Sustainable coffee supply chain management: a case study in Buon Me Thuot City, Daklak, Vietnam

Abstract

This paper aims to analyze and discuss the evolution towards sustainable coffee supply chain and its management in Vietnam. Coffee is a major agricultural export commodity of Vietnam with the export value accounts for 3% of national GDP in 2014 and provides a livelihood for approximately 2.6 million people. However, the sector is facing enormous challenges as the current farming methods and processing infrastructure have been unsustainable resulting in many catastrophic impacts on the environment such as deforestation and soil degradation that have the potential to lead to a decrease in the quality of coffee beans. Using a case study in Buon Me Thuot City, Daklak, Vietnam, the paper analyses the key factors influencing the sustainable coffee supply chain management in Vietnam. Our analysis confirms that although productivity is high, and farmers have positive experiences in this sector, sustainability issues are emerging. For instance, the farmers have experienced soil erosion and a lack of water and as such are now more willing to incorporate sustainability initiatives in their production and processing.

Full text

O R I G I N A L A R T I C L E Open Access
Sustainable coffee supply chain
management: a case study in Buon Me
Thuot City, Daklak, Vietnam
Giang N. T. Nguyen
1
and Tapan Sarker
2*
Abstract
This paper aims to analyze and discuss the evolution towards sustainable coffee supply chain and its management
in Vietnam. Coffee is a major agricultural export commodity of Vietnam with the export value accounts for 3% of
national GDP in 2014 and provides a livelihood for approximately 2.6 million people. However, the sector is facing
enormous challenges as the current farming methods and processing infrastructure have been unsustainable resulting
in many catastrophic impacts on the environment such as deforestation and soil degradation that have the potential
to lead to a decrease in the quality of coffee beans. Using a case study in Buon Me Thuot City, Daklak, Vietnam, the
paper analyses the key factors influencing the sustainable coffee supply chain management in Vietnam. Our analysis
confirms that although productivity is high, and farmers have positive experiences in this sector, sustainability issues are
emerging. For instance, the farmers have experienced soil erosion and a lack of water and as such are now more
willing to incorporate sustainability initiatives in their production and processing.
Keywords: Coffee supply chain, Sustainability, Case study, Vietnam
Introduction
Coffee is a major agricultural export commodity of
Vietnam with the export value accounts for 3% of
national GDP in 2014 and provides a livelihood for ap-
proximately 2.6 million people (Vietnam Customs 2015).
Following Brazil, since 2000 Vietnam has continuously
been the world’s second-largest exporter of coffee, typic-
ally to EU and US markets, which shows a positive out-
look for the future of this sector (Marsh 2007). However,
numerous challenges need to be overcome in order to
make it happen. Currently, less than 10% of Vietnamese
coffee is grown sustainably, compared with 75% in Latin
America (Mistiaen 2012). With the increase in global
market requirements, the competitiveness of Vietnamese
coffee is being threatened. For example, people still use
many unsustainable farming methods such as monocul-
tures, burning of crop residue, poor fertility manage-
ment, tillage, etc. which results in many catastrophic
impacts on the environment –such as deforestation and
soil degradation –have the potential to lead to a
decrease in yields, increase in insect pests and diseases
on crops (Schmitter et al. 2010). Many researches con-
firms that the rural poor dwellers are one of the most
vulnerable residential group to environmental deterior-
ation as their livelihoods mainly depend on natural
resources (Dasgupta et al. 2003). A meta-analysis of
(Rahmann 2011; Bennett and Franzel 2013) states that
the level of biodiversity in sustainable farms (such as or-
ganic farms, fair-trade farms) is higher than conventional
farms. Sustainable farming is cost-effective system that
have significant impacts on poverty alleviation, sustain-
able development in under-developed nations around
the world (Kilcher 2007). According to (Crowdera and
Reganold 2015; Nemes 2009; Ramesh et al. 2010), sus-
tainable farms provide farmers with higher economic
profitability by 22 to 35% compare to others thanks to
higher yields and price premiums of sustainable prod-
ucts. Therefore, sustainability will need to be compre-
hensively addressed in coffee production to improve the
uses of natural resources for human needs without dam-
aging the environment (Nguyen and Yapwattanaphuna
2015). Also, sustainable approach enables farmers to use
their knowledge and skills more effectively. However, the
* Correspondence: tapan.sarker@griffith.edu.au
2
Griffith Business School, Griffith University, Brisbane, Queensland, Australia
Full list of author information is available at the end of the article
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factors impact on farmers’adoption to a new sustainable
agricultural practice vary widely from farmers’percep-
tion, the characteristics of the new practice to resource
endowments, socio-economic status, demographic char-
acteristics, and access to institutional services (Negatu
and Parikh 1999). The government is aiming to reach
65% of sustainable coffee production by 2018, which will
help to preserve the environment, improve the living
standards of the farmers and ensure a steady coffee
supply for food processors (Mistiaen 2012).
Hence, the purpose of this paper is to study the current
situation of the supply chain of Vietnamese coffee in Buon
Ma Thuot City, Dak Lak Province, Vietnam, to examine
the issues related to the development of sustainable coffee
and to build up a logistic model that will explain the cor-
relation between those factors and the decision to join the
sustainable coffee program. This study also propose some
suggestions to increase the competitive advantages of the
commodity, as well as to help coffee farmers to be more
flexible in a constantly changing market.
This research investigates the opinions of local
farmers through quantitative surveys. Qualitative in-
terviews are also used to interview 23 local collectors
and the staff of five famous large coffee manufactur-
ing companies to provide an overview of the situ-
ation. SPSS was used to analyse the data and run the
logistic regression model. The data were complemen-
ted by documentary analysis, including internal data
and interview documents.
The paper provides empirical research about the
sustainable supply chain in coffee farming methods in
Buon Me Thuot City. The study found that although
productivity is high, and farmers have positive experi-
ences in this sector, sustainability issues are emerging.
The farmers have experienced soil erosion and a lack
of water. A logistic regression model is established
based on the collected data to explain the relationship
between the dependent variable ‘Certificate ownership’
and the independent variables ‘Productivity’,‘Local
support’and ‘Experience’to help sustainable coffee
organisations forecast the probability of farmers
obtaining a sustainability certificate in their current
situation; this will help to choose promising candi-
dates to develop sustainable programs.
