Vietnam’s coffee sector faces headwinds in global market
As the world's second-largest coffee exporter and leading producer of robusta coffee, Vietnam is grappling with both domestic and international pressures affecting this industry.
![Coffee prices are rising but the industry is facing many challenges. Photo courtesy of Unplash.](https://i.ex-cdn.com/theinvestor.vn/files/content/2024/08/07/hinh-3--nguon-unsplash-1039.jpg)
Coffee prices are rising but the industry is facing many challenges. Photo courtesy of Unplash.
Vietnam's coffee industry is a vital pillar of the global coffee market and contributes significantly to the local economy, according to RMIT university lecturer in finance Dr Devmali Perera.
The country is the largest robusta coffee producer in the world. Around 97% of its output is robusta coffee. The remainder includes arabica coffee and other specialty varieties.
While domestic consumption of coffee in Vietnam is rising, exports generate the main income for Vietnamese coffee producers. Total coffee exports are estimated at 25 million 60-kilogram bags by the end of the 2023-2024 period, reflecting a decline of around 10% year-on-year.
However, the country is still the second-largest coffee exporter for robusta coffee globally, following Brazil, said Perera.
According to Perera, Vietnam's coffee industry is facing significant challenges and changes as it navigates through a period of heightened market dynamics and environmental pressures.
![RMIT university lecturer in finance Dr Devmali Perera. Photo courtesy of RMIT.](https://i.ex-cdn.com/theinvestor.vn/files/content/2024/08/07/rmit--ts-devmali-perera-2-1046.jpg)
RMIT university lecturer in finance Dr Devmali Perera. Photo courtesy of RMIT.
“The Vietnamese coffee market faces two main challenges this year: declining output and rising prices. The increase in prices is driven by heightened demand both locally and globally, especially among Southeast Asian countries, while adverse weather conditions and supply chain disruptions contribute to the decrease in production,” said Dr Perera.
Vietnam's coffee production is increasingly affected by prolonged droughts and rising temperatures, which reduce yields and affect crop quality, she added.
![RMIT senior lecturer in logistics and supply chain management, Dr Majo George. Photo courtesy of RMIT.](https://i.ex-cdn.com/theinvestor.vn/files/content/2024/08/07/rmit--ts-majo-george-1-1047.jpg)
RMIT senior lecturer in logistics and supply chain management, Dr Majo George. Photo courtesy of RMIT.
As RMIT senior lecturer in logistics and supply chain management, Dr Majo George explained that climate-related stress is particularly acute in the Central Highlands, where severe droughts have scorched coffee plantations and exacerbated water scarcity for irrigation.
Meanwhile, the global supply chain has faced significant disruptions due to container shortages and port congestion, which have delayed shipments and increased costs. These challenges have been worsened by the ongoing geopolitical tensions across the world.
Dr George added that such logistical hurdles make it difficult for Vietnamese coffee to reach international markets on time, affecting exporters' ability to meet demand.
Inefficiencies in the value chain also pose challenges. Many smallholder farmers in Vietnam still rely on traditional farming methods, leading to inconsistent quality and yields. The lack of advanced post-harvest processing and storage facilities can lead to a significant decline in quality.
“New environmental regulations, particularly from the EU regarding pesticide residues, required adjustments in farming practices and increased costs for compliance. This puts additional pressure on smallholder farmers who may struggle to adapt quickly,” said Dr George.
According to George, despite having over 700,000 hectares of coffee land, the country is struggling with finding suitable land to further increase production due to concerns about deforestation and the pressure to meet climate-related goals.
Dr Perera said that many coffee farmers in the country have switched to farming durian due to the rising demand for this fruit in China. This shift has further reduced the area available for coffee production.
In addition, Vietnamese farmers are experiencing increased cost of production mainly due to the rising prices of fertiliser and labor. The rising domestic prices for coffee have been able to partially compensate farmers for this rising cost of production. However, the increased cost of production has made the life of exporters challenging.
“Exporters are now struggling with financial pressures, product shortages, and higher transportation costs, leading to a cautious approach in accepting new orders. Growing demand amidst the supply chain constraints creates more price volatility and market uncertainty for coffee,” Dr Perera remarked.
- Read More
Central Vietnam province to receive bids for $2.2 bln LNG-fired power plant
Vietnam's central province of Nghe An will receive bids for the 1,500-MW Quynh Lap LNG-fired power plant from September 20 to October 5.
Energy - Sat, September 7, 2024 | 8:07 am GMT+7
Indonesia promotes green industries
Luhut Binsar Pandjaitan, Indonesia's coordinating minister for maritime affairs and investment, has stressed that the country’s clean energy transition is not only aimed at reducing carbon emissions but also promoting the development of green industries.
