Coffee exports, lesson learned from 2010

The surging prices of coffee in the early days of 2011 are benefiting farmers in the Central Highlands. However, they should be watchful for resulting devaluation in the future.

Signs of prosperity

After rocketing by US$70 per tonne at the end of 2010, coffee prices in the London market continued to rise to US$2,099 per tonne on January 4, 2011.

Meanwhile, coffee prices in the Central Highland provinces saw an increase of VND300-400 per kilo, which was good news for farmers.

According to Deputy Minister of Agriculture and Rural Development, Diep Kinh Tan, coffee output in the 2010-2011 crop is estimated at 1 million tonnes, down 15 percent compared to the set target, due to the bad weather.

However, coffee growers can earn more interest as prices are increasing sharply, said Tan.

The Dak Lak provincial People’s Committee asked localities and businesses to protect coffee plantations and not harvest coffee if the beans are not 90 percent ripe to ensure the quality of the export products. In the 2010-2011 crop, the province has 170,000 ha of coffee plantation, producing the highest output of coffee in Vietnam.

As the Government decided to buy 300,000 tonnes of coffee for temporary stockpiling, prices are expected to continue surging in the future.

Coffee growers said coffee is enjoying record high prices in the early stage of the crop and this is a positive sign for the development of the sector.

Effective measures of the Government

Unlike early in 2010 when coffee was unmarketable, many businesses tried to buy coffee at any cost in the middle of the year, making the prices constantly rise, said Nguyen Huu De, Secretary General of the Vietnam Coffee and Cacoa Association (VICOFA).

Therefore, coffee exports earned as much as US$1,800 billion in 2010, up 1.9 percent against 2009, he said, adding that the average price of coffee fetched up to US$1,503 per tonne.

De attributed the success of the coffee sector to the Government’s decision to buy 200,000 tonnes of coffee for stockpiling to prevent the decrease of coffee prices in 2010.

He said thanks to the decision, the value immediately increased from US$1,201 per tonne to US$1,267 in the London market.

Improving the quality of coffee for higher prices

According to De, as there are still risks of price reduction in 2011, Vietnam should make great effort to improve the quality of coffee for higher prices, he said.

Although Vietnam is the world’s biggest coffee exporter, coffee growers do not earn much from coffee exports. Tran Thi Quynh Chi, Head of the project on coffee and cacao co-operatives, attributed the problem to the low quality of Vietnamese coffee.

Most Vietnamese coffee has been exported as low-profit raw material and sometimes mixed with low quality products to reduce prices, she said.

In addition, small-scale production limited the effectiveness of investment and the application of scientific and technological advances in processing coffee.

De said Vietnam could not build a strong brand name for coffee because of the low quality caused by harvesting of unripe beans.

To ensure the quality and profit of coffee, VICOFA asked farmers not to harvest coffee until it is 89 percent ripe and asked businesses to buy only high-quality products.

Also, Vietnam’s coffee market is still controlled by some international speculators because the country has not yet established a professional system of processing and exporting coffee, and there is not a close link between processing and export businesses and coffee growers. – VOV

Tags: Vietnam Coffee, vietnam coffee exports