Analyzing Costs And Margins Of Smallholder Farmers In The Coffee Value Chain

Dak Lak province is the coffee capital of the Central Highlands and the whole country of Vietnam.The growth of coffee production and processing contributes to poverty alleviation for local people.However,in recent times,coffee prices are experiencing complex fluctuations that make the profits of coffee farmers seriously decline,affecting the livelihoods of thousands of farmers as well as hundreds of thousands of direct and indirect workers.Against this background,an analysis of costs and margins of coffee farmers and the calculation of the fluctuation of these indicators in the coming time are in significance.The study conducted the survey in three districts with the largest coffee growing area in Dak Lak province to calculate and compare the costs and margins of coffee farmers and other actors in the Dak Lak coffee value chain,and used ARIMA model with the monthly data set from January 2004 to March 2020 of some indicators to analyse the fluctuation of costs and margins of coffee famers over time.The research results show that:(1)The cost of investing in new plantations and the maintenance of coffee gardens are relatively high,and the investment period is relatively long compared to the financial potential of coffee growers;(2)Coffee growing households receive the highest profits and create the highest value added,compared to other actors in the Dak Lak coffee value chain;and(3)In the short term,the risk of price volatility that coffee farmers have to bear will be less than that of processing and export enterprises,but in the long term,this risk will gradually shift from processing and export enterprises to coffee growing households.Based on the above findings,the paper gives some suggestions such as:(1)Improving the capacity of coffee farmers in organizing and managing production;(2)Enhancing the efficiency of the Dak Lak coffee value chain;and(3)Strengthening State management in the implementation of policies to support farmers.