VietNamNet Bridge - Vietnam’s coffee exports may fall by 25 percent this year to 1 million tons, a 20-year low.

According to the Vietnam Coffee and Cocoa Association (Vicofa), Vietnam’s coffee industry now suffers heavily from a 3-decade serious drought. 

The lack of water for irrigation is threatening 165,000 hectares of coffee growing area, or 30 percent of total area in the Central Highlands. 

Vicofa’s chair Luong Van Tu predicted that Vietnam’s coffee exports may decrease by 25 percent this year.

However, though news about the crop failure in Vietnam is known, the prices in the world market have not increased. 

Therefore, Vietnamese farmers and exporters are facing big difficulties.

A report by the Ministry of Agriculture and Rural Development (MARD) showed that in the first four months of the year, Vietnam exported 681,000 tons, worth $1.16 billion, an increase of 44.6 percent in export volume and 18.2 percent in value.

Also according to the ministry, the average export price in the first three months of the year decreased by 18.3 percent compared with the same period of 2015, at $1,697 per ton.

Robusta coffee in London is now traded at $1,554 per ton, remaining unchanged.

The consumption in the domestic market accounts for 10 percent of the total coffee output in Vietnam, an increase of 5 percent compared to 10 years ago.

Pham Thi Kim Dung from IPSARD, an institute on agriculture development policies, noted that in the domestic market, coffee roasters provide coffee on short-term orders and under contracts with spot deliveries.

The increase in the domestic market, and output decrease, which leads lower supply for exports, will push the export prices up.

Vietnamese farmers hoped that the crop failure would lead to the price increase; therefore, they stockpiled coffee, planning to sell when the prices goes up. However, the plan has failed.

However, the export price depends on the prices fixed in the contracts signed before.

Meanwhile, businesses are still waiting for clearer signs about Vietnam’s coffee output; therefore, the coffee price still has not gone up.

Experts said the 2014-2015 crop price was low because of heavy fluctuations in the gold and crude oil markets and the repeated changes of the US dollar value against the other currencies. 

These prompted speculators to adjust their investments and focus on business fields which can bring optimal profits. As they sold coffee in large quantities, the price dropped sharply.

In general, Vietnamese exporters sell coffee at prices lower by $50-100 per ton. Analysts estimated that Vietnam loses $150 million a year in coffee export because of this.

Le Tien Hung, general director of Simexco Dak Lak, said the drought would raise more difficulties for Vietnam’s coffee exports. 

Vietnamese farmers hoped that the crop failure would lead to the price increase; therefore, they stockpiled coffee, planning to sell when the prices goes up. However, the plan has failed.


DNSG