Vietnam aims high in first draft of coffee master plan

In the draft of the first-ever master plan for the coffee industry, the country targets to ship abroad 1.16 million tons worth US$2.4 billion by 2020 by raising both quality and productivity of one of the country’s farm mainstays.

Hoang Quoc Tuan, head of the department of agriculture planning under the agriculture ministry, said in the first review of the draft master plan held on Tuesday in HCMC that the Central Highlands would remain the key coffee growing region.

“Firstly, Vietnam needs to round up the Central Highlands area comprising Daklak, Gia Lai, Lam Dong, and Dak Nong as the center for planting and processing coffee,” said Tuan, who is in charge of drafting the master plan.

Tuan said the total area under coffee cultivation should be some 447,000 hectares in these provinces, and cultivation should observe the master plan instead of rampant planting without any planning.

“In fact, cultivation areas of farmers often fluctuate in line with prices on the global market, which makes authorities and processors passive. Hence, a stable development requires strict adherence to the indicated plan” he said.

Tuan explained that the master plan was in its final stage of review before being passed on to the Government for approval, expected for late this year.

Every year Vietnam exports around one million tons of Robusta coffee beans and is currently the world’s leader for this low-grade category, the other superior-quality coffee being Arabica.

However, export quality remains a big problem as only one-third of Vietnam’s Robusta coffee beans are accepted on London’s Liffe Commodities market, one of the world’s largest derivative exchanges. The rest is mainly used for blending and producing instant coffee at cheap prices.

The sub-quality coffee generates little value, Tuan said.

“The difference of export prices between the two kinds of coffee is very big. This obviously causes damage to the country’s coffee exports,” he said.

Besides, rising production cost also make inroads into the country’s coffee competitiveness. In 2009, the cost for producing a kilo of coffee bean is over VND23,000 or US$1,355 per ton, higher than the export prices at times.

In the master plan, the agriculture ministry also suggests setting up a coffee fund valued at US$100 million in order to support replacement of millions of old and unproductive trees and bolster export.

In 2009, the country exported 1.18 million tons of coffee beans for a total value of US$1.7 billion, rising in volume but dropping 17% in value compared to 2008, when Vietnam earned US$2.1 billion worth of one million tons of exported coffee.

The agriculture ministry has forecast a continued rise in global demand for coffee in the coming years. Vietnam’s key export markets will possibly be unchanged with Germany, the U.S., Italy, and Japan on top of the list.

Coffee is Vietnam’s second biggest farm produce export behind rice.- Saigon Times

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Posted by VBN on Jul 29 2010. Filed under Agriculture. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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