The research has some limitations. For instance, it
does not measure the financial benefits of sustainable
coffee; therefore, future research should focus more on
the financial aspects of sustainable coffee farming.
Nevertheless, the paper helps to consolidate the position
of the Vietnamese coffee brand on the international mar-
ket, to improve the livelihood of famers and to conserve
the environment in Vietnam and will help fulfil the goal
of improving the supply chain of Vietnamese coffee to
develop sustainable practices.
Literature review: Sustainable supply chain
management
Interest in sustainable supply chain management has in-
creased significantly in both academic research and in-
dustrial practices since the minimisation of the adverse
impacts of human activities and the maintenance of sus-
tainable social development have become central
concerns globally (Beamon 1999; Prokesch 2010). First,
sustainability is defined as the capability to meet current
demands without compromising the ability of future
generations to meet their needs (World Commission on
Environment and Development 1987). Linking the three
pillars of sustainability and supply chain management
means managing a complete supply chain life-cycle,
from product design, procurement, logistics, knowledge
management, marketing, and operations to return and
disposal, with the explicit considerations of sustainable
development factors such as economic, environmental
and social elements (Kolk and Tulder 2010; Morali and
Searcy 2012). A sustainable supply chain is essential
for competitiveness with regard to price, quality,
dependability, flexibility and responsiveness (Markley
and Davis 2007).
Over the last few decades, many companies have put
notable financial investment in socially and environmen-
tally responsible business but the real contribution of
these investment to the economic performance has been
a matter of controversy (Carter and Easton 2011;
Hoejmose and Adrien-Kirby 2013). Zhu and Sarkis
(2007) pointed out that the implementation of sustain-
able supply chain management is mostly because of ex-
ternal pressures such as regulatory requirements,
customer interests or competitive reasons irrespective of
little financial return. Moreover, other issues in supply
chains such as price competition and responsiveness are
matters of the utmost importance, sustainable supply
chain adoption is a challenging strategy (Mohd 2010).
However, Wang and Sarkis (2013) showed that the im-
plementation of sustainable supply chain management
might not receive a reward immediately, but the corpor-
ate financial performance might be improved after two
years. Carter (2005) also stated that socially responsible
practices may not have direct impact on organizational
cost performance, but influence the relationship man-
agement indirectly. It can bring higher customer satis-
faction, innovation, efficiency, trust, flexibility and
environmental conservation, as well as better living stan-
dards (Ageron et al. 2012; Brammer et al. 2011). More-
over, a rising number of significant issues on
sustainability and sustainable supply chain management
have been seen as impacting on the enterprise’s
upstream relationships (Beske et al. 2006) and its down-
stream customer satisfaction (Ageron et al. 2012). Be-
sides, in the coming years when environmental
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standards and international legislations become stricter,
businesses may benefit significantly from the adoption of
sustainable supply chain such as waste minimization,
green product design, and technology cooperation. And
thus, the integrating sustainability into supply chain may
prove to be an effective strategy in the future to secure
the business.
In today’s world agriculture has to be more intensive
to feed a booming world population. The detrimental
impacts of conventional agriculture can be widely known
including water pollution, land degradation, soil erosion,
an increase in pest resistance, pesticide drift and diffu-
sion throughout the food chain and ecological equilib-
rium disruption (Altieri and Koohafkan 2008).
Productivity has no longer been seen as a solely metric
to evaluate agricultural development. Sustainable
agriculture has been gaining significant attention from
farmers, policy makers and consumers worldwide
(Theocharopoulos et al. 2012). Sustainable agricultural
supply chain management can be understood as man-
aging resources and risks to create a more effective, effi-
cient and productive supply chain network in order to
produce more valuable and competitive agriculture com-
modities from the same land area while reducing
negatively environmental impacts and increasing contri-
butions to environmental improvements and the devel-
opment of societies (Pretty et al. 2011). Furthermore,
cross-border supply chains are admittedly becoming in-
creasingly popular in agriculture. Local famers in devel-
oping countries have connections with traders in
developed countries to sell their products at higher
prices, achieving a vertical cross-border supply chain
network (Jaffee and Siegel 2008). Cross-border supply
chains not only make profit for individuals or separate
companies, but can also stimulate the development of
local agriculture, boost the economy, reduce the un-
employment rate, develop the sustainability of the soci-
eties and environment, and secure global food security
(Roekel et al. 2002). However, when a cross-border sup-
ply chain becomes more popular in the agricultural sec-
tor, the supply chain will experience increasing risks
such as policy and institutional related risk, operational
managerial related risks. For this reason, managing a
sustainable supply chain is vital in order to maintain
long-term business relationships and stabilise the
economic development of the world (Farina and
Reardon 2000).
Moreover, (Sarkis et al. 2011; Font et al. 2008) con-
firmed that sustainable supply chain management litera-
ture derived from several organizational theories including
complexity theory, population ecology theory, information
theory, institutional theory (Aguilera and Jackson 2003;
Maignan and Ralston 2002), resource based view (RBV)
(Bowen et al. 2001; Carter and Rogers 2008), resource
dependence theory (RDT) (Carter and Rogers 2008), social
network theory, stakeholder theory, and transaction cost
economics (Carter and Rogers 2008).
Due to the nature of this research, the literature of this
paper is mostly based on institutional theory, resource-
based view (RBV) theory and stakeholder theory. In
terms of institutional theory, it explained how institu-
tional factors, such as regulation, ‘collective industrial
self-regulation’, NGOs and other independent organiza-
tions can influence organizations to interact with their
stakeholders and behave in socially responsible manners
and avert socially irresponsible actions (Campbell 2007).
Institutional theory facilitates the ability to understand
the variance in interactions amongst various stake-
holders and corporate governance in different situations
(DiMaggio and Powell 1983; Matten and Moon 2008).
