The land will be divided into in one-hectare plots for 200 farming families.
Tanna Coffee's managing director Terry Adlington said he knew the cyclone recovery process would be long and arduous.
"This year we'll get back to 25 tonne which is a quarter of where we were (before the cyclone,)" he told AAP.
The investment aims to increase annual coffee production from 20 tonnes to 100 tonnes.
Adlington said it would be a game changer for struggling families, some of whom are still living under tarps because the leaves they used to make traditional houses are still growing back.
Incomes are expected to increase by 20 per cent.
When Adlington arrived in Vanuatu farmers were paid about 25 cents for each kilogram of coffee cherries. Changing processes and value adding mean they now get A$3.20 a kilogram.
Tanna Coffee grows, processes, roasts, and distributes premium single-origin coffee across Vanuatu and the Pacific region.
The Difference Incubator spokeswoman Anthea Smits said younger trees survived the cyclone while older plants were lost. "So we are rehabilitating and developing crops at different stages to ensure a regular supply," she said.
There are hopes boosting Vanuatu's private sector will help reduce the country's reliance on aid and build its resilience to natural disasters. Vanuatu receives A$41.9 million from Australia's foreign aid programme.
- AAP
