By Lina Irawan 
Vietnam’s rise as a coffee powerhouse is a remarkable story of agricultural transformation. Following the Doi Moi economic reforms in the late 1980s, the Vietnamese government actively encouraged coffee cultivation, particularly in the Central Highlands. Favorable climatic conditions, abundant land, and low labor costs fueled an explosion in production, primarily of the robusta variety, known for its hardiness, higher caffeine content, and suitability for instant coffee and espresso blends. This strategic focus quickly propelled Vietnam past Colombia to become the world’s second-largest producer by the early 2000s, establishing it as a dominant force in the global coffee trade. Today, coffee is not merely an export commodity but a cornerstone of the national economy, supporting millions of farmers and contributing significantly to rural livelihoods and foreign exchange earnings. The industry’s rapid expansion, however, often came at an environmental cost, with concerns raised over deforestation, water usage, and unsustainable farming practices, contributing to the perception of "cheap coffee" that Binu Jacob highlighted.
The European Union, as the world’s largest coffee market, consuming approximately 24% of global production, wields immense influence over international trade standards. Its new regulations, particularly the EUDR, are designed to leverage this market power to drive global sustainability. "Vietnam was always known to produce cheap coffee, but cheap coffee is no longer going to be attractive to export because [the] EU is coming up with very stringent norms," Jacob emphasized. "So if we don’t go up the value chain and create coffee that is sustainable and that meets the very high standards, we will be unable to export." This sentiment reflects a broader global shift where consumers and policymakers are increasingly demanding products that are not only affordable but also ethically sourced and environmentally responsible.
The EU Deforestation Regulation (EUDR), which applies to most companies from December 30, 2026 (with some smaller businesses granted an extension until later in 2027), represents a landmark legislative effort. Its primary objective is to curb global deforestation and forest degradation linked to the consumption of certain commodities within the EU. The regulation mandates that companies placing specified products – including coffee, cocoa, palm oil, soy, wood, cattle, and rubber – on the EU market must conduct rigorous due diligence to ensure these products have not been grown on land deforested after December 31, 2020. This requires detailed traceability systems, including geolocation data for all farms, and verifiable information proving compliance. The EUDR is a critical component of the European Green Deal, aiming to reduce the bloc’s contribution to global greenhouse gas emissions and biodiversity loss, while promoting responsible supply chains. For Vietnamese coffee producers, this translates into an unprecedented demand for transparency and verifiable proof of sustainable cultivation practices, moving beyond traditional certifications to encompass a comprehensive, legally binding framework.
Compliance with EUDR presents both significant challenges and opportunities for Vietnam. The sheer number of smallholder farmers, who constitute the vast majority of coffee producers in Vietnam, means that implementing robust traceability systems and ensuring adherence to deforestation-free standards across fragmented supply chains will be a monumental task. Many smallholders lack the resources, technical knowledge, or access to technology required to provide precise geolocation data or maintain detailed records. The financial implications of upgrading farming practices, investing in new technologies, and undergoing certification processes could be substantial, potentially burdening farmers and smaller businesses. However, it also offers a compelling impetus for Vietnam to accelerate its transition towards higher-value, sustainable coffee production.
Recognizing the urgency, Hanoi is actively collaborating with Brussels to navigate the complexities of compliance. This collaboration is exemplified by the multiyear, EU-backed SustainCoffee project. Initiated by CARE International in Vietnam, in partnership with local government bodies and private sector actors, the project aims to bolster the country’s coffee sector’s capacity to meet international environmental, social, and governance (ESG) standards. SustainCoffee provides crucial technical assistance, training, and capacity-building initiatives to over 400 coffee-related businesses, while indirectly benefiting an estimated 1.4 million farmers and workers across the supply chain. The project focuses on improving farming practices, promoting climate-resilient agriculture, enhancing supply chain transparency, and strengthening farmer organizations. By empowering farmers with knowledge and tools, such as sustainable land management techniques and access to market information, SustainCoffee seeks to ensure that Vietnamese coffee can meet the rigorous demands of global markets while improving farmer livelihoods.
Nestlé, a major player in Vietnam’s coffee sector and globally, is at the forefront of driving sustainable transformation. Binu Jacob highlighted Nestlé Vietnam’s long-standing commitment to improving coffee cultivation through advanced research and development. The company has partnered with the Western Highlands Agriculture and Forestry Science Institute (WASI), a prominent agricultural research institution, to develop coffee plantlets "best suited for the soil conditions in the Central Highlands." This collaborative research focuses on identifying and propagating robusta varieties that are not only high-yielding but also disease-resistant, climate-resilient, and require less water and fertilizer, thereby minimizing environmental impact.
