Documentation:Open Case Studies/FRST522/2022/History and development of coffee plantations in Yunnan Province, China: an assessment

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Summary of Case Study

This paper gives a general introduction to the coffee industry in Yunnan province, China. Mainly focus on its history, issues they are facing, and also some suggestions based on different stakeholders.

Keywords

coffee plantation, stakeholders, issues, solutions

Introduction

Geograghic, climate and population conditions of Yunnan Province

Geograghic conditions

Yunnan province located at 21°08′32″~29°15′08″N, 97°31′39″~106°11′47″E[1], and is an inland province in the southeast of China. The province borders the Chinese provinces of Guizhou, Sichuan, autonomous regions of Guangxi, and Tibet as well as Southeast Asian countries: Vietnam, Laos, and Myanmar. With its geographical advantage, Yunnan will become the fulcrum of China's opening up to South and Southeast Asia under the "One Belt, One Road" policy.

Climate conditions

Yunnan Province is a mainly highland and mountainous province with an extremely diverse range of terrain, including plateaus, plains, mountains, mesas, low mountains, hills, basins, and river valleys. The climate is influenced by the topography of the Yunnan-Guizhou Plateau and the southeast and southwest monsoons, combining low latitude climate, plateau climate and monsoon climate, with abundant heat resources, the winter is dry and warm, the summer is wet and warm. Spring, summer, autumn and winter averaged temperature are 17.9 °C, 21.7 °C, 16.9 °C and 10.4 °C. The average annual precipitation is 1,086.2 mm and the average annual sunshine hours are 2,020.7 h. The average altitude is about 2,000 m[1].

Population conditions

Yunnan is a province with the largest number of ethnic minorities, with 25 of China's 55 minority groups. According to the Seventh National Population Census data, the Yi are the most populous minority group, accounting for 10% of the total population of Yunnan Province, while other ethnic groups with more than 1% are Hani (3.45%), Bai (3.4%), Dai (2.66%), Zhuang (2.56%), Miao (2.65%) (14). Most of them live in remote mountainous areas at the border and are economically backward[2].

Coffee industry in Yunnan Province

Coffee is one of the main cash crops exported by developing countries[3][4].The Tropic of Capricorn is the world's coffee-growing belt, and Yunnan province is crossed by the Tropic of Capricorn, together with its highland and mountainous location, makes it a great place to grow coffee[5].Based on the latest list of geographical indication products published by the China National Intellectual Property Administration, three types of coffee in Yunnan have been named as geographical indication products. There are Pu’er coffee, Baoshan small grain coffee, and  Binchuan Zhukula coffee[6]These coffees are mainly grown in five-core coffee producing areas in Yunnan, and there are Baoshan, Dehong, Lincang, Pu'er and Xishuangbanna[7][8].

Coffee is one of the key industries in the development of modern agriculture with highland characteristics in Yunnan, and has gradually become the industry with the most potential to generate foreign exchange, and is also a key product for Yunnan's agriculture to "go global" [9].Because of its border location and the development of the "One Belt One Road" initiative, there is a wide market for it. The annual net return per acre from coffee is even higher than that from maize, rice and vegetables grown in the same region. However, after 2017, the coffee growing industry in Yunnan Province has also been hit hard due to the fall in international coffee bean prices. There are still a series of issues that need to be addressed for the Yunnan coffee industry to achieve sustainable and stable development.

In Yunnan, the average coffee yield gradually increased from 1.41 t/hm2 in 2005 to 2.44 t/hm2 in 2012, reaching the highest level, while the average coffee yield in China has been decreasing from the highest point in 2012 to 1.99 t/hm2 in 2019 due to various factors. In contrast, the average coffee yield in Colombia, Venezuela and Indonesia has been 8 t/hm2 in the last decade[10].Compared with foreign countries, there is a large gap in coffee yields in China. Therefore, analysing the constraints affecting coffee production efficiency and measuring coffee production efficiency can provide a reference for promoting the sustainable and healthy development of the coffee industry[7].

