Think Vietnam and an utterly scenic country ravaged by a brutal war comes to mind. However, its post-war economic and social growth has been remarkable. More specifically, in coffee since the year 2000, consumption has increased by an average of 13% per annum to an estimated 1.6 million bags in 2012. The majority consumed is domestic production, as Vietnam imports very little coffee. It has a vibrant coffee drinking and café culture with a significant local and multinational private sector presence.
Vietnam’s demography is conducive to further growth – an expanding base of young, well-educated consumers with higher disposable income Set in the sleepy, picturesque highlands of Dak Nong province is Thuan An Fairtrade Agricultural Cooperative. The collective was organised in 2012 after farmers took an informed decision to subscribe to the Fairtrade model. They were initially very reluctant to adopt a new concept having previously suffered financial losses engaging with other Standards programs.
The organisation started out with training farmers to develop capacities to meet the various social and environmental requirements. They next focussed on strengthening management and governance structures and marketing their produce domestically. The results after two years were astounding; the organisation doubled its membership, formed the first Arabica producing cooperative in Vietnam and built a regional network of farmer cooperatives to enhance their bargaining power in the market.
Farmers were spurred on by the Fairtrade price (VND 4000/kg) which was 10% higher than the market price and receipt of additional USD 440/tonne as premium. But, what truly encouraged them is the respect earned from the wider community because of the infrastructural projects like street lighting, construction of roads and welfare homes made possible through premium investments. So, began Thuan An Cooperative’s journey with Fairtrade which shored up their confidence to venture into uncharted territory they would otherwise have resisted.
- On average the Cooperative sold about 600900 tonnes of the green bean as Fairtrade each year, approx 30% of production, which earned them 17,000 USD. The remaining was sold in the conventional market. They were eager to sell greater volumes under Fairtrade terms
. • In 2014, a training course organised by NAPP Field Associate in Vietnam which underscored the need to increase their value proposition was received with open mind. After successive follow up meetings and supported visits to trade fairs, producers realized that a roasted product would fetch them higher returns than selling as green bean to the trader
. • In 2016, the Cooperative invested a premium of USD 10,000 to purchase roasting equipment and erect the necessary facility. They started roasting their own coffee and branded it “DAKDAM”. • Facilitated by NAPP Associate, Thuan An Fairtrade Agricultural Cooperative entered into a contractual agreement with Fairtrade International and secured an FT licence permitting DAKDAM coffee to carry the Fairtrade mark. A license fee of 1% total sale would be paid to International.
- With a smartly packaged Fairtrade product in place, the next challenge was creating brand awareness in Vietnam. Their strategy was to stay competitive by offering a good quality product at a price that matched conventional brands. The organisation approached the provincial Cooperative Alliance who found a fit with their existing range of healthy and quality produce at an attractive price.
- This joint initiative led to a substantial first-year sales volume of 1-tonne Fairtrade ground coffee in the domestic market.
- In spite of the license fee and the premium of 400 USD / tonne, the organisation earned a fair profit
- Thuan An Cooperative plans to reinvest earnings into the development of production processes such as the expansion of the roasting facility. Convinced by their initiative, the government has extended a supportive loan of USD 25,000. Other Fairtrade cooperatives have been inspired to go the same path and adopt the strategy that has worked here.
- In an auxiliary capacity, NAPP Associate intends to work with local NGOs to advocate for Fairtrade among consumers and facilitate a deeper understanding of its contribution to Vietnam’s progress. A good story always has a good recipe!
In this case, it has been an organisational desire to do better, space to strategically think outside- the -box, meaningful collaboration and taking little steps.
A well thought Fairtrade premium plan and initial investment of USD 10,000 – a roastery is established and the “DAKDAM” brand emerges.
Thuan Anh Agri Cooperative; FLO ID 28651 also attended the Fairtrade Training on Coffee Cupping in 2018 imparted by Specialty Coffee Association of America. Post the training they made a strategic decision to purchase a sample roasting machine, to check the grade and quality to improve the quality of their roasted coffee.
‘’In order to check the quality of our coffee and produce high-quality coffee, we have utilized the Premium money to invest in a roasting machine. Since then the coffee quality has been good and income is better for farmers. I hope every Cooperative adopts this module as it also fetches better income for workers’’ – Thai Viet Thuan- Internal Control- Thuan Anh Agri Co-op
As a fairtrade cooperative, the institution requires to comply with strict procedures, encoded in its register charter. It ensures democratic and collective decision making. It means members have rights to decide on all matters of the cooperative, including setting the price, contract, planning of activities, budgeting, spending of the fund, and reporting. The cooperative ‘s board of management is accountable for reporting of all spending and the daily operation. General Assembly is organized at least annually to evaluate performance. Election of the board of management is also organized democratically according to term.