The environment impacts of coffee industry and environmental requirements for coffee enterprises in Vietnam

ABSTRACTS:

Coffee production has made a huge contribution to production outputs, exports and job creation in Vietnam, at the same time it has had negative environmental impacts on biodiversity conservation, use of pesticides and other dangerous materials, soil conservation and fertility, water conservation, waste management, energy consumption. Coffee production has also caused other issues relating to greenhouse gas emissions. International free trade agreements that Vietnam has signed and international environmental requirements highlight the role of environmental standards and regulations in coffee production and processing activities in Vietnam’s trade chains as well as international trade chains. In addition, corporate social responsibility towards the environment is an increasingly concerned issue and it has been widely recognized one of the rules and standards in business activities. Hence, it is necessary for Vietnam’s coffee industry to develop appropriate environmental principles, standards and code of conduct to meet national standards and related provisions of the free trade agreements which Vietnam has signed.

Keywords: coffee, environment impacts, responsible business.

1. Introduction

Vietnam is the second largest coffee growing country in the world, accounting for 17.6% of the total global coffee output. Each year, Vietnam’s coffee industry attracts about 600,000-700,000 employees. Currently, Vietnamese coffee has been exported to over 80 countries and territories, ranking the world’s second biggest exporter of coffee beans and the world’s first largest exporter of Robusta beans. The coffee industry has greatly and increasingly contributed to the country’s socio-economic development and global coffee value chains.

However, the coffee industry also has negative effects on the environment in terms of biodiversity conservation, use of pesticides and other dangerous materials, soil conservation and fertility, water conservation, waste management, energy consumption. It has also caused other issues relating greenhouse gas emissions.

Coffee production has direct impacts on the area of ​​mountainous forests. Meanwhile, coffee preliminary processing activities create a large amount of solid waste causing air and water pollution. The coffee production poses occupational health risks due to exposure to noise and chemicals used in the processing activities. Coffee production requires a large amount of packaging, thus discharging solid waste into the environment.

This research aims to examine the status quo of environmental impacts in Vietnam’s coffee industry. The research also presents the environmental requirements in trade agreements which Vietnam has signed, standards and international certification for coffee production and trading. Based on the research’s findings, some policy recommendations for Vietnam’s coffee industry are made.

2. Research methodology

In order to conduct this research, the authors employed the following methods:

Firstly, the historical research method was conducted to investigate the formulation process of policies and regulations for Vietnamese coffee industry, then we compared these policies and regulations to international standards and requirements of free trade agreements (FTAs) that Vietnam has signed, such as the European Union–Vietnam Free Trade Agreement (2020) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (2018).

Secondly, the desk research method was conducted to make a literature review and to study current situation of environmental impacts in Vietnam’s coffee industry, the environmental requirements of trade agreements which Vietnam has taken part in as well as international standards and certification for coffee production and trading.

Finally, an interview was conducted to gather opinions from 10 coffee production and business entities (enterprises, cooperatives and farm households) on environmental impacts and measures to protect the environment in Vietnam’s coffee industry. Primary data is collected via questionnaire-based interview. Interviewees are diversified from a number of provinces in the Central Highlands (Dak Nong, Dak Lak and Lam Dong) and Northwest Vietnam (Son La).

3. Research results

3.1. An overview of the coffee industry

There are currently about 75 coffee growing countries, primarily in South America, Africa and Asia with about 10 million workers involved in coffee production. The global total land area used for coffee is about 10 million hectares with annual output of about 8 million tons, bringing income to about 100 million people. Currently, there are 56 coffee exporting countries (Truong Hong, 2018) the production is concentrated in 10 countries including: Brazil which accounts for 35.3% of global coffee output, followed by Vietnam (17.6%), Colombia and Indonesia (7.4% and 7.9%, respectively), Ethiopia (4.4%), India and Honduras (3.6%), Uganda and Mexico (2.4%), Guatemala (2.3%) (ico.org, 2017). In 2019/2020, the coffee demand in Asia and Oceania was estimated to increase from 3% to 37.84 million bags (International Monetary Fund, 2019).

In Vietnam, by the end of 2019, the coffee growing area was 688,300 hectares, with average yield at 2.6 tons / hectare and the coffee bean production in 2018 estimated at 1,623 million tons. Coffee plants are currently cultivated in 20 provinces, most of which are grown in Dak Lak with nearly 210,000 hectares, Lam Dong with 170,000 hectares, Dak Nong about 130,000 hectares (VietnamBiz, 2019). According to the Vietnam Coffee – Cocoa Association (Vicofa), each year the coffee industry attracts about 600,000-700,000 employees, in three months of harvesting, the figure can be 800,000. In Vietnam, there are 97 coffee bean processing facilities with a capacity of more than 1.2 million tons, 8 large-scale instant coffee processing factories with a planned capacity of over 36,400 tons / year and the actual capacity is nearly 98% of the planned capacity. Currently, Vietnamese coffee has been exported to over 80 countries and territories, ranking the second in the world and the first in Robusta beans export.

