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Short-term cash flow trap and the challenge of reinvesting in aging coffee plantations in the Central Highlands

Analysis of financial barriers, soil treatment techniques, nematode management, and phased replanting and Robusta rehabilitation strategies in the Central Highlands to overcome the short-term cash flow trap.

The challenge of replanting and rejuvenating Robusta growing regions in the Central Highlands: Perspectives from agronomy to cash flow.

The Central Highlands plays a pivotal role as Vietnam's key coffee-producing region, particularly for Robusta coffee. The large scale of the growing area provides advantages in volume, but simultaneously poses a long-term challenge: how to maintain productivity, soil health, and economic efficiency as an increasing number of plantations enter stages of aging or declining growth.

Bài toán trẻ hoá vùng nguyên liệu Robusta tại Tây Nguyên

Coffee replanting is therefore not simply a decision to clear an old plantation and replant. It is a process involving tree age, root health, soil conditions, nematodes, planting material, cultivation techniques, investment capital, and the household's ability to maintain cash flow during the years before the plantation reaches a stable commercial phase.

For a large-scale Robusta growing region like the Central Highlands, the effectiveness of replanting is not measured solely by the number of hectares replanted. More importantly, it depends on whether the replanted area truly establishes a new production cycle with stable yields, reasonable costs, consistent quality, and the capacity to meet the market's increasingly high demands.

The essence of aging: The distinction between tree age and biological performance.

According to the Western Highlands Agriculture and Forestry Science Institute (WASI), approximately 87% of Vietnam's coffee area was planted before 2000. As of 2016, the area of coffee over 20 years old was estimated at around 198,000 ha, equivalent to 30.8% of the total national coffee area. WASI also forecasts that between 2017 and 2026, approximately 140,000 to 160,000 ha of coffee will continue to enter the over-20-years-old category.

These figures reflect the scale of the aging problem in growing regions, but should not be interpreted to mean that every tree over 20 years old must necessarily be removed. In perennial coffee production, tree age is only one of several indicators used to assess the potential for continued exploitation.

A plantation with advanced age but healthy roots, good arable soil layers, balanced growth, and economically viable yields may be considered for rehabilitation measures such as pruning or grafting rather than full replanting.

Conversely, some plantations are not yet very old but exhibit weak growth, sustained low yields over many years, damaged roots, or severe pressure from nematodes and fungal diseases, making them unsuitable for rehabilitation. These areas need to be assessed for conversion to appropriate replanting options.

Therefore, the concept of an “aging plantation” in replanting should not be understood solely by the number of years since planting. Multiple factors must be evaluated simultaneously:

  • Tree age and growth potential: Assessing the degree of growth decline, the ability to produce new branches, and the capacity to maintain yields.
  • Root health: Examining water and nutrient uptake capacity, the extent of mechanical damage, and root disease agents.
  • Pest pressure: Evaluating the presence and density of nematodes and other soil-borne and root-zone pathogens.
  • Soil conditions: Considering soil depth, fertility, structure, water retention capacity, and degradation status after multiple cultivation cycles.
  • Recovery potential: Determining whether the plantation is still suitable for rehabilitation pruning or grafting, or if it requires replanting.

Core bottlenecks hindering the replanting process

The Coffee Replanting Project for the 2021–2025 period was approved by the Ministry of Agriculture and Rural Development under Decision No. 1178/QD-BNN-TT dated 31/03/2022, setting a target to replant and rehabilitate approximately 107,000 ha of coffee nationwide. Of this, the five provinces of the Central Highlands account for approximately 91,000 ha, comprising about 64,000 ha of replanting and 27,000 ha of grafting rehabilitation.

The scale of the program shows that replanting is no longer merely an issue for individual households but has become an important component of Vietnam's strategy to maintain its coffee production capacity.

However, the actual pace of replanting depends on many factors. A household may clearly understand the benefits of replanting but still be unable to proceed due to insufficient capital, an inability to accept several years of lost income, or unresolved issues regarding soil and planting material.

Short-term cash flow trap and household livelihood pressures

This is one of the key reasons why households delay removing old trees.

When a productive coffee plantation is cleared, revenue from that area almost immediately disappears. Meanwhile, living expenses, costs for caring for remaining areas, labor hiring, fertilizers, irrigation, and loan repayments continue to accrue.

Replanted coffee trees cannot quickly replace the lost income. Households must undergo a basic construction phase before the plantation enters a stable commercial period. This creates a cash flow gap that households with low reserve capital find difficult to endure.

The case in Đắk Nông clearly demonstrates the impact of price volatility. From 2021 to 2023, the province’s replanting and grafting rehabilitation progress reached 7,456.8 ha against a plan of 17,892.2 ha. According to the National Agricultural Extension Center, coffee prices rose sharply from 2022, at times exceeding VND 120,000/kg. When selling prices are high, some households tend to retain old but still productive gardens rather than clearing them to start a new cycle.

This presents a notable paradox in replanting. Rising coffee prices may improve short-term income but simultaneously increase the opportunity cost of clearing a garden that is still generating revenue.

