Vietnamese farmers will harvest new coffee in October but the bitterness of the previous crop is strong in their mind: The output rose but the price was awfully low. Mr Luong Van Tu, President of the Vietnam Coffee and Cacao Association (Vicofa), admitted: “The more we exported, the more we suffered.”
Hurt by price slump
Mr Tu analysed the average export price in the first eight months of 2009 declined US$613 per tonne from the same period of the previous year, leading to a sharp fall in value. With an annual export of 1 million tonnes coffee and a rebate of US$100 per tonne, the overall decline is a large sum.
Sharing this viewpoint and difficulty, Mr Nguyen Thanh Bien, Deputy Minister of Industry and Trade, said the price of Vietnamese exported coffee is now lower than that of Brazil and India although the quality is similar.
The Vietnam Coffee and Cacao Association (Vicofa) said in the first eight months of 2009, Vietnam earned more than US$800,000 tonnes of coffee worth over US$1.2 billion. In the last four months of 2009, Vietnam is expected to earn some US$350,000 - 400,000 tonnes. In total, Vietnam may earn US$1.1 million tonnes of coffee worth US$1.6 billion or more in 2009.
Though price is higher, loss remains
Global coffee prices have surged since the middle of last week but beneficiaries are foreign importers, not Vietnamese farmers or exporters.
In the first week of September, robusta coffee traded in London continuously rose to US$1,518 per tonne. Consequently, robusta coffee in Vietnam surged to VND25,300 per kilo, a rise of over VND1,000 from a month earlier. However, according to traders, coffee stocks of Vietnamese farmers and exporters have almost run out. Thus, price increase has not benefitted domestic participants since June.
Foreign importers are the beneficiaries because they signed coffee purchasing contracts and settled payments when prices were quite low. They did not take coffee from Vietnam immediately as they used bonded warehouses or leased warehouses of Vietnamese exporters to store their coffee
Responses to price changes
Worries about Vietnamese coffee price volatility have worsened before the new crop starts in October 2009. To deal with this context, Vicofa proposed the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development, the State Bank of Vietnam and the Ministry of Finance to consider regimes in which several enterprises can borrow zero-interest loans to purchase 150,000 - 200,000 tonnes of coffee and these enterprises function as keepers for farmers but are entitled to decide against the time to sell coffees to regulate the market supply.
The higher objective of Vicofa, coffee producers and exporters is to control the global markets in both prices and volumes to ensure the highest results in exporting activities. “If we continue floating, the price is impossibly pushed up. Thus, the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development, the Vietnam Coffee and Cacao Association, and trouble-encountering industry associations like the Vietnam Cashew Association, the Vietnam Pepper Association and the Vietnam Food Association should work to introduce a suitable regime,” said Mr Luong Van Tu.
Vicofa also proposed setting up an assistance fund to help coffee traders with soft loans to purchase reserved coffee and sell at suitable time. In Brazil, when the Government founded this fund, it granted an initial fund and assigned a committee to manage it.
According to analyses by Vicofa, global economies are reviving and incomes of the people will increase, leading to higher coffee demand. The demand for coffee in Belgium, the largest consumer of Vietnamese coffee, has surged from the start of 2009. Therefore, Vietnam expects a greater quantity in this market. In many European markets, consumers tend to use ground coffees in small packages.
Huong Ly
Vietnamese
