While building internationally certified coffee-growing areas is essential, a big question remains: where will the money come from—and who will finance the replanting of hundreds of thousands of hectares of aging coffee trees in Vietnam’s Central Highlands?
In reality, most coffee exporters simply purchase coffee for export and have not focused on funding replanting or supporting farmers with capital for new plantations.
Nearly 30% of the Coffee Area Needs “Rejuvenation”
Vietnam’s coffee industry has grown rapidly in acreage, yield, and quality, rising to second place globally in coffee exports. According to the Department of Crop Production (Ministry of Agriculture and Rural Development), in 2011 the country had 548,200 hectares of coffee, of which 491,500 hectares were in the five Central Highlands provinces.
If the productive life of a coffee tree is about 20 years, then more than 135,000 hectares—nearly 30% of the total—must be replanted, concentrated mainly in Đắk Lắk and Lâm Đồng.
Nguyễn Văn Sinh, Deputy Director of the Đắk Lắk Department of Agriculture and Rural Development, explained that Đắk Lắk has over 185,000 hectares of coffee producing more than 380,000 tons annually. But more than 51% of its trees are over 15 years old and yields are declining. Among more than 180,000 farming households, about 70% cultivate less than one hectare. Cutting down old trees for replanting would seriously impact their income.
Similarly, Lâm Đồng Province has over 40,000 hectares of coffee aged 15–30 years (about 27% of its total coffee area) needing replanting. Although farmers know their coffee is aging, many hesitate to replant. Lâm Đồng’s strategy calls for replanting 33,000 hectares by 2015 using grafting and new seedlings. But the biggest obstacle is funding for farmers to cut and replace their old trees.
Đắk Lắk has launched a Sustainable Coffee Development Program through 2020, investing 1.647 trillion VND to maintain 150,000 hectares with an average annual output of 400,000 tons. The province has also established four nurseries for grafted seedlings to meet the demand for replanting material.
Who Will Finance Replanting?
Đoàn Triệu Nhạn, former chairman of the Vietnam Coffee and Cocoa Association (Vicofa), estimated that replanting one hectare—including seedlings, fertilizer, and technology transfer—costs over 100 million VND. Rejuvenating 135,000 hectares would cost about 10 trillion VND. Farmers can buy seedlings from the Western Highlands Agriculture and Forestry Science Institute.
The key question remains: who will fund the “rejuvenation” of these aging coffee plantations? Most coffee exporters focus on trading and do not invest in farmer replanting, even though supporting farmers would secure a stable, high-quality supply and ensure reliable sourcing for exporters.
Nhạn believes the coffee sector needs a detailed plan for each locality. To avoid a drop in production during replanting, smallholders should be grouped into cooperatives of several dozen hectares, and replanting should be done in phases so farmers do not lose income all at once.
To support farmers, Vicofa (representing nearly 150 coffee-exporting enterprises) decided in December 2011 to create a Coffee Sector Insurance Fund, planning to collect a fee of USD 2 per ton of exported coffee starting October 2012. The fund would allocate 50% for replanting, 30% to subsidize storage-loan interest, 10% to improve coffee quality, and 10% for trade promotion. However, many Vicofa member companies opposed the plan.
They argued that if non-members were exempt, it would create an uneven playing field. As a result, implementing the fee is challenging. Nguyễn Hoàng Thủy, CEO of Đại Hoàng Thủy JSC, said his company focuses only on trading and does not invest in farmer replanting. However, if farmers request funds for seedlings or fertilizer, the company will provide support on the condition that they sell their coffee to Đại Hoàng Thủy at a price below market rates.
Quách Văn Đức, CEO of Tín Nghĩa Company, said the firm exports more than 73,000 tons of coffee annually worth over USD 155 million but currently operates purely as a trader. It is considering investing in coffee-growing areas, but this remains only a plan.
Replanting coffee is a major challenge for Vietnam’s coffee industry and demands a clear strategy to avoid disrupting production and trade. For sustainable growth, rather than shifting responsibility, enterprises must cooperate to help farmers build internationally certified coffee-growing zones. Only then can Vietnamese coffee secure a strong brand and a firm position in the global market.