As one of the leading countries in terms of coffee production and export, but more than 95% of Vietnam’s export products are green coffee, the remaining percentage is processed coffee. This fact leads that profits received are not equivalent with the volume of goods exported.
Much export but small profit
Vietnam is the world’s leading producer and exporter of Robusta coffee and the second largest producer and exporter of green coffee (only behind Brazil). It can be affirmed that, over the past decade, Vietnam’s coffee production has achieved a high growth in terms of area, productivity as well as yield. The evidence is that in 2012, Vietnam’s green coffee production reached 1.3 million tons, 14 times higher than in 1990, the export turnover also reached 2.7 billion USD, 29 times higher than in 1990.
It is forecasted that the coffee export turnover by 2020 will be stable at 3.5 billion USD/year.
However, it is easy to see that Vietnam’s coffee production and export industry is experiencing a big paradox that until now, the main coffee export of Vietnam is green coffee with a rate of up to 95% of total volume, while processed coffee exports account for only 5%. It is noteworthy that the value of a unit of processed coffee is 3 times higher than that of green coffee.
Mr. Nguyen Trong Thua, Director of the Agro-forestry Processing and Salt Industry Department (MARD), said that this result is partly due to the fact that Vietnam’s coffee industry now has a processing and preservation system that has increased sharply in terms of quantity but is still weak and unbalanced development. The actual total capacity of processing of green coffee, roasted coffee and storage is low compared to the designed capacity, causing a great waste of investment capital. Even in 2011 and 2012, there were a number of businesses that had to suspend their operations and were in danger of bankruptcy.
“The major weakness of the coffee industry is that the stages of production, processing and preservation of coffee products have not been linked together, and the relationship between farmers and businesses is still loose. The export processing enterprises are mainly engaged in pure commercial activities, less associated with coffee production. Almost roasted coffee volume is processed in small establishments, with low quality, so it is difficult to expand the consumption market,” said Nguyen Trong Thua.
Enhancing the “quality” of export coffee
According to the International Coffee Organization (ICO), the global coffee consumption has increased continuously over the past 40 years with an average growth rate of 1.6% per year. The global coffee consumption will continue to increase and the increase will be higher than production, so coffee prices will be maintained at over $2,000/ton.
Currently, the Ministry of Agriculture and Rural Development has assigned the Agro-forestry Processing and Salt Industry Department to develop and finalize the Draft “Planning on the coffee processing and preservation system associated with production and export until 2020, with a vision to 2030”. In the draft, the sector experts made a judgment that from now to 2020, the orientation of Vietnam’s green coffee export will be maintained and stabilized in the market. Vietnamese coffee has been exported to 80 countries; especially, 10 largest import countries of green coffee are: the United States, Germany, Belgium, Italy, Spain, Japan, Korea, the Netherlands, the UK and China. However, the most prominent problem in exporting green coffee is that the quality must be improved and followed the ICO’s coffee quality improvement program. At the same time, in order to export better, there must be strong enough enterprises (group of 20 coffee exporting enterprises – G20) run by a team of businessmen who are experienced and knowledgeable about the coffee trading system in the world market.
For consumer coffee, the potential for export will open up for Vietnamese enterprises if coffee products are processed by modern technological equipment lines, meeting high quality standards and having a highly feasible logical market expansion strategy.
According to Mr. Nguyen Trong Thua, in the draft, the Agro-forestry Processing and Salt Industry Department also pointed out “fundamental” solutions to gradually increase the value of Vietnam’s coffee exports. That is to build areas producing high-quality and certified coffee as raw materials for processing. The best way is that each coffee processing and preservation enterprise must cooperate with the local authority to find a stable and long-term raw material coffee production area, to invest and sign contracts to purchase products. Later, green coffee or consumer coffee products can be easily traced back to the origin.
In addition, the coffee industry needs to strengthen the trading promotion and market expanding activities, and quickly improve the method of buying and selling green coffee through the exchange at a favorable price for Vietnam enterprises.
Moreover, business owners who have invested in green coffee processing factories must re-evaluate their technological equipment lines, develop production and business plans on the basis of enough capital to purchase green coffee and collaborate to trade green coffee for export in a reasonable way. Inefficient factories and warehouses should be considered converting their functions or implementing the coffee preservation contracts for other businesses to improve the efficiency of warehouse use to avoid wasting investment capital…
According to the draft “Planning on coffee processing and management system associated with production and export until 2020, with orientation to 2030”: It is forecasted that the coffee export turnover by 2020 will reach a stable $3.5 billion/year, with a vision to 2030 to reach 4 – 4.5 billion USD/year. 100% of processed coffee products meet national and international quality standards and regulations on food hygiene and safety. The proportion of green coffee processed on an industrial scale will reach 40% by 2015; reaching 70% by 2020 and over 80% by 2030. By 2020, the proportion of coffee consumption (deeply processed coffee: roasted coffee, instant coffee) will reach 25% of total green coffee production. .
Regarding the distribution of coffee processing and preservation facilities by economic regions, it is expected that by 2020, it will focus on developing instant coffee processing in the main regions including: Central Highlands, Southeast and Mekong Delta, the total designed capacity by 2020 of 55,000 tons of products/year. The businesses are encouraged to mix 3-in-1 coffee because of relatively low investment in equipment lines and large market demand.
According to Customs Newspaper