3.2. Negative environmental impacts of coffee industry in Vietnam

3.2.1. Conservation of biodiversity

The coffee industry has impacts on biodiversity conservation in areas where forests are replaced by coffee plantation. In Vietnam, according to Ngo Dinh Que, Nguyen Thu Huong, Nguyen Thanh Tung, Ta Thu Hoa (2010), after deforestation to plant coffee, the forest layer declined from 3-5 layers to only 1-2 layers. Canopy cover decreased significantly from 0.6–0.7 to 0.2-0.3. The cause of the forest decline in the period 1982 - 2002 was the encouragements of the land exploitation for coffee cultivation (Ngo Dinh Que el al, 2004) The total natural forest area of ​​Vietnam in 1943 was 14.3 million ha, with a coverage rate of 43.8%, above the safety level of 33%, but in 1999 it was only 10.88 million ha, with a coverage rate of 33%. The reason for the decline of the forest area in this period was the process of reclaiming land for industrial crops such as coffee trees (baovemoitruong.org.vn, 2020)

3.2.2. Use of pesticides and other hazardous materials

Common coffee tree pests and diseases are pseudococcus risso, boisduval scales, stem borer, hypothenemus hampei, dry branch disease and dry fruit disease, nematodes causing yellowing leaf and root rot diseases. These diseases harm and reduce significantly the yield and quality of coffee. Thus, using insecticides on coffee plants impacts the environment. For example, the excessive use of plant protection drugs makes the yield and quality of coffee unstable while the production environment is degraded. Coffee plants are subjected to expose to dozens of plant protection drugs; Unregulated use of plant protection drugs creates the risk of pollution of the soil, water, and air environment and harms the health of users (Mai Phuong et al, 2020).

3.2.3. Soil conservation and fertility

Coffee problems negatively impact soil conservation and fertility due to:

- Soil moisture in natural forests and coffee gardens differs significantly, on average, 60% - 65% compared to natural forests. The physical clay content decreases from 1% - 10%, the humus content decreases sharply, making the nitrogen content in the soil decrease.

- Soil moisture in coffee gardens is only 60% - 65% on average compared to natural forests.

- The ability to return nutrients to the soil is lower than that of other plants because the amount of falling leaves of the coffee garden after 6 - 9 years old is only 1.6 - 2.5 tons/ha, an average of only 1/3 compared to the level of 4.5 - 9 tons/ha of poor secondary forest, the forest group has been exhausted and has not been recovered.

- The total microorganism content in coffee-growing soil is always 10% - 20% lower than that of natural forests and the number of microorganisms is also different in each soil type.

- Increased acidity and changes in the concentration of medium and trace substances in the soil such as S, Cu, Zn, etc. due to excessive use of inorganic fertilizers (Ngo Dinh Que, 2018).

3.2.4. Water conservation

The increase in the coffee growing area has a negative impact on the water conservation above due to the following problems. Firstly, the water demand for coffee is high, on average, it needs from 300 to 400 liters of water per stem / time. Secondly, exploiting drilled wells to get water for coffee irrigation leads to laminar flow, declining groundwater due to improper exploitation (Cong Ly el al, 2010); Coffee processing requires a lot of water; The process of pre-processing and processing coffee creates a lot of wastes that pollute the surface water and groundwater.

The causes to these problems are:

- Irrigation water plays a decisive role in the yield and quality of coffee plants;

- Biological characteristics of coffee trees with root mainly concentrated in the topsoil layer (from 0 to 30 centimeters), the coverage of the root system varies from 0 to 50cm, so there is a very high water demand (chungfarm.com, 2020).

- In Vietnam, the largest coffee-growing regions are concentrated in the Central Highlands’ provinces. However, due to the impact of climate change, the weather in the Central Highlands’ provinces is complicated and irregular, especially in the long dry season, drying rivers, small streams and reservoirs. To have irrigation water for coffee, people intensify digging wells, exploiting groundwater (nhandan.vn, 2020).

