Nation’s coffee industry urged to focus on quality, not quantity

Viet Nam’s coffee industry should focus on improving quality and stimulating domestic demand, according to experts who spoke at an international conference on next year’s coffee outlook held yesterday, December 9, in HCM City.

Despite being the world’s largest robusta exporter, the coffee industry faces many challenges, including low competitiveness, high production costs and modest domestic consumption.

Nestor Osorio, executive director of the International Coffee Organisation, said sustainable development of the industry would create more added value for coffee products.

The coffee sector must replant old trees to avoid a sharp decrease in yield, he added.

Despite being the world’s largest robusta exporter, the coffee industry faces many challenges, including low competitiveness, high production costs and modest domestic consumption, according to Doan Xuan Hoa, deputy general director of the Department of Processing and Trade for Agro-Forestry Fisheries Products and Salt Production.

Hoa said the high cost of coffee production prevented growers from using technology that increases quality.

To help the sector develop in a sustainable manner, Hoa said the Vietnamese government had mapped out plans to raise quality by adding value of 30-50 per cent to products.

It has recommended diversifying processed-coffee products, and boosting domestic consumption to 15-20 per cent from the current 10 per cent.

In addition, the Government will offer support to upgrade technology from harvest to preservation, and create new high-yield varieties. It will also support farmers in planting techniques in accordance with Vietnamese standards.

New trade promotions and Government policies to stimulate exports of quality products will be launched.

Speaking at the conference, Jonathan Clark, general director of Dakman Coffee Exporters, said that quality and sustainability “go hand in hand”.

By the next crop, the world coffee price was expected to rise because of an imbalance in supply and demand, Nestor Osorio, executive director of the International Coffee Organisation, said.

The stockpile in export countries has fallen compared to last year due to an increase in exports, but output has not risen.

In countries with flexible exchange rates, the appreciation of local currency in relation to the greenback has reduced the benefits of higher coffee prices since 2004.

Demand for coffee from traditional markets for the 2009-10 crop is expected to account for 58 per cent of the world consumption.

There would be changes in consumption habits from outside the home to at home and a greater demand for lower-priced brands in traditional markets Osorio said.

However, the impact on total volume of consumption in these markets was likely to be limited.

Demands from emerging markets account for 18 per cent of world coffee consumption.

However, coffee continues to be considered a luxury item, and the devaluation of local currencies to the dollar increases the price to consumers. In addition, macroeconomic weaknesses such as the unemployment rate and lack of credit can reduce demand.

Luong Van Tu, chairman of the Viet Nam Coffee and Cocoa Association, said Viet Nam had exported more than 1 million tonnes of coffee this year, earning US$1.7 billion, $400 million less than last year.

At least one-third of the 2009-10 crop has been harvested. The total expected yield for the crop is 17.5 billion bags, 15-20 per cent less than the previous crop. The decline was due to unfavourable weather.

VietNamNet/Viet Nam News

Tags: Vietnam agriculture, Vietnam Coffee