Hazards from nematodes and soil degradation

Replanting involves more than just replacing tree trunks. Soil after many years of cultivation may harbor nematode pressure and root-pathogenic agents, particularly in old coffee gardens exhibiting leaf yellowing, growth decline, or root rot.

If diseased old trees are not thoroughly removed and the soil is not properly rehabilitated, newly planted seedlings may face disease pressure from the very first years.

Technical replanting procedures require handling old trees and root residues, rehabilitating soil, assessing soil-borne pathogens, and determining appropriate crop rotation plans before replanting. The duration and method of treatment must be based on the actual conditions of each plot.

This indicates that a successful replanting process does not begin when seedlings are placed in the holes. It begins with assessing the soil foundation and addressing factors that could affect the new trees’ root systems.

Difficulties in accessing long-term credit capital

Replanting investment requires upfront capital, while revenue from the replanted area is interrupted.

Đắk Nông’s coffee replanting plan for the 2021–2025 period initially estimated total funding at approximately VND 1,433.66 billion, of which bank loan requirements accounted for about VND 983.92 billion, equivalent to nearly 68.6% of the total estimated funding.

These figures show that replanting represents a large-scale investment challenge for households. Not all producers can self-finance the entire capital requirement over several consecutive years.

Further difficulties lie in ensuring that land assets, legal documentation, collateral, and payback periods align with the characteristics of perennial crops. If loan terms or grace periods do not match the coffee growth cycle, debt repayment pressure may arise before the garden generates sufficient cash flow.

Framework of technical solutions and cash flow optimization strategies

An effective raw material zone rejuvenation program does not necessarily require converting all aging areas into replanted areas simultaneously. A more appropriate approach is to stratify areas based on biological status and recovery potential.

Gardens with healthy root systems may be considered for stump pruning rehabilitation or grafting improvement. Areas that are truly depleted, with serious issues regarding yield or root health, should be prioritized for replanting.

This stratification reduces the area losing revenue simultaneously and allows households to allocate capital in stages. For households with large areas, phased replanting can become an important cash flow management tool.

Phased replanting: A tool to mitigate cash flow shock

Instead of clearing the entire garden in one year, the area can be divided into multiple lots and replanted in phases. The unplanted areas continue to generate revenue while new lots enter the development period.

This model does not reduce the total replanting requirement but changes the temporal distribution of cash flow. This is crucial for households heavily dependent on coffee income.

Agricultural extension services have also recognized partial replanting as suitable for households lacking the resources to clear entire gardens at once. Phasing the area helps producers maintain partial income while newly planted areas are under development.

Intercropping: An economic buffer during the development period

Intercropping can serve as an economic buffer during the period when coffee has not yet achieved stable yields. However, intercropping does not mean introducing as many crop types as possible into the garden.

Intercropped species must be selected based on soil, water, light, coffee density, and production goals. If intercrops compete too aggressively for water, nutrients, or light, the additional benefits may be offset by the decline of the main coffee plants.

Models in Lâm Đồng have researched and implemented intercropping avocado, macadamia, durian, and other crops in coffee gardens. Effectiveness depends on model design, spacing, density, and ecological conditions of each region.

Therefore, intercropping during the replanting phase should be viewed as a technical and economic solution requiring design, rather than a one-size-fits-all formula for every garden.

Standardization of planting material: Clonal lines and TRS1 hybrid seed variety

Using certified planting material with clear traceability is one of the key factors determining the quality of the new production cycle.

WASI has researched and bred many Robusta coffee planting materials for production in the Central Highlands. The clonal group includes TR4, TR5, TR6, TR7, TR8, TR9, TR11, TR12, and TR13. Additionally, there is the multi-line hybrid seed variety TRS1.

TRS1 was bred from a combination of four parent lines TR4, TR9, TR11, and TR12 through controlled synthetic crossing. The variety was recognized by the Ministry of Agriculture and Rural Development in 2015 and included in seed production programs serving coffee replanting.

The key difference lies in the propagation method. Clonal lines are propagated vegetatively to maintain line characteristics, while TRS1 is a multi-line hybrid seed variety propagated by seed.

Variety selection should not rely solely on the variety name or advertised yield potential. It is necessary to simultaneously consider soil conditions, water sources, climate, irrigation capacity, planting density, ripening time, yield targets, and product quality orientation.

Seedling quality is just as important as the variety name. Seedlings for replanting must have clear origins, be produced at qualified facilities, have normally developed root systems, exhibit vigorous growth, and be free of nursery-borne diseases.

For seed-grown seedlings, seed sources and seedling quality must be controlled. For grafted plants, the graft union, callus formation, root system, and growth status must be inspected before field planting.

Therefore, standardization of planting material must be understood more broadly than simply selecting a variety code. It includes mother trees, mother tree gardens, seed or scion sources, seed production facilities, potting mix quality, root systems, pest and disease status, and adaptability after field planting.

Implementation practices and economic lessons in the Central Highlands

Dak Nong and Lam Dong provinces provide notable practical data on replanting scale, capital sources, and yield changes after coffee garden rejuvenation.

