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Coffee production in the Central Highlands faces a multitude of challenges; decades of intensive cultivation and expansion onto marginal land has degraded the soil quality and left smallholders less resilient to both climate change and vulnerable to fluctuations in the price of coffee. As a result, many smallholders are in a negative spiral of declining yields leading to the increasing application of inputs to compensate, which is further reducing their already limited margins.

This new analysis presents the business case for sustainable Robusta coffee cultivation in the Central Highlands region of Vietnam. In recent years, inter- cropping models involving coffee interspersed with shade or fruit trees have demonstrated their potential to generate multiple benefits to smallholders and the environment. This analysis focuses on the economic benefits of transitioning from an intensive coffee cultivation model to three different intercropping models: avocado, durian and cassia siamea and pepper, and makes recommendations concerning the transition pathway that will be most accessible to smallholders.

Even in poor market conditions, the analysis finds that diversifying a smallholding through the addition of another productive crop will generate economic benefits for the producer. Furthermore, the revenue generated through the addition of a crop can help to reduce the impact of periods of low coffee price on a smallholder’s livelihood. However, while this will provide a degree of economic resilience to a smallholder, if the coffee price remains consistently subdued, it cannot be said that the smallholder will or should not make the economically rational decision to replace their coffee plantation with what they perceive to be a more lucrative or less volatile crop.

In addition to economic benefits, diversifying a smallholding can bring potential environmental benefits: leading to increased biodiversity and improved soil structure, that may further contribute to the economic profitability of the model by reducing the requirement for irrigation or agricultural inputs and increasing resilience to climate driven drought or flooding.

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