External Strategic
3. Study area
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Besides the un-certification of the coffee farming, individual farmers and manufacturers are confront with limitation in market and export of the coffee product. For instance, the expense for international standard organic certification is relatively high and inability to enroll the world trade system (Helvetas , 2003).19 Therefore, this study aim to investigate the situation of the coffee farmers. The research question is dose coffee production leads to better quality of life and family strength or vulnerability?
2. Research Methodology
This study used both qualitative and quantitative data analysis. A questionnaire was distributed to 260 coffee farmers. An interview was performed in 69 farmer families in three villages with the largest, medium and lowest cultivation area. These were Setkhot village, Katouad village, and Luck 11 village in Paksong district , Champasak provice. The statistics was analyzed using SPSS for Windows (Statistical Package for the Social Sciences) and content analysis.
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Fig. 1. The map of Lao, PDR and location of three villages in Paksong district Champasak province 4. Result & Discussion
4.1. Coffee production process
The coffee farmer in area was start plantation in 1965 , with Arabica, Robusta, and Reberica. During that time there was no seed cultivation for trading. Until 1996 the demand for coffee seed and the market for coffee grew higher therefore the coffee seed was cultivated for selling to the farmers. Conventional plantation process of coffee uses the stick for making hole for young coffee plant and needs only rain water for maintaining the soil humidity. Weed management is required and fertilization is from the wasted seed coat and organic fertilizer (Nilavong, 2010).22 The seed harvest starts once the coffee seeds are ripe with red or yellow color, or green for raw. The beans are then sun dried and the seed coat was cracked and the beans are ready for trading.
The conventional cultivation method was not efficient due to the rusty disease and fog from low temperature. Until 1975, the decrease in fog from higher temperature led to the re-cultivation of Robusta and Arabica. In 1996, Catimor, the hybrid cultivar invented by the Nurn Soong Seed Research Station, was introduced for its fast harvesting time. At present, the majority of farmers in the villages have a profession in coffee cultivation. The coffee production today is more accurate according to the standard growing process. The process includes using cultivated seeds, organic fertilizers, wasted seed coat, and biological fertilizers. The harvest method is done several rounds and aim for only the ripe seeds to control to quality of the coffee beans. The drying process is also performed according to the standardized protocol (Wannasiri, 2008).23
The labour for coffee plantation is from the farmers. The farming families farmers who have a shortage of labour hires workers for the cropping processed which included the soil preparation, plantation, and harvest. Main labour is needed in weed management and seed harvest since the area has rain year-round. Also, almost of the farmers hire workers from outside the area like Savannakhet provice, Attapeu provice, and Khong district in Champasak provice.
This is incident similar to those of Mexico, Ethiopia, and Nicaragua (Lim et al., 2007; Valkila, 2009 and Bradford et al., 2011).24-26
4.2. Market and trading of the coffee production
In the past, organic coffee from Lao, PDR has been exported without any organic certified documents and therefore there was no advantage from premium price setting. Eighty per cent of coffee produced in Lao, PDR is exported to European countries like Poland, Germany, Belgium, and Switzerland. The rest is to Japan, USA, and ASEAN countries such as Viet Nam and Singapore (JICA, 2001& Lao Coffee Association, 7008).27,28 These import countries use Lao coffee beans with no mentioning of the origin of the beans to blend with other brewed or instant coffees. Therefore, the export of Lao, PDR coffee is it the form of the raw beans with low price comparing with instant
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The biggest coffee export company in Lao, PDR is Dao Heuang Company, sharing 70% of the total export. The rest of the export shares among Sinouk Coffee Company, Jhai Coffee Company, Lao Mountain Coffee Company, and several other small trading companies. The coffee association of Lao, PDR indicated that two years were required for setting up reasonable condition for import and export of organic coffee to international markets. It also planned to export 20,000 tons of organic coffee in 2009, valued 30 million dollars USD. The export coffee is expected to increase in the coming years. Lao, PDR has to produce organic coffee under the European Union standard so it can export to USA and Japan as well (Lao Coffee Association, 7008).28
The coffee bean trade in the village is mainly through the local agencies and middle merchants. Some sell directly to the company and require cash. Another trading model is the farmers form a group and trade the coffee beans with the company. The leader of the group receives money and splits it with the members. Coffee beans can be traded in several forms including one-layer peeled or double-layer peeled beans, red beans, and green beans (the farmers receive money before the beans ripe). The most popular trading form is red beans since the farmers can trade fast with no labor or processing needed (Suwanwisolkij, 1999). 29
It is found that trading coffee beans with middle merchants or company agencies cause price disadvantage to the farmers. Moreover, harvesting and releasing coffee beans in the market at the same time as the other farmers along with the reduced price from the seed humidity lead to buying rejection or suppressed price from the merchants. Some farmers choose to not sell but dry and process the beans for better price
4.3. The impact from coffee production
Our interviews with the farmers indicate that coffee cultivation result in the stable profession for them. They have more income when growing coffee (Philaphone, 2011).7 The better economy of each member of the village lead to new house, new car, and commodities. The new road in the village from coffee trading income allow other villagers to conduct business more easily. An example are the food carts. Variety of food from outside upscale their meals and therefore their health. All young members receive basic education and also higher education. When ill, they are able to afford the hospital bills.