Besides that, stakeholder theory suggest that internal
and external parties exert pressure on firms to change
organizational practices in order to eliminate negative
impacts promote positive ones (Freeman 1984). There-
fore, stakeholder theory may explain how stakeholders
can put pressure on firms to implement sustainable sup-
ply chain management practices which are initially eco-
nomically disadvantageous (Sarkis et al. 2011). Regarding
to the resource-based view (RBV) theory, (Barney 1991)
indicated that a firm have to manage valuable, rare, im-
perfectly imitable, and non-substitutable (VRIN) re-
sources in order to generate sustained competitive
advantages. There is also a positive correlation between
VRIN resource management and vertical integration in
the supply chain (Pfeffer and Salancik 1978; Sarkis
2009). Therefore, this research aims to examine the im-
pacts of institutional factors, stakeholders’pressures and
the scarce of resources on sustainable coffee supply
chain management practice in Vietnam.
The introduction of certified sustainable coffee
This paper aims to investigate the management of the
sustainable coffee supply chain. According to
(Giovannucci and Koekoek 2003), sustainable produc-
tion practices are the best solution to improve the situ-
ation and bring better quality coffee to customers.
Sustainable production is a relatively new initiative for
the coffee industry, but growing numbers of customers
are willing to purchase certified sustainable coffee. There
are also significant benefits for approximately three
quarters of a million farm households around the world
and society more generally. Certified coffees are cur-
rently defined as those that consider at least one aspect
of sustainability, including farming in a good-quality en-
vironment, providing economically viable for farmers
and promoting social equity among farmers and workers
(Giovannuccia and Ponte 2005). It helps stakeholders in
the coffee supply chain network to preserve the
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environment, appreciate human and social rights, and
offer customers traceable and high-quality products
(Wahyudi and Jati 2012). The certifications for sustain-
able coffee are verified by third-party auditors to ensure
that coffee is produced in accordance with the guide-
lines. Producers or buyers have to pay different fees
related to certification, but will receive a higher eco-
nomic benefit through premiums paid when they sell
their coffee (Lentijo and Hostetler 2011). Currently, the
most common and famous types of certifications includ-
ing Organic, Fairtrade, Rainforest Alliance, Bird Friendly,
UTZ certified, Starbucks C.A.F.E Practices and 4C.
General criteria for common certification programs for
coffee are presented in Table 1 (Lentijo and Hostetler
2011). However, according to (Conroy 2007), the large
companies in rich nations earned certificates faster and
easier than small firms in developing countries due to
the lack of support infrastructure, high costs of certifica-
tion, annual auditing, and improvements. Therefore,
there is a need to improve the situation.
The supply chain and sustainable issues of Vietnamese
coffee
According to (TechnoServe 2013) in Vietnam, approxi-
mately 95% of coffee growers are smallholder farmers,
and coffee brings highly profitable incomes for them.
Moreover, Vietnamese coffee has the highest yields and
the lowest farming cost in the world that means Viet-
namese coffee is very potentially competitive in the
world market (The Voice Of Vietnam 2014; Minot 1998;
Ward and Nguyen 2014). But the high yields also result
from intensive farming practices deployed with the fact
of over-fertilisation for coffee tree that could lead to the
very detrimental decline in the future production
(Vietnam Briefing 2014).
Figure 1 illustrates the supply chain of Vietnam’s cof-
fee. In this chain, supporting industries play roles as
input providers, including coffee seedling providers,
plant protection sellers and fertiliser sellers.
According to (Le 2013; D'haeze et al. 2005), although
they are well experienced in planting coffee, Vietnamese
farmers’lives have not been improved due to the high
risk of the production environment and market condi-
tions. The added value they gain remains the lowest in
the entire chain of coffee production (Le 2013). There
are some major risks faced by farmers, which could
make the supply chain unsustainable. These are listed in
Table 2 (Minot 1998).
Data from the (International Coffee Organisation
(ICO) 2015) showed that only 9% of total exported
Vietnamese coffee is sustainable. It also revealed differ-
ent challenges for coffee industry in different countries,
as shown in Fig. 2.
(Jarosz 2000) as well highlighted the role of small-
scale household farmers in maintaining sustainable agri-
culture which are the main workforce in Vietnam’s
coffee industry. State-owned (provincial) farms, which
account for just 15% of the coffee-growing area, are
organised and managed by governmental cooperation
(Nguyen 2010). They produce high-quality coffee with
professional farming techniques. Sustainability programs
have concentrated mainly on this high-yield farmer seg-
mentation. However, the private farms accounted for
85% of the total area operated by household farmers
(less than 5 ha per household). Although they receive
some support from local authorities, their farming
methods are still below certification standards for coffee.
Those farmers also have experienced socioeconomic in-
equality (Nguyen and Yapwattanaphuna 2015). More-
over, intensive use of cheap inorganic inputs and
inefficient use of irrigation water have gradually resulted
in soil degradation and deteriorated water quality
(Zulfiqara and Zulfiqara 2017; Ali and Byerlee 2002).
These issues have threatened sustainability of economic
and social achievements in any areas (Zulfiqara and
Zulfiqara 2017). Therefore, many problems that needs to
be tackled in order to increase the production of sustain-
able certified coffee in Vietnam.
Conceptual framework to manage the supply chain of
sustainable coffee
As mentioned in the previous part, this research is based
on institutional theory, resource-based view (RBV) the-
ory and stakeholder theory. Although triple dimensions
of sustainability have been widely accepted (Acosta-Alba
and van der Werf 2011), environmental and economic
goals have attracted more attention (Von Wirén-Lehr
2001; Galdeano-Gómez et al. 2017), while social con-
cerns have been neglected (Galdeano-Gómez et al.
