VietNamNet Bridge – Vietnam has a record high coffee export turnover in 2010-2011. However, the good news has been shadowed by a lot of big worries about the coffee quality problems and the disappearance of many exporters.

The growth unsustainable

The coffee output of the 2010-2011 crop reached 1.1 million tons, which allowed to bring the record high export turnover of 2.4 billion dollars, a sharp increase of 58 percent over the previous crop.

The Vietnam Coffee and Cocoa Association (Vicofa) has predicted that the output of the 2011-2012 crop would be about 1.1 million tons due to the bad weather and the insect epidemics in some key cultivated areas. To date, Vietnam’s coffee has been available in 70 countries and territories in the world.

However, the record high export turnover in the 2010-2011 does not bring big joy to Vietnam, since too many problems still exist, which is threatening Vietnam’s coffee industry.

A lot of coffee processing factories did not run in the crop because of the lack of materials, high interest rates and low profits. In previous year, Arabica coffee mostly went through wet processing. Meanwhile, 40 percent of coffee went through dry processing in the last two crops, which led to the lower quality products.

In Lam Dong province, the “metropolis” of Arabica coffee, key wet processing factories such as Cong Chinh and Dalatcafe have halted operation because of the losses, while Ho Phuong, Thuy Dung and Mercon are just small enterprises. Abundant capacity and short material supply are the things being faced by the coffee industry.

Besides, Vicofa has also rung the alarm bell over the picking up of unripe coffee beans.

Doan Xuan Hoa, a high ranking official of the Ministry of Agriculture and Rural Development (MARD), said that despite the warnings, farmers still pick up both ripe and unripe beans, because they hope they can make big profits when the prices escalates. When the price goes up, the quality goes down.

As a result, a lot of Vietnamese big coffee exporters have disappeared. In Dak Lak province, which once had tens of “big guys” in coffee export, there are now only 9 big exporters, because others cannot survive the competition with foreign companies.

Foreign invested enterprises have been scrambling for collecting coffee materials directly from farmers with domestic enterprises. As a result, domestic enterprises do not have materials to process, and take loss. It is estimated that foreign companies collected 50 percent of the total coffee output in the last crop.

The Dak Lak people’s committee has warned that the competition of foreign invested enterprises in collecting coffee materials can bring bigger profits to farmers, but this will harm the coffee industry in the long term, if the enterprises dominate the market and control the prices later.

Export companies complain they cannot borrow money

According to Ta Quang Khanh, Director of the Credit Management Department of the State Bank of Vietnam, the Dak Lak provincial authorities have requested the State Bank to increase the credit limits to the province. They have asked to ease the procedures for accessing bank loans and provide loans at preferential interest rates.

“However, the State Bank cannot do that,” Khanh said. The problem is that coffee export companies usually do not have collaterals for their loans, while coffee export proves to be a risky business.

He also said that coffee exporters should contact the Vietnam Development Bank to seek preferential loans, because commercial banks can only provide loans at commercial rates.

However, Khanh has still informed some good pieces of news. Agribank has committed to provide 5 trillion dong to coffee exporters, Techcombank 2 trillion dong, while Military Bank and some other bankers have also signed agreements on supporting coffee export.

Meanwhile, Le Duc Thong, General Director of Dak Lak’s 2/9 Company said that the current lending policy cannot help businesses get stronger. He can borrow money at the preferential interest rate of 15.5 percent, while foreign companies just have to pay 3.7 percent only.

Source: Lao dong