Fig 2. Coffee trading model of the farmers Export
Quality Coffee Production Center
Lao coffee company
Farmer members of quality coffee production
Trading agency in the village
Coffee farmers
General merchants Local Consumption
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Page | 180 Coffee farmers can sell their product to several channels including middle merchants, trading agencies, quality coffee production center and Lao coffee companies. From our study, we find that farmers who are members of quality coffee production center (cooperative) receive higher price than selling to the other trading channels. The members of the center will process the coffee beans by themselves before direct export. For those who choose middle merchants, agencies, or coffee companies, at the end all the coffee will be collected at the company ready to be exported. Our findings are similar to those of (Vilavong, 2004 and Sisomboun, 2011).30,31
5. Conclusion
The analysis of the income of coffee farmers annually shows that 34 farmers or 13.1% have income less than 1000 dollars USD. One hundred fifty two farmers or 61.9% have income 1000-3900 dollars USD. Thirty nine farmers of 15.1% have income 4000-6900 dollars USD. Thirteen or 5.0% have income 7000-9900 dollars USD. Thirteen or 5.0%
have income more than 10000 dollars USD.
Table 2. Annual income of the coffee growing in 3 villages
Village
Annual family income from coffee growing (%)
<1000 $ 1000-3900 $ 4000-6900 $ 7000-9900 $ >10000 $ Total
No. % No. % No. % No. % No. % No. %
Setkhot 17 6.5 92 35.4 35 13.5 12 4.6 9 3.4 165 63.4
Katouad 8 3.1 51 19.6 3 1.2 1 0.4 2 0.8 65 25.1
Luck 11 9 3.4 18 6.9 1 0.4 0 0.0 2 0.8 30 11.5
Total 34 13.0 152 61.9 39 15.1 13 5.0 13 5.0 260 100
The projection of the world’s coffee trading during 2010-2015 indicates that it will increase for 11.3 billion dollars USD. The freshly brewed coffee beverages will share more than 50% of the total. Instant coffee market increases 23%, while fresh coffee market increases 17%. In addition, the coffee market tends to direct to the premium coffee products including organic coffee (Food Institute, Thailand, 2012).32 This fact benefit the Lao, PDR’s coffee farmers since the growing location is perfectly suitable for organic coffee farming. We find that the average growing area of each farmer is 1.6-3.1 hactares. A lot of labor is needed for coffee production. Therefore, most farmers sell red beans and have average income 1000-3900 dollars USD, considered as 61.9% of the total farmers. The farmers who join the quality coffee production will sell to the center (cooperative) with about 30% higher price than selling to general merchants.
Farmers who sell green beans will receive lowest price. Therefore, it should be suggested that strengthening the quality coffee production center or the coffee cooperative will also strengthen the individual coffee farmers as well. This finding is in agreement with the improvement and development of Latin America and South Africa coffee associations (Bacon, 2005; Lim et al., 2007; Valkila, 2009; Bradford et al., 2011).33,24-25
6. Recommendation
Coffee farmers in southern Lao, PDR have grown coffee for trading since 1996. This profession has brought wealth to the farmers. However, the farmers need more education in coffee production process and also learn to negotiate in the coffee market system. Our recommendations are as follows:
1) An insurance policy in coffee crop price
2) Implementation and development strategy to strengthen the Laos coffee production cooperative 3) Development and technology transfer about coffee production process to the farmers
Acknowledgements
I am grateful to the many informants interviewed for this study in southern Lao PDR. I would also like to thanks the two anonymous reviewers for their valuable comments to this paper. This research is funded by Research funding KKU (2013), Thailand International Development Cooperation Agency (TICA) and Research Group on Wellbeing and Sustainable Development.
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