2017). Nevertheless, triple dimensions of sustainability
are concurrently considered in this research. Besides,
most of the previous researches focus on sustainability
at farm level because individuals are believed to be
Table 1 General criteria of common certification programs
for coffee
Certification
Seal
Environmental
Criteria
Social
Criteria
Economic
Criteria
Quality
Standards
Organic ✓
Fairtrade ✓✓ ✓
Rainforest Alliance ✓✓ ✓
Bird-friendly ✓✓
UTZ Certified ✓✓✓
Starbucks C.A.F.E ✓✓✓✓✓
4C ✓✓✓✓✓
✓: Moderate criteria- ✓✓: Very Strong criteria
Source: (Lentijo and Hostetler 2011)
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responsible for making the most important decisions re-
garding the use of resources and new technological im-
plementation (Webster 1999). However, as stated by
(Halberg et al. 2015), the analysis should be taken from
different points of view of farmers, organisations and
local authorities. Thus, this research approaches the
viewpoints of all related-stakeholders including farmers,
coffee processing companies and coffee collectors. Simi-
lar to the work of (Iakovou et al. 2014), the research uses
the methodological framework for sustainable supply
chain management in agricultural business, as shown in
Fig. 3. The framework helps to deal holistically with all
aspects of the chain. It covers major concerns about sus-
tainable agricultural management in terms of farming
methods, environmental management, supply chain
management and reverse logistics as well as marketing
strategy and corporate social responsibility. This frame-
work is then modified to fit the objectives of the
research in Vietnamese coffee supply chain. A similar
schematic framework which showed very comprehensive
results is applied in the research of (Zulfiqara and
Zulfiqara 2017) to evaluate agricultural sustainability in
Pakistan.
Six main factors need to be focused upon to build up
a sustainable supply chain network:
Sustainable farming. This relates to the
replacement of chemical pesticides and fertilisers
with bio-fertilisers for weed and pest control
(Hayati et al. 2010). The annual production level and
farmers’income are also investigated to understand
the differences between certified and non-certified
coffee farms. Moreover, crop diversification is also
mentioned due to its benefit of reducing risks and
uncertainties arising from mono-cropping, and
biological and climatic changes. All indicators above
are fully assessed in the work of (Acs et al. 2005).
These indicators aim to evaluate sustainability of
economic and environmental pillars (Malik and
Singh 2002; Chakraborty 2012).
Supply chain management: This pays attention on
the innovation of supply chain and logistics
management to reduce energy consumption and
control the pollution levels from the transportation
and production process. The support of information
systems also proves to be crucial with regard to this
aspect. This aspect is presented comprehensively in
the research of (Sarkis et al. 2011; Seuring and
Müller 2008) and used to evaluate the economic
sustainability.
Marketing: According to Johns and Pine (2002),
with the purpose of evaluating economic dimension,
this focuses on pricing policies of companies for
premium products; product differentiation in terms
of labelling, promotion strategies, etc.; consumers’
Fig. 1 General supply chain of Vietnam’s coffee
Table 2 Major risks to Vietnamese coffee supply chain
Production risks
Drought
Pest and disease outbreaks
Erratic rainfall
Market risks
Coffee price volatility risk
Steep and prolonged price fall
input price volatility
Counterparty risk
Exchange rate & Interest rate volatility
Enabling environment risks
Reputational risk
Theft
Source: (International Bank for Reconstruction and Development/ The World
Bank 2011)
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attitudes and awareness of sustainable products; and
the strategic development of the product life-cycle.
Environmental management: (Walker et al. 2008;
Hassini et al. 2012) examined the critical factors
regarding environmental management to reduce
negative environmental impacts. They concentrate
great attention on biodiversity; soil quality; natural
resources; climate change; air and water quality; and
emission reductions in production and logistics
activities. The management of waste-disposal
processes, controlling the source and amount of water
consumption for irrigation and the use of energy-
saving systems could also draw a lot of attention.
Reverse logistics: This relates to the recycle of
containers, packaging materials and the use of
environmentally friendly materials. The critical
issues of reverse logistics are investigated through
content analysis in the research of (Pokharel and
Mutha 2009). Evidences of the benefits gained from
reverse logistics in sustainable supply chain are
presented comprehensively in (Alblas et al. 2014;
Hsu et al. 2016). This measure the efficiency of
economic sustainability.
Corporate social responsibility (CSR): This
concerns the harmony of using natural and local
human resources to tackle inequality, poor living
standards and low education levels in the rural area.
Typically, this issues are studied broadly in the study
of (Kong 2012; Cuganesan et al. 2010). This aspect
evaluates social sustainability factor.
The methodology and model
Research design
Due to the nature of the research, an empirical multi-
phase mixed methods approach was used to examine
different perspectives of the coffee supply chain to inves-
tigate sustainability implementation and its effects on
the coffee supply chain in Vietnam. A plausible explan-
ation for this design is that different groups of inter-
viewees require different methodologies in order to fully
Fig. 2 Challenges of coffee industry in different areas
Fig. 3 Conceptual framework for sustainable supply chain management for coffee
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access the most available information and achieve the
goal of the research.
Qualitative research methodology
A qualitative methodology was utilised to examine the
opinions of experienced professionals in well-known cof-
fee manufacturing companies and local coffee collectors.
They have good knowledge about the research topic and
high educational levels that ensure the accuracy and reli-
ability of the responses. It helps to provide an in-depth
investigation of the real impacts of sustainable certifica-
tion practice on their business, which quantitative ques-
tions cannot access and evaluate precisely.
Quantitative research methodology
A quantitative methodology was utilised to examine the
current circumstance of sustainable behaviours and how
sustainability certification practices are measured in terms
of farming methods, social security and the knowledge of
sustainable coffee production by farmers. They have
experience of the current situation and the basic know-
ledge to answer these simple and clear questionnaires.
The information produced by quantitative research is then
used to run the regression, and run an ANOVA analysis
to check the relationships among the variables.
Research population and sampling
The population of the research
The population of the research is a collection of key
stakeholders including coffee farmers, local coffee collec-
tors and five coffee manufacturing companies in Buon
Ma Thuot City. The research chose Buon Ma Thuot City
where is known as the capital coffee production of
Vietnam, accounted for two third of total Vietnamese
coffee production since 2010 (Voice of Vietnam 2017).
The population excludes the participation of final cus-
tomers because 95% of Vietnamese coffee production is
exported to developed countries and consumption of
sustainable coffee has increased significantly, as men-
tioned in the literature review section. Hence it is quite
clear that customers show considerable support for sus-
tainable coffee, and the development of sustainable cof-
fee depends mainly on the collaboration of the listed
stakeholders.
