Boosting Investments in Hi-tech Coffee Production

In 2010, the provincial authorities had measures to help enterprises in sales and market expansion. Export value of many products, including construction stone, sand, cashew nut, bricks and fertiliser sharply increased. The value of agricultural products such as tea, vegetables and silk gained a stable growth.

 

 Implementation of many important industrial and trade projects are being sped up for the operation during the 2010-2011 period, including alumina production and processing project, Dong Nai 3 Hydropower Plant and four small power projects namely DaSiar, Da Dang 2, Da Khai and DamBo-Da Teh; a project on hi-tech application in the production of construction materials of Vinh Duc Building Materials Ltd. Co. and many others.

 

 The department has actively cooperated with companies and districts to deal with difficulties for projects. It has also implemented instructions of the provincial Party Committee, People’s Council and People’s Committee.

 

Lam Dong’s coffee-growing area is more than 142,000 ha, standing the second in the country. The figure accounts for 26 percent and 28 percent of the country’s total number of coffee area and output. In 2010, the province exported over 93,000 tonnes of coffee, up 4.64 percent in volume, earning a value of US$153.35 million, up 9.4 percent compared to 2009. The major importers are EU countries, the Philippines, Japan, the US, Singapore, India, China, Malaysia, African countries, New Zealand, the Middle East and Australia. Coffee makes up more than 70 percent of the provincial total export value, but last year, the province failed to meet the set target of coffee output, affecting its export value.

To date, the province has 65 units, two branches and 564 households which focus on coffee purchase, business and semi-processing, mostly in the districts of Lam Ha, Di Linh, Bao Lam, Duc Trong and the cities of Bao Loc and Da Lat. Among those are many big firms, including Atlantic Commodities Vietnam Ltd. Co., Thai Hoa Coffee Company and Hoang Dao Ltd. Co. However, the majority of local firms just focus on semi-processed coffee for export. The refinery coffee output reaches 309 tonnes, holding a small ratio.

 

 Coffee exporters have to implement differential pricing contracts with foreign importers, thus, they suffer from big losses. A number of exporters ink these contracts of up to US$90-100 and even US$120 per tonne at the beginning of crops. One of the main reasons is Vietnam’s coffee export activities are controlled by foreign speculators. Since they learn that Vietnamese exporters are storing a great amount of commodities traded in differential pricing principle/basis (where traded prices have not fixed/struck), they intentionally push prices down (with their advantages)

 

 Besides, the state lacks consistent policies on coffee management, such as a policy on coffee stockpile, development of coffee preservation stores during crops when the output is high, but prices drop; a policy to provide loans for enterprises and particularly a policy to support companies in processing of refined and instant coffee and other products. Therefore, Lam Dong Province in particular and the Central Highlands region in general just focus on semi-processing, polishing and exporting and coffee added value remains low. Attracting factories to process refined and instant coffee still encounters many difficulties due to narrowed market and big investment costs. In Lam Dong, the coffee brand of Di Linh is certified by the National Office of Intellectual Property of Vietnam, but activities to promote it remains limited. Thus, the province has no large-scaled refined coffee processors.

 

Lam Dong coffee has helped to bring Vietnam to become the top Robusta coffee exporter in the world. In Lam Dong’s agricultural plant structure, the coffee tree is among the key plants which account for a high ratio in the local agricultural production value, making a great contribution to the province’s state budget and socio-economic development. The coffee sector helps to stabilise living condition of more than 60 percent of local households and production units whose major income source is coffee processing, business and production activities.

 

 In the time to come, the province will maintain and conduct intensive cultivation of coffee area currently estimated at 130,000-135,000 ha. It will also pay attention to reclamation of the area which is seriously hurt by pesticides, resulting low output; cross-breeding coffee varieties for higher output and quality; encouraging the Arabica cultivation in suitable areas such as the districts of Lam Ha, Don Duong, Duc Trong, Dam Rong, Lac Duong and Da Lat City.

 

The province has also called for investment to build a coffee bean processing plant using wet technology and refined coffee ones, aiming to sharpen its coffee products’ competitiveness, protect environment and apply hi technologies. Other priorities are encouraging the new investment and upgrade of existing coffee semi-processors and ones for classifying and polishing coffee, creating favourable conditions for instant coffee development as high-quality coffee products from Di Linh, Bao Lam, Bao Loc and Duc Trong districts. Lam Dong targets to reach an refined coffee output of 9,000 tonnes per year from now to 2020 and links processing factories with material areas to ensure the material supply as well as interests for enterprises and growers and meeting the market’s increasing demand. The province will invest in building a system of stores and drying grounds for coffee preservation and reserves during crops, particularly in areas which have high output.

 

We will continue proposing the government and banks supporting companies in loan access; encourage enterprises not to sign differential pricing contracts but those of spot sales and select a trading form in the global market; and set up an insurance fund for coffee exports and work out an investment plan for Vietnamese coffee industry in the coming years.