- The coffee preliminary processing requires a lot of water because coffee processing establishments in the Northwest and Central Highlands of Vietnam use wet processing methods including the following stages: rubbing the berries to remove the peel; soak for the mucus fermenting itself and then sunder; washed and dried to have parchment coffee. The wet processing method is fairly expensive and usually only used for high quality Arabica beans. In the Northwest, small coffee processing facilities are often concentrated in the watershed area, so surface water pollution becomes a major environmental problem for the surrounding residential areas and downstream areas. In the season of preliminary processing, coffee processing causes environmental pollution and water source pollution (Nguyen Nga. 2019)

- Coffee processing generates wastewater that affects the water environment at the following stages: rough washing, shell grinding, enzyme immersion, rinse, sanitary wastewater, and domestic wastewater (xulymoitruong.com, 2020).

3.2.5. Waste management

The preliminary processing and processing of coffee beans in Vietnam creates solid wastes including coffee husks; liquid wastes including wastewater from preliminary processing, processing and production; emissions including dust from preliminary processing, processing, and production.

Solid waste generated by coffee husks is caused by coffee preliminary processing of establishments using wet preliminary processing, creating a large amount of solid waste, hence, polluting the surrounding environment.

Wastewater is generated from coffee preliminary processing, processing and production. In the Central Highlands and Northwest regions, coffee production and processing establishments are spontaneous, small, scattered, and lack technology to treat waste and wastewater according to standards; the awareness of coffee production and processing households and establishments about environmental protection is still limited, they often discharge waste directly into the environment, hence, polluting water sources.

For emissions, the process of preliminary processing of coffee by wet method and the last stage is drying. In this stage, establishments usually use electricity to dry, creating a large amount of emissions; at the same time, the coffee roasting process also generates a large amount of emissions.

3.2.6. Energy consumption

Energy is consumed in all stages of the coffee supply chain. In which, the production phase includes planting, preliminary processing, and processing coffee beans. These stages consume a lot of energy. For example, coffee planting soil machine consumes petroleum and oil; lawn machines consume petroleum and oil; aircraft spraying pesticides on coffee trees consumes electricity or petroleum; water pump for coffee irrigation consumes electricity; coffee harvesters consume large amounts of electricity and petroleum; coffee peeling machine highly consumes electricity or petroleum; coffee packaging machine using electricity or petroleum; coffee dryers and coffee roasters consume a lot of electricity. The problem of energy consumption in coffee production tends to increase due to the increasingly common use of machinery and equipment in coffee growing, processing and production in Vietnam.

3.2.7. Climate impacts

Growing and production coffee have an impact on the environment by generating greenhouse gases such as CH₄, CO­₂, CFC, and CO. This process occurs in all stages of coffee production and processing. For about the residues of coffee plants in branches, leaves, etc., if they are buried, they will create CH₄, or create CO₂ while the burning process of these parts of coffee tree will create CO₂. Irrigation often has to use energy from machines such as electricity, gasoline, etc. and it emits CO₂. Irrigation often has to use energy from machines such as electricity, gasoline, etc. that emits CO­₂. Wet processing produces scrap such as fresh pods, in the decomposition process that emits CH₄ gas. Wastewater from wet processing causes pollution and CH₄ and N₂O emissions. Drying process requires fuels and electricity to run machines, which emit CO₂. Roasting requires using fuel, electricity to run roasting and grinding machines, which emit CO­₂ emission.  

The authors’ interview of 10 coffee production and business entities shows the importance of environmental issues for coffee production in Vietnam. More than 20% apply environmental assessment measures; 90% apply environmental protection measures; 40% apply international environmental standards related to biodiversity, pesticides, soil and water conservation, waste management, energy, greenhouses and adaption to climate change.

3.3. Relevant Environmental Regulations, Standards and Certifications in Coffee Industry

The environment issues discussed in part 3.2 have been regulated in the regulations of Vietnam, international standards as well as FTAs.

- Regulations of Vietnam: Law on Environmental protection (2014), Law on Biodiversity of Vietnam (2008), Law on Forestry (2017), Law on Plant Protection and Quarantine (2013), Law on Water resources (2012), Law on Economical and Efficient use of Energy (2010), Vietnam Sustainable Development Strategy for 2011-2020, National Strategy on Climate Change 2011, National Green Growth Strategy for the period 2011-2020, TCVN ISO 14001: 2015, Criteria TCVN 11892-1: 2017, Criteria TCVN 11892-1: 2017, Criteria TCVN 6537: 2007, Good agricultural practices in Vietnam VIETGAP (Criteria TCVN 11892-1: 2017).

- International standards: 4C Standard. (Code of conducct.2018) UTZ Standard (UTZ Coffee Modulus Code of Conduct. 2015), Rainforest Alliance Sustainable Agriculture Standard (RA), (Sustainable agriculture standard. 2020), Fair trade coffee certification[1], Organic Food Development and Certification (OFDC) (Fair trade coffee.2020)

- FTAs: EU-Vietnam Free Trade Agreement (EVFTA); Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).

