Vietnam faces coffee scarcity despite price hikes

By Thien Ky, Thanh Tra
Thu, September 21, 2023 | 9:37 am GMT+7

Although coffee prices have increased continuously in recent days, Vietnam lacks supply to serve domestic consumption and exports, according to the Vietnam Coffee-Cocoa Association (Vicofa).

On Tuesday, September 19, coffee prices in the domestic market rose to VND300-400 ($1.6 U.S. cents) per kilogram. In the Central Highlands and southern provinces, the purchasing price surged to VND65,500-70,000 ($2.88) per kilogram. Vietnam's coffee export prices have also recorded consecutive hikes in recent days, the association said.

Since the beginning of the year, rising domestic and export coffee prices have boosted the value of Vietnam’s coffee industry.

Coffee is havested in Dak Lak province, the coffee capital of Vietnam. Photo courtesy of Vietnam News Agency.

Coffee is havested in Dak Lak province, the coffee capital of Vietnam. Photo courtesy of Vietnam News Agency.

In the first eight months of this year, Vietnamese coffee was exported to 38 markets with the highlight being an increase in export price to a record $3,054 per ton, nearly $700 higher than the same period last year.

During this period, Vietnam shipped 1.2 million tons of coffee, worth about $3 billion, Vicofa said.

The country earned $4.06 billion from exporting 1.78 million tons of coffee in 2022, an increase of 13.8% in volume and 32% in value compared to 2021. This was also the first year in history that Vietnam’s coffee export value topped the $4 billion mark.

According to the International Coffee Organization, Vietnam ranked second in the world in terms of coffee export market share in the February 2021-January 2022 period, only after Brazil.

Prices in Dak Lak province, dubbed “the coffee capital of the country”, and the entire Central Highlands region in general are hovering around VND65,000-68,000 ($2.8) per kilogram, the highest in the past 10 years. However, since the coffee season is ending, many local households say there is nothing to supply to the market.

"In recent times, many farmer households have switched from coffee to other fruit trees. Some intensive coffee gardens are now intercropping with durian trees, resulting in reduced output," said one Dak Lak farmer.

Phan Minh Thong, chairman of Phuc Sinh Corporation, said world coffee prices depend heavily on Vietnam as it has the second largest supply.

"Crop failures and reduction in coffee growing areas have reduced supply and pushed up prices. This problem needs to be solved," Thong said.

According to the Vicofa, lack of credit access meant that many businesses did not have enough capital to buy and stock coffee.

This year's coffee output is estimated to decrease by 10-15% due to unfavorable weather, the association said.

However, the situation is still positive for Vietnam’s coffee exports from now until the end of the year because of increased demand and limited supply. It is expected that Vietnam will export about 1.72 million tons of coffee this year, earning $4.2 billion, the Vicofa said.

Unlikely to last

Pham Quang Anh, director of the Vietnam Commodity News Center, said the high coffee prices may not last long.

He noted that leading coffee producers Brazil and Indonesia have supplies from the new crop and were actively promoting exports. Meanwhile, Vietnam will begin harvesting its the 2023/24 crop in the fourth quarter of this year, contributing to adding a large amount of coffee in the market.

Therefore, Anh stressed, there was a need to improve statistics and forecasting data on the coffee market to help farmers and other stakeholders access timely accurate information about market trends.

A Vicofa executive said that the industry needed to continue restructuring and improve quality.

For this to happen, experts have said that individuals and businesses need to get loans at preferential rates to invest in growing, processing and trading coffee. There should also be solutions to facilitate product origin traceability to make Vietnamese coffee more marketable.

To earn higher returns from the industry, the Ministry of Agriculture and Rural Development has approved a 10-year (2021-2030) project to develop Vietnamese specialty coffees. Under the project, the specialty coffee area will account for 2% of the total and produce 5,000 tons by 2025; and 3% and 11,000 tons by 2030.

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