Although state-owned coffee companies now manage barely 15% of the region’s coffee area, most of them clearly reveal serious flaws—poor management, wasteful investment, and performance far inferior to the dynamic, cost-efficient production of independent farmers.
Many Party members have recognized this and have strongly called for reform.
Party Members Take the Lead
Pham Van Chuc carefully compiled and calculated numerous petitions exposing violations by state coffee companies. His dossier—demanding rights for workers—was the first we received from a former company leader.
At 65, with 33 years in the Communist Party, Chuc is now Party Cell Secretary of Residential Group 3A in Dak Ha Town, Kon Tum Province. After retiring from 19 years as deputy director and three years as acting director of Dak Ha Coffee Company, he drew on the deep knowledge of an insider to fight “for the conscience of a Party member.”
Through extensive documentation, Chuc revealed that the coffee companies misapplied Decree 22 on minimum wages; violated Decree 135 and Circular 102 in assigning production contracts for both coffee and rice land; over-collected depreciation on coffee plantations; invented extra “management fees”; and charged excessive insurance contributions—yet still received tacit approval from the Vietnam Coffee Corporation (VINACAFE) leadership.
In 2004, following VINACAFE’s directive, Dak Ha Coffee Company piloted the sale of 50 hectares of aging coffee. The price was set at 45,000 VND per tree—trees planted 20 years earlier at an average density of 1,300 per hectare. Workers contracting that land were given a 20% discount; those lacking funds could borrow through the company for a three-year bank loan. Many workers eagerly purchased plots.
Today, with careful intensive cultivation, yields still reach 3.5–4 tons per hectare—no need for expensive replanting as on many other state-run farms. “It’s a pity,” Chuc says, “that such a sound policy was later discontinued.”
Tran Minh Thuy, the first “Red Star” entrepreneur of Dak Lak and for over 20 years both director and Party Secretary of Phuoc An Coffee Company—one of the largest state coffee enterprises—shared his view: Dak Lak is now pushing to equitize (convert to joint-stock) the plantations of its coffee companies. But in farming, profit depends mainly on labor; once the plantations are fully depreciated, equitization becomes difficult. The state’s proposal of holding 51% while investors hold 49% draws little interest. “Personally,” Thuy said, “selling plantations to the workers and granting them ownership is the best solution!”
Dr. Le Ngoc Bau, Director of the Western Highlands Agro-Forestry Science Institute, agrees: “We should no longer maintain state-owned coffee companies. Farmers already farm more effectively. The intermediary sector should shift to providing technical services, processing, logistics, and export. If management is poorer than the farmers’, why cling to it? Only by boldly removing these unreasonable constraints can the nation grow strong and the people become wealthy!”
For a Strong Nation and Prosperous People
Reality proves the point in the mixed coffee-pepper garden behind the home of Hoang Van Dong, a worker of Team 2 at Cu Pul Coffee Company.
Dong spent years saving to buy this 8,000 m² plot as his private property. With his meticulous intensive farming, last year—after all expenses—he earned a net profit of 200 million VND; this year, despite a sharp drop in coffee prices, he expects no less than 300 million. Yet on the one hectare of coffee he contracts from the company, after covering costs and required quotas, he earns nothing.
“In these eight sào (≈8,000 m²), I grow 700 pepper vines and 800 coffee trees. Each vine yields about 5 kg of dried pepper, each coffee tree about 4 kg of beans. But when I interplant pepper in the company’s contracted plot, they cut it down—wasting resources and disrespecting workers!”
Roughly half a million laborers in the Central Highlands depend on coffee under three forms of ownership: private plantations, provincial state-owned companies, and branches directly under VINACAFE. Of the total coffee area, private individuals control over 85%, free to maximize profits from their land without supporting a cumbersome intermediary bureaucracy.
Among the five Central Highlands provinces, only Lam Dong—whose budget revenue and per-capita income are the highest—long ago eliminated the state-run coffee-production model. Officials from both the provincial Department of Planning and Investment and the Department of Agriculture and Rural Development confirm: the province’s entire coffee area is privately owned, allowing farmers to prosper and ensuring abundant commercial output—without the state having to worry or interfere.
After ten years implementing Resolution 28 on restructuring and reforming state-run agro-forestry farms, their inefficiency is obvious. At the 2013 business-operations conference, delegates were startled to hear VINACAFE report accumulated losses at the parent company of 382.5 billion VND (not counting thousands of billions in bad debts at its subsidiaries) while still petitioning to borrow 1,969 billion VND to replant 11,000 ha of coffee; to request an additional 1,000 billion VND in charter capital; to ask for ODA debt cancellation of 61 billion VND; to seek resolution of 211 billion VND in AFD debt; and to create mechanisms to borrow around 4,500 billion VND to stockpile 100,000 tons of coffee for export each year.
Merely collecting rent while burdening the national budget with debt—and stifling the creative labor of tens of thousands—can such an obsolete state-owned model truly be allowed to continue?