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Abstract

Smallholder farmers in Daklak in the central highlands of Vietnam tried to capitalize on high coffee prices in the early 1980’s and mid 1990’s by planting much of their agricultural land with coffee. In 2001, when the coffee price dropped to 20% of those in 1995 the primary source of income for households was gone leaving the poorer households extremely vulnerable.
Converting the least productive parts of their coffee plantations into planted forages and using these forages as the basis for market-oriented livestock production – fattening of cattle, intensive cow-calf production and fish ponds – enabled these household to recover and reduce risk by diversify their production system. This diversification required only a small portion (on average 20%) of their agricultural land, enabling farmers to maintain the more productive coffee areas and diversify into other crops. Other key factors for the success of livestock enterprises were the high returns on labor of more intensive, forage-based cattle production and the high net income from livestock. Once proven, the local government arranged concessional loans to poor households to enable them to take advantage of this opportunity.
Within 5 years of the first 25 farmers evaluating the use of forages for cattle in 2000, the number of households growing production-size plots of forages has increased to over 2,000 households in 2005. Planted forages were the key entry point for converting extensive livestock management into market-oriented production systems as they give farmers control over feed resources.
Prices for livestock products have been stable and are predicted to continue to increase in the foreseeable future; powered by increasing urbanization and raising living standards in Asia. This makes livestock an ideal commodity for diversifying agricultural production of smallholder in the uplands.

1 Riding a roller coaster to increased vulnerability

The province of Daklak is part of the Central Highlands of Vietnam. Thirty percent of the one million six hundred people living in the province are either from indigenous minority groups or migrated to the Central Highlands in recent times. The mainstay of their livelihoods is smallholder agriculture but over most of the province, production is limited by unfavorable soils and long dry seasons. Only very small pockets of land are suitable for irrigated rice cultivation. Living standards are, on average, much lower than in the rest of the country.
To capitalize on high coffee prices in the early 1980’s and, especially, the mid 1990’s, many smallholder farmers established coffee plantations. The area planted with coffee increased rapidly from 54,000 ha in 1990 to more than 250,000 ha in 2000. Initially, this expansion was on fertile basaltic soil but soon farmers on more marginal sandy soils also started growing coffee. In many cases, this resulted in the replacement of all other crops, leading to monoculture coffee plantations in marginal environments.
The returns from coffee on all soil types were high until the dramatic price slump of the late 1990’s. Nearly all of the coffee production in Vietnam is the robusta variety and this was particularly hard hit in the price slump with 2001 prices dropping to 20% of those in 1995 (Fig 1). Farmers with the resources to sustain high coffee yields (especially fertilizers, pumps for irrigating with groundwater and more-fertile soils) were better able to weather the roller coaster of international coffee prices. Those growing coffee on the more-marginal sandy soils (by definition the poorer farmers in the area) felt the full force of the volatility in international coffee markets. They were unable to provide the inputs required to sustain yields on the poorer soils. Many lost their entire investment and, without the safety net of other farm activities, found themselves exposed to great livelihood risk.

While these major changes in production systems were playing out, staff from Tay Nguyen University (in the provincial capital Buon Ma Thuot), the provincial agricultural offices and CIAT were working with smallholder farmers to better understand the potential of forages for their cattle production systems (Stür et. al., 2002). In 2000, 25 farmers whose farms were on the less fertile soils in Ea Kar district began evaluating new forage varieties in small plots. The varieties they tested had emerged from earlier selection trials in the province and were 2
known to be well adapted to the biophysical conditions of the area. Consequently, these varieties grew well prompting the early evaluators to quickly see the potential for using the varieties to fatten cattle as an alternative source of income to coffee. Many of them began to replace their coffee gardens on the most marginal land with forages, mainly using the grass Panicum maximum ‘Simuang’ and, to a lesser extent, Pennisetum purpureum ‘Local’ and used this to expand livestock production. Other farmers began to follow their lead and within 5 years, more than 2,800 farmers in five districts had planted forages to support various forms of livestock production. The process of working with farmers in developing forage and livestock systems has been described in Horne et. al. (2005).
Farmers planting forages diversified into three types of market-oriented production systems: Fattening of thin cattle for sale; improved cow-calf production, and grass-eating fish in ponds. In addition, some farmers were able to sell forage planting material, seed and manure. Some farmers developed just one of these production systems but others (like Mrs Kieu – see Box) diversified into two or more forage and livestock enterprises. The scale of the adoption and the anecdotal evidence of forages contributing substantially to reducing farmers’ vulnerability to volatile coffee prices prompted a study to better understand the nature and extent of the impacts in 2005. The district with the largest adoption of forages was Ea Kar (>2,000 farmers; Fig 2). A summary of the impact studies on cattle for Ea Kar is presented in the following sections.