Research sample
To fit with the research design, the sample of the re-
search comprised a group of private coffee farmers in
Buon Ma Thuot City whose coffee is partly or wholly
sold to well-known coffee processing companies and the
local collectors for these farmers. It also included partici-
pants from five large coffee processing companies to
examine their opinions and experience with the purpose
of analysing the current sustainability practices of the
coffee supply chain and identifying weaknesses in order
to make improvements.
Although the size of the sample seems small, it is still
representative and controllable to ensure the generalis-
ability of the results. Most private coffee farms are
planted using the same farming methods (Nguyen 2010).
The companies that were examined were the major and
best-known coffee processing companies in Vietnam,
accounting for nearly 25% of the market share (Ipsos
Business Consulting 2013). The companies also have ex-
perience in developing certified sustainable coffee. They
were awarded a UTZ Certificate for sustainable coffee
cultivation in coordination with local coffee farmers in
Dak Lak Province.
This is a purposive and controlled sample, so the sur-
veyed participants needed to have a number of
characteristics:
In the interview with the coffee processing companies,
interviewees had to be staff or former staff in the
purchasing department or in coffee processing
factories in both Ho Chi Minh City and Buon Ma
Thuot City. They all had a good understanding of the
supply chain network and sustainability practices in
the coffee processing industry.
The survey of farmers had to be random and
include both male and female workers. The surveyed
farmers could plant either sustainable certified
coffee or normal coffee.
All the surveyed coffee growers and collectors had
to wholly or partly sell their product to the factories
of these companies.
Conceptual framework for the research
Based on the conceptual framework mentioned in the
literature review, three different interview stages were
conducted.
Firstly, 200 close-ended quantitative survey question-
naires were randomly given to local coffee farmers in
Buon Ma Thuot City, Dak Lak Province to investigate
the current farming methods, environmental issues and
social attainment in this research area. These questions
were simple and required little time to finish, encour-
aging interviewees to complete the survey. The author
strictly monitored and followed up the quantity and
quality of the responses. The questionnaires concen-
trated mainly on current farming methods; environmen-
tal issues; social attainment and the knowledge of
sustainable coffee programs of surveyed farmers. The re-
sponse rate was 137 out of 200 questionnaires.
Open-ended questionnaires were then used to ask 23
experienced representatives of five major coffee pro-
cessing companies and local coffee collectors about
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experience and to elicit information. For the local col-
lectors, questionnaires were focused on reverse logis-
tics, supply chain management, corporate social
responsibility and environmental management. For the
coffee processing companies, questionnaires concen-
trated on organisational-level issues, including market-
ing, supply chain management; reverse logistics;
corporate social responsibility (CSR); and environmen-
tal management. These frameworks are presented in
Figs. 4, 5 and 6 below.
Data analysis and findings
Current farming methods
According to the survey results shown in Table 3, coffee
growers in the surveyed area have considerable experi-
ence (more than 10 years) in cultivating coffee, but they
are mainly small household coffee farmers (2–5 ha),
which conforms to the previous figures in literature re-
view. Furthermore, coffee trees in this area are mostly
mature (11–20 years) –a very important factor to the
productivity of crops. Moreover, the data prove the cof-
fee farms are highly productive in comparison with the
average yield of Vietnam.
However, just 43.1% (59 of 137) of surveyed farmers
stated that they were currently planting shade trees to
protect their farms against soil degradation. Further-
more, 57.7% of samples (79 of 137) said they were using
both organic and chemical fertilisers, with only 38.7%
(53 of 137) stating that they only use organic fertilisers.
A total of 70.1% (96 of 137) admitted that they had used
large amount of pesticides for pest control in cultivating
coffee. Another figure that should be noted is nearly
60% of surveyed farmers who said they had diversified
their coffee farms with other agricultural trees such as
durians and avocados. Approximately half of participants
(55.5%, or 76 of 137) said they owned a coffee-hulling or
roasting machine. The data also led to the finding that
although there are some machinery supports for cultiva-
tion, coffee farmers still tend to use traditional farming
practices to intensively cultivate their farms in order to
increase the yields. They have not yet applied proper
organic farming practices to maintain sustainability in
their cultivation.
A Chi square test in Table 4, showed a positive rela-
tionship between certification ownership and experience
of farmers, as surveyed farmers who owned sustainable
coffee certificates were more likely not to be more expe-
rienced than those who did not. The statistics also
showed that the productivity of experienced farmers was
significantly higher than the productivity of farmers with
less than 10 years’experience.
Environmental management
Turning to concerns about environmental management,
as mentioned earlier, coffee growers still mainly use
traditional farming practice to cultivate their farms,
which can only reach higher yields but cannot achieve
sustainability status. Base on the collected information,
47.4% (65 of 137) of surveyed farmer agreed that they
had experienced soil erosion within the past year and
Fig. 5 Conceptual framework to interview local coffee collectors
Fig. 4 Conceptual framework to interview coffee farmers. Source: Authors' own
Nguyen and Sarker International Journal of Corporate Social Responsibility (2018) 3:1 Page 8 of 17
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

65.7% (90 of 137) of surveyed farmers said they had ex-
perienced a shortage of water for irrigation during farm-
ing times. Moreover, 73.7% (101 of 137) of participants
said they had to dispose of solid waste by themselves in-
stead of waiting for local companies collect it, resulting
in very negative effects for the environment, such as pol-
lution and soil degradation.
According to the results of the Chi-square test shown
in Tables 5 and 6, surveyed farmers who had been
granted sustainable coffee certificates were more likely
not to use pesticides to control pests and to plant shade
trees to protect soil from deterioration than those who
did not hold such a certificate.
On the other hand, local collectors and supervisors
from the coffee processing companies agreed that
they did not pay enough attention to the management
of waste disposal. Although it is said that processing
factories strictly follow the current waste disposal
instructions and regulations of the Vietnamese gov-
ernment, there is a failure to monitor suppliers’
waste-disposal processes because of a lack of aware-
ness of farmers and collectors. It is not even possible
to control the use of fertilisers and pesticides if the
farmers do not participate in any certified coffee pro-
grams and do not follow their instructions. However,
they believe that if farmers and local collectors join a
sustainable coffee program, their waste-disposal pro-
cesses, and use of fertilisers and pest control are con-
trolled and managed properly due to the introduction
of related actors to train and educate farmers on the
benefits of sustainable and safe farming practices.