The development of coffee cultivation is conducive to improving the economic situation of rural areas inhabited by ethnic minorities in the mountainous border areas; improving the construction of the local ecological environment and effectively increasing the area covered by forests; the combination with farming under coffee trees can also promote the diversification of the local economy; relying on the special coffee industry, it can also develop special rural tourism and promote the combination of the local industrial structure; improving the establishment of the local industrial chain and following the path of modern development.

History of the development of the coffee industry in Yunnan Province[11]

1940-1949

First introduced by missionary, self-initiated coffee cultivation in various regions. In 1904, the first coffee tree in mainland China was planted by French missionaries outside the church in Zhukula, pioneering the cultivation of coffee in Yunnan. A small number of villagers also grew coffee for their own consumption and this is the origin of the name Zhukula coffee. Among the 15 acres of old coffee trees found in China, 24 of them are over 100 years old and are known as "living fossils of Chinese coffee"[5],providing an invaluable resource for coffee breeding in China.

1952-1978

Development of coffee production to meet specialized supplies; Agricultural reclamation system tries to grow coffee. Driven by the strategic needs of the country, especially during the first five-year plan, the Soviet Union helped China to build 156 projects. Yunnan began to grow coffee on a larger scale to supply the Soviet Union. The coffee industry was developed mainly in Baoshan City, making it as the first small-grain coffee growing base in China, and gradually developed into a scientific research centre for small-grain coffee in China.

Since 1952, there was a high tide of collectivisation, over 80% of all agricultural land had been collectivized and put under the control of village cooperatives[12]. The farming system began to experiment with coffee production, and from 1957 onwards, coffee was developed on a large scale on individual farms, reaching a peak in 1960, when the planted area reached 2,186.67 hectares, accounting for 60% of the province's planted area, achieving large-scale cultivation[11].

1978-1988: Downturn

There were three reasons for the fall of the coffee industry:

1. Macroeconomic strategies were tuned to put the whole emphasis on solving the food problem. A large amount of land was used to grow food rather than coffee.

2. During the "Cultural Revolution", coffee sales in the domestic market were restricted, prices fell and exports were affected.

3. Coffee plantations were severely affected by pests and diseases.

By 1980, only 78.53 hectares had been planted in the whole area, a 96% decline in coffee cultivation.

1988-2008: Marketisation of the coffee industry

In 1988, Nestlé turned its attention to the city of Pu'er, and Maxwell's and Starbucks also come to Yunnan; Coffee drinking became a new lifestyle for urban white-collar workers. Coffee cultivation in Yunnan was finally revived. In 1998, the Yunnan Provincial People's Government issued the “Opinions of the Yunnan Provincial People's Government on Accelerating the Development of the Coffee Industry”, which led to a rapid expansion of coffee cultivation in the mountainous and semi-mountainous areas along the Yunnan border, driven by the rising price of coffee beans. In 2007, the Ministry of Agriculture drew up the Regional Layout Plan for Special Agricultural Products, listing southwestern Yunnan as a priority area for coffee development, with multi-channel investment to support the development of Yunnan's coffee growing, processing and research capacity[8].

2008-2016: Transformation of coffee farmain from traditional agriculture to modern agriculture

The area and production of coffee cultivation in Yunnan has been increasing. Spread to 35 counties in nine states. Yunnan's coffee cultivation area is 118 thousand hectares, with a total output of 13.9 million tonnes, accounting for more than 99% of the country's coffee cultivation area and total production. Yunnan's local coffee enterprises, such as Hougu and Lingfeng, have developed rapidly.

2016-now: The coffee industry is growing rapidly

After the 13th Five-Year Plan, Yunnan Province focused on cultivating eight major industries to further support the development of the coffee industry; the full implementation of the "One Belt, One Road" initiative and the transformation and upgrading of Chinese consumption. On 5 April 2017, the Yunnan Provincial Government issued the "Guidance for the development of the coffee industry", proposing a number of goals such as reaching 2 million mu(134 thousand hectares) of coffee plantation area and 200,000 tonnes of dry bean production by 2020, striving to make Yunnan the world's high-quality coffee bean raw material base, the country's largest coffee refining production base and coffee bean trading centre. Five development guarantee policies and measures are proposed, such as corresponding organisational leadership, fiscal and financial taxation, industrial fund guidance, scientific and technological innovation, and intellectual support for talents.

