SDM Case Study: COFCO, Vietnam

The Vietnamese coffee value chain is characterised by several layers of collectors (traders) who sit between farmers and exporters. COFCO International, like other international organisations, had been purchasing coffee through this “arms-length” mechanism for many years, but the layers have always presented a challenge in influencing farm-level practices and securing the long-term availability of coffee within the region.

Now, COFCO has embarked on an SDM that seeks to better leverage the existing value chain by working closely with the tier of collectors that are most locally integrated. Supported by the use of digital technology, COFCO's SDM provides training, 4C verification, access to inputs and financial services to farmers in the Di Linh region. Our analysis predicts positive benefits for the farmer and collector in terms of net income. However, the current design of the SDM implies the elimination of one to two layers of collectors from the supply chain – a feature which carries unknown consequences.