April 07, 2020 23:59

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Will coffee exports flourish in 2020?

10:36 | 17/02/2020

VCN- In the first days of 2020, Vietnam's exports of coffee continue to face many difficulties when prices are low. It is expected that in the short term, the price of coffee will struggle to flourish, and the strong investment in deep processing and branding will still be the "base" for this industry.  

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Vietnam's coffee products have been exported to more than 80 countries and territories, accounting for 14.2 percent of the global coffee bean export market. Photo: N. Thanh.

Price slipped, people give up coffee

According to a report of the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development), in 2019, coffee exports reached 1.59 million tonnes, valued at US$2.75 billion, down 15.2 percent in volume and decreased up to 22.4 percent in value compared to 2018. Germany and the US continued to be the two largest coffee consuming markets of Vietnam.

Entering the first days of 2020, the coffee industry continued to receive very negative information. In mid-January 2020, the price of robusta and arabica coffee delivered decreased compared to the first week of January 2020. Specifically: on the London exchange, on January 18, 2020, robusta coffee delivered in March 2020 decreased 1.4 percent compared to January 10, 2020 and down 6.9 percent compared to 18 / 12/2019, down to 1,319 USD / tonne. Similarly, on the New York Stock Exchange, on January 18, 2020, the price of arabica coffee delivered in February 2020 decreased by 4.4 percent compared to January 10, 2020 and down 16.1 percent compared to December 18, 2019, to 112.15 US cents/lb. At the Ho Chi Minh City port, robusta coffee exported - type 2, the black breakage rate of 5 percent was traded at 1,399 USD/tonne, down 2.4 percent compared to January 10, 2020 and down 5.8 percent compared to the 18/12/2019. Coffee prices fell due to ample supply, transactions were quiet.

As a person with many years of experience with coffee trees, Siu Toi (Dak Doa-Gia Lai) said at present, the price of coffee drops too low, only about half compared to two years ago. The money gained from coffee is not enough to cover the costs of watering and fertilising. If prices continue to fall, he will cut his coffee garden to grow other trees. "I have divided the whole coffee area for my five children, leaving only about 150 coffee roots. Currently, all five of my children and many people in Dak Doa are trying to switch from growing coffee to other trees. However, the problem is that people lack capital, information and struggle to know what to plant. Some types of trees are directed to pineapple, passion fruit, pumpkin,” he said.

Deep processing, quality improvement

Nguyen Do Anh Tuan, Director of the Department of International Cooperation (MARD) said that Vietnam's coffee industry is facing many big challenges due to price fluctuations and supply-demand imbalance. The sharp decline in coffee prices has made it difficult for coffee farmers and reduced planted areas and investment in coffee. "However, it must be said that despite the sharp decrease in the price of raw green coffee, the price of roasted and ground coffee in developed countries has increased significantly," Tuan said.

From the perspective of export enterprises, Do Ha Nam, General Director of Intimex Group said Vietnamese coffee enterprises were interested in investing more for deep processing, especially instant coffee, thereby gradually improving the quality of products. Regarding coffee prices, Nam emphasised: "In the immediate future, the coffee purchasing and exporting Association of Vietnam needs to better coordinate the market, helping farmers improve their selling prices. Owning 60 percent of world robusta output, if Vietnamese exporters keep goods and reduce world supply, it will have a positive impact on the price of coffee. To do this, it is necessary to have smooth coordination between management agencies, associations, businesses and coffee growers."

According to the Import and Export Department (Ministry of Industry and Trade), the plan is to build Vietnam's coffee industry to develop in a modern, synchronous and highly competitive manner with diversified and quality products, aiming to achieve export turnover of $6billion by 2030, while increasing added value for Vietnamese coffee products. To achieve this, the Ministry of Industry and Trade said it would focus on implementing many measures to support the promotion of consumption and market development for coffee products such as negotiating market opening, connecting and promoting consumption, trade promotion and market information. Besides, the Ministry of Industry and Trade also continues to research and synthesise market information (demand, types, specifications, models, supply and demand, price, policies on import and export management, quality control, food hygiene and safety)for coffee to provide information to the Ministry of Agriculture and Rural Development, localities, businesses and people to coordinate production organisation, reasonable product structure, creating stable sources of goods in quality and quantity, meeting market demands.

"The Ministry of Industry and Trade has been focusing on trade promotion activities in some potential markets such as China, Russia, ASEAN, EU, the US, North Africa, South Africa and the Middle East to gradually increase export coffee processing volume, step by step build a solid foundation for Vietnam's processed coffee brands on the world market,” the representative of the Import-Export Department said.

By Thanh Nguyen/Quynh Lan