Tenure rights change

In Yunnan, there has been five major changes of the main institution charged with making decisions about land:

Between 1950 and 1959 lands were devolved from the ‘township’ to the ‘village’.

Then from 1959 to 1964/7 authority over land shifted to ‘cooperatives’.

In the next phase, 1964/7-1982/3, the main authority became the ‘production brigades’.

After 1983, ‘cooperatives’ were restored to authority

since 1990 the emphasis has been placed on the recognition of ‘village groups”[12]

Affected stakeholders

Yunnan coffee plantation owners

These people obtain coffee beans from the coffee plantations for processing and selling to downstream producers, their main economic source is the coffee plantations and they have a direct link to the coffee plantations, so they are affected stakeholders. The following table gives a detailed analysis of the categories of coffee plantation owners as well as the size and altitude of the plantations.

Summary of major coffee plantations in Yunnan Province
Location Dehong Baoshan Pu'er Xishuangbanna Lincang Wenshan Nujiangzhou
Major owners of

coffee plantations

98% are owned by

Honggu coffee company;

others are private owned

State-run farms,local farms,

companies, self-employed

owner and foreign investments

Numerous coffee companies,

self-employed owners, large

outside companies

State-run farm,

self-employed owners

and private owned

Yuan Teng Feng ,Honggu

and Longchang coffee company

State-run farm

and company

Lisan

coffee

company

Plantation size 9,000 hm2 9,200 hm2 18,400 hm2 3,300 hm2 1,400 hm2 800 hm2 300 hm2
Plantation altitude 800-1300 m 700-1500 m 1000-1400 m 500-1500 m 450-1500 m 400-700 m 1000-1200 m

Interested Stakeholders

Research institutions:

They only work on technology and breeding related to the coffee industry and are not directly linked to coffee plantations, so they are interested stakeholders.

Governments:

Government agencies at all levels are responsible for policy and do not liaise directly with coffee plantations, so they are interested stakeholders.

Enterprises:  

They only buy beans from the coffee plantations and are not directly involved in the production of the coffee plantations and have no emotional connection, so they are interested stakeholders. However, when they build their coffee plantations in Yunnan, they will become affected stakeholders.

Discussion

The area planted with coffee in Yunnan province expanded from 17,200 hm2 in 2005 to 110,700 hm2 in 2017, and production increased from 21,600 t to 164,700 t[7]. After being affected by the fall in global coffee prices, the planted area shrank to 89,100 ha and production to 135,100 t by 2020, although overall there was an increase(as Figure 1 showing below)[13]. Average yields, however, are still far from those of Western countries.

Figure 1. Coffee plantation area and yields from 2010 to 2020 in Yunnan Province

Core issues

Coffee plantations have the obvious problem of being "small, fragmented and weak". Agrarian land is used for coffee plantations; hence the applicable forestry standards do not apply. According to the introduction, the land belongs to the village collective, which allocates the contractual and management rights to its members[14]. The villagers can keep the land for their own use or sublet it for contract to other people or the collective. As a result, coffee estates are now dispersed and modest in size.

The weakness of the strength is reflected in the following points:

First of all, lack of infrastructure development. Only 10% of the plantations got well-supported facilities. Engineered water shortages during winter. During the winter and spring seasons of coffee production, droughts often occur in many areas due to the lack of basic water facilities, which in turn leads to a reduction in coffee production.

Secondly, lack of skills support and insufficient education. Coffee growers typically have low levels of scientific and education literacy. The administration and cultivation of coffee are careless, and adoption and use of new technologies are delayed. Furthermore, it is challenging to introduce and maintain highly skilled and educated coffee specialists due to the challenging working and living conditions. Therefore, the capacity to refine and deepen coffee processing as well as product development and brand marketing falls behind[5][15].

Thirdly, lack of leading enterprise and branding. There are no local coffee enterprises strong enough to have a distinctive coffee brand. Moreover, local enterprises face difficulties in obtaining loans and do not have financial products to match their needs in the development process[11].