Indicator Dak Nong Lam Dong
Replanting and grafting renovation area Nearly 30,000 ha cumulative since 2012 Over 45,600 ha in the 2021–2025 period
Implementation progress 29,980.75 ha cumulative up to the 2021–2023 period Achieved over 85% of the 2021–2025 plan
Loan capital sources Estimated bank loan demand of VND 983.92 billion Nearly VND 653 billion in preferential loans over 5 years
Average yield Increased from 2.01 tons/ha in 2012 to 2.9 tons/ha in 2023 Increase from 2.6 tons/ha to over 3.1 tons/ha
Yield of replanted orchards Average of approximately 3.5–4.0 tons of green beans/ha Many replanted areas achieve high and stable yields
Yield of grafted rehabilitation orchards Approximately 3.0–3.5 tons of green beans/ha Used to rejuvenate orchards with recovery potential
Varieties used TRS1, TR4, TR9, TR11, Wire Coffee, and other suitable planting materials TR4, Xanh lun, Thien Truong, La xoai, Wire Coffee, and other suitable varieties

In Dak Nong, cumulatively from 2012 to the 2021–2023 period, the province carried out replanting and grafting rehabilitation on nearly 30,000 ha of coffee. The average provincial yield increased from 2.01 tons of green beans/ha in 2012 to 2.9 tons of green beans/ha in 2023.

Replanted orchards alone achieved an average yield of approximately 3.5 to 4 tons of green beans/ha. Grafted rehabilitation orchards achieved approximately 3 to 3.5 tons of green beans/ha. Some orchards reached levels of 4.5 to 5 tons of green beans/ha, indicating that there is still room for yield improvement when varieties and techniques are applied appropriately.

In Lam Dong, during the 2021–2025 period, replanting and grafting rehabilitation were carried out on over 45,600 ha of coffee, achieving over 85% of the plan. The province's coffee yield increased from approximately 2.6 tons/ha to over 3.1 tons/ha. The total volume of preferential loans for replanting over the five years reached nearly VND 653 billion.

A notable aspect in these two localities is that replanting was implemented through various methods. Orchards with no recovery potential were converted to replanting, while those with good root systems could undergo grafting rehabilitation or apply appropriate recovery measures.

This stratification helps use capital more efficiently and limits the loss of entire coffee cash flows at the same time.

From orchard replanting to rejuvenating Robusta supply regions

At the household level, replanting is about replacing an aging coffee orchard. However, at the industry level, it is a process of rejuvenating the entire Robusta production base.

A young supply region is not just about having more new trees. It must be a supply region with standardized variety structures, clear production records, good pest and disease control capabilities, more efficient water and nutrient use, and sufficiently stable yields to maintain producer income.

This also changes the perspective on replanting. If the goal is solely to increase the number of hectares replanted, the program may meet area targets but not necessarily create corresponding improvements in supply region quality.

Conversely, if replanting is linked to variety standardization, soil management, water-saving irrigation, appropriate intercropping, production logging, and consumption linkages, each replanted hectare becomes a higher-value production unit compared to simply replacing old trees with new ones.

EUDR and the requirement for digitization of planting area data in the new cycle

Pressure on Robusta supply regions now comes not only from yield. Export markets are increasingly concerned with product origin, planting area data, land legality, and the ability to prove that products are not associated with deforestation or forest degradation.

This context makes the replanting story increasingly tied to traceability. A new coffee orchard that is not managed with data from the outset will struggle to create a complete supply region profile when the product enters the export chain.

Coffee falls within the scope of the European Union Deforestation Regulation (EUDR). According to the current implementation schedule of the European Commission, main obligations will apply from December 30, 2026, for large and medium-sized enterprises, and from June 30, 2027, for most micro and small enterprises.

This makes planting area data an increasingly important part of competitiveness. In a new replanting cycle, recording information on area, seed sources, planting location, care processes, and yields can help form a more complete traceability profile for the supply chain.

For export-oriented material regions, building geographical data should also be done from the outset. Information on the boundaries and location of the production area must be accurate enough to serve the tracing and verification process as required by each market.

Therefore, data digitization should not be considered a secondary task when the product is about to be exported. This should become a part of the orchard management process right from the beginning of the replanting cycle.

Source reference

  • Central Highlands Agricultural Science and Technology Institute (WASI). Research on aged coffee area, Arabica coffee, and technical solutions for replanting.
  • Ministry of Agriculture and Rural Development. Decision No. 1178/QĐ-BNN-TT dated March 31, 2022, on the approval of the Coffee Replanting Scheme for the 2021–2025 period.
  • National Center for Agricultural Extension. Reports on the coffee replanting and grafting improvement program in Đắk Nông and Lâm Đồng.
  • People's Committee of Đắk Nông Province. Decision No. 961/QĐ-UBND in 2021 on the Plan for Coffee Replanting and Grafting Improvement in Đắk Nông Province for the 2021–2025 period.
  • European Commission. Regulation on Deforestation-free Products (EUDR).
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