Siegried in Vietnam

I endeavor to learn something new about coffee every day. *Today I got a very early start. I was grinding some excellent Honduran coffee during the opening seconds of BBC Witness History when I thought I heard coffee and Vietnam mentioned. 

East Germany's Coffee from Vietnam
9-minute radio interview

Đắk Lắk province

I do know a bit about the geography of coffee in Vietnam, but I had been missing a significant chapter of its history. BBC journalist Michael Rossi spoke with Siegfried Kaulfuß, an East German government official who had been instrumental in bringing 10,000 hectares (about 25,000 acres) of land in Dak Lak Province into production in the 1980s. 

I can be forgiven, perhaps, for not knowing about this important chapter in Vietnam's coffee history; even the Wikipedia article on the subject gives it only a brief mention and a link to a separate article. And although the project was huge, it accounts for less than two percent of the land now under coffee cultivation in Vietnam.

The story bears out a few things I knew about coffee in Vietnam -- it is indeed the second-largest producer of coffee, for example, but it was not a significant player in world markets prior to the 1980s. The interview emphasizes the role of a fellow centrally-planned (communist) state in its growth; my understanding is that significant investment from global capital was also involved.

I had a brief conversation a decade or so ago with a fellow who had been somewhat involved but was by then running an art gallery in Nantucket. He averred that the rapid expansion of coffee in Vietnam had been encouraged by the World Bank as part of an effort to reduce the country's political isolation by increasing its trade. 

This was despite the hypsometric and climatic challenges of growing coffee in this location. Although it is well within the global coffee belt, the temperatures are too high and the altitudes are too low for arabica coffee to be grown in most of the country, and even the lower-quality robusta requires an extraordinary amount of chemical inputs.

Back to the BBC. The interview mentions an aspect of Vietnam's coffee history that I did know, but a translation error puts its origins in the wrong century. The Wikipedia article above points to the correct timing. Rossi says that coffee cultivation dates to the French Revolution of 1789 but it really entered around the time of the French Invasion by Napoleon in 1857. This geographer notes that these are opposite kinds of events at opposite ends of the Eurasian continent in separate centuries. 

Another important part of the historic importance of Vietnam's rapid expansion into the global coffee market is that it now sits alongside Brazil as such a large producer that local conditions have global impact. A frost in Brazil has become a cliché as an example of a commodity price disruptor, since such an event can send prices of coffee up throughout the world. 

In 1999,  Vietnam had the opposite effect, with its rapid increase in production cratering prices worldwide and creating a coffee crisis that permanently altered the structure of the industry, especially in Central America. This April, a drought in Vietnam was having the effect as a Brazilian frost, contributing to a dramatic increase in the price of coffee futures. 

I should note that mainstream economists and the journalists who follow them tend to pay attention to the industry only when a rapid increase in price is occurring, even though the industry itself uses futures markets to shift most of the financial risks to farmers themselves. 

*A note about timing: I started this blog post with enthusiasm but it has lingered as a set of open tabs for many weeks. In this context "today" means "about two months ago."