Supply chain management
The information in this section is based on qualitative
interview with local collectors and staff of a well-known
coffee processing company. When asked, senior pur-
chasing executives and the production supervisors of the
coffee processing factory in Buon Ma Thuot City said
that all the factory’s products were sourced only from re-
liable local collectors, who had a very good relationship
with the company. The company deals mainly with these
collectors rather than individual farmers, although they
know that purchased coffee needs to go through at least
two lower tiers before them, which could increase the
production cost and reduce the value for farmers. How-
ever, because of coffee growers are small household
farmers, it takes more time to collect at their farms and
they have to accept the need to pay more to go through
intermediaries. Chi square test results show that farmers
who held a sustainability certificate could more readily
sell their coffee directly to coffee manufacturing com-
panies than those who did not hold the certificate.
In addition, these senior purchasing executives also
mentioned that they were trying to set up a traceability
supply chain network for all coffee products, but this
had not yet been put into practice. Only few premium
and high quality Arabica coffee products use this system
to harmonise with the requirements of certified coffee
production in the project, coordinating with Utz Associ-
ation. Finally, the production supervisors said they were
planning to gradually change packaging of the final
product from plastic materials to paper and recyclable
materials up until 2020.
Fig. 6 Conceptual framework to interview staff of coffee manufacturing companies
Table 3 Descriptive statistics about the coffee farming (data collected from the survey)
N Minimum Maximum Mean Std. Deviation
Years of experience 137 1.00 4.00 2.4453 .96953
Total area 137 1.00 3.00 1.8102 .64777
Productivity 137 1.00 4.00 2.4891 1.03694
The years of coffee farm 137 1.00 3.00 1.7883 .62345
Valid N (listwise) 137
(With years of experience: ‘1.00’: < 5 years, ‘2.00’:5–10 years, ‘3.00’:10–15 years, ‘4.00’: >15 years; total area: ‘1.00’: < 2 ha; ‘2.00’:2–5 ha; ‘3.00’: >5 ha; productivity:
‘1.00’: < 2 tons/ha, ‘2.00’:2–4 tons/ha, ‘3.00’:4–6 tons/ha, ‘4.00’: >6 tons/ha; and years of coffee farm: ‘1.00’: < 10 years, ‘2.00’:11–20 years, ‘3.00’: > 20 years)
Nguyen and Sarker International Journal of Corporate Social Responsibility (2018) 3:1 Page 9 of 17
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

Local collectors are the main dealers who sell coffee
bean to exporters or coffee factories, and they said they
tried to find reliable coffee beans from farmers. As
shown in Table 7, certified coffee farmers tended to sell
more coffee directly to coffee processing companies or
coffee cooperatives than uncertified coffee farmers.
According to the Chi square test shown in Table 8,
collectors or traders examined the planting process
more often with regard to famers who held a sustain-
ability certificate than in relation to those who did
not have a certificate.
Finally, the representative of a coffee bean-collecting
company commented that the logistics costs in her com-
pany were due mainly to transportation and storage. It
was necessary to arrange different collection times for
each farm as the harvest times varied considerably from
farm to farm. Everything the farmers did to improve
practices relied on experience, as they had not yet
attended any training to optimise their operations.
Reverse logistics
For the reverse logistic issues, data were analysed based
on the opinions in the interviews about the current situ-
ation. Local collectors said they just improved their work
by experience; there was no training to assist them with
the most effective recycling strategies. For example, in
the case of an examined private coffee bean collecting
Table 4 The relationship between productivity and years of experience
Count
Years
of experience
Total
<5 years 5–10 yrs 10–20 yrs >20 years
Productivity <2 tons/ha 19 9 0 0 28
2–4 tons/ha 16 23 3 0 42
4–6 tons/ha 1 2 20 16 39
>6 tons/ha 1 1 10 16 28
Total 37 35 33 32 137
Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 1.202E2
a
9 .000
Likelihood ratio 143.572 9 .000
Linear-by-linear association 81.480 1 .000
N of valid cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 6.54
Table 5 The relationship between certificate ownership and the use of pesticides
Count
Certification ownership Total
Yes No
Pesticides No 29 12 41
Yes 37 59 96
Total 66 71 137
Chi-Square Tests
Value df Asymp. Sig. (2-sided) Exact Sig. (2-sided) Exact Sig. (1-sided)
Pearson Chi-Square 11.924
a
1 .001
Continuity Correction
b
10.669 1 .001
Likelihood Ratio 12.170 1 .000
Fisher’s Exact Test .001 .000
Linear-by-Linear Association 11.837 1 .001
N of Valid Cases
b
137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 19.75
b
Computed only for a 2 × 2 table
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enterprise, the manager said the packages of products
were bought from other suppliers and the enterprise
failed to address concerns about the origins of the ma-
terial. Furthermore, they still often used new PVC sacks
instead of packages made from environmentally friendly
materials or recycled sacks.
Most production supervisors of the coffee process-
ing company thought the company was currently pay-
ing more attention to its recycling policies. It mainly
used packaging produced by Tetra Pak, a global
environmentally friendly package producer. Moreover,
in the factory and their main office, they separated
production waste to dispose of or recycle it. One
supervisor also stated that his company was now con-
sidering a training plan to guide farmers and local
collectors to apply green supply chain and effective
reverse logistics in the next financial year.
Marketing, social attainment and corporate social
responsibility
From the statistical numbers in the survey, it is worth
noting that only 66 out of 137 farmers had joined a sus-
tainable certified coffee program, which accounted for
48.2% of those surveyed. These figures prove that few
coffee growers have good knowledge of sustainable cof-
fee. Furthermore, only 53.3% (73 of 137) of farmers said
they often received support from local associations and
32.8% of those surveyed agreed that local associations
and coffee companies often offered supportive scheme
to encourage them.
