VIETNAM COFFEE – AN EVENTFUL YEAR

According to the Ministry of Agriculture and Rural Development, in 2015, Vietnam coffee declined in both value and export volume. It can be considered that this is a very eventful year for coffee when the export decline is over 28%.

Both price and volume decrease

According to the Vietnam Coffee – Cocoa Association (Vicofa), the total world coffee production in 2014-2015 is 141 million bags, equivalent to 8.5 million tons, decreased by 3.5%, compared to the previous crop year. In which, the main coffee producing countries in the world, first, Brazil produced up to 45 million bags, accounting for about 31% of the total coffee production in the world; next, Vietnam produced 27.5 million bags, accounting for 19.4%; followed by Colombia and Indonesia.

Farmers in Đăk Lăk are harvesting coffee. Photo: T.L

Also according to Vicofa, in terms of Robusta coffee production alone, Vietnam ranks first, accounting for more than 50% of total global production. In the 2014-2015 crop year, the total coffee farming area in Vietnam was 617,700 hectares, equivalent to 1.5 million tons. This figure decreased by 20% compared to previous years. In the period 2011-2014, our country’s coffee production was stable at 1.5-1.7 million tons/crop year.

In terms of coffee exports, in 2014-2015, Vietnam exported 1.2 million tons, decreased by 20% compared to 2013-2014. The main markets of Vietnamese coffee, including Germany accounting for 16%, the US 12%, followed by Spain, Italy and Japan…

However, according to Mr. Nguyen Huy Hung – member of the Executive Committee of Vicofa, along with the decrease in output, the export turnover in the past year also decreased by 20% (total export turnover was 2.62 billion USD, decreased by 20.1%, compared to $3.15 billion of last year).

Decline of exports due to “naive” business

According to Mr. Nguyen Huy Hung, The Vietnam’s coffee production decreased by 20% due to many reasons; first of all, the influence of weather and El Nino make coffee flowering unevenly. The program of replanting over 20-year old coffee fields is carried out slowly, so the production as well as the area of ​​old coffee fields increases, causing the decrease of coffee production.

“The paradox is that when the production falls, its price also falls. Currently, the coffee price no longer follows the supply and demand but according to the financial market. At the beginning of the crop, the price was relatively high, 41-42 million dong/ton, but now it’s reduced to 33.5-34 million dong/ton”- Mr. Hung said.

According to Vicofa’s analysis, there are several reasons why Vietnamese coffee has decreased in both volume & export value: in the past year, prices fluctuated strongly according to the market as well as the financial storms; The Vietnam’s business method is mainly in the traditional way without tools to control risks; especially, two crises in Greece, Spain and the impact of the stock market. Investors’withdrawing of money from funds also greatly affects the prices of commodities, especially agricultural products.

Mr. Hung also said that it is extremely important that in the world’s major coffee producing countries, their currencies depreciate. For Brazil, this country’s value of domestic currency lost up to 32%, Indonesia lost 8.6%, Colombia also lost 30%. This leads that the lower the coffee price falls, the more these countries sell, their domestic currency depreciates causing the decrease of the market. At that time, Vietnam was greatly affected because hesitated to the goods.

Coffee replanting – the key to survival

According to the Ministry of Agriculture and Rural Development, the whole country’s coffee area has reached 650,000 hectares, while the orientation of the Ministry of Agriculture and Rural Development is limited to an area of ​​​​530,000 hectares. Of these, according to the Department of Crop Production, 86,000 hectares of coffee are over 20 years old (accounting for 15%), and 140,000 hectares are from 15-20 years old (accounting for 25%). Thus, the total area of ​​old coffee that needs to be replaced and converted in the next 5 years is about 140,000 – 160,000 ha.

Therefore, according to the orientation of the sustainable agricultural transformation project in Vietnam, the coffee replanting program will be implemented methodically with the support from the World Bank (WB).

Accordingly, the project will provide long-term loans (7-10 years) for farmers to replant coffee through commercial banks on an area of ​​about 9,000 hectares, in accordance with the replanting plan of localities.

The project will also provide training to wholesale and retail banks to assist with the appraisal and loan disbursement process for coffee replanting farmers, as well as assist private nursery owners to produce high quality seedlings to meet the seed needs for coffee replanting.

Specifically, the project will provide long-term loans for farmers to replant coffee through retail commercial banks. Loans will be supported with a partial interest for the first time (3-5 years) because coffee tree is immature and has no income at this stage. All farmers participating in the project are trained and their coffee replanting plan must be consistent with the overall provincial replanting plan approved by MARD…

The Ministry of Agriculture and Rural Development aims to provide training in agronomy and sustainable coffee management to about 63,000 coffee farmers in 12 key districts with a total area of ​​about 69,000 hectares. In which, there are about 9,000 farmers involved in replanting coffee on an area of ​​about 10,000 ha. The training will be carried out on a farmer field school (FFS) approach through the development of pilot models and training of key farmers.

Hạ Vi (Dân Việt)