Once abandoned due to low productivity and economic inefficiency, cacao trees in Vietnam’s central highlands are now making a comeback. Thanks to the EU-funded “Circular Economy in Cacao Production: From Cacao Beans to Chocolate Bars” project, cacao farming in the region has undergone a remarkable transformation over the past three years. More land is being cultivated with cacao, farmers are growing increasingly invested in their crops, and earnings are on the rise.

Running from July 2022 to July 2026, the project is being implemented in Dak Lak, Dak Nong, and Gia Lai provinces in the central highlands as well as Binh Phuoc, Dong Nai, and Ba Ria-Vung Tau in the southern region and Ben Tre in the Mekong Delta. With a total budget of €1.93 million ($2.09 million), 80 per cent of which is funded by the EU under the SWITCH-Asia Program, it is paving the way for a thriving, sustainable cacao industry in Vietnam.

Impact of new approach

Use of the circular economy model in cacao production is gaining momentum. To date, a total of 1,163 cooperative staff, business representatives, agricultural extension officers, and key farmers have received training on sustainable practices. Notably, around 30 per cent have already earned higher incomes by putting these insights into action.

The impact is becoming tangible: six demonstration models showcasing circular economy solutions for cacao have been implemented, a standardized industry guide has been developed and widely shared, and two case studies have been published. Meanwhile, 26 technical support activities have been launched in collaboration with businesses and cooperatives to drive sustainable cacao farming forward.

More businesses are embracing this shift. Five companies and seven cooperatives have successfully integrated circular economy practices, translating ideas into real-world applications. Partner investments in these efforts have reached an estimated €115,000 ($124,200).

On a broader scale, four key policy initiatives are underway involving the Ministry of Agriculture and Rural Development and the Ministry of Natural Resources and Environment, which have recently merged to become the Ministry of Agriculture and Environment. These initiatives aim to strengthen the legal framework for circular economy practices, regulate agricultural waste management, and introduce a circular economy index for the agricultural sector.

Looking ahead, the project aims to drive lasting change: 3,500 farmers are expected to boost their incomes through regenerative farming, 500 people will secure better jobs, six businesses will make a full transition to circular economy practices, and 4,000 tons of cocoa will be produced under improved sustainability standards.

Excited about the initial success, Mr. Bach Thanh Tuan, Director of the Center for Community Development (CDC), said the EU-backed project has unlocked Vietnam’s agricultural potential through an innovative management approach. This method not only adapts to climate change but also meets the high standards of demanding international markets.

Prior to the project being introduced, farmers in the central highlands cultivated and harvested cacao trees using traditional methods, focusing only on extracting cacao beans for chocolate production. However, as a cacao bean accounts for less than 10 per cent of a cacao fruit, the economic return for farmers was limited. The remaining by-products, such as husks and leaves, were discarded, leading to waste and environmental pollution.

With the introduction of circular cacao farming and technological support from the Institute of Agricultural Environment, every part of the cacao tree, such as husks, leaves, and stems, has been repurposed into valuable materials. Cacao husks are composted into nutrient-rich soil additives, fermented to produce animal feed, or converted through pyrolysis into biochar, which enhances soil structure, stimulates plant growth, and reduces greenhouse gas emissions by sequestering carbon in the soil. These methods not only lower input costs for farmers but also increase crop yields.

Mr. Cam Ba Bien, a farmer from Hamlet 2 in Dak Wil commune, Cu Jut district, in Dak Nong province, said that with the adoption of circular farming techniques and improved pest management skills, he has gained confidence in the viability of expanding his cacao plantation. Market demand is rising, and cacao bean prices have increased every year. “In 2024, my 700-tree cacao farm generated a net income of VND200 million ($8,000),” he said. “With cacao bean prices expected to reach VND80,000 ($3.20) per kg in 2025, I anticipate a profit of around VND300 million ($12,000).” He also noted that many farmers, previously burdened with debts, have now fully repaid their loans thanks to the steady rise in cocoa prices.

The Nhat Tam Agricultural Services Cooperative in Ea Dar commune, Ea Kar district, in Dak Lak province, currently has 20 official members and 200 affiliated farmers, cultivating nearly 700 ha of cacao. According to Ms. Nguyen Hong Thuong, Cooperative Director, its cocoa production follows a circular model, enabling continuous harvesting for nine months a year. With stable and increasing cocoa prices, annual revenue per ha ranges from VND500 million ($20,000) to VND1 billion ($40,000). By 2030, the district aims to expand its circular cacao farming area to 1,200 ha.

Meanwhile, the Dong Tien Ea Kar Agricultural and Services Cooperative in Dak Lak, which has 80 members managing 120 ha of cacao, produces approximately 300 tons of beans annually. Mr. Nguyen Dinh Thien, the Cooperative’s leader, emphasized the importance of strong farmer-cooperative-business partnerships, ensuring a stable and growing market for cacao beans. Even after deducting costs, each hectare generates a profit of VND400 million ($16,000) a year, motivating farmers to continue cacao cultivation.

A model to follow

Like other agricultural sectors, the cacao industry faces challenges in adopting the circular economy, which as a concept is still not widely recognized in Vietnam. According to Mr. Tuan, issues such as land degradation, water pollution, resource waste, and non-eco-friendly packaging persist, largely due to the absence of supportive policies. “If Vietnam’s cacao industry were integrated into a national strategic program with circular economy solutions, it would open up a new position for Vietnamese cacao on the global cacao map,” Mr. Tuan affirmed. He also noted that Vietnamese cacao is rated the best by chocolate manufacturers. If managed correctly, the industry could develop sustainably without harming the environment.

Mr. Tuan emphasized that businesses in the sector are willing to adapt, but they need a clear, effective, and profitable path. This approach could also serve as a foundation for expanding the circular economy model to other agricultural products such as coffee, pepper, durian, and macadamia nuts across various regions of Vietnam.

Seeing the transformation of cacao farms firsthand, H.E. Julien Guerrier, EU Ambassador to Vietnam, expressed optimism, saying that the EU Regulation on Deforestation (EUDR) has had a positive impact on Vietnam’s agricultural sector. This regulation has not only motivated farmers to trace the origins of their cacao beans but has also helped increase product value. By adopting such sustainable processes, Vietnamese cacao farmers have secured sustainability certifications from the EU and Japan, enabling them to export cacao beans at higher prices. “Vietnamese businesses and farmers are leading the way in upgrading production under the circular economy model,” Ambassador Guerrier remarked, noting that farms in the central highlands do not just cultivate cacao but also grow a variety of other crops, maximizing the benefits of intercropping. They also utilize the entire cacao fruit, not just the beans, ensuring minimal waste.

Farmers also raise earthworms to produce organic fertilizers for their crops, creating a highly-efficient model. The Ambassador also witnessed another circular economy model being developed in the shrimp farming sector in the Mekong Delta. There, a truly circular pond system exists, where shrimp and fish coexist in an ecological chain, with fish feeding on shrimp waste. “Vietnam is truly taking the lead and has the potential to become a model in circular economy practices, not only for the region but for other countries,” he affirmed.