Fourthly, the export structure of Yunnan Province is relatively homogeneous and the industrial structure chain is too short, mainly exporting raw coffee beans. The demand for raw coffee beans is elastic and vulnerable to external factors, and exports show a certain volatility. Yunnan's coffee bean exports are dominated by the European market, followed by Asia, with the Middle East market being the lowest. The European market mainly exports raw coffee beans, the Asian and Middle Eastern markets will also have also instant coffee, coffee powder and other products exported[9].

Related issues

In addition, although Yunnan coffee has repeatedly won international coffee competitions[8] and has achieved a variety of international certifications, this has led to the following problems:

Mixed names: The different channels for the introduction of coffee varieties and the lack of awareness of the morphology of coffee varieties have led to confusion in the use and overall designation of coffee varieties in current production, which is not conducive to coffee production and the overall evaluation of the product, and has affected the implementation of good breeding[16].

The quality standard system is mixed and there is no decisive quality standard system. Due to the lack of government regulation of quality techniques, individual plantations or factories have their own implementation standards, making it difficult to achieve high yields, quality, efficiency and sustainable development[11].

Suggestions for future development baesd on different stakeholders

Plantation owners

In summary, owners need to improve water and fertilizer management, develop shading cultivation and high-altitude cultivation and enhance early processing technique.

The management of coffee, such as water and fertilizer, should be improved to increase its resilience to diseases and pests in the coffee plantations, as this is one of the most significant barriers to healthy coffee development.

Based on a study of small grain coffee growing areas in Lincang City, Yunnan Province[17], it is suggested to adopt the agroforestry cultivation pattern of the fast-growing economic tree species plus coffee, which has a high output value and quick effect, such as Musa paradisiaca, Persea americana and Macadmia ternifolia. In addition to shade trees, short-term crops such as soybeans, peanuts, vegetables, herbs and artificial mushrooms can be grown in the open spaces between the coffee tree rows; poultry such as chickens and geese can also be raised to increase the income from the land[8].

According to Shuo Zhang's study, the centroid of the most suitable area of Arabica coffee would migrate northward generally to higher altitude or higher latitude because of the future climate scenario[18]. So owners should look at the problem from a developmental perspective and take advantage of suitable coffee growing areas at high altitudes in advance.

Increase training efforts to improve management standards of coffee farmers. Firstly, training for farmers should be strengthened to ensure that their planting,  picking and storage processes are standardised. Secondly, a large number of coffee-related technology products have been released by universities in recent years[8], but they are difficult to apply in actual production. Owners should actively promote the application of new technologies on plantations in order to improve the yield of coffee beans and the quality of the primary processing products.

Government

Solutions of "Small, fragmented and weak" issue

Enhancing the coffee industry

The government has played an important role in solving the problem of a "small, fragmented and weak" coffee industry. Firstly, the government should strengthen its leadership and set up a special department responsible for the development of the coffee industry. Also set up a special quality control department to regulate coffee production.

To improve the phenomenon of over-reliance on climate in poor border areas, where climatic precipitation is an important factor in the yield and quality of coffee beans, water infrastructure should be increased and a high standard of base construction should be built.

The government and relevant departments should conduct field surveys and provide targeted training to farmers. During agricultural leisure time, the government should organise cooperation with agricultural universities and agricultural research institutes, and hire relevant experts to provide practical guidance and classes in the local area, combining theory and practice to help curry farmers improve their production techniques and management levels[7].

Bringing the coffee industry together

To address the problem of small and scattered coffee plantations, the government can work on the institutional regulation of land transfer contracts and the active encouragement of coffee cooperatives.

The specific content of the land transfer contract should be stipulated in a system that clarifies the relationship between property rights, including the duration of the land transfer contract, the manner in which disputes arise and the responsibilities of both parties, and establishes a reasonable land transfer process and standardises to reduce the risk of land transfer for coffee farmers. Provide appropriate assistance to farmers to guide and encourage the transfer of land in the form of contracting and leasing, so as to expand the planting area and promote the development of coffee farming on a large scale[7].

