Vietnam coffee exports grew in 2016 despite drought

Vietnam’s coffee exports have rebounded, notching up double-digit growth this year after being hit by the most-severe drought in almost a century.

Coffee exports grew, on-year, by 33.6 percent in terms of volume, reaching nearly 1.8 million tons.

The Ministry of Agriculture and Rural Development said Vietnam’s coffee industry regained its momentum after seeing exports decline by more than 20 percent on-year in 2015.

Germany and the U.S. remained the two largest buyers of Vietnamese beans and, this year, sales to the two markets grew by 42.4 percent and 49 percent, respectively.

Exports of coffee also saw impressive increases in emerging markets like the Philippines (83 percent), Algeria (68 percent) and China (50 percent).

Analysts fear ongoing El Nino conditions could result in a 20 percent decline in coffee production during the coming year.

Roughly a fifth of Vietnam’s total plantations had been damaged by water shortages, according to the Association of Coffee and Cacao (VICOFA).

Flooding struck the Central Highlands’ coffee belt in November, making harvesting and drying rather difficult.

VICOFA chairman Luong Van Tu, however, says Vietnamese enterprises should shift their focus to processing coffee rather than increasingly the amount of raw materials shipped abroad.

He said new free trade agreements will slash tariffs on coffee sales to the E.U. and South Korea from 15 percent to under five in the coming year.