Coffee prices plunge as stockpile buffer target fails

Vietnamese coffee companies failed to stockpile 200,000 tonnes of beans in a government plan to counter a fall in global prices, government officials said Tuesday.

The plan, approved in early April, was due to be implemented from April 15 to July 17. The government undertook to subsidise the interest on loans taken out by companies to buy coffee for stockpiling.

But the subsidies were not enough. The eight companies authorised to carry out the plan bought only 55,000 tonnes of coffee beans worth 1.4 trillion dong out of a total 200,000 tonnes, deputy agriculture minister Bui Ba Bong said.

“Despite failure in volume, companies have helped to rally domestic coffee prices,” said Doan Trieu Nhan, a senior adviser at the Vietnam Coffee Association.

Nhan said the plan helped to raise coffee prices to between 25 million dong and 26 million dong a tonne on average during the stockpiling period.

On the domestic market, coffee prices rose to 28 million dong a tonne in July, after falling to the lowest level in three years at 22 million dong a tonne in March, he added.

Do Van Nam, general director of the Vietnam Coffee Corporation, said the government compensated companies for 6 percentage points of their loan interest, but that commercial banks were charging between 15 and 18 percent.

After deducting the 6 percent, companies still had to pay between 8 and 12 percent interest and found it hard to make enough money to make this worthwhile.

The Vietnam Coffee and Cocoa Association have proposed another plan to stabilise the coffee price for early October when the 2010-2011 harvest starts, Nhan said.

Tags: Vietnam Coffee, Vietnam coffee prices