According to a door-to-door survey of 220 coffee households in Baoshan[7], it was found that there is a significant positive correlation between coffee production efficiency and whether to join cooperatives. The government should give financial support to existing cooperatives and expand awareness to dispel farmers' worries and increase their motivation to join the cooperative. In addition, support enterprises to establish or expand high-standard coffee plantations and guide coffee farmers to develop as a group.

Economic policy

Accelerate the promotion of agricultural disaster insurance, price index insurance and storage regulation systems. Ensure that in the event of a sudden natural disaster, coffee farmers' planting losses can be covered and their incentive to produce is protected. There is also a need to ensure that when the price falls below the cost price, the government or the coffee trading platform subsidises the storage of coffee at a minimum protected price.

Establishing a Yunnan coffee futures exchange: setting up a coffee futures exchange to gain pricing power will greatly ensure the interests of coffee farmers and the benefits of domestic consumers. A moderate increase in tariffs on coffee imports to increase the protection of the domestic coffee market and provide the necessary conditions to increase the share of Yunnan coffee raw materials in the domestic market.

[11] Research institutions

Universities and some related research institutions can play an active role in coffee breeding[16], production technology and training for farmers.

They should strengthen coffee breeding and change the dominance of one type of coffee species. They could use the existing old coffee trees as breeding material for the development of new varieties that are resistant to disease and of high quality. Rust-resistant varieties for high altitude areas should also be selected in order to deal with future changes in coffee growing areas.

They should develop miniaturised machinery suitable for the Yunnan landscape. This will reduce the labour costs of coffee production and modestly increase the profit margin of coffee farming in the face of uncontrollable market prices for coffee beans.

Need to strengthen the training of basic coffee technology promotion teams, improve the technical promotion service network, increase training in new technologies for coffee farmers, and speed up the promotion and application of new varieties and technologies. At the same time, farmers' identification of existing coffee varieties should also be strengthened.

Enterprises

Local companies should actively establish distinctive brands, taking into account the local climate and geography and historical characteristics of Yunnan. For example, Saturnbird[19] and Lucky coffee[20] have launched a range of coffee with Yunnan characteristics and have established their own modern coffee plantations in the region.


This conservation resource was created by Course:FRST522.