Southeast Asia - Fri, September 6, 2024 | 10:53 pm GMT+7
ASEAN can hold key role in global carbon market
Indonesian Trade and Industry Chamber (Kadin) head Arsjan Rasjid on Thursday underscored at the 2024 International Sustainable Development Forum (ISF) that sustainability plays a key part in achieving an economic growth of 8%.
Southeast Asia - Fri, September 6, 2024 | 10:51 pm GMT+7
Indonesia, EU to ratify key trade deal soon
Negotiations on the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) are nearly 90% complete, with the deal expected to be finalized this month, according to Indonesia’s Trade Minister Zulkifli Hasan.
Southeast Asia - Fri, September 6, 2024 | 10:50 pm GMT+7
ADB announces partnership strategy to assist Philippines
The Asian Development Bank (ADB) has launched a new six-year country partnership strategy designed to ensure that the Philippines' growth is sustained, inclusive, and resilient in the face of climate challenges.
Southeast Asia - Fri, September 6, 2024 | 10:48 pm GMT+7
Foreign tourist arrivals to Vietnam surges 46% in 8 months
Vietnam welcomed over 11.4 million tourist arrivals in the first eight months of this year, rising 45.8% year-on-year and exceeding the same period of pre-pandemic 2019 by 1%.
Travel - Fri, September 6, 2024 | 8:19 pm GMT+7
HCMC conference stresses need for cyber security vigilance
Individuals, organizations and businesses need to stay vigilant about information security, participants emphasized at a conference held in Ho Chi Minh City on Friday.
Companies - Fri, September 6, 2024 | 7:05 pm GMT+7
Stock of Vietnamese tech unicorn VNG hits historic low
VNZ, the ticker of Vietnam’s first tech unicorn VNG, plunged to VND437,800 ($17.8) per share at a time on Friday, its record low since registering on the unlisted public companies market UPCoM early last year.
Companies - Fri, September 6, 2024 | 5:01 pm GMT+7
VAFIE outlines ways to boost corporate bond market in report to Prime Minister
The Vietnam’s Association of Foreign Invested Enterprises (VAFIE) has stressed the need for greater transparency in the nation’s corporate bond market in a report submitted to the Prime Minister and relevant agencies.
Finance - Fri, September 6, 2024 | 4:55 pm GMT+7
Real estate, financial services and insurance CEOs draw fattest paychecks in Vietnam
Average 2023 CEO income in Vietnam was VND2.5 billion ($102) a year, with in 2023, the head honchos in real estate, financial services (mainly securities) and insurance leading the remuneration pack, according to FiinGroup.
Companies - Fri, September 6, 2024 | 3:55 pm GMT+7
Vietnam's Truong Thanh taps DPPA to power firms in Mekong Delta province
Local firm Truong Thanh Vietnam Group JSC aims to survey two locations in the Mekong Delta province of Tra Vinh to supply electricity to local businesses via direct power purchase agreements (DPPAs).
Energy - Fri, September 6, 2024 | 1:57 pm GMT+7
Standard Chartered Vietnam appoints first Vietnamese CEO
Standard Chartered Bank Vietnam on Friday announced the appointment of Nguyen Thuy Hanh as CEO & head of Banking & Coverage, Vietnam, effective October 1, 2024.
Banking - Fri, September 6, 2024 | 1:51 pm GMT+7
Vietnam Jan-Aug industrial production up 8.6%; mobile phone, beer outputs fall
Vietnam’s January-August index of industrial production (IIP) grew 8.6% year-on-year, extending the recovery of the sector.
Economy - Fri, September 6, 2024 | 11:37 am GMT+7
Foreign firms in Vietnam post expanding trade surplus
Foreign-invested enterprises (FIEs) in Vietnam recorded a merchandise trade surplus of $34.77 billion in the first eight months of this year, expanding from $29 billion a month earlier.
Economy - Fri, September 6, 2024 | 11:29 am GMT+7
Vietnam Electricity to make coal-to-LNG switch for $2.1 bln power plant
State utility Vietnam Electricity (EVN) received an in-principle approval for its LNG-fired Quang Trach II thermal power project in the central province of Quang Binh on Thursday.
Energy - Fri, September 6, 2024 | 10:25 am GMT+7
Trungnam Solar Power posts $9 mln H1 net profit, up 46%
Trungnam Solar Power JSC, which runs a 204-megawatt solar farm in central Vietnam, recorded a net profit of VND221.24 billion ($8.99 million) in H1/2024, up 46% year-on-year.
Companies - Fri, September 6, 2024 | 9:53 am GMT+7