The Chi square result in Table 9 showed a positive re-
lationship between holding a certificate and support
from local associations, with those farmers who held a
sustainability certificate receiving support more often
than those who did not have a certificate.
Table 6 The relationship between certificate ownership and planting shading trees
Count
Certification ownership Total
Yes No
Shade trees No 33 45 78
Yes 33 26 59
Total 66 71 137
Chi-Square Tests
Value df Asymp. Sig. (2-sided) Exact Sig. (2-sided) Exact Sig. (1-sided)
Pearson Chi-Square 2.498
a
1 .114
Continuity Correction
b
1.982 1 .159
Likelihood Ratio 2.503 1 .114
Fisher’s Exact Test .124 .080
Linear-by-Linear Association 2.479 1 .115
N of Valid Cases
b
137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 28.42
b
Computed only for a 2 × 2 table
Table 7 The relationship between certificate ownership and the percentage of coffee sold directly
Count
Percentage of your coffee sold directly Total
0–30% 30–50% 50–70% 70–100%
Certification ownership Yes 14 10 18 24 66
No 52 7 5 7 71
Total 66 17 23 31 137
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 41.480
a
3 .000
Likelihood Ratio 44.025 3 .000
Linear-by-Linear Association 35.426 1 .000
N of Valid Cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 13.97
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Furthermore, only 45 out of 137 surveyed farmers
(32.8%) agreed that local traders ensured they would take
their output production, and 65 of asked farmers (47.5%)
said they did not join any cooperative farming group to
protect their rights and their production. The Chi square
test result in Table 10 shows that there is a positive rela-
tionship between the certification ownership and farmers
who are members of any cooperative farming group, with
group members having more knowledge about sustainable
coffee than those who were not group members.
More importantly, 88.3% of farmers said coffee farming
was their main source of income and 82.5% (113 partici-
pants) said their family had suffered poverty as a result of
fluctuating coffee prices in the past. Only 37 out of 137
(27%) surveyed farmers said the average profit from coffee
farms was more than 120 million Vietnamese dong per
hectare per year. Their average total income is between
5 and 10 million Vietnamese dong per month
(US$250–500).
The Chi square result in Table 11 showed a positive
relationship between the certification ownership and the
profit from the coffee farms, with more people who held
a sustainability certificate achieving profit over 100
million Vietnamese dong/ha/year than those who did
not hold a certificate.
Most farmers support one to three dependant family
members, including one or two children of school age.
A total of 86.1% of farmers said they had to work
between eight and 12 h daily to cultivate their crops.
Most famers had completed secondary education
(27%, or 37 people) or high school level (49.6%, or 68
people) –a very positive figure to show that they have a
good basis to learn new advanced farming practices to
participate in the certified coffee project. Only seven out
of 137 surveyed participants were not willing to partici-
pate in training course about sustainable coffee develop-
ment. The Chi square result in Table 12 showed a
positive relationship between willingness to join a
Table 8 The relationship between certificate ownership and quality examination
Count
Collectors or traders examine the planting process and quality frequently Total
None 1–2 times/crop 3–5 times/crop > 5 times/crop
Certification ownership Yes 2 12 38 14 66
No 25 40 6 0 71
Total 27 52 44 14 137
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 71.855
a
3 .000
Likelihood Ratio 84.249 3 .000
Linear-by-Linear Association 63.461 1 .000
N of Valid Cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 6.74
Table 9 The relationship between certificate ownership and support from local association
Count
Support from local associations
Never Rarely Often Very often Total
Certification ownership Yes 8 2 41 15
No 24 30 15 2 71
Total 32 32 56 17
Chi-Square tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 54.403
a
3 .000
Likelihood Ratio 61.388 3 .000
Linear-by-Linear Association 37.179 1 .000
N of Valid Cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 8.19
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sustainable coffee development program and the main
sources of income of farmers.
Moreover, 132 out of 137 interviewees (96.4%) agreed
that they were willing to invest over 10 million Vietnamese
dong to improve farming methods and certify their coffee.
A total of 73 of 137 interviewees (53.3%) said knowledge
was the biggest challenge when it came to developing
sustainable coffee. The role of woman in society was also
emphasised, as 62% of farmers said women were fairly
important in their family and 34.3% said women were very
important.
The local collectors said they were trying to support
local farmers. The certified coffee can be sold at 15–20%
higher price than normal coffee. And certification pro-
grams request rigorous certification criteria and monitor
the conditions strictly annually. Under sustainability cer-
tification schemes, certified farmers tend to conserve soil
and water resources. They also had found that although
more coffee manufacturing companies and exporters to
ensure a good output and price for farmers, sometimes
there were risks that they were unable to manage. How-
ever, all the interviewees said they never tried to use fi-
nancial tools or insurance to limit the risk.
The senior purchasing executive also explained that
his company offered the best purchasing price for
local farmers to support them in cultivating tech-
niques. He agreed that his company also played a role
as a bridge to connect famers and coffee manufactur-
ing companies when the companies organised volun-
teer trips or supportive schemes, and suggested that
the company supported poor farmers and collected
old clothes for them.
The coffee company representative said the company
would like to coordinate with government, certifying
Table 10 The relationship between knowledge about sustainable coffee and membership of a cooperative farming group
Count
A member of any cooperative farming group Total
No Yes
Knowledge about sustainable coffee area Never heard 33 7 40
Have heard but never joined 29 37 66
Have participated 8 23 31
Total 70 67 137
Chi-Square tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 25.074
a
2 .000
Likelihood Ratio 26.832 2 .000
Linear-by-Linear Association 23.485 1 .000
N of Valid Cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 15.16
Table 11 The relationship between certificate ownership and profit
Count
Profit from the coffee farm Total
<80 million Vietnamese
dong/ha/year
80–100 million Vietnamese
dong/ha/year
100–120 million Vietnamese
dong/ha/year
>120 million Vietnamese
dong/ha/year
Certification
ownership
Yes 4 7 24 31 66
No 25 30 10 6 71
Total 29 37 34 37 137
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson
Chi-Square
52.048
a
3 .000
Likelihood Ratio 56.584 3 .000
Linear-by-Linear
Association
46.404 1 .000
N of Valid Cases 137
a
0 cells (.0%) have expected count less than 5. The minimum expected count is 13.97.
