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.
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.
“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.
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.
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