, green chimney growths lined in close-knit grids, dot the 593 square kilometre (220 square mile) island.Local authorities estimate acreage under the crop in recent years has risen to 650 hectares (1,606 acres), although farmers say the actual figure is closer to 1,000 hectares (2,471 acres), having been just 100 hectares (247 acres) at the end of the Vietnam War in 1975. Output from this year's crop reached a record 1,000 tonnes, compared with 800 tonnes in 1998, local authorities estimate. With almost perfect weather so far this year farmers on the island predict a bumper harvest in 2000. ~

“Le Minh Dung, vice-chairman of Phu Quoc people's committee, said all pepper on the island was grown by private smallholders and with new acreage coming on line it was hoped some 1,250 tonnes would be harvested next year. Harvesting takes place from February to June and the country ships up to 90 to 95 percent of its crop. Vietnam's pepper exports soared in the first half of the year to 23,800 tonnes, up 300 percent from the same period last year. Black pepper export revenue jumped to $91 million in that period, from $35 million the previous year. ~

“Van Van Su, 67, a Phu Quoc pepper grower with around two hectares (4.942 acres) and 5,000 pepper chimneys — each of which holds up to five plants twisting round a central four-metre (13- foot) high wooden pole — said farmers were at the mercy of middlemen. The living room of his modest three-room home doubles as a bedroom and pepper processing plant. Two women hand-filled nylon sacks with the dried commodity which was strewn across the floor, and on the bed Su's son-in-law cuddled a two-month old baby girl. ~

"We have no rights to fix the price,'' Su said. "It is difficult, it is the Saigon people who come and set the price. "Even if we were to bring the pepper directly to Ho Chi Minh City to sell we would not be able to carry large quantities.'' Farmers said Phu Quoc authorities had promised initiatives to assist pepper growers, but so far nothing had materialised.Low interest loans of up to 40 million dong ($2,870) were available from the Bank for Agriculture and Rural Development, but the money had to be repaid within a year, they added. For Phu Quoc's 70,000 people, the main options are limited to pepper and other small-scale cash crops, or fishing-related work. Dung of the people's committee said pepper growing, which employed around 10,000 people, offered the chance of salaried employment for laborers and a secure and adequate income for the farmers. This was not always the case. In 1990 the price crashed to 6,000 dong per kilogram, less than the then going price for fish. "In 30 years of pepper growing I have a lot of experience,'' said Su. "Nine or 10 years ago the price was very low and at that time a lot of farmers quit pepper and shifted to fishing. "But since 1995 when the pepper price has risen, more and more people have started growing the crop. If we have no pepper we cannot live,'' he added. ~

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Vietnamtourism. com, Vietnam National Administration of Tourism, CIA World Factbook, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, Fox News and various websites, books and other publications identified in the text.

Last updated May 2014