Coffee industry brews up plans

Viet Nam’s coffee industry should invest in more professional facilities, adequate irrigation methods and efficient watering systems to gain a stronger foothold in the global market, speakers at the Asia International Coffee Conference (AICC) said yesterday in HCM City.

Speaking at the16th annual AICC conference, Luong Van Tu, chairman of the Viet Nam Coffee-Cocoa Association (VICOFA), said the industry had suffered lower export profits because of inconsistent quality.

The two-day conference is being attended by domestic and foreign experts, as well as coffee roasters, retailers, traders and producers.

Coffee selling prices had at times been lower than production costs, causing farmers’ incomes to drop. With such low revenue, many of them had been unable to reinvest in their plantations, Tu said.

Moreover, current coffee cultivation practices in Viet Nam are seen as unsustainable, leading to high production costs, soil degradation and lower yields.

“Adverse weather and ageing coffee bushes have also contributed to low quality of Viet Nam’s coffee. About 30 per cent of the country’s coffee bushes are more than 20 years old,” Tu noted.

Severe competition from other countries is another challenge faced by the local industry.

To address these concerns, VICOFA said it would provide market information and organise promotions for exporters.

VICOFA has also asked the Government to support coffee growers by offering preferential loans for a period of six or nine months.

Jose Sette, executive director of the International Coffee Organisation, said many countries faced similar challenges, including economic pressures such as interest rates, exchange rates and labour costs.

Other issues include infrastructure, management of pests and diseases and development of new coffee varieties that can adapt to climate change and resist disease.

Better fertility, erosion control, improved harvesting techniques and post-harvest processing were also essential for the sustainable development of the coffee industry, Sette said.

The top 10 coffee producers are Brazil, Viet Nam, Indonesia, Colombia, India, Mexico, Ethiopia, Guatemala, Honduras and Uganda.

Doan Xuan Hoa, deputy head of the Ministry of Agriculture and Rural Development’s Agro-Processing and Trade Department, said that the Vietnamese coffee industry had showed weaknesses in cultivation, processing and exporting.

“Our coffee has high status, but the price offered for it is unstable in the global market because of the inconsistent quality,” Hoa said.

Distribution

He also noted that the Vietnamese coffee sector had not established a professional production and trade system that applies modern trading methods such as forwards, options and future exchange.

Only 20 of the 168 exporters nationwide export large quantities, and there is only one local coffee exchange centre of Buon Ma Thuot.

The competitiveness of coffee producers and traders remained at a low level, and traders did not have financial resources to buy coffee for storage so they could wait for a good price to sell, Sette said.

“The companies need better coffee storage to ensure benefits from exports,” he noted.

Many companies had not paid attention to enhancing quality and applying high standards, he added.

“Linkages between processors and traders as well as companies and farmers are weak. Farmers do not have enough information about the market and face many risks in their production,” he said.

Jonathan Clark, general director of Dakman Coffee Exporter, said Viet Nam should improve coffee quality to improve its image in the world market.

Nguyen Duc Tuan Vinh, general director of Nedcoffee Viet Nam, said there should be rewards and penalties in the quality-control system. This would help to add value to Vietnamese coffee products.

Viet Nam is the largest robusta producer worldwide, about 500,000ha in area, which includes 1 million tonnes of green coffee yield each year and more than US$1.5 billion in export turnover.

Vietnamese coffee is sold in 100 countries and territories, including big markets such as Spain, Japan, South Korea and the US as well as new markets like Africa and Eastern Europe. The coffee industry represents 2 per cent of Vietnamese GDP. — VNS

Tags: Vietnam Coffee industry