References

  1. ↑ 1.0 1.1 Zhang, M., WANG, R., Li, Y., Hu, X., Li, M., Zhang, M., & Duan, C. (2020) Ecological suitability zoning of Coffea arabica L. in Yunnan Province. Chinese Journal of Eco-Agriculture, 28(2), 168-178. http://doi.org/10.13930/j.cnki.cjea.190509
  2. ↑ Yang, Y., Li, D., Li, X., Wang, Y., Luo, Y., Du, G., & Dai, Z. (2020) Gonggu Tisheng Yunnan Bianjing Shaoshu Minzu Shanqu Kafei Chanye de Duice [Measures to strengthen and improve coffee in the mountainous border minority areas of Yunnan]. Industry Development, 92(1), 17-21.
  3. ↑ Fain, S. J., Quiñones, M., Álvarez-Berríos, N. L., Parés-Ramos, I. K., & Gould, W. A. (2018). Climate change and coffee: Assessing vulnerability by modeling future climate suitability in the caribbean island of puerto rico. Climatic Change, 146(1-2), 175-186. https://doi.org/10.1007/s10584-017-1949-5
  4. ↑ Geeraert, L., Aerts, R., Berecha, G., Daba, G., De Fruyt, N., D’hollander, J., Helsen, K., Stynen, H., & Honnay, O. (2020). Effects of landscape composition on bee communities and coffee pollination in coffea arabica production forests in southwestern ethiopia. Agriculture, Ecosystems & Environment, 288, 106706. https://doi.org/10.1016/j.agee.2019.106706
  5. ↑ 5.0 5.1 5.2 Bai, S. (2021) Xiangcun Zhenxing Zhanlue Beijing xia Dayao Xian Kafei Chanye Fazhan de Tiaozhan yu Duice[Challenges and countermeasures for the development of coffee industry in Dajao county in the context of the strategy of rural vitalization]. Journal of Green Science and Technology, 23(13), 138-140. http://dx.doi.org/10.16663/j.cnki.lskj.2021.13.050
  6. ↑ "Geographic indication".
  7. ↑ 7.0 7.1 7.2 7.3 7.4 7.5 Lan, S., Zhang, Y., & Li, X. (2022) Analysis on input efficiency and influencing factors of coffee growers. Agricultural Outlook, 18(1),102-108.
  8. ↑ 8.0 8.1 8.2 8.3 8.4 Yang, Y., Li, D., Li, X., Wang, Y., Luo, Y., Du, G., & Dai, Z. (2020) Gonggu Tisheng Yunnan Bianjing Shaoshu Minzu Shanqu Kafei Chanye de Duice [Measures to strengthen and improve coffee in the mountainous border minority areas of Yunnan]. Industry Development, 92(1), 17-21.
  9. ↑ 9.0 9.1 Zou, Z., He, M., & Liu, P. (2022).  Yunan Sheng yu Guoji Kafei Chanye Fazhan de Bijiao Yanjiu [A comparative study of the development of the coffee industry between Yunnan Province and international]. Industrial innovation, 13(1), 87-89.
  10. ↑ Mekouar, M. A. (2017). 15. food and agriculture organization of the united nations (FAO). Yearbook of International Environmental Law, 28, 506-520. https://doi.org/10.1093/yiel/yvy073
  11. ↑ 11.0 11.1 11.2 11.3 11.4 7. Yu, W. (2017) Yunnan Kafei Chanye: Licheng, Chengxiao,Weiti, Celue [Yunnan coffee industry: history, results, problems, strategies]. The Journal of Yunnan Provincial Committee School of CPC, 18(5), 111-115. http://doi.org/10.13410/j.cnki.ypcscpc.2017.05.021
  12. ↑ 12.0 12.1 Colchester, M. (2004). Community forestry in Yunnan: the challenge for networks [Chinese]. Retrieved from https://hdl.handle.net/10568/19060
  13. ↑ Yunnan Provincial Department of Agriculture and Rural Development. "Data Release".
  14. ↑ Ju, M. (2021) Analysis on the farmland right structure under the separation of three rights. Tropical Agricultural Engineering, 45(2), 98-102.
  15. ↑ Zhu,H. (2012) A review of development of coffee industry in Pu’er, Yunnan. China Beverage, 15(12), 3-7. http://dx.doi.org/10.3969/j.issn.1007-7871.2012.12.001
  16. ↑ 16.0 16.1 Zhang, H., Li, W., Zhou, S., Zhou, H., Li, J., Bai, X., & Xia, H. (2011) Use of coffee varieties in Yunnan and innovative application. Chinese Journal of Tropical Agriculture, 31(10), 24-33.
  17. ↑ Fu, X., Hu, F., Cheng, J., Lou, Y., Lv, Y., Huang, J., … Li, G. (2021) A survey of diseases and insect pets of Coffea arabica under seven agroforestry cultivation patterns. Chinese Journal of Tropical Agriculture, 41(9), 74-81.
  18. ↑ Zhang, S., Liu, X., Li, R., Wang, X., Cheng, J., Yang, Q., & Kong, H. (2021). AHP-GIS and MaxEnt for delineation of potential distribution of arabica coffee plantation under future climate in Yunnan, China. Ecological Indicators, 132, 108339. https://doi.org/10.1016/j.ecolind.2021.108339
  19. ↑ New nutrition business. (2012, April 13). Retrieved November 20,2022, from https://www.xinyingyang.com/content-9-22523-1.html
  20. ↑ Asia coffee, tea & ice cream magazine. (2022, May 13). Retrieved November 20,2022, from  http://www.coffeeteaimagazine.com/%E7%91%9E%E5%B9%B8%E5%92%96%E5%95%A1-x-%E4%B8%AD%E5%9B%BD%E4%BA%91%E5%8D%97-%E6%89%93%E9%80%A0%E9%80%9A%E5%BE%80%E6%9C%AC%E5%9C%9F%E5%8E%9F%E4%BA%A7%E5%9C%B0%E7%9A%84%E6%A1%A5%E6%A2%81/
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