A cornerstone of Nestlé’s strategy is the propagation of these improved plantlets through tissue culture technology. "From one leaf of this coffee plant, you can actually make 2,000 trees, and this is what we’ve been doing in the last 15 years," Jacob explained. Tissue culture allows for the rapid, mass production of genetically identical, disease-free plantlets, ensuring uniformity and consistent quality. This controlled propagation method significantly accelerates the replacement of older, less productive, or disease-susceptible coffee trees. Nestlé has scaled this initiative dramatically, having produced and distributed "100 million plantlets of this disease-resistant coffee plantlet… at subsidized rates to farmers all over central Vietnam." This massive undertaking represents a substantial investment in the long-term sustainability and productivity of Vietnam’s coffee industry.
The impact of these efforts has been profound. Jacob proudly stated, "As a result, the productivity and the yield of coffee today in Vietnam is three times that of the global average, and this can be replicated anywhere in the world." Such a significant increase in yield per hectare is critical for sustainable intensification, allowing farmers to produce more coffee on existing land, thereby reducing pressure on forests and preventing further deforestation. Higher yields also translate directly into improved farmer incomes and economic stability. The "replicable" nature of this model suggests a potential blueprint for other coffee-producing nations grappling with similar challenges of productivity, disease, and environmental sustainability. It underscores the power of public-private partnerships and scientific innovation in transforming agricultural sectors.
Beyond mere compliance, Jacob framed the EUDR as a unique opportunity for Vietnam to strategically move up the value chain. This involves shifting away from a volume-driven, commodity-focused approach to one that emphasizes quality, sustainability, and differentiation. "With small farms, it’s quite easy to move from the old ways of traditional farming to regenerative farming," he asserted. Regenerative agriculture, a set of farming practices focused on restoring and enhancing ecosystem health, including soil biodiversity, water retention, and carbon sequestration, offers a path to achieving this. For coffee, this means practices like intercropping with shade trees, using organic fertilizers, improving soil cover, and efficient water management. These methods not only meet environmental standards but can also improve coffee quality, command higher prices, and make farms more resilient to climate change.
By embracing regenerative practices and verifiable sustainability, Vietnam can carve out a distinct competitive advantage in the global market. Meeting the stringent EU standards will allow Vietnamese coffee to access premium segments, where consumers are willing to pay more for ethically and sustainably produced goods. This shift from "cheap coffee" to "sustainable, high-value coffee" ensures "that more value stays here" within Vietnam. This means higher prices for farmers, increased export revenues for the nation, and the development of more sophisticated processing and branding capabilities domestically. Moving up the value chain implies not just growing beans sustainably, but also investing in roasting, packaging, and branding, capturing more of the profit margin that traditionally goes to importers and distributors in consumer countries.
However, realizing this opportunity is not without its challenges. The scale of transformation required across millions of smallholder farms is immense. It demands sustained investment in farmer training, financial incentives for adopting new practices, and robust digital infrastructure for traceability. Furthermore, ensuring equitable benefit sharing throughout the value chain, so that farmers truly profit from higher-value coffee, will be crucial. The EUDR also raises questions about market access for coffee that does not meet the new standards, potentially necessitating diversification into other markets or a dual-track approach to production.
In conclusion, Binu Jacob’s warning serves as a potent call to action for Vietnam’s coffee industry. The era of cheap, undifferentiated coffee exports is drawing to a close, replaced by a future where sustainability, traceability, and verifiable ESG compliance are non-negotiable prerequisites for market access, especially to the lucrative European market. While the EU Deforestation Regulation presents considerable challenges, it simultaneously offers Vietnam an unparalleled opportunity to redefine its position in the global coffee landscape. By leveraging scientific innovation, fostering strong public-private partnerships, empowering its vast network of smallholder farmers with sustainable practices like regenerative agriculture, and committing to value chain upgrading, Vietnam can transform itself from a mere volume producer to a leading exporter of high-quality, sustainably produced coffee, securing long-term prosperity for its farmers and a competitive edge in a rapidly evolving global market. The journey ahead will demand concerted effort and strategic vision, but the prize is a more resilient, equitable, and environmentally responsible coffee sector.