2 Raising livestock to reduce livelihood vulnerability – a case study of Ea Kar

The study collected secondary data from district and provincial sources and conducted a survey of 50 randomly selected forage adopters. In addition, two more detailed surveys were conducted on the impact of forages on fattening of cattle and on the cow-calf production system. An overview of the results is presented in this paper and the details of the surveys will be published in journal articles in 2006.
The median farm size in Ea Kar is 1 ha, with most of this area being accounted for by upland areas (Table 1). Only 10% of the area is suitable for lowland rice and not all households have access to such areas. The most important agricultural crop grown is coffee. Other upland 3
crops grown are annual food crops and pepper. In 2005, the median number of cattle per household was 3 animals and more than one third of households only started cattle production since 2000.
In 2005, farmers who had planted forages grew on average 1,710 m2 of forages, with 72% farmers having planted between 500 and 4,000 m2. Many of the smaller forages areas were new farmers who were still expanding their forages areas.

In 2000, the first cohort of farmers grew forages in un-cropped areas or areas which had previously been planted with annuals. Once farmers appreciated the potential of using planted forages for livestock production and started to expand they had to replace existing crops as they had no other available land. By 2005, 80% of farmers reported that they had planted forages on areas previously planted with coffee. Farmers did not replace all of their coffee areas but only those that were marginal for coffee production, and forage areas are only one (relatively small) component of the agricultural land of households.
Farmers utilized forages to develop and intensify three main livestock production systems (Table 3). 90% of households used forages to produce calves and many of these households also fattened their own cattle before sale. Other farmers bought thin cattle from other farmers or from traders and fattened these for a few months before selling them to traders. Approximately one third of farmers had fish ponds and used forages to produce grass-eating fish for sale. In addition, some households diversified into forage seed production for local sale, with 500kg of forage seed being produced and sold in 2005. Others were selling forage cuttings with a total market in 2005 of over 620 tons. Since 400-500kg of cuttings are needed to establish 1000m2 of new forage plots, the sale of cuttings in 2005 was enough to establish 125 hectares of additional forage in the district that year. Prior to this sale, the forage area in the district was 280 hectares.

2.1 Fattening thin cattle for sale1

Feeding cattle for 2 months (range of 1-5 months) on planted forages plus concentrate feed to increase weight of cattle before sale is now common in Ea Kar. On average, farmers fed their cattle 20 kg/animal of fresh forage plus 2 kg/animal of concentrate feed each day. This resulted in an average daily gain of over 600 g/day during the fattening period. Compensatory weight gain (rapid growth rates of poorly-fed cattle once they are given access to more and better-quality feed) is a well understood phenomenon and the likely explanation for the relatively high growth rates in this study. It is a phenomenon that allows smallholder farmers with access to good forage resources to cash-in by buying thin cattle and selling them a few months later in much better condition.
All farmers who fatten cattle have planted forages. The area of forage grown per animal fattened was just over 500m2 with most farmers fattening 2 animals at any one time. On average, farmers fattened 9 cattle over the previous 12 month period with periods between fattening cycles allowing forage areas to recover from intensive use. Although better-off households2 had larger forage areas and more capital available than poor farmers and fattened more cattle. On average, poor households grew 750 m2 of forage, compared to 1,350 m2 in better-off households.
The average net income from cattle fattening was $57 per animal fattened over a 2-month period. When comparing forage and coffee production on a 1,200 m2 land basis (the average forage area grown by farmers who were fattening 9 cattle per year), the average annual net income from cattle fattening was $511 compared to $90 for coffee. However, cattle fattening required a higher investment for buying thin cattle.
The proven potential of the cattle fattening system prompted the local government to make available concessional credit (6% p.a.) to farmers in the poor and middle wealth category to enable them to expand their forage areas, buy fertilizer and buy thin cattle.

