VietNamNet Bridge – A lot of existing coffee exporters may not be allowed to export coffee any more, if the proposal by the Ministry of Agriculture and Rural Development (MARD) on considering coffee export as a conditional business gets approved.

Coffee exporters all have voiced a concern that if the proposal is approved, this would make the competitiveness of Vietnam’s coffee industry decrease and lead to many other immeasurable consequences.

In the dispatch No 290 sent to MARD on October 7, the Ministry of Industry and Trade (MOIT) replied to the MARD’s suggestion that listing coffee export as a conditional business is an urgent task and a feasible work in the current circumstances.

The two ministries intend to impose some conditions on coffee exporters. Every export company must have at least one coffee processing workshop and a storage house which can meet the requirements on food hygiene. Besides, the exporters must be the ones which have been processing and exporting coffee for the last two consecutive years with the minimum export volume of 5000 tons per annum.

The intention has been applauded by some big coffee exporters, who believe that the new regulation aims to restructure coffee export companies and make the coffee market, which has got chaotic due to the cases of scrambling for selling and purchasing products recently, become healthier.

However, small coffee exporters do not think this way. Pham Ngoc My, Director of Mylabcoffee, said that the new regulation will hinder the development of small and newly established enterprises. My has also pointed out that very few enterprises can meet the stipulated requirements on the export volumes , while newly set up businesses cannot meet the requirements set by the ministries.

Nguyen Minh Duc, Chair of Green Bazan Coffee (GBC), said that the new regulation will not only put big difficulties for small enterprises, but also annul the development capability of enterprises.

“We have made heavy investment on machines and equipments to make clean coffee for export with an aim to increase the value of the Vietnamese coffee beans. However, our export capability is no more than 1000 tons a year, which, in accordance with the tentative new regulations, will make us unable to export coffee. This is really an unreasonable decision,” Duc said.

He went on to say that in the last many years, GBC has spent great efforts to promote trade and seek more clients. Therefore, it would be a big waste that GBC loses the clients it has found after a lot of exertion.

According to the Vietnam Coffee and Cocoa Association (Vicofa), there are about 140 coffee export companies. The companies collect materials and export coffee products. They also sell the materials to some 20 foreign invested enterprises which have processing factories or representative offices in Vietnam.

In 2010, Vietnam’s coffee accounted for 14 percent of the total global coffee output.

Analysts have pointed out that a paradox is existing. Previously, MARD intended to restrict the direct collection of coffee materials from farmers by foreign invested enterprises. However, with the new proposal, the ministry tends to open the doors more widely for foreign companies to join coffee export activities. With the advantages in capital and technology, it would be not a difficulty for foreign enterprises to meet the requirements to be set up by MARD and MOIT.

“The State should control the scrambling for coffee materials with other methods, while it should not impose such administrative method,” a coffee exporter noted.

Experts have also warned that if the proposal gets approval, the history of the coffee industry would return to the early age, when state owned enterprises, which were big with the state’s investment, held the monopoly in the market. Meanwhile, the monopoly in all business fields will not do good in the national economy.

Source: TBKTSG