Vietnam’s agricultural exports falter despite high prices

The prices of many agricultural products are rising in the world market, but Vietnamese exporters may not be able to capitalize on this opportunity because their stocks are thin.
Coffee prices have surged past 51 million dong per ton and hovered around that level for two months in the Central Highlands, Vietnam’s main producing region. But many exporters said they cannot boost shipments and profit from the high price.

“Coffee supplies are running low and exporters now have difficulties buying enough beans to deliver on their contracts,” a trader told Thanh Nien newspaper. “Local firms have delayed shipments totaling more than 70,000 tons as of mid-August.”

Vietnam, the world’s second-largest exporter after Brazil, shipped 40,000 tons in August, down 24.5 percent from the previous month. Coffee exports in the first eight months of the year were estimated by the General Statistics Office at 958,000 tons, 11 percent higher than a year earlier.

According to a Bloomberg survey, high global prices spurred Vietnamese farmers to sell 90 percent of the latest crop by May. “Domestic coffee prices were so good this year, reaching record highs of above 50,000 dong a kilo, which prompted people to sell faster than during previous crops,” the news service cited an official at Tay Nguyen Coffee Investment, Import and Export Co., the country’s biggest exporter, as saying.

Pepper and cashew exporters are also caught in the same bind.

The price of pepper in Vietnam hit an all-time high of 130,000 dong per kilogram last week due to increasing demand for the spice in the upcoming holiday season. Traders said they are scouting for supplies to seize this opportunity, but it was not easy.

Customs data showed export prices of raw Vietnamese cashew nuts averaged US$9,096 per ton in the first half of August, an increase of 57.41 percent from the same period last year.

Officials of the Vietnam Cashew Association said its member companies have signed many contracts at high prices this year. The problem is some do not have enough cashew nuts to deliver to buyers.

Meanwhile, rice shipments are also being delayed.

According to the Vietnam Food Association, also known as VFA, many foreign ships had to wait at local seaports last month because Vietnamese traders could not deliver the grains on time.

Rice prices this week reached $580 per ton, compared to $560 the previous week. As prices have surged, many exporters have found it difficult to buy rice for contracts that they signed in June and July. Some have incurred losses while others have tried to delay delivery.

The VFA said traders should stop signing new contracts unless they have secured ample rice supplies, and warned prices could surge further.

Vietnam is the world’s second biggest rice exporter, after Thailand. Exports in the first eight months of 2011 were estimated at 5.31 million tons, up 6.5 percent from a year earlier. The VFA expects the full year’s figure to reach a record 7.3 million tons.

There have been concerns that increased exports could lead to a shortage in the home market. But the Ministry of Industry and Trade has said domestic reserves of more than 1.3 million tons make a food shortage unlikely.

Truong Thanh Phong, VFA chairman, said top exporter Vinafood 2 now has 500,000 tons of the grain in stock, including 200,000 tons that have not been contracted for export. The fall-winter crop will also add 700,000 tons to Vietnam’s rice supply, not to mention the winter-spring harvest in January and February, he said. – Thanhnien

Tags: Vietnam Agricultural exports