Rising coffee prices have helped Vietnam's coffee industry become better known and benefited farmers, but traders and export businesses have faced many difficulties.
Robusta coffee prices in the domestic market increased sharply following world prices in the early days of January 2024. Coffee prices in Lam Dong province, one of Vietnam's coffee hubs, are now up to VND70 million ($2,850) per ton, nearly double compared to the beginning of last year.
Vietnam coffee to continue gaining from high Robusta prices
Vietnam's coffee exports in 2023 totaled roughly 1.61 million tons, valued at $4.18 billion, a 9.6% decrease in volume but a 3.1% increase in value year-on-year. The average coffee export price in 2023 was $2,834 per ton, a 14.1% year-on-year rise, according to the Ministry of Industry and Trade.
According to the Agricultural and Rural Development Information Center, in 2024, Vietnam's coffee sector will continue to benefit from the increase in Robusta coffee prices, which may peak due to concerns about supply shortages.
It is forecast that coffee output in the 2023-2024 season may decrease by 10% to 1,656 million tons, the lowest crop in four years, due to unfavorable weather. Although Vietnam's harvest is in full swing, the supply is not as strong as in previous years. People tend to limit selling to wait for prices to increase, pushing up domestic coffee prices continuously.
Looking back at 2023, Phan Minh Thong, board chairman at Phuc Sinh JSC, one of Vietnam's leading coffee and pepper exporters, commented that Vietnamese coffee has just reached a 25-year peak. "Coffee prices have nearly doubled in a year. Many international buyers are now coming to Vietnam to buy coffee, and the industry is booming."
Some people are happy, others are not
There are those who are happy about the rise in coffee prices and those who are unhappy about it. This year's high coffee prices have made many coffee-growing households in Quang Son commune, Dak Glong district, Dak Nong province very happy.
Nguyen Dinh Chuyen, a farmer in Quang Son, reported that his family had recently harvested one hectare of coffee. The price had increased to VND65 million ($2,650) per ton by the end of 2023 from only approximately VND42 million ($1,710) per ton at the beginning of the year.
However, many traders are in the opposite mood. Phuc Sinh JSC board chairman Thong claims that high coffee prices have hurt a lot of traders since farmers aren't delivering goods to them. Due to a lack of inventory, export businesses and buyers are going through a difficult time. On certain days, Phuc Sinh meets 10 groups of customers, but has nothing to sell.
According to a spokesperson for Me Trang Coffee JSC, businesses that offer complete coffee products will find it challenging to compete with the high price of raw coffee, which causes high input expenses. Besides that, since coffee is not an essential product, lower consumption will have an impact on it. Me Trang finds that, despite the aforementioned challenges, the Alibaba sales channel had significantly boosted sales for the company.
Exports to a number of markets rose significantly
Coffee export value increased in 2023 to a number of markets, including South Korea, Algeria, and the Netherlands.
Algeria, for example, is the sixth-biggest market for Vietnamese coffee exports, and in 2023, it spent $160.2 million, a 62% increase from 2022, to purchase Vietnamese coffee.
In 2023, the Netherlands purchased Vietnamese coffee for $121 million, a 46.2% increase over the previous year. South Korea paid $117 million for Vietnamese coffee, a 17% increase from 2022.