Hanoi - Vietnam needs to spend nearly 2 billion dollars by 2020 to shore up its coffee industry and compete on the international market, a government official said Tuesday.

The Ministry of Agriculture and Rural Development last month approved a plan to enhance the competitiveness of Vietnamese coffee by improving coffee strains, farming techniques and processing technologies, Deputy Minister Diep Kinh Tan said.

"It's important to raise the quality of Vietnamese coffee," Tan said. He said the country would not necessarily increase the quantity of coffee it grows.

The plan requires investments totaling 32.8 trillion Vietnamese dong (1.97 billion dollars) with 50 per cent expected to come from processing firms and coffee growers, 48 per cent from foreign aid and the remaining 2 per cent from the state budget.

"The quality of Vietnamese coffee is not very competitive, mainly due to the coffee strains and the poor farming techniques," said Luong Van Tu, chairman of the Vietnam Coffee and Cocoa Association.

"There are too many farmers who all have different ways of farming, harvesting, drying and storing the coffee beans, leading to an uneven quality of product," Tu said.

Vietnam is the second-largest coffee exporter in the world but suffers a reputation for poor quality. Jenny Scharrer, a development expert who has researched Vietnam's coffee industry, said the small size of Vietnamese plantations is a barrier to improvement.

"About 70 per cent of Vietnamese farms are smallholders, less than one hectare," Scharrer said. "The amount of mechanization they can do is limited."

Scharrer said Vietnam could find it hard to keep up with countries such as Brazil, where most coffee is grown on large plantations. Brazilian plantations are investing in mechanized harvesters and in new strains of plants whose beans all ripen at the same time, leading to better productivity and quality.

Vietnam has a limited number of generally low-quality coffee strains, said Doan Trieu Nhan, a senior adviser to the Vietnam Coffee and Cocoa Association who participated in compiling the plan.

"We have too few coffee strains, compared with other crops," Nhan said. "We have only some 10 coffee strains while there are hundreds of rice strains in the country."

Nhan said Vietnam needs better coffee strains, both robusta and arabica, with higher yields; larger, simultaneously ripening beans; and better immunity to pests. He also said Vietnamese coffee firms use poor processing techniques.

Vietnam exported 728,000 tons of coffee to earn 1.5 billion dollars in the first eight months of this year, down 22.4 per cent in terms of volume but up 9.2 per cent in terms of value, according to government statistics. (dpa)