Coffee industry in Vietnam turns bitter

The Ministry of Agriculture and Rural Development in turn estimated the export volume in the first quarter when compared against the same three months last year to have dipped 5.4% to 449,000 tons with revenue jumping 25.6% to US$1 billion.

Average prices in the first quarter ticked up 32% on year to US$2,262 a ton, said MARD, adding that Germany and the US were the two largest buyers with market shares of 17% and 16%, respectively.

Markets witnessing sharp growth over the same period last year were Belgium (230%), the Republic of Korea (79%), the US (60%), Algeria (50%), Spain (34%), Germany (29%), the UK (27%), Japan (21%) and Italy (20%).

Compared to the end of February 2017, the price of coffee Robusta in the Central Highlands at the end of March rose by US$.09-US$.10 (US$ VND2,000-VND2,200) to US$2.03- US$2.07 (VND46,000-VND46,900) per kilogram.

Coffee prices in Dak Lak, the largest coffee bean-growing province in the country, stood at US$2.08-US$2.11 (VND47,300-VND48,000) per kilogram as stockpiles remain low.

According to Nam, coffee prices look to continue to increase in the near term as farmers are holding back waiting to see if prices will rise even further.

Despite the higher coffee prices, the profits per hectare remain lower than other alternative crops such as fruit trees and pepper— resulting in many farmers getting out of the coffee business entirely.

Solutions to boost coffee exports

The small production scale and lack of sophisticated skills of farmers have stopped them from becoming major players in the global market, said Nam, noting the lack of access to credit has prevented them from replanting with the latest varieties and newest technology.

Meanwhile, farmers collectively have processed 10% of the total coffee output for the year but instant, roasted and ground coffee products, have not achieved a high volume, strong brand or the quality reputation to compete with top global brands.

Huynh Quoc Thich, deputy director of Dak Lak Agriculture and Rural Development Department, notes that most actors in the coffee segment in the province have not paid sufficient attention to quality.

He added that the existing sales prices have not incentivized coffee growers to produce high quality coffee.

Meanwhile, he looks for exports to drop 25-30% this year. That won’t turn around until actors in the segment comprehensively collaborate to promote brand recognition, food safety and boost added value, he concluded.