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association and processing companies to organise free
training for farmers to join sustainable coffee programs
in order to enhance the output of certified coffee. The
assistant brand manager of the coffee manufacturing
company said her company worked closely with other
companies to promote Buon Ma Thuot coffee to inter-
national and domestic market.
In analysing the opinions of interviewees, it is
plausible to note that coffee processing companies in
Vietnam aim to develop a sustainable society. They
coordinate to organise a study encouragement fund
for poor students, and offer higher purchasing price
policies for local collectors to enable them buy coffee
from local farmers at a higher price. In addition, by
opening and expanding Coffee Village, one of those
examined coffee process companies has created
around 50 new positions per year for young people,
and given them opportunities to promote their cul-
ture to tourists. This company also runs free English
classes to teach staff to communicate with inter-
national tourists.
According to the production supervisor of this com-
pany, the factory in Buon Ma Thuot city currently of-
fers jobs for approximately 270–300 workers, mainly
from the local area. It also organises free training to
teach farmers to cultivate their farms more effectively.
The senior purchasing executive said the company
was now planning to form a farmers’cooperative as-
sociation and provide free processing machines for
them with the purpose of cutting down the number
of links in the supply chain network and increasing
the return to farmers. He added that the company al-
ways emphasised the role of farmers and tried its best
to improve their living standards. The company is co-
ordinating with local authorities to develop a Regional
Development Plan until 2025.
Logistic regression for the dependent variable ‘certificate
ownership’
The research used the surveyed data to run logistic re-
gression to explain the relationship between the
dependent variable ‘Certificate ownership’and independ-
ent variables ‘Productivity’,‘Local support’and ‘Experi-
ence’. It examined the probability of a farmer having a
sustainability certificate with the given data of the inde-
pendent variables. This helps sustainable coffee organisa-
tions to forecast whether or not a farmer will have a
sustainable certificate with their current situation. The
−2 Log likelihood is 72.26, showing that the model is
appropriate to develop and the percentage of correct
prediction will be 89.1%, which means it is a reliable for-
mula (Table 13).
The formula of logistic regression is as follows:
–10:711 þ2:015Productivity þ1:3Local support
þ0:934Experience
Following the logistic model, if a farmer’s productivity
is around 4–6 tons/ha/year, the farmer has five years’ex-
perience and often receives local support, then he will
have (e
-10.711 + 2.015*3 + 1.3*3 + 0.934*2
) / (1+ e
-10.711 + 2.015*3 +
1.3*3 + 0.934*2
) = 0.75 ~ 75% probability of having a sustain-
ability certificate. Based on that model, we can consider
which type of farmers should be focused on to develop
the sustainability program, in order to help them to gain
a sustainability certificate.
Summary and conclusions
Following the research, it is plausible to conclude that
the development of sustainable coffee in Buon Ma Thuot
City in particular, and in Vietnam in general, offers many
opportunities but still encounters some difficulties that
need to be overcome. By means of Chi-square analysis,
Table 12 The relationship between main source of income and willingness to join
Count
Is the coffee farm your main source of income? Total
NO YES
Willing to join sustainable coffee development program No 4 3 7
Yes if have any supportive schemes 6 79 85
Yes for sure 6 39 45
Total 16 121 137
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 15.905
a
2 .000
Likelihood Ratio 10.492 2 .005
Linear-by-Linear Association 1.380 1 .240
N of Valid Cases 137
a
1 cells (16.7%) have expected count less than 5. The minimum expected count is .82
Nguyen and Sarker International Journal of Corporate Social Responsibility (2018) 3:1 Page 14 of 17
Content courtesy of Springer Nature, terms of use apply. Rights reserved.

the positive impacts of sustainable coffee programs on
the sustainable coffee supply chain management are
confirmed. Certified farmers also perform higher levels
of adoption of improved production practices. Environ-
mental management, social attainment and corporate so-
cial responsibility are becoming the main concern of
coffee processing companies but there is limited evi-
dence of large-scale support from them to local farmers.
Thus, the success of the improvement depends mainly
on cooperation among stakeholders, both in the public
and private sectors. They have to coordinate closely to
improve current farming practices, and then manage the
supply chain network as well as reverse logistic issues
along with consider strategies to support sustainable de-
velopment. The government should also consider more
effective policies and laws to encourage investment in
sustainable coffee production, and expand the market
for this product. Besides, the premium price for certified
coffee is known as approximately 10–20% higher than
the normal price. A positive relationship between certifi-
cation ownership and higher economic profit is shown
in the research; however, future researches should meas-
ure and prove the financial benefits for farmers to per-
suade them to join sustainable programs. Another
contribution that future research should examine is the
productivity benefit when farmers change from planting
normal coffee to certified coffee. Researchers should
provide them with guidance to help them manage the
quality of their coffee farms. Finally, the logistic regres-
sion model is suggested to help government and sustain-
able coffee programs choose farmers with proper
conditions in order to achieve more success.
It is confirmed that sustainable coffee schemes should
be enhanced thanks to their benefits. However, there are
some limitations of this study that future research
should consider. Due to the limitations of time and ex-
perience, the researchers were unable to study a larger
sample, which could generate a more accurate result. In
addition, the research did not measure the financial im-
pacts of the sustainable coffee program.
Acknowledgements
The authors sincerely thank you all farmers and participants from coffee
manufacturing companies who willing to complete the surveys and interview
to complete this research.
Funding
No funding.
Availability of data and materials
Not applicable.
Authors’contributions
GNTN, conduted the field work and analysed data; TS, provided theoretical
framework and methodology. Both authors read and approved the final
manuscript.
Ethics approval and consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
The authors declare that they have no competing interests.
Publisher’sNote
Springer Nature remains neutral with regard to jurisdictional claims in
published maps and institutional affiliations.
Author details
1
Becamex Business School, Eastern International University, Binh Duong,
Vietnam.
2
Griffith Business School, Griffith University, Brisbane, Queensland,
Australia.
Received: 12 May 2017 Accepted: 10 December 2017
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