How Climate Change Could Alter Vietnamese Society

12/07/16
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Vietnam’s central highlands are rich in natural resources, containing lush forests, diverse wildlife, and historically one of the most productive coffee-growing locales on the planet. In the early part of 2016, however, the country suffered the worst drought seen in nearly a century. As a result, coffee traders now expect that output of the Robusta variety grown in the central highlands region may decrease by as much as 30% over the next marketing year.[1]

As a globally traded commodity, coffee is comparable to petroleum in number of trades and market complexity. In Vietnam, coffee is intensively cultivated; farmers use high fertilizer and labor inputs to achieve one of the highest annual yields in the world, and exports the largest crop of the Robusta coffee variety.[2] Today, the hand-picked coffee harvest provides a livelihood for large numbers of small-scale farmers, laborers, and value chain workers.[3]

Using its high-resolution historical weather data, aWhere tracked the progression of the drought in real-time, issuing reports on the likely impacts on coffee prices. In its reports starting February 2016, aWhere visually demonstrated the drought’s impact on a weekly basis and consistently argued that weather conditions in Vietnam, as well as Brazil and Colombia, were very likely to cause supply-side constraints and push up the price of coffee futures.

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Figure 1: Sample graphics from aWhere’s Coffee Commodity Reports. The image to the left is from the report dated February 3, 2016, and the image to the right is from the report dated April 20, 2016. Each displays the severity of crop stress in the coffee-growing regions of Vietnam during the respective previous month. Crop stress is defined as negative soil moisture conditions, calculated using daily P/PET (precipitation over potential evapotranspiration) for each aWhere virtual  weather station versus long-term normal values at that same virtual weather station.

The early warnings delivered by these reports were possible both because of aWhere’s reliable, timely data as well as an understanding of the Robusta growing season in Vietnam.  Production in this part of the world relies heavily on a healthy rainy season beginning around April. The build-up of water stress at this particular time would be expected to cause damage to coffee flower development and influence global price increases for Robusta.

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Figure 2: Robusta price trends taken from investing.com, aggregated weekly. The lowest price of Robusta in this chart occurred in the week of February 21, 2016, with prices increasing sharply thereafter.

Possible Futures of Coffee in Vietnam

The El Niño weather pattern in 2016 was a significant driver of the Vietnamese drought as well as negative conditions affecting crops all over the globe.[4]  Vietnamese farmers and laborers whose incomes depend on coffee may hope for a return to more regular weather conditions this coming year.  However, there is a distinct possibility this may not be a one-off occurrence but instead an early sign of further disruption of traditional agricultural practices down the road.[5]

Some researchers expect the warming atmosphere, due to climate change, will significantly decrease the areas in Vietnam in which coffee can be grown, as rainfall becomes less evenly distributed across time and space and as nighttime temperatures rise. One study suggests that Southeast Asia could see a 60% reduction in land area suitable for Robusta cultivation, particularly impacting Vietnam.[6]

There is no exact figure known for how many Vietnamese workers earn their living from the coffee industry. The European Coffee Federation estimates the number to be one million, while others suggest it could be multiple millions.[7] This translates to roughly 2-4% of the total Vietnamese workforce. An analysis of the social safety net availability in Vietnam conducted by the Asian Development Bank reported that poverty in the central highlands region is relatively high, and the availability of a government social safety net is relatively weak.[8] If climate change makes coffee more difficult to grow, the social and economic profile of Vietnam’s central highlands region could go through some disruptive change.

Farmers may turn to alternative cash crops like pepper, cacao, or cashew nuts, which have some growing history in the area and could potentially absorb the excess labor previously devoted to coffee. Any transition effort will take time, however, and there is no guarantee that the labor demands of any new crops will match those of coffee.

Across the world, when income prospects are uncertain and old rural industries collapse, migration and urbanization tends to result, particularly among able-bodied young men and women. If changing weather permanently reduces the labor demands of central highlands agriculture, we might reasonably anticipate migration flows from the farming villages to the cities, and societal disruption resulting from changes in the economic prosperity and age composition of the farming villages.

This is only one example of the inter-related effects a warming atmosphere may have on global commodities markets, on national agricultural outputs, and on regional changes in labor and poverty.[9] It shows how aWhere’s data can help farmers, governments, and businesses alike to understand regional variation in climate as well as how different areas are trending over time. With this insight, they can apply their own domain knowledge to identify potential problems before they happen, and implement strategies to safeguard their livelihoods and communities.

 

[1] http://www.wsj.com/articles/drought-hurts-coffee-production-in-vietnam-1462542579

[2] http://www.ecf-coffee.org/about-coffee/coffee-facts

[3] https://www.theguardian.com/global-development/poverty-matters/2012/mar/26/better-future-vietnam-coffee-growth

[4] http://blog.awhere.com/visualizing-south-africas-drought

[5] http://blog.awhere.com/agriculture-food-security-and-increasingly-variable-weather

[6] http://link.springer.com/article/10.1007/s10584-014-1306-x

[7] http://www.ecf-coffee.org/about-coffee/coffee-facts

[8] https://www.adb.org/sites/default/files/linked-documents/cps-vie-2012-2015-pa.pdf

[9] http://blog.awhere.com/an-energetic-atmosphere-and-increasingly-variable-weather

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