2.2 Using planted forages in cow-calf systems

When farmers first started planting forages at Ea Kar, fattening thin cattle was the preferred system, mainly because of the quick returns. Recently, however, because of the number of farmers taking advantage of this system, it has been difficult to find thin cattle to buy so the majority of farmers have turned to producing their own calves.
Not all farmers who operate a cow-calf system have planted forages. Those without planted forages (non-adopters) graze their cattle on communal land; and cut naturally-occurring forages for animals kept back near their house for some periods (e.g. sick animals and those giving birth). Most farmers with planted forages (adopters) continued to graze cattle but kept their cattle closer to their house and supplemented cattle with cut forages. Some of the adopters kept all cattle in a pen and fed 100% planted forages. The use of planted forages enabled adopters to manage cattle more intensively and raise more cross-bred cattle (Red Sindhi x local) which command a higher price in the market but require better feeding than can be obtained from grazing alone. On average, farmers without forages raised mostly native cattle (73%), while those with planted forages raised mostly cross-breds (77%). One third of farmers with planted forages produced all cross-bred animals; these were new cattle farmers who were able to start immediately by buying crossbred cattle because they had forages. No forage adopters kept only native cattle anymore, seeing the higher returns from crossbred animals if given enough feed.
As with the cattle fattening system described above, the poorest farmers were initially not able to make use of forages to make their cow-calf systems more market-oriented. Slightly more than half of the farmers in both groups were from the middle wealth status but among the adopters, fewer farmers were poor (15%) than among the non adopters (35%). There are many factors that will have contributed to this, among them the greater capacity of the better-off farmers to take risks and allocate land and labor to a new and unproven enterprise. Furthermore the better-off farmers have the capital to buy the resources (cattle, fertilizer) needed to take advantage of the potential of the forages. Those farmers who had larger forage areas were able to raise bigger herds, because the communal grazing resources in Ea Kar are limited (Figure 3).


Adopters of forages raised, on average, more cattle (6.9 animals) than non-adopters (4 animals), and approximately one third of farmers only started cow-calf production since the introduction of forages. Average returns from cow-calf production was higher for adopters (US$800) than for non-adopters (US$467).
There was a significant impact on labor usage between adopters and non-adopters. Farmers who adopted forages were able to substantially reduce or eliminate altogether the large labor needed to look after grazing animals each day, with only a small additional amount of labor required for cutting grass. The net result of this was that, on average, adopters were spending 6
less than half the amount of time looking after their cattle than the non-adopters (3.0 versus 6.8 hours/day). The combination of the higher net income from the sale of cattle and the lower labor requirements resulted in much higher labor productivity for the adopters ($0.7 per hour compared to $0.2 per hour for non-adopters).

3 Livestock intensification – providing stability and improving income

The demand for livestock products has increased at a steady rate for many years and is projected to continue to increase, driven by increasing living standards and urbanization. Delgado and colleagues (Table 4) predict an annual increase of 3% in demand for meat and 2.7% for milk products in Southeast Asia, which is likely to result in stable and increasing prices for livestock products. Vietnam is one of the fastest growing countries in Southeast Asia with more than half of the population expected to live in urban areas by 2030. This increasing urbanization will inevitably be associated with changes in the patterns of food consumption as urban diets are characterized by higher consumption of livestock products.
At a local level, the price for meat in the Daklak market has been stable or increased over the last 7 years (Figure 4); the average annual increase was 7%. This is in sharp contrast to the price for coffee (Figure 1) which has fluctuated wildly. The market for livestock products have been shown to be relatively stable and predictable.

4 Conclusions