The big challenge for Vietnamese coffee

09:08 | 09/06/2015 Trade

(VEN) - The coffee sector that annually earned US$2.5-3 billion in export revenue has provided nearly 2.5 million jobs and made a contribution of three percent to the country’s gross domestic product (GDP). Vietnam currently tops Asia and ranks second worldwide in terms of coffee exports.

The big challenge  for Vietnamese coffee

Dr. Nguyen Quoc Manh, Deputy Manager of Industrial Crop Division of the Ministry of Agriculture and Rural Development’s Department of Crops Production said since 1975, the Vietnamese coffee industry has developed rapidly in terms of cultivation area, yield and output, and has succeeded in forming coffee growing areas in the Central Highlands and Arabica coffee growing areas in the northwestern region. Since 2000, Vietnam has become the world’s second biggest coffee producer and exporter and the world’s biggest Robusta coffee producer and exporter.

Vietnam’s coffee output has increased from a mere 10,000 tonnes in 1975 to millions of tonnes. Output increased to 1.276-1.395 million tonnes per year in 2011-2014. Vietnamese coffee has been present around the world and become an important input material for leading roasted coffee brands like Nestle, Lovazza, Tchibo, Modelez, and Folgers.

The risk of relegation

Vietnam Coffee and Cocoa Association (VICOFA) General Secretary Nguyen Viet Vinh said that 2014- 2015’s coffee output fell 20 percent compared with the 2013- 2014’s, greatly affecting exports and coffee grower incomes, with exports reaching only 466,000 tonnes valued at US$970 million in the first fourth months of 2015, down 41 percent in volume and 39.3 percent in value compared to the same period last year.

According to VICOFA, coffee warehouses in Europe lack Vietnamese Robusta coffee and most of coffee they have is Robusta coffee from Brazil. The price of Brazilian coffee is considerably higher than that of Vietnamese product of the same kind.

VICOFA senior advisor Phan Huu De attributed the decrease to the fact that Central Highland provinces faced water shortages, crop diseases and hoar frost, with 700 hectares of coffee in Lam Dong Province dying or suffering stunted growth.

Robusta coffee prices are currently low at VND38,600 per kilo, so both farmers and exporters have tended to hoard awaiting better prices of more than VND40,000/kilo.

According to VICOFA Chairman Luong Van Tu, if coffee is not properly invested, Vietnam’s coffee production and export ranking will drop to the fourth or fifth in the world in the next 10 years. The National Institute of Agricultural Planning and Projection (NIAPP) has estimated that the coffee sector needs to invest at least VND14 trillion in coffee re-cultivation to increase coffee yield to 2.4 million tonnes per hectare, up from a current 2.1 million tonnes./.

By Quynh Nga & Lan Anh