4. Discussion and Conclusion

The environmentally responsible business in the coffee industry is one of the requirements of the customers as well as Vietnam's commitments in international trade agreements. Currently, coffee production enterprises that want to export must strictly follow the certification requirements of importers. At the same time, enterprises that carry out the certification are paid by the importer for a certain price plus the normal selling price, as well as building the image and brand name in the international market.

Exporting Vietnamese coffee to some certain markets needs to comply with strict regulations by environmental standards. In the European market that accounts for over 42% of Vietnamese coffee, environmentally friendly products are encouraged and get “plus points”. Consumers are willing to pay a higher price for coffee produced under an eco-certified process (vnce.vn,2020). The United States is the second largest market for Vietnamese coffee consumption, accounting for 8.49%. US consumers care about environmental factors related to products, businesses must commit to coffee standards such as Fair Trade, Organic, Rainforest Alliance / UTZ Certified and 4C (Dang Huy, 2019). Russia accounts for 4.76% of coffee exports, and Vietnamese suppliers get 49.9% of the coffee market share in Russia (Dang Huy, 2019). Russian consumers are highly demanding with food safety standards. In Australian market that accounts for 1.23% of Vietnam's coffee exports, environmental regulations for coffee imported into Australia must meet Australian biosafety requirements (vietnamexport.com, 2018). International consumers tend to pay attention to coffee products with high environmental responsibility, friendly with the environment, natural resources conservation, ecological safety. Thus, the direct and active participation of coffee businesses in environmentally responsible production is not only beneficial for environmental sustainability but also economic benefits.

The regulations of Vietnam, international standards as well as FTAs shows the role of environmental standards and regulations in coffee production and processing activities to national and international trade chains. Production of coffee towards sustainable, ecological, safe, organic, climate change adaption, circular economy and green economy is becoming the popular trend over the world and in Vietnam. Corporate social responsibility for the environment is increasingly concerned, widely recognized and becomes one of the rules and standards in production and business of the enterprise. Therefore, it is necessary to develop and apply an environmental code of conduct in the Coffee industry in Vietnam in order to provide principles and standards suitable to Vietnam, to meet domestic standards, and related provisions of the two Free Trade Agreements of which Vietnam is a member (EVFTA and CPTPP). These industries are able to show their environmentally responsible business practices to minimize negative impacts of production activities, becoming a guideline for businesses in the coffee sector.

[1] This article is the research result of the project “Advancing environmentally responsible business practice for the fruit and vegetable sector and the coffee sector in Vietnam” funded and supported by the United Nations Development Program (UNDP) and the Government of Sweden.

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Tác động môi trường của ngành Cà phê và yêu cầu về môi trường đối với các doanh nghiệp cà phê tại Việt Nam

TÓM TẮT:

Sản xuất cà phê có đóng góp rất lớn vào sản lượng sản xuất, xuất khẩu và tạo việc làm ở Việt Nam, nhưng cũng có tác động tiêu cực đến môi trường về mặt bảo tồn đa dạng sinh học, sử dụng thuốc trừ sâu và hóa chất độc hại, bảo tồn đất, bảo tồn nước, quản lý chất thải, tiêu thụ năng lượng và các vấn đề phát thải khác liên quan đến khí nhà kính.

Các hiệp định thương mại tự do quốc tế mà Việt Nam đã ký kết, cũng như các yêu cầu quốc tế về môi trường cho thấy vai trò của tiêu chuẩn và quy định về môi trường trong hoạt động sản xuất và chế biến cà phê đối với chuỗi thương mại quốc gia và quốc tế. Đồng thời, trách nhiệm xã hội đối với môi trường của doanh nghiệp ngày càng được quan tâm, thừa nhận rộng rãi và trở thành một trong những quy tắc, chuẩn mực trong sản xuất - kinh doanh.

Do đó, ngành Cà phê Việt Nam cần xây dựng và áp dụng bộ quy tắc ứng xử về môi trường nhằm đưa ra các nguyên tắc, tiêu chuẩn phù hợp với Việt Nam, đáp ứng tiêu chuẩn trong nước và các quy định liên quan của các hiệp định thương mại tự do mà Việt Nam là thành viên.

Từ khóa: cà phê, tác động môi trường, kinh doanh có trách nhiệm. 

[Tạp chí Công Thương - Các kết quả nghiên cứu khoa học và ứng dụng công nghệ, Số